SONICWALL, INC. STOCK OPTION ASSUMPTION AGREEMENT
Exhibit 99.3
SONICWALL, INC.
STOCK OPTION ASSUMPTION AGREEMENT
STOCK OPTION ASSUMPTION AGREEMENT
Dear [Name]:
As you know, on February 22, 2006 (the “Closing Date”) SonicWALL, Inc. (“SonicWALL”) acquired
MailFrontier Inc. (“MailFrontier”) (the “Acquisition”) pursuant to the Agreement and Plan of Merger
by and among SonicWALL, Inc., Meridian Acquisition Corp. and MailFrontier dated February 7, 2006
(the “Merger Agreement”). On the Closing Date you held one or more outstanding options to purchase
shares of MailFrontier common stock granted to you under the MailFrontier 2002 Stock Plan (the
“Plan”). Pursuant to the Merger Agreement, on the Closing Date SonicWALL assumed all obligations
of MailFrontier under your outstanding option (or options). This Stock Option Assumption Agreement
(the “Agreement”) evidences the terms of SonicWALL’s assumption of an option (or options) to
purchase MailFrontier common stock granted to you under the Plan (the “MailFrontier Option”), and
documented by a stock option agreement (or stock option agreements) and any amendment(s) entered
into by and between you and MailFrontier (the “Option Agreement(s)”), including the necessary
adjustments for assumption of the MailFrontier Option(s) that are required by the Acquisition.
The table below summarizes your MailFrontier Option(s) immediately before and after the
Acquisition:
| MAILFRONTIER OPTION | ASSUMED OPTION | |||||||||
| Grant Date | Option Type | MailFrontier Shares | Exercise Price per | No. of Shares of | Exercise Price | |||||
| Share | Stock | per Share | ||||||||
The post-Acquisition adjustments are based on the Option Exchange Ratio of .12824127744528 (as
determined in accordance with the terms of the Merger Agreement) and are intended to: (i) assure
that the total spread of your assumed MailFrontier 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 incentive stock option (“ISO”) status under
federal tax laws. The number of shares of SonicWALL common stock subject to your assumed
MailFrontier Option(s) was determined by multiplying the Option Exchange Ratio by the number of
shares remaining subject to your MailFrontier Option(s) on the Closing Date and rounding the
resulting product down to the next whole number of shares of SonicWALL common stock. The exercise
price per share of your assumed MailFrontier Option(s) was determined by dividing the exercise
price per share of your MailFrontier Option(s) by the Option Exchange Ratio and rounding the
resulting quotient up to the next whole cent.
Example: Assume you held an option to purchase 10,000 shares of MailFrontier common
stock with an exercise price of $.20 per share. The number of shares of
SonicWALL common stock that would subject to your assumed option would be 1282 (10,000 x .12824127744528) after rounding down and the exercise price of your assumed option would be
$1.56 ($.20/.12824127744528) after rounding up.
1
Unless the context otherwise requires, any references in the Plans and the Option Agreement(s) to:
(i) the “Company” or the “Corporation” means SonicWALL, (ii) “Stock,” “Common Stock” or “Shares”
means shares of SonicWALL common stock, (iii) the “Board of Directors” or the “Board” means the
Board of Directors of SonicWALL and (iv) the “Committee” means the Compensation Committee of the
Board of Directors of SonicWALL. All references in the Option Agreement(s) and the Plans relating
to your status as an employee of MailFrontier will now refer to your status as an employee of
SonicWALL or any present or future SonicWALL subsidiary.
The vesting commencement date, vesting schedule and expiration date of your assumed MailFrontier
Option(s) remain the same as set forth in the Option Agreement(s), but the number of shares subject
to each vesting installment and the exercise price per share have been adjusted to reflect the
effect of the Acquisition. Prior to assumption, your MailFrontier Option(s) may have been eligible
to be exercised prior to the vesting date of the option(s) with the underlying shares then being
subject to a right of repurchase which lapsed upon vesting know as an “early exercise”. Your
assumed MailFrontier Option will no longer be eligible for early exercise and may only be exercised
after it has become vested. All other provisions which govern either the exercise or the
termination of your assumed MailFrontier Option(s) remain the same as set forth in the Option
Agreement(s), and the provisions of the Option Agreement(s) (except as expressly modified by this
Agreement and the Acquisition) will govern and control your rights under this Agreement to purchase
shares of SonicWALL common stock. Upon termination of your employment with SonicWALL you will have
the limited post-termination exercise period specified in your Option Agreement(s) for your assumed
MailFrontier Option(s) to the extent vested and outstanding at the time of termination after which
time your assumed MailFrontier Option(s) will expire and NOT be exercisable for SonicWALL common
stock.
To exercise your assumed MailFrontier Option(s), you must utilize one of SonicWALL’s designated
brokers.
Nothing in this Agreement or the Option Agreement(s) interferes in any way with your right and
SonicWALL’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 SonicWALL will be governed by the
terms of the SonicWALL stock option plan under which such options are granted, and such terms may
be different from the terms of your assumed MailFrontier Option(s). Please sign and date this
Agreement and, by March ___, 2006, return it to SonicWALL at the following address:
SonicWALL, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Stock Administration
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Stock Administration
[SIGNATURE PAGE FOLLOWS]
2
Until your fully executed Acknowledgment (attached to this Agreement) is received by SonicWALL’s
Stock Administration Department your SonicWALL account will not be activated. If you have any
questions regarding this Agreement or your assumed MailFrontier Option(s), please call (000)
000-0000 and ask for Stock Administration.
| SONICWALL, INC. |
||||
| By: | ||||
[ACKNOWLEDGMENT PAGE FOLLOWS]
3
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock Option Assumption Agreement and
understands and agrees that all rights and liabilities with respect to the assumed MailFrontier
Option(s) listed on the table above are hereby assumed by SonicWALL and are as set forth in the
Option Agreement(s) for such assumed MailFrontier Option(s), the Plans and this Stock Option
Assumption Agreement and agree to the terms as set forth in such Stock Option Assumption Agreement.
DATED: , 2006 |
||
| - OPTIONEE | ||
| Address: | ||
| Taxpayer ID No.: |
ATTACHMENTS
Exhibit A — Form S-8 Prospectus
Exhibit A — Form S-8 Prospectus
