Exhibit 99.4
CISCO SYSTEMS,
INC.
STOCK OPTION ASSUMPTION
AGREEMENT
Dear «Name»:
As you know, on September 16, 2005, (the
“Closing Date”) Cisco Systems, Inc.
(“Cisco”) acquired Sheer Networks, Inc.
(“Sheer”) (the “Acquisition”) pursuant to
the Agreement and Plan of Merger by and among Cisco Systems, Inc.,
Santa Barbara Acquisition Corp., and Sheer dated July 26, 2005
(the “Merger Agreement”). On the Closing Date you held
one or more outstanding options to purchase shares of Sheer common
stock granted to you under the Sheer Networks, Inc. 2000 Stock
Option Plan (referred to in some documents as the Sheer Networks
Inc. Employee and Consultant Stock Option Plan and herein referred
to as the “Plan”). Pursuant to the Merger Agreement, on
the Closing Date, Cisco assumed all obligations of Sheer 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
Sheer common stock granted to you under the Plan (the “Sheer
Option”), and documented by a stock option agreement (or
stock option agreements) and any amendment(s) entered into by and
between you and Sheer (the “Option Agreement(s)”),
including the necessary adjustments for assumption of the Sheer
Option(s) that are required by the Acquisition.
The table below summarizes your Sheer Option(s)
immediately before and after the Acquisition:
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SHEER OPTION
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ASSUMED SHEER
OPTION
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Grant Date
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Option Type
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Sheer Shares
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Exercise Price
per Share
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No. of Shares of
Cisco Stock
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Exercise Price
per Share
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«DoG»
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«Type»*
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«SheerShares»
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«SheerPrice»
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«CisShares»
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«CisPrice»
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*
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[Confidential personal tax
information].
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The post-Acquisition adjustments are based on
the Option Exchange Ratio of 0.3219512096 (as determined in
accordance with the terms of the Merger Agreement) and are intended
to: (i) assure that the total spread of your assumed Sheer
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;
(ii) to preserve, on a per share basis, the ratio of exercise
price to fair market value that existed immediately prior to the
Acquisition; and (iii) to the extent applicable and allowable
by law, to retain Israeli tax incentive status under the Israeli
Income Tax Ordinance (the “Ordinance”) and the
regulations promulgated thereunder. The number of shares of Cisco
common stock subject to your assumed Sheer Option(s) was determined
by multiplying the Option Exchange Ratio by the number of shares
remaining subject to your Sheer 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 Sheer Option(s) was determined by dividing the exercise
price per share of your Sheer Option(s) by the Option Exchange
Ratio and rounding the resulting quotient up to the next whole
cent.
