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EXHIBIT 99.3
FORM OF STOCK OPTION ASSUMPTION AGREEMENT
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QUEST SOFTWARE, INC.
STOCK OPTION ASSUMPTION AGREEMENT
FOGLIGHT SOFTWARE, INC.
1998 STOCK OPTION PLAN
OPTIONEE: <> <>
STOCK OPTION ASSUMPTION AGREEMENT effective as of the 7th day of
January, 2000 by Quest Software, Inc., a California corporation ("Quest").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding options to purchase shares of the common stock of Foglight
Software, Inc., a Delaware corporation ("Foglight"), which were granted to
Optionee under the Foglight 1998 Stock Option Plan (the "Plan") and are each
evidenced by a Stock Option Agreement (the "Option Agreement").
WHEREAS, Foglight has been acquired by Quest through the merger
of Quest Acquisition Corporation II, Inc., a Delaware corporation and the
wholly-owned subsidiary of Quest ("Sub"), with and into Foglight (the "Merger")
pursuant to that certain Agreement and Plan of Merger, dated as of November 10,
1999, by and among Quest, Sub and Foglight (as amended, the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require Quest to
assume all obligations of Foglight 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
0.10374484330342 of a share of Quest common stock ("Quest Stock") for each
outstanding share of Foglight common stock ("Foglight 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 Quest in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Foglight Stock subject to the options
held by Optionee immediately prior to the Effective Time (the "Foglight
Options") and the exercise price payable per share are set forth below. Quest
hereby assumes, as of the Effective Time, all the duties and obligations of
Foglight under each of the Foglight Options. In connection with such assumption,
the number of shares of Quest Stock purchasable under each Foglight Option
hereby assumed and the exercise price payable thereunder have been adjusted to
reflect the Exchange
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Ratio. Accordingly, the number of shares of Quest Stock subject to each Foglight
Option hereby assumed shall be as specified for that option below, and the
adjusted exercise price payable per share of Quest Stock under the assumed
Foglight Option shall also be as indicated for that option below.
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FOGLIGHT STOCK OPTIONS QUEST ASSUMED OPTIONS
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# of Shares
# of Shares of Foglight Exercise Price of Quest Adjusted Exercise
Common Stock per Share Common Stock Price per Share
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2. The intent of the foregoing adjustments to each assumed
Foglight Option is to assure that the spread between the aggregate fair market
value of the shares of Quest 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 Foglight Stock subject to the Foglight 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 Foglight Option immediately prior
to the Merger.
3. The following provisions shall govern each Foglight Option
hereby assumed by Quest:
(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 Quest, (ii) to "Share" or "Stock" shall
mean share of Quest Stock, (iii) to the "Board" shall mean the
Board of Directors of Quest and (iv) to the "Committee" shall
mean the Compensation Committee of the Quest Board of Directors.
(b) The grant date and the expiration date of each
assumed Foglight Option and all other provisions which govern
either the exercise or the termination of the assumed Foglight
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 Quest Stock.
(c) Pursuant to the Plan, none of your options assumed
by Quest in connection with the transaction will terminate in
connection with the Merger. Each Foglight Option shall be
assumed by Quest as of the Effective Time. Each such assumed
Foglight Option shall thereafter continue to vest for any
remaining unvested shares of Quest Stock subject to that option
in accordance
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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 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 Foglight, 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 Quest or any present or future Quest
subsidiary. Accordingly, the provisions of the Option Agreement
governing the termination of the assumed Foglight Options upon
Optionee's cessation of service as an employee or a consultant
of Foglight shall hereafter be applied on the basis of
Optionee's cessation of employee or consultant status with Quest
and its subsidiaries, and each assumed Foglight 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 Quest and its subsidiaries.
(e) The adjusted exercise price payable for the Quest
Stock subject to each assumed Foglight 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 Quest Stock delivered in payment
of such adjusted exercise price, the period for which such
shares were held as Foglight Stock prior to the Merger shall be
taken into account.
(f) In order to exercise each assumed Foglight Option,
Optionee must deliver to Quest a written notice of exercise in
which the number of shares of Quest 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 Quest Stock and should be delivered
to Quest at the following address:
Quest Software, Inc.
Attention: Xxxxx Xxxxxx
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxx, XX 00000
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.
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IN WITNESS WHEREOF, Quest Software, Inc. has caused this Stock
Option Assumption Agreement to be executed on its behalf by its duly-authorized
officer as of the 7th day of January, 2000.
QUEST SOFTWARE, INC.
By:_________________________________
Xxxx Xxxxx
President and 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 Foglight Options hereby assumed by Quest are as
set forth in the Option Agreement, the Plan, as applicable, and such Stock
Option Assumption Agreement.
_________________________________________
<> <>, OPTIONEE
DATED: __________________, 2000
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