1
EXHIBIT 99.5
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
STRATUMONE COMMUNICATIONS, INC.
1997 STOCK PLAN
OPTIONEE: [EMPLOYEE],
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 20th day of
September, 1999 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 StratumOne
Communications, Inc., a California corporation ("StratumOne"), which were
granted to Optionee under the StratumOne 1997 Stock Plan (the "Plan") and are
each evidenced by a Stock Option Agreement (the "Option Agreement").
WHEREAS, StratumOne has been acquired by Cisco through the merger of
StratumOne with and into Cisco (the "Merger") pursuant to the Agreement and Plan
of Reorganization, by and between Cisco and StratumOne (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Cisco to assume
all obligations of StratumOne 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 0.3837454
shares of Cisco common stock ("Cisco Stock") for each outstanding share of
StratumOne common stock ("StratumOne Stock").
WHEREAS, this Agreement became effective immediately upon the
consummation of the Merger (the "Effective Time") in order to reflect certain
adjustments to Optionee's outstanding options 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 StratumOne Stock subject to the options held
by Optionee immediately prior to the Effective Time (the "StratumOne 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 StratumOne
under each of the StratumOne Options. In connection with such assumption, the
number of shares of Cisco Stock purchasable under each StratumOne 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 StratumOne Option hereby assumed shall be as specified for that option
below, and the adjusted
2
exercise price payable per share of Cisco Stock under the assumed StratumOne
Option shall also be as indicated for that option below.
----------------------------------------------------------------------------------------------------
STRATUMONE STOCK OPTIONS CISCO ASSUMED OPTIONS
----------------------------------------------------------------------------------------------------
# of Shares of Exercise Adjusted Exercise Price
StratumOne Common Price per # of Shares of per Share
Grant # Stock Share Cisco Common Stock
----------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------
$ $
----------------------------------------------------------------------------------------------------
2. The intent of the foregoing adjustments to each assumed StratumOne
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 StratumOne Stock subject to the StratumOne 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 StratumOne Option immediately prior to the Merger.
3. The following provisions shall govern each StratumOne Option hereby
assumed by Cisco:
(a) Unless the context otherwise requires, all references in
each Option Agreement and, if applicable, in the Plan (as incorporated
into such Option Agreement) (i) to the "Company" shall mean Cisco, (ii)
to "Share" shall mean share 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
StratumOne Option and all other provisions which govern either the
exercise or the termination of the assumed StratumOne Option shall
remain the same as set forth in the Option Agreement applicable to that
option, and the provisions of the Option Agreement shall accordingly
govern and control Optionee's rights under this Agreement to purchase
Cisco Stock.
(c) Pursuant to the terms of the Option Agreement, none of
your options assumed by Cisco in connection with the transaction will
vest and become exercisable on an accelerated basis upon the
consummation of the Merger. Each StratumOne Option shall be assumed by
Cisco as of the Effective Time. Each such assumed StratumOne Option
shall thereafter continue to vest for any remaining 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
2
3
number of shares subject to each such installment shall be adjusted to
reflect the Exchange Ratio.
(d) For purposes of applying any and all provisions of the
Option Agreement and/or the Plan relating to Optionee's status as an
employee or a consultant of StratumOne, 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
StratumOne Options upon Optionee's cessation of service as an employee
or a consultant of StratumOne shall hereafter be applied on the basis
of Optionee's cessation of employee or consultant status with Cisco and
its subsidiaries, and each assumed StratumOne Option shall accordingly
terminate, within the designated time period in effect under the Option
Agreement for that option, generally a three (3) month period,
following such cessation of service as an employee or a consultant of
Cisco and its subsidiaries.
(e) The adjusted exercise price payable for the Cisco Stock
subject to each assumed StratumOne 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 StratumOne Stock prior to the
Merger shall be taken into account.
(f) In order to exercise each assumed StratumOne 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
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.
3
4
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 September, 1999.
CISCO SYSTEMS, INC.
By: /s/ XXXXX X. XXXXXX
------------------------------
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 StratumOne Options hereby assumed by Cisco are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
-----------------------------------
[EMPLOYEE], OPTIONEE
DATED: _______________, 1999
4
