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EXHIBIT 99.3
CISCO SYSTEMS, INC.
STOCK OPTION ASSUMPTION AGREEMENT
DESIGNATED OPTIONS UNDER
SEAGULL SEMICONDUCTOR LTD.
1998 SECTION 102 STOCK OPTION PLAN
OPTIONEE: <<First_Name>><<Last_Name>>,
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 29th day of June,
2000 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 Seagull Networks
Ltd., an Israeli corporation ("Seagull"), which were originally granted to
Optionee under the Seagull Semiconductor Ltd. 1998 Section 102 Stock Option Plan
(the "Plan").
WHEREAS, upon the contribution by Seagull Semiconductor Ltd. of all of the
employment agreements of its employees, all redundancy payments with respect to
such employees and the Plan, which occurred on this date but prior to the
effectiveness of this Agreement (the "Contribution"), Seagull assumed all
obligations of Seagull Semiconductor Ltd. under certain outstanding options
under the Plan.
WHEREAS, each outstanding Seagull Option is evidenced by a Stock Option
Agreement (the "Option Agreement"), with any shares purchased under such options
to be subject to the terms and conditions of such agreement.
WHEREAS, Seagull, a subsidiary of Seagull Semiconductor Ltd., has been
acquired by Cisco through the purchase by Cisco of all the outstanding shares of
Seagull ordinary shares (the "Acquisition") pursuant to the Agreement, by and
between Cisco and Seagull Semiconductor Ltd., relating to the purchase and sale
of 100% of the issued and outstanding stock of Seagull (the "Acquisition
Agreement").
WHEREAS, the provisions of the Acquisition Agreement require Cisco to
assume all obligations of Seagull under all outstanding options under the Plan
at the consummation of the Acquisition and to issue to the holder of each
outstanding option an agreement evidencing the assumption of such option.
WHEREAS, the provisions of the Acquisition Agreement require Cisco to
comply with the Israeli tax rules in connection with the assumption of all
outstanding options under the Plan at the consummation of the Acquisition and to
comply with the Israeli tax rules with regard to the procedures for the exercise
of such outstanding options.
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WHEREAS, pursuant to the provisions of the Acquisition Agreement, the
exchange ratio (the "Exchange Ratio") in effect for the Acquisition is 0.57363
of a share of Cisco common stock ("Cisco Stock") for each outstanding share of
Seagull ordinary shares ("Seagull 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 Acquisition (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 Seagull Stock subject to the options held by
Optionee immediately prior to the Effective Time (the "Seagull 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 Seagull under each of
the Seagull Options. In connection with such assumption, the number of shares of
Cisco Stock purchasable under each Seagull Option hereby assumed and the
exercise price payable thereunder (as converted into U.S. Dollars, when
applicable) have been adjusted to reflect the Exchange Ratio. Accordingly, the
number of shares of Cisco Stock subject to each Seagull 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 Seagull Option shall also be
as indicated for that option below.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
SEAGULL STOCK OPTIONS CISCO ASSUMED OPTIONS
--------------------------------------------------------------------------------------------------
# of Shares of Exercise Price per # of Shares of Adjusted Exercise Price
InfoGear Common Stock Share Cisco Common Stock per Share
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
<<Seagull_Shares>> $<<Seagull_Price>> <<Cisco_Shares>> $<<Cisco_Price>>
--------------------------------------------------------------------------------------------------
</TABLE>
2. The intent of the foregoing adjustments to each assumed Seagull 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 Acquisition, be not greater than the spread which
existed, immediately prior to the Acquisition, between the then aggregate fair
market value of the Seagull Stock subject to the Seagull 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 Acquisition, on
a per share basis, the same ratio of exercise price per option share to fair
market value per share which existed under the Seagull Option immediately prior
to the Acquisition.
3. The following provisions shall govern each Seagull Option hereby
assumed by Cisco:
(a) Unless the context otherwise requires, all references in each
Option Agreement and in the Plan (i) to the "Company" shall mean Cisco,
(ii) to "Shares" or "Ordinary Shares" shall mean shares of Cisco Stock,
(iii) to "Option"
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shall refer to the option to purchase shares of Cisco Stock, (iv) to the
"Board of Directors" shall mean the Board of Directors of Cisco and (v) 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 Seagull
Option and all other provisions which govern either the exercise or the
termination of the assumed Seagull 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 Seagull Option.
(c) Pursuant to the terms of the Option Agreement, none of your
options assumed by Cisco in connection with the transaction vested on an
accelerated basis upon the consummation of the Acquisition. Each Seagull
Option was assumed by Cisco as of the Effective Time. Each such assumed
Seagull Option shall 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 number
of shares subject to each such installment has been 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 of
Seagull, 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 Cisco subsidiary. Accordingly, the provisions of the
Option Agreement governing the termination of the assumed Seagull Options
shall hereafter be applied on the basis of Optionee's cessation of employee
status with Cisco and its subsidiaries, and each assumed Seagull Option
shall accordingly terminate, within the designated time period in effect
under the Option Agreement for that option, following such cessation of
service as an employee of Cisco and its subsidiaries.
(e) In accordance with the Israeli tax rules, your outstanding
options will be held by Investec Clali - Trust Company Ltd., an Israeli
company whose address is 29 Yavne Street, Tel Aviv, Israel (the "Trustee")
and each assumed Seagull Option shall only be exercisable according to the
terms set forth by (i) the Trustee and (ii) the procedures described in
paragraphs (f) - (h) below.
(f) The adjusted exercise price payable for the Cisco Stock subject
to each assumed Seagull Option shall be payable in any of the forms
authorized under the Option Agreement applicable to that option and
approved by the Trustee.
(g) In order to exercise each assumed Seagull Option, Optionee must
comply with any requirements of the Trustee and 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
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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.
170 West Tasman Drive
MS 11-3
San Jose, CA 95134
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 Acquisition 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, Cisco Systems, Inc. has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 29th day of June, 2000.
CISCO SYSTEMS, INC.
By: /s/ LARRY R. CARTER
-------------------
Larry R. Carter
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 Seagull 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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<<First_Name>> <<Last_Name>>, OPTIONEE
DATED: __________________, 2000
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