EXHIBIT 99.4
FORM OF STOCK OPTION ASSUMPTION AGREEMENT
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Exhibit 99.4
MICROMUSE INC.
STOCK OPTION ASSUMPTION AGREEMENT
NETOPS CORPORATION
1997 Long-Term Incentive Plan
Optionee: <<Name>>,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 18th day of
July, 2000.
WHEREAS, the undersigned individual ("Optionee") holds one or more
outstanding options to purchase shares of the common stock of NetOps
Corporation, a Delaware corporation ("NetOps"), which were granted to Optionee
under the NetOps Corporation 1997 Long-Term Incentive Plan (the "Plan").
WHEREAS, each of those options is evidenced by a Stock Option
Agreement (the "Option Agreement") issued to Optionee under the Plan.
WHEREAS, NetOps has been acquired by Micromuse Inc., a Delaware
corporation ("Micromuse") through the merger of NetOps with and into Micromuse
(the "Merger") pursuant to the Agreement and Plan of Reorganization, by and
between Micromuse and NetOps, dated June 21, 2000 (the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require the
obligations of NetOps under each outstanding option under the Plan to be assumed
by Micromuse at the consummation of the Merger and the holder of each
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 0.006705 of a
share of Micromuse common stock ("Micromuse Stock") for each outstanding share
of NetOps common stock ("NetOps Stock").
WHEREAS, the purpose of this Agreement is to evidence the assumption
by Micromuse 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 those options which have become necessary in connection with
their assumption by Micromuse in the Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of NetOps Stock subject to the options held
by Optionee immediately prior to the Effective Time (the "NetOps Options") and
the exercise price payable per share are set forth below. Micromuse hereby
assumes, as of the Effective Time, all the duties and obligations of NetOps
under each of the NetOps Options. In connection with such
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assumption, the number of shares of Micromuse Stock purchasable under each
NetOps Option hereby assumed and the exercise price payable thereunder have been
adjusted to reflect the Exchange Ratio. Accordingly, the number of shares of
Micromuse Stock subject to each NetOps Option hereby assumed shall be as
specified for that option below, and the adjusted exercise price payable per
share of Micromuse Stock under the assumed NetOps Option shall also be as
indicated for that option below.
<TABLE>
<CAPTION>
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NETOPS STOCK OPTIONS MICROMUSE ASSUMED OPTIONS
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# of Shares of Exercise Price # of Shares of Adjusted Exercise
NetOps Common Stock per Share Micromuse Common Stock Price per Share
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<S> <C> <C> <C>
<<NetOps_Shares>> $<<NetOps_Price>> <<Micromuse_Shares>> $<<Micromuse_Price>>
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</TABLE>
2. The intent of the foregoing adjustments to each assumed NetOps
Option is to assure that the spread between the aggregate fair market value of
the shares of Micromuse Stock purchasable under each such option and the
aggregate exercise price as adjusted pursuant to this Agreement will not,
immediately after the consummation of the Merger, be greater than the spread
which existed, immediately prior to the Merger, between the then aggregate fair
market value of the NetOps Stock subject to the NetOps 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 NetOps Option immediately prior
to the Merger.
3. As a result of the Merger, the maximum term of each NetOps option
was extended five (5) years from the Effective Date to July 18, 2005, subject to
earlier termination (as provided in the applicable Option Agreement) following
Optionee's cessation of service or employment.
4. The following provisions shall govern each NetOps Option hereby
assumed by Micromuse:
(a) Unless the context otherwise requires, all
references in each Option Agreement and the applicable Plan (to the
extent incorporated into such Option Agreement) shall be adjusted as
follows: (i) all references to the "Company" shall mean Micromuse,
(ii) all references to "Stock," "Common Stock", "Employee Stock" or
"Shares" shall mean shares of Micromuse Stock, (iii) all references
to the "Board" shall mean the Board of Directors of Micromuse and
(iv) all references to the "Committee" shall mean the Compensation
Committee of the Micromuse Board of Directors.
(b) Except as modified by this Agreement in Paragraph 3
above, the grant date of each assumed NetOps Option and all other
provisions which govern either the exercise or the termination of
the assumed NetOps Option
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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 under this Agreement to purchase Micromuse Stock under the
assumed NetOps Option.
(c) Each NetOps Option hereby assumed by Micromuse shall
continue to vest and become exercisable in accordance with the same
installment vesting schedule in effect for that option under the
applicable Option Agreement immediately prior to the Effective Time;
except, that the 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 the Plan relating to Optionee's status as
an employee of NetOps, Optionee shall be deemed to continue in such
status as an employee for so long as Optionee renders services as an
employee to Micromuse or any present or future majority-owned
Micromuse subsidiary. Accordingly, the provisions of the Option
Agreement governing the termination of the assumed NetOps Options
upon Optionee's cessation of service as an employee of NetOps shall
hereafter be applied on the basis of Optionee's cessation of
employee status with Micromuse and its subsidiaries, and each
assumed NetOps Option shall accordingly terminate, within the
designated time period in effect under the Option Agreement for that
option, following such cessation of employee status.
(e) The adjusted exercise price payable for the
Micromuse Stock subject to each assumed NetOps 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 Micromuse Stock delivered in payment of such
adjusted exercise price, the period for which such shares were held
as NetOps Stock prior to the Merger shall be taken into account.
(f) In order to exercise each assumed NetOps Option,
Optionee must deliver to Micromuse a written notice of exercise in
which the number of shares of Micromuse 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 Micromuse Stock and should be delivered to
Micromuse at the following address:
Micromuse Inc.
139 Townsend Street
San Francisco, CA 94107
Attention: Jim DeGolia
5. 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, Micromuse Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 18th day of July, 2000.
MICROMUSE INC.
By: _____________________________________
Jim DeGolia, General Counsel
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 NetOps Options hereby assumed by Micromuse are as
set forth in the Option Agreement, the applicable Plan and such Stock Option
Assumption Agreement.
_________________________________________
<<Name>>, OPTIONEE
DATED: __________________, 2000
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