{"id":38323,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/1998-stock-option-plan-sonicwall-inc.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"1998-stock-option-plan-sonicwall-inc","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/1998-stock-option-plan-sonicwall-inc.html","title":{"rendered":"1998 Stock Option Plan &#8211; SonicWALL Inc."},"content":{"rendered":"<pre>\n                                SONICWALL, INC.\n                            1998 STOCK OPTION PLAN\n               Adopted July 23, 1998; as Amended August 24, 1999\n\n     1.  Purposes of the Plan.  The purposes of this Stock Option Plan are to\n         --------------------                                                \nattract and retain the best available personnel for positions of substantial\nresponsibility, to provide additional incentives to Employees, Non-Employee\nDirectors and Consultants of SONICWALL, INC. ('the Company') and its\nSubsidiaries, and to promote the success of the Company's business.  Options\ngranted hereunder may be either Incentive Stock Options or Nonstatutory Stock\nOptions at the discretion of the Committee.\n\n     2.  Definitions.  As used herein, and in any Option granted hereunder, the\n         -----------                                                           \nfollowing definitions shall apply:\n\n     (a) 'Board' shall mean the Board of Directors of the Company.\n          -----                                                   \n\n     (b) 'Code' shall mean the Internal Revenue Code of 1986, as amended.\n          ----                                                           \n\n     (c) 'Common Stock' shall mean the Common Stock of the Company.\n          ------------                                             \n\n     (d) 'Company' shall mean SonicWALL, Inc., a California corporation.\n          -------                                                       \n\n     (e) 'Committee' shall mean the Committee appointed by the Board in\n          ---------                                                    \naccordance with paragraph (a) of Section 4 of the Plan.  If the Board does not\nappoint or ceases to maintain a Committee, the term 'Committee' shall refer to\nthe Board.\n\n     (f) 'Consultant' shall mean any independent contractor retained to perform\n          ----------                                                           \nbona fide consulting services for the Company or any Subsidiary (other than\nservices in connection with the offer or sale of securities in a capital-raising\ntransaction) and who is compensated for such services.\n\n     (g) 'Continuous Employment' shall mean the absence of any interruption or\n          ---------------------                                               \ntermination of service as an Employee or Non-Employee Director by the Company or\nany Subsidiary.  Continuous Employment shall not be considered interrupted\nduring any period of sick leave, military leave or any other leave of absence\napproved by the Board or in the case of transfers between locations of the\nCompany or between the Company and any Parent, Subsidiary or successor of the\nCompany.\n\n     (h) 'Covered Employee' shall mean any individual whose compensation is\n          ----------------                                                 \nsubject to the limitations on tax deductibility provided by Section 162(m) of\nthe Code and any Treasury Regulations promulgated thereunder in effect at the\nclose of the taxable year of the Company in which an Option has been granted to\nsuch individual.\n\n     (i) 'Employee' shall mean any person, including officers (whether or not\n          --------                                                           \nthey are directors), employed by the Company or any Subsidiary.  'Employee does\nnot include any individual who provides services to the Company or any\nSubsidiary as an independent contractor whether or not such individual is\nreclassified as a common law employee, unless the Company or a Subsidiary\nwithholds or is required to withhold U.S. Federal employment taxes for such\nindividual pursuant to Section 3402 of the Code.\n\n     (j) 'Exchange Act' shall mean the Securities Exchange Act of 1934, as\n          ------------                                                    \namended.\n\n                                       1\n\n \n     (k) 'Incentive Stock Option' shall mean any option granted under this Plan\n          ----------------------                                               \nand any other option granted to an Employee in accordance with the provisions of\nSection 422 of the Code, and the regulations promulgated thereunder.\n\n     (1) 'Non-Employee Director' shall mean any director of the Company or any\n          ---------------------                                               \nSubsidiary who (i) is not employed by the Company or such Subsidiary; (ii) does\nnot receive compensation, either directly or indirectly, from the Company or a\nparent or Subsidiary for services rendered as a consultant or in any capacity\nother than as a director, except for an amount that does not exceed the dollar\namount for which disclosure would be required pursuant to Item 404(a) of\nRegulation S-K; (iii) does not possess an interest in any other transaction for\nwhich disclosure would be required pursuant to Item 404(a) of Regulation S-K;\nand (iv) is not engaged in a business relationship for which disclosure would be\nrequired pursuant to Item 404 (b) of Regulation S-K.\n\n     (m) 'Nonstatutory Stock Option' shall mean an option granted under the Plan\n          -------------------------                                             \nthat is subject to the provisions of Section 1.83-7 of the Treasury Regulations\npromulgated under Section 83 of the Code.\n\n     (n) 'Option' shall mean a stock option granted pursuant to the Plan.\n          ------                                                         \n\n     (o) 'Option Agreement' shall mean a written agreement between the Company\n          ----------------                                                    \nand the Optionee regarding the grant and exercise of Options to purchase Shares\nand the terms and conditions thereof as determined by the Committee pursuant to\nthe Plan.\n\n     (p) 'Optionee' shall mean an Employee, NonEmployee Director or Consultant\n          ---------                                                           \nwho receives an Option.\n\n     (q) 'Outside Director' shall mean a director of the Company who qualifies\n          ----------------                                                    \nas an outside director as such term is used in Section 162(m) of the Code and\ndefined in any applicable Treasury Regulations promulgated thereunder.\n\n     (r) 'Parent' shall mean a 'parent corporation,' whether now or hereafter\n          ------                                                             \nexisting, as defined by Section 424(e) of the Code.\n\n     (s) 'Plan' shall mean this 1998 Stock Option Plan.\n          ----                                         \n\n     (t) 'Registration Date' shall mean the effective date of the first\n          -----------------                                            \nregistration statement filed by the Company pursuant to Section 12 of the\nExchange Act with respect to any class of the Company's equity securities.\n\n     (u) 'Section 162(m) Effective Date' shall mean the first date as of which\n          -----------------------------                                       \nthe limitations on the tax deductibility of certain compensation provided by\nSection 162(m) of the Code and any Treasury Regulations promulgated thereunder\nare applicable to Options granted under the Plan.\n\n     (v) 'Securities Act' shall mean the Securities Act of 1933, as amended.\n          --------------                                                    \n\n     (w) 'Share' shall mean a share of the Common Stock of the Company subject\n          -----                                                               \nto an Option, as adjusted in accordance with Section 11 of the Plan.\n\n     (x) 'Subsidiary' shall mean a 'subsidiary corporation,' whether now or\n          ----------                                                       \nhereafter existing, as defined in Section 424(f) of the Code.\n\n                                       2\n\n \n     3.  Stock Subject to the Plan.  Subject to the provisions of Section 11 of\n         -------------------------                                             \nthe Plan, the maximum aggregate number of Shares which may be optioned and sold\nunder the Plan is 2,179,162 Shares of Common Stock, plus an automatic annual\nincrease on the first day of each of the Company's fiscal year beginning in\n2000, 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008 equal to the lesser of\n(i) 1,000,000 Shares; (ii) four percent (4%) of the Shares outstanding on the\nlast day of the immediately preceding fiscal year or (iii) such lesser number of\nShares as is determined by the Board. The Shares may be authorized but unissued\nor reacquired shares of Common Stock. If an Option expires or becomes\nunexercisable for any reason without having been exercised in full, the Shares\nwhich were subject to the Option but as to which the Option was not exercised\nshall become available for other Option grants under the Plan, unless the Plan\nshall have been terminated. In addition, any shares of Common Stock which are\nretained by the Company upon exercise of an Option in order to satisfy the\nexercise or purchase price for such Option or any withholding taxes due with\nrespect to such exercise shall be treated as not issued and shall continue to be\navailable under the Plan. Shares repurchased by the Company pursuant to any\nrepurchase right which the Company may have shall be available for future grant\nas nonstatutory stock options under the Plan.\n\n     The Company intends that as long as it is not subject to the reporting\nrequirements of Section 13 or 15(d) of the Exchange Act and is not an investment\ncompany registered or required to be registered under the Investment Company Act\nof 1940, all offers and sales of Options and Shares issuable upon exercise of\nany Option shall be exempt from registration under the provisions of Section 5\nof the Securities Act, and the Plan shall be administered in such a manner so as\nto preserve such exemption. The Company intends that the Plan shall constitute a\nwritten compensatory benefit plan within the meaning of Rule 701(b) of 17 CFR\nSection 230.701 promulgated by the Securities and Exchange Commission pursuant\nto such Act or any successor rule. Unless otherwise specified Options granted\nunder the Plan are intended to be granted in reliance on Rule 701 whenever\napplicable.\n\n     4.  Administration of the Plan.\n         -------------------------- \n\n     (a) Procedure.  The Plan shall be administered by the Board.  The Board may\n         ---------                                                              \nappoint a Committee consisting of not less than two (2) members of the Board to\nadminister the Plan, subject to such terms and conditions as the Board may\nprescribe. Once appointed, the Committee shall continue to serve until otherwise\ndirected by the Board. From time to time, the Board may increase the size of the\nCommittee and appoint additional members thereof, remove members (with or\nwithout cause) and appoint new members in substitution therefor, fill vacancies,\nhowever caused, and remove all members of the Committee and, thereafter,\ndirectly administer the Plan.\n\n     Members of the Board or Committee who are either eligible for Options or\nhave been granted Options may vote on any matters affecting the administration\nof the Plan or the grant of Options pursuant to the Plan, except that no such\nmember shall act upon the granting of an Option to himself, but any such member\nmay be counted in determining the existence of a quorum at any meeting of the\nBoard or the Committee during which action is taken with respect to the granting\nof an Option to him or her.\n\n     The Committee shall meet at such times and places and upon such notice as\nthe chairperson determines. A majority of the Committee shall constitute a\nquorum. Any acts by the Committee may be taken at any meeting at which a quorum\nis present and shall be by majority\n\n                                       3\n\n \nvote of those members entitled to vote. Additionally, any acts reduced to\nwriting or approved in writing by all of the members of the Committee shall be\nvalid acts of the Committee.\n\n     (b)  Procedure After Registration Date.  Notwithstanding subsection (a)\n          ---------------------------------                                 \nabove, after the date of registration of the Company's Common Stock on a\nnational securities exchange or the Registration Date, the Plan shall be\nadministered either by: (i) the full Board; or (ii) a Committee of two (2) or\nmore directors, each of whom is a Non-Employee Director.  After such date, the\nBoard shall take all action necessary to administer the Plan in accordance with\nthe then effective provisions of Rule 16b-3 promulgated under the Exchange Act,\nprovided that any amendment to the Plan required for compliance with such\nprovisions shall be made consistent with the provisions of Section 13 of the\nPlan, and said regulations.\n\n     (c)  Procedure After Section 162(m) Effective Date.  Notwithstanding\n          ---------------------------------------------                  \nsubsections (a) and (b) above, after the Section 162(m) Effective Date the Plan\nand all Option grants shall be administered and approved by a Committee\ncomprised solely of two or more Outside Directors.\n\n     (d)  Powers of the Committee.  Subject to the provisions of the Plan, the\n          -----------------------                                             \nCommittee shall have the authority: (i) to determine, upon review of relevant\ninformation, the fair market value of the Common Stock; (ii) to determine the\nexercise price of Options to be granted, the Employees, Non-Employee Directors\nor Consultants to whom and the time or times at which Options shall be granted,\nand the number of Shares to be represented by each Option; (iii) to interpret\nthe Plan; (iv) to prescribe, amend and rescind rules and regulations relating to\nthe Plan; (v) to determine the terms and provisions of each Option granted under\nthe Plan (which need not be identical) and, with the consent of the holder\nthereof, to modify or amend any Option; (vi) to authorize any person to execute\non behalf of the Company any instrument required to effectuate the grant of an\nOption previously granted by the Committee; (vii) to defer an exercise date of\nany Option (with the consent of the Optionee), subject to the provisions of\nSection 9(a) of the Plan; (viii) to determine whether Options granted under the\nPlan will be Incentive Stock Options or Nonstatutory Stock Options; and (ix) to\nmake all other determinations deemed necessary or advisable for the\nadministration of the Plan.\n\n     (e)  Acceleration of Vesting.  In addition to its other powers, the Board\n          -----------------------                                             \n(or the Committee), in its discretion, has the right to accelerate unvested\nOptions in connection with (i) any tender offer for a majority of the\noutstanding shares of Common Stock by any person or entity; (ii) any proposed\nsale or conveyance of all or substantially all of the property and assets of the\nCompany; or (iii) any proposed consolidation or merger of the Company with or\ninto any other corporation, unless the Company is the surviving corporation.  In\nthe case of such accelerated vesting, the Company shall give written notice to\nthe holder of any Option that such Option may be exercised even though the\nOption or portion thereof would not otherwise have been exercisable had the\nforegoing event not occurred.  In such event, the Company shall permit the\nholder of any Option to exercise during the time period specified in the\nCompany's notice, which period shall not be less than ten days following the\ndate of notice.  Upon consummation of a tender offer or proposed sale,\nconveyance, consolidation or merger to which such notice shall relate, all\nrights under said Option which shall not have been so exercised shall terminate\nunless the agreement governing the transaction shall provide otherwise.\n\n     (f)  Effect of Committee's Decision.  All decisions, determinations and\n          ------------------------------                                    \ninterpretations of the Committee shall be final and binding on all potential or\nactual Optionee, any other holder of an Option or other equity security of the\nCompany and all other persons.\n\n                                       4\n\n \n     5.   Eligibility.\n          ----------- \n\n     (a)  Persons Eligible for Options.  Options under the Plan may be granted\n          ----------------------------                                        \nonly to Employees, Non-Employee Directors or Consultants whom the Committee, in\nits sole discretion, may designate from time to time. Incentive Stock Options\nmay be granted only to Employees. An Employee who has been granted an Option, if\nhe or she is otherwise eligible, may be granted an additional Option or Options.\nHowever, the aggregate fair market value (determined in accordance with the\nprovisions of Section 8(a) of the Plan) of the Shares subject to one or more\nIncentive Stock Options grants that are exercisable for the first time by an\nOptionee during any calendar year (under all stock option plans of the Company\nand its Parents and Subsidiaries) shall not exceed $100,000 (determined as of\nthe grant date). As of the Section 162(m) Effective Date, Options under the Plan\nshall be granted to Covered Employees upon satisfaction of the conditions to\nsuch grants provided pursuant to Section 162(m) and any Treasury Regulations\npromulgated thereunder.\n\n     (b)  No Right to Continuing Employment.  Neither the establishment nor the\n          ---------------------------------                                    \noperation of the Plan shall confer upon any Optionee or any other person any\nright with respect to continuation of employment or other service with the\nCompany or any Subsidiary, nor shall the Plan interfere in any way with the\nright of the Optionee or the right of the Company (or any Parent or Subsidiary)\nto terminate such employment or service at any time.\n\n     6.   Term of Plan. The Plan shall become effective upon its adoption by the\n          ------------\nBoard or its approval by vote of the holders of the outstanding shares of the\nCompany entitled to vote on the adoption of the Plan (in accordance with the\nprovisions of Section 19 hereof), whichever is earlier. It shall continue in\neffect for a term of ten (10) years unless sooner terminated under Section 13 of\nthe Plan.\n\n     7.   Term of Option. Unless the Committee determines otherwise, the term of\n          --------------\neach Option granted under the Plan shall be ten (10) years from the date of\ngrant. The term of the Option shall be set forth in the Option Agreement. No\nIncentive Stock Option shall be exercisable after the expiration of ten (10)\nyears from the date such Option is granted, provided that no Incentive Stock\nOption granted to any Employee who, at the date such Option is granted, owns\n(including by attribution under Section 424(d) of the Code) more than ten\npercent (10%) of the total combined voting power of all classes of stock of the\nCompany or any Parent or Subsidiary shall be exercisable after the expiration of\nfive (5) years from the date such Option is granted.\n\n     8.   Exercise Price and Consideration.\n          -------------------------------- \n\n     (a)  Exercise Price.  Except as provided in subsections (b) and (c) below,\n          --------------                                                       \nthe exercise price for the Shares to be issued pursuant to any Option shall be\nsuch price as is determined by the Committee, which shall in no event be less\nthan: (i) in the case of Incentive Stock Options, the fair market value of such\nShares on the date the Option is granted; or (ii) in the case of Nonstatutory\nStock Options, eighty five percent (85%) of such fair market value; provided\n                                                                    --------\nthat, in the case of any Optionee owning stock possessing more than ten percent\n----                                                                           \n(10%) of the total combined voting power of all classes of stock of the Company\nor any Parent or Subsidiary of the Company, the exercise price shall be one\nhundred ten percent (110%) of fair market value on the date the Option is\ngranted.  Fair market value of the Common Stock shall be determined by the\nCommittee, using such criteria as it deems relevant; provided, however, that if\nthere is a public\n\n                                       5\n\n \nmarket for the Common Stock, the fair market value per Share shall be the\naverage of the last reported bid and asked prices of the Common Stock on the\ndate of grant, as reported in The Wall Street Journal (or, if not so reported,\n                              ----------------------- \nas otherwise reported by the National Association of Securities Dealers\nAutomated Quotation (NASDAQ) System) or, in the event the Common Stock is listed\non a national securities exchange (within the meaning of Section 6 of the\nExchange Act) or on the NASDAQ National Market System (or any successor national\nmarket system), the fair market value per Share shall be the closing price on\nsuch exchange on the date of grant of the Option, as reported in The Wall \n                                                                 --------\nStreet Journal.\n--------------\n\n     (b)  Ten Percent Shareholders.  No Incentive Stock Option shall be granted\n          ------------------------                                             \nto any Employee who, at the date such Option is granted, owns (within the\nmeaning of Section 424(d) of the Code) more than ten percent (10%) of the total\ncombined voting power of all classes of stock of the Company or any Parent or\nSubsidiary, unless the exercise price for the Shares to be issued pursuant to\nsuch Option is at least equal to one hundred ten percent (110%) of the fair\nmarket value of such Shares on the grant date determined by the Committee in the\nmanner set forth in subsection (a) above.\n\n     (c)  Section 162(m) Limitations.  After the Section 162(m) Effective Date,\n          --------------------------                                           \nthe Option Price of any Option granted to a Covered Employee shall be at least\nequal to the fair market value of the Shares as of the date of grant as\ndetermined in the manner set forth in subsection (a) above.\n\n     (d)  Consideration.  The consideration to be paid for the Shares to be\n          -------------                                                    \nissued upon exercise of an Option, including the method of payment shall be\ndetermined by the Committee (and, in the case of an Incentive Stock Option,\nshall be determined at the time of grant) and may consist entirely of (1) cash,\n(2) check, (3) promissory note, (4) other Shares that (x) in the case of Shares\nacquired upon exercise of an Option, have been owned by the Optionee for more\nthan six months on the date of surrender or such other period as may be required\nto avoid a charge to the Company's earnings, and (y) have a fair market value on\nthe date of surrender equal to the aggregate exercise price of the date of\nsurrender equal to the aggregate price of the Shares as to which such Option\nshall be exercised, (5) authorization for the Company to retain from the total\nnumber of Shares as to which the Option is exercised that number of Shares\nhaving a fair market value on the date of exercise equal to the exercise price\nfor the total number of Shares as to which the Option is exercised, (6) delivery\nof a properly executed exercise notice together with such other documentation as\nthe Committee and the broker, if applicable, shall require to effect an exercise\nof the Option and delivery to the Company of the sale or loan proceeds required\nto pay the exercise price and any applicable income or employment taxes, (7)\ndelivery of an irrevocable subscription agreement for the Shares that\nirrevocably obligates the option holder to take and pay for the Shares not more\nthan twelve (12) months after the date of delivery of the subscription\nagreement, (8) any combination of the foregoing methods of payment, or (9) such\nother consideration and method of payment for the issuance of Shares to the\nextent permitted under applicable laws.  In making its determination as to the\ntype of consideration to accept, the Committee shall consider if acceptance of\nsuch consideration may be reasonably expected to benefit the Company.\n\n                                       6\n\n \n     9.  Exercise of Option.\n         ------------------ \n\n     (a) Vesting Period.  Any Option granted hereunder shall be exercisable at\n         --------------                                                       \nsuch times and under such conditions as determined by the Committee and as shall\nbe permissible under the terms of the Plan, which shall be specified in the\nOption Agreement evidencing the Option.  Options granted under the Plan shall\nvest at a rate of at least twenty percent (20%) per year.\n\n     (b) Exercise Procedures.  An Option shall be deemed to be exercised when\n         -------------------                                                 \nwritten notice of such exercise has been given to the Company in accordance with\nthe terms of the option agreement evidencing the Option, and full payment for\nthe Shares with respect to which the Option is exercised has been received by\nthe Company. After the Registration Date, in lieu of delivery of a cash payment\nfor the purchase price of the Shares with respect to which the Option is\nexercised, the Optionee may deliver to the Company a sell order to a broker for\nthe Shares being purchased and an agreement to pay (or have the broker remit\npayment for) the purchase price for the Shares being purchased on or before the\nsettlement date for the sale of such shares to the broker.\n\n     Pursuant to the terms of the Option Agreement, the Committee may require\nthat any Option may be exercised only upon the execution of a Restricted Stock\nPurchase Agreement which gives the Company a right of first refusal in the\nOption Shares at the per share price at which the Option Shares are proposed to\nbe transferred. The right of first refusal shall terminate at such time as a\npublic market exists for the Company's Common Stock or the Company dissolves or\nis a party to a merger, reorganization, consolidation, exchange of stock or sale\nof assets in which it is not the surviving entity. The Restricted Stock Purchase\nAgreement shall contain such provisions as the Committee may approve in its sole\ndiscretion.\n\n     An Option may not be exercised for fractional shares. As soon as\npracticable following the exercise of an Option in the manner set forth above,\nthe Company shall issue or cause its transfer agent to issue stock certificates\nrepresenting the Shares purchased. Until the issuance of such stock certificates\n(as evidenced by the appropriate entry on the books of the Company or of a duly\nauthorized transfer agent of the Company), no right to vote or receive dividends\nor any other rights as a shareholder shall exist with respect to the Shares\nnotwithstanding the exercise of the Option. No adjustment will be made for a\ndividend or other rights for which the record date is prior to the date of the\ntransfer by the Optionee of the consideration for the purchase of the Shares,\nexcept as provided in Section 11 of the Plan. After the Registration Date, the\nexercise of an Option by any person subject to short-swing trading liability\nunder Section 16(b) of the Exchange Act shall be subject to compliance with all\napplicable requirements of Rule 16b-3 promulgated under the Exchange Act.\n\n     (c) Death of Optionee.  In the event of the death during the Option period\n         -----------------                                                     \nof an Optionee who is at the time of his death, or was within the ninety (90)-\nday period immediately prior thereto, an Employee or Non-Employee Director, and\nwho was in Continuous Employment as such from the date of the grant of the\nOption until the date of death or termination, the may be exercised, at any time\nprior to the expiration of the Option period, by the Optionee's estate or by a\nperson who acquired the right to exercise the Option by bequest or inheritance,\nbut only to the extent of the accrued right to exercise at the time of the\ntermination or death, whichever comes first.\n\n                                       7\n\n \n     (d) Disability of Optionee.  In the event of the permanent and total\n         ----------------------                                          \ndisability during the Option period of an Optionee who is at the time of such\ndisability, or was within the ninety (90)-day period prior thereto, an Employee\nor Non-Employee Director, and who was in Continuous Employment as such from the\ndate of the grant of the Option until the date of disability or termination, the\nOption may be exercised at any time within one (1) year following the date of\nsuch permanent and total disability, but only to the extent of the accrued right\nto exercise at the time of the termination or disability, whichever comes first,\nsubject to the condition that no Option shall be exercised after the expiration\nof the Option period.\n\n     (e) Termination of Status as Employee, NonEmployee Director or Consultant.\n         ---------------------------------------------------------------------  \nIf an Optionee shall cease to be an Employee or Non-Employee Director for any\nreason other than permanent and total disability or death, or if an Optionee\nshall cease to be Consultant for any reason, the Optionee may, but only within\nninety (90) days (or such other period of time not less than thirty (30) days as\nis determined by the Committee) after the date he or she ceases to be an\nEmployee or Non-Employee Director, exercise his or her Option to the extent that\nhe or she was entitled to exercise it at the date of such termination, subject\nto the condition that no Option shall be exercisable after the expiration of the\nOption period.  No termination shall be deemed to occur and this Section 9(e)\nshall not apply if (i) the Optionee is a Consultant who becomes an Employee; or\n(ii) the Optionee is an Employee who becomes a Consultant.\n\n     (f) Tax Withholding.  As a condition of the exercise of an Option granted\n         ---------------                                                      \nunder the Plan, the Optionee (or in the case of the Optionee's death, the person\nexercising or receiving the Option) shall make such arrangements as a Committee\nmay require for the satisfaction of any applicable federal, state, local or\nforeign withholding tax obligations that may arise in connection with the\nexercise of an Option and the issuance of Shares. The Company shall not be\nrequired to issue any Shares under the Plan until such obligations are\nsatisfied. In the case of an Employee and in the absence of any other\narrangement, the Employee shall be deemed to have directed the Company to\nwithhold or collect from his or her compensation an amount sufficient to satisfy\nsuch tax obligations from the next payroll payment otherwise payable after the\ndate of an exercise of the Option. After the Registration Date, when an Optionee\nis required to pay to the Company an amount with respect to tax withholding\nobligations in connection with the exercise of an Option granted under the Plan,\nthe Optionee may elect prior to the date the amount of such withholding tax is\ndetermined (the 'Tax Date') to make such payment, or such increased payment as\nthe Optionee elects to make up to the maximum federal, state and local marginal\ntax rates, including any related FICA obligation, applicable to the Optionee and\nthe particular transaction, by: (i) delivering cash; (ii) delivering part or all\nof the payment in previously owned shares of Common Stock (whether or not\nacquired through the prior exercise of an Option); and\/or (iii) irrevocably\ndirecting the Company to withhold from the Shares that would otherwise be issued\nupon exercise of the Option that number of whole Shares having a fair market\nvalue equal to the amount of tax required or elected to be withheld (a\n'Withholding Election'). If an Optionee's Tax Date is deferred beyond the date\nof exercise and the Optionee makes a Withholding Election, the Optionee will\ninitially receive the full amount of Optioned Shares otherwise issuable upon\nexercise of the Option, but will be unconditionally obligated to surrender to\nthe Company on the Tax Date the number of Shares necessary to satisfy his or her\nminimum withholding requirements, or such higher payment as he or she may have\nelected to make, with adjustments to be made in cash after the Tax Date.\n\n                                       8\n\n \n     Any withholding of Optioned Shares with respect to taxes arising in\nconnection with the exercise of an Option by any person subject to short-swing\ntrading liability under Section 16(b) of the Exchange Act shall satisfy the\nrequirements of Section 16b-3(e).\n\n     Any adverse consequences incurred by an Optionee with respect to the use of\nshares of Common Stock to pay any part of the exercise price or of any tax in\nconnection with the exercise of an Option, including without limitation any\nadverse tax consequences arising as a result of a disqualifying disposition\nwithin the meaning of Section 422 of the Code shall be the sole responsibility\nof the Optionee.  Shares withheld in accordance with this provision shall not\nagain become available for purposes of the Plan and for Options subsequently\ngranted thereunder.\n\n     10.  Non-Transferability of Options.  Options may not be sold, pledged,\n          ------------------------------                                    \nassigned, hypothecated, transferred or disposed of in any manner other than by\nwill or by the laws of descent and distribution, provided that, after the\nRegistration Date, the Committee may in its discretion grant transferable\nNonstatutory Stock Options pursuant to Option Agreements specifying (i) the\nmanner in which such Nonstatutory Stock Options are transferable and (ii) that\nany such transfer shall be subject to the applicable laws. The designation of a\nbeneficiary by an Optionee will not constitute a transfer. Options may be\nexercised or purchased during the lifetime of the Optionee, only by the\nOptionee.\n\n     11.  Adjustments Upon Changes in Capitalization.  Subject to any required\n          ------------------------------------------                          \naction by the shareholders of the Company, the number of Optioned Shares covered\nby each outstanding Option, and the per share exercise price of each such\nOption, shall be proportionately adjusted for any increase or decrease in the\nnumber of issued shares of Common Stock resulting from a stock split, reverse\nstock split, recapitalization, combination, reclassification, the payment of a\nstock dividend on the Common Stock or any other increase or decrease in the\nnumber of such shares of Common Stock effected without receipt of consideration\nby the Company; provided, however, that conversion of any convertible securities\nof the Company shall not be deemed to have been 'effected without receipt of\nconsideration'. Such adjustment shall be made by the Board, whose determination\nin that respect shall be final, binding and conclusive. Except as expressly\nprovided herein, no issue by the Company of shares of stock of any class, or\nsecurities convertible into shares of stock of any class, shall affect, and no\nadjustment by reason thereof shall be made with respect to, the number or price\nof shares of Common Stock subject to an Option.\n\n     The Committee may, if it so determines in the exercise of its sole\ndiscretion, also make provision for adjusting the number or class of securities\ncovered by any Option, as well as the price to be paid therefor, in the event\nthat the Company effects one or more reorganizations, recapitalizations, rights\nofferings, or other increases or reductions of shares of its outstanding Common\nStock, and in the event of the Company being consolidated with or merged into\nany other corporation.\n\n     Unless otherwise determined by the Board, upon the dissolution or\nliquidation of the Company the Options granted under the Plan shall terminate\nand thereupon become null and void. The Optionee shall be given not less than\nten (10) days notice of such event and the opportunity to exercise each\noutstanding Option before such event is effected.\n\n                                       9\n\n \n     Upon any merger or consolidation, if the Company is not the surviving\ncorporation, the Options granted under the Plan shall either be assumed by the\nnew entity or shall terminate in accordance with the provisions of the preceding\nparagraph.\n\n     12.  Time of Granting Options.  Unless otherwise specified by the\n          ------------------------                                    \nCommittee, the date of grant of an Option under the Plan shall be the date on\nwhich the Committee makes the determination granting such Option; provided\nhowever, that in the case of any Incentive Stock Option, the grant date shall be\nthe later of the date on which the Committee makes the determination granting\nsuch Incentive Stock Option or the date of commencement of the Optionee's\nemployment relationship with the Company.  Notice of the determination shall be\ngiven to each Optionee to whom an Option is so granted within a reasonable time\nafter the date of such grant.\n\n     13.  Amendment and Termination of the Plan.  The Board may at any time\n          -------------------------------------                            \namend, alter, suspend or discontinue the Plan, but no amendment, alteration,\nsuspension or discontinuation shall be made that would impair the rights of any\nOptionee under any grant theretofore made, without his or her consent. In\naddition, to the extent necessary and desirable to comply with applicable laws,\nthe Company shall obtain shareholder approval of any Plan amendment in such a\nmanner and to such a degree required. No amendment or termination of the Plan\nshall adversely affect Options already granted, unless mutually agreed otherwise\nbetween the Optionee and the Board, which agreement must be in writing and\nsigned by the Optionee and the Company.\n\n     14.  Conditions Upon Issuance of Shares.  Shares shall not be issued with\n          ----------------------------------                                  \nrespect to an Option granted under the Plan unless the exercise of such Option\nand the issuance and delivery of such Shares pursuant thereto shall comply with\nall relevant provisions of law, including, without limitation, the Securities\nAct, the Exchange Act, the rules and regulations promulgated thereunder, and the\nrequirements of any stock exchange upon which the Shares may then be listed, and\nshall be further subject to the approval of counsel for the Company with respect\nto such compliance.  As a condition to the exercise of an Option, the Company\nmay require the person exercising such Option to represent and warrant at the\ntime of any such exercise that the Shares are being purchased only for\ninvestment and without any present intention to sell or distribute such Shares\nif, in the opinion of counsel for the Company, such a representation is required\nby any of the aforementioned relevant provisions of law.\n\n     15.  Reservation of Shares.  During the term of this Plan the Company will\n          ---------------------                                                \nat all times reserve and keep available the number of Shares as shall be\nsufficient to satisfy the requirements of the Plan. Inability of the Company to\nobtain from any regulatory body having jurisdiction and authority deemed by the\nCompany's counsel to be necessary to the lawful issuance and sale of any Shares\nhereunder shall relieve the Company of any liability in respect of the\nnonissuance or sale of such Shares as to which such requisite authority shall\nnot have been obtained.\n\n     16.  Information to Optionee.  During the term of any Option granted under\n          -----------------------                                              \nthe Plan, the Company shall provide or otherwise make available to each Optionee\na copy of its financial statements at least annually.\n\n                                       10\n\n \n     17.  Option Agreement.  Options granted under the Plan shall be evidenced\n          ----------------                                                    \nby Option Agreements.\n\n     18.  Indemnification of Board (or Committee, if applicable).  In addition\n          ------------------------------------------------------              \nto such other rights of indemnification as they may have as directors or as\nmembers of the Committee, the members of the Board (or the Committee, if\napplicable) shall be indemnified by the Company against the reasonable expenses,\nincluding attorneys, fees, actually and necessarily incurred in connection with\nthe defense of any action, suit or proceeding, or in connection with any appeal\ntherein, to which they or any of them may be a party by reason of any action\ntaken or failure to act under or in connection with the Plan or any Option\ngranted thereunder, and against all amounts paid by them in settlement thereof\n(provided such settlement is approved by independent legal counsel selected by\nthe Company) or paid by them in satisfaction of a judgment in any such action,\nsuit or proceeding except in relation to matters as of which it shall be\nadjudged in such action, suit or proceeding that such Board (or Committee, if\napplicable) member is liable for negligence or misconduct in the performance of\nhis duties; provided that within sixty days after institution of any such\naction, suit or proceeding a Board (or Committee, if applicable) member shall in\nwriting offer the Company the opportunity, at its own expense, to handle and\ndefend the same.\n\n     19.  Shareholder Approval.  The Plan shall be subject to approval by the\n          --------------------                                               \naffirmative vote of the holders of a majority of the outstanding capital stock\nof the Company entitled to vote within twelve (12) months before or after the\nPlan is adopted. Any Option granted before shareholder approval is obtained must\nbe rescinded if shareholder approval is not obtained within twelve (12) months\nbefore or after the Plan is adopted. Shares issued upon the exercise of such\nOptions shall not be counted in determining whether such approval is obtained.\n\n                                       11\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8863],"corporate_contracts_industries":[],"corporate_contracts_types":[9539,9545],"class_list":["post-38323","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-sonicwall-inc","corporate_contracts_types-compensation","corporate_contracts_types-compensation__esp"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/38323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=38323"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=38323"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=38323"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=38323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}