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Exhibit 99.3
NETWORK APPLIANCE, INC.
STOCK OPTION ASSUMPTION AGREEMENT
OPTIONEE: 1~
NUMBER OF INTERNET MIDDLEWARE SHARES: 2~
GRANT DATE: 3~
ORIGINAL EXERCISE PRICE: $4~
OPTION ASSUMPTION AGREEMENT issued as of the 17th day of March
1997 by Network Appliance, Inc., a California corporation ("Network Appliance").
WHEREAS, the undersigned Optionee is the holder of one or more
outstanding options to purchase shares of the common stock of Internet
MiddleWare Corporation, a California corporation ("Internet MiddleWare"), which
were granted to Optionee pursuant to the Internet MiddleWare Corporation 1996
Long Term Equity Incentive Plan (the "Option Plan") and are evidenced by a
Non-Qualified Stock Option Agreement (the "Option Agreement") between Internet
MiddleWare and Optionee.
WHEREAS, Internet MiddleWare has this day been acquired by
Network Appliance through merger of Internet MiddleWare with Network Appliance
(the "Merger") pursuant to the Agreement and Plan of Merger dated March 17, 1997
(the "Merger Agreement").
WHEREAS, the provisions of the Merger Agreement require
Network Appliance to assume the obligations of Internet MiddleWare under the
options outstanding under the Option Plan at the time of the Merger and to issue
an agreement evidencing the assumption of each such option (the "Assumption
Agreement").
WHEREAS, pursuant to the provisions of the Merger Agreement,
the exchange ratio (the "Exchange Ratio") in effect for the Merger is 0.0345267
shares of Network Appliance common stock ("Network Appliance Stock") for each
outstanding share of Internet MiddleWare common stock ("Internet MiddleWare
Stock").
WHEREAS, this Agreement is to be effective immediately upon
the consummation of the Merger (the "Effective Time") and shall reflect certain
adjustments to Optionee's outstanding options under the Option Plan which have
become necessary by reason of the assumption of those options by Network
Appliance in connection with the Merger.
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NOW, THEREFORE, it is hereby agreed as follows:
1. The number of shares of Internet MiddleWare Stock subject
to the stock options held by Optionee under the Option Plan immediately prior to
the Effective Time (the "Internet MiddleWare Options") and the exercise price
payable per share are set forth below. Network Appliance hereby assumes, as of
the Effective Time, all the duties and obligations of Internet MiddleWare under
each of the Internet MiddleWare Options and hereby agrees to issue up to the
number of shares of Network Appliance Stock indicated below for each such
assumed option upon (i) exercise of that option in accordance with the
provisions of the Option Agreement applicable thereto (as supplemented hereby)
and (ii) payment of the adjusted exercise price per share set forth below.
INTERNET MIDDLEWARE NETWORK APPLIANCE
STOCK OPTIONS ASSUMED OPTIONS
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# of Shares # of Shares Adjusted
Common Stock Exercise Common Stock Exercise
Internet MiddleWare Price/Share Network Appliance Price/Share
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2~ $4~ 6~ $7~
2. The number of shares of Network Appliance Stock purchasable
under each Internet MiddleWare Option hereby assumed and the exercise price
payable thereunder reflect the Exchange Ratio at which shares of Internet
MiddleWare Stock were converted into shares of Network Appliance Stock in
consummation of the Merger. The intent of such adjustments is to assure that the
spread between the aggregate fair market value of the shares of Network
Appliance Stock purchasable under each assumed Internet MiddleWare Option and
the aggregate exercise price as adjusted hereunder will, immediately after the
consummation of the Merger, approximate the spread which existed, immediately
prior to the Merger, between the then aggregate fair market value of the
Internet MiddleWare Stock subject to the Internet MiddleWare Option and the
aggregate exercise price in effect at such time under the Option Agreement. Such
adjustments are also designed to preserve, on a per-share basis immediately
after the Merger, the same ratio of exercise price per option share to fair
market value per share which existed under the Internet MiddleWare Option
immediately prior to the Merger.
3. The following provisions shall govern each Internet
MiddleWare Option hereby assumed by Network Appliance:
- Unless the context otherwise requires, all references to
the "Company" in each Option Agreement shall mean Network Appliance, all
references to "Option", "Common Stock", "Stock" or "Non-Qualified Option" shall
mean stock or options of Network Appliance Stock, all references to "Board" or
"Committee" shall
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mean the Compensation Committee of the Network Appliance Board of Directors, or
a committee of Board members.
- The grant date and the expiration date of each assumed
Internet MiddleWare Option and all other provisions which govern the termination
of each such assumed Internet MiddleWare Option shall remain the same as set
forth in the Option Agreement applicable to such option and shall accordingly
govern and control the Optionee's rights under this Assumption Agreement to
purchase Network Appliance Stock.
- Each assumed Internet MiddleWare Option shall vest in
accordance with the same installment vesting schedule in effect under the
applicable Option Agreement immediately prior to the Effective Time, with the
number of shares of Network Appliance Stock subject to each such installment
adjusted to reflect the Exchange Ratio. Accordingly, no acceleration of vesting
of the Internet MiddleWare Options shall be deemed to occur by reason of the
Merger, and the vesting dates under each applicable Option Agreement shall
remain the same.
- The adjusted exercise price payable for the Network
Appliance Stock subject to each assumed Internet MiddleWare Option shall be
payable in any of the forms authorized under the Option Agreement applicable to
that option and the provisions of the Option Plan incorporated by reference into
that Option Agreement. For purposes of determining the applicable holding period
for any shares of Network Appliance Stock delivered in payment of the exercise
price of each assumed Internet MiddleWare Option, the period for which such
shares were held as Internet MiddleWare Stock prior to the Merger shall be taken
into account.
- In order to exercise each assumed Internet MiddleWare
Option, the Optionee must deliver to Network Appliance a written notice of
exercise in which the number of shares of Network Appliance 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
Network Appliance Stock and should be delivered to Network Appliance at the
following address:
Network Appliance, Inc.
2770 San Tomas Expressway
Santa Clara, CA 95051
Attention: Plan Administrator
- For purposes of applying the termination of employment
provisions of the Option Agreement, the Optionee shall be deemed to continue in
employment and remain an employee for so long as the Optionee remains employed
by Network Appliance or any present or future parent or subsidiary of Network
Appliance, including (without limitation) Internet MiddleWare.
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4. Except to the extent specifically modified by this
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 Assumption Agreement.
IN WITNESS WHEREOF, Network Appliance, Inc. has caused this
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the 17th day of March, 1997.
NETWORK APPLIANCE, INC.
By:
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Title:
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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 Internet MiddleWare Options hereby assumed by
Network Appliance, Inc. are as set forth in the Option Agreement, the Option
Plan and such Stock Option Assumption Agreement.
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1~, OPTIONEE
DATED: , 1997
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