EXHIBIT 10.11B

 

STOCK OPTION LETTER AGREEMENT

 

APPROVED UK SUB PLAN TO THE NETIQ CORPORATION AMENDED AND

RESTATED 1998 STOCK INCENTIVE COMPENSATION PLAN

 

1. Grant. NetIQ Corporation (the “Company”) has granted to the Option Holder
named in the notice of grant of stock options and option agreement (the “Notice
of Grant”) an Option (which is a US Nonqualified Stock Option) to purchase the
total number of shares of Common Stock set forth in the Notice of Grant at the
exercise price per share set forth in the Notice of Grant (the “Exercise
Price”). This Option is intended to be an approved share option for UK tax
purposes (i.e., generally complying with the requirements of Schedule 4 to the
Income Tax (Earnings and Pensions) Act 2003) and is subject to the terms set
forth below and in the UK Approved Sub-Plan (the “Sub Plan”) to the Company’s
1998 Stock Incentive Compensation Plan, as amended (the “1998 Plan”) and in the
Notice of Grant. In the event of a conflict between the terms of the Sub Plan
and the terms of this Stock Option Letter Agreement (the “Agreement”), the terms
of the Sub Plan shall prevail.

 

All terms not otherwise defined herein shall have the same meanings as set forth
in the Sub Plan and the 1998 Plan.

 

2. Exercisability. This Option is exercisable during its term in accordance with
the Vesting Schedule set forth in the Notice of Grant and the applicable
provisions of the Sub Plan. In addition, the exercise of the Option is
conditioned upon and subject to a joint election between Option Holder and the
employer (the “Election”), being entered into by Option Holder, to provide for
the transfer from the employer to Option Holder of any Secondary Class 1
(employer’s) national insurance contribution (“NICs”) liability which may be due
in connection with the Option. By accepting the Option, to the extent allowable
by applicable law, Option Holder hereby consents to and agrees to satisfy any
liability the employer realizes (if any) with respect to Secondary Class 1 NICs
payable in connection with the Option. Option Holder also agrees to enter into
any additional consents and/or elections requested by the Company or the
employer in order to accomplish the foregoing promptly following any such
request. See Section 8 below for a discussion regarding when NICs payments will
be due with respect to Options granted under the Sub Plan.

 

3. Termination of Option. The unvested portion of the Option will terminate
automatically and without further notice immediately upon termination (voluntary
or involuntary) of Option Holder’s employment or service relationship with the
Company. The vested portion of the Option will terminate automatically and
without further notice on the earliest of the dates set forth below. It is
Option Holder’s responsibility to be aware of the date the Option terminates.

 

a) three months after termination of Option Holder’s employment or service
relationship with the Company or its Subsidiary for any reason other than for
Cause, injury, Retirement (as defined in the Sub Plan), Disability or death;

 

b) one year after termination of Option Holder’s employment or service
relationship with the Company or its Subsidiary by reason of injury, Disability,
Retirement (as defined in the Sub Plan) or death; or

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c) the Expiration Date.

 

If the Company or its Subsidiary terminates Option Holder’s employment or
services for Cause Option Holder will forfeit the unexercised portion of the
Option, including vested and unvested shares, on the date the Company notifies
Option Holder of Option Holder’s termination, unless in exceptional
circumstances the Plan Administrator determines otherwise.

 

4. Method of Exercise. You may exercise this Option by delivering an exercise
notice, in the form attached as Exhibit A (the “Exercise Notice”), which will
state the election to exercise the Option and the number of Option Shares for
which Option Holder is exercising the Option. The written notice must be
accompanied by full payment of the exercise price for the number of Option
Shares Option Holder is purchasing by means of cash or cheque, or instructions
to a brokerage firm designated by the Company to sell shares that Option Holder
is entitled to upon exercise of the Option pursuant to a cashless exercise
program that has been approved by the Company.

 

5. Applicable UK Taxes. There will be no income tax or NICs due on the exercise
of the Option where, in addition to complying with the rules of the Sub Plan, an
exercise takes place: (i) while the Sub Plan remains approved by the Inland
Revenue; and either (ii) not earlier than three nor later than 10 years after
the date of grant or, (iii) if earlier than three years after the date of grant,
within six months of the termination of Option Holder’s employment by reason of
injury, Disability, redundancy or Retirement. Please note that, depending on the
circumstances of Option Holder’s termination, Option Holder may not have six
months after termination of employment in which to exercise Option Holder’s
option. Please see Section 3 above for post-termination exercise periods. In
addition, the Expiration Date may be prior to 10 years after the Grant Date.
Please see the Notice of Grant for the applicable Expiration Date. Additional
information on the UK tax consequences of receipt, exercise and transfer of the
Option, as well as upon disposition of the Shares following exercise, is
available in the UK Supplementary Tax Information provided with your grant
documents.

 

6. Limited Transferability. During Option Holder’s lifetime only Option Holder
can exercise the Option. The Option is not transferable except by will or by the
applicable laws of descent and distribution. The Sub Plan provides for exercise
of the Option by the personal representative of Option Holder’s estate or the
beneficiary thereof during the one-year period following Option Holder’s death.

 

7. Registration. At the present time, the Company intends to file and maintain a
registration statement with respect to the Option Shares. The Company intends to
maintain this registration but has no obligation to do so. In the event that
such registration is no longer effective, Option Holder will not be able to
exercise the Option unless exemptions from registration under U.S. federal and
state securities laws are available; such exemptions from registration are very
limited and might be unavailable. By accepting the Option, Option Holder hereby
acknowledges that Option Holder has read and understands Section 15.3 of the
1998 Plan.

 

8. Responsibility for Taxes. Regardless of any action the Company or the
employer (the “Employer”) takes with respect to any or all income tax, NICs,
payroll tax, payment on account or other tax-related withholding (“Tax-Related
Items”), Option Holder acknowledges that the ultimate liability for all
Tax-Related Items legally due by Option Holder is and

 

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remains Option Holder’s responsibility and that the Company and/or the Employer
(1) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the Option, including the
grant, vesting or exercise of the Option, the subsequent sale of shares acquired
pursuant to such exercise and the receipt of any dividends; and (2) do not
commit to structure the terms of the grant or any aspect of the Option to reduce
or eliminate the Option Holder’s liability for Tax-Related Items. Prior to
exercise of the Option, Option Holder shall pay or make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy all withholding and
payment on account obligations of the Company and/or the Employer. In this
regard, Option Holder authorizes the Company and/or the Employer to withhold all
applicable Tax-Related Items legally payable by Option Holder from Option
Holder’s wages or other cash compensation paid to Option Holder by the Company
and/or the Employer or from proceeds of the sale of the shares. Alternatively,
or in addition, if permissible under local law, the Company may (1) sell or
arrange for the sale of shares that Option Holder acquires to meet the
withholding obligation for Tax-Related Items, and/or (2) withhold in shares,
provided that the Company only withholds the amount of shares necessary to
satisfy the minimum withholding amount. Finally, Option Holder shall pay to the
Company or the Employer any amount of Tax-Related Items that the Company or the
Employer may be required to withhold as a result of Option Holder’s
participation in the Sub Plan or Option Holder’s purchase of shares that cannot
be satisfied by the means previously described. The Company may refuse to honor
the exercise and refuse to deliver the shares if Option Holder fails to comply
with Option Holder’s obligations in connection with the Tax-Related Items as
described in this section.

 

Option Holder agrees and authorizes that any withholding, deduction or payment
indicated above must occur within 90 days after the exercise, assignment or
release of the Option or the receipt of a benefit in money or money’s worth in
connection with the Option (the “Due Date”). In the event that the Company
and/or the Employer are unable to withhold or collect any income tax, NICs or
other withholding due by the Due Date, Option Holder agrees that the amount of
uncollected tax shall constitute a loan owed by Option Holder to the Company
and/or the Employer and interest will be charged at the Inland Revenue official
rate of interest. Option Holder further agrees that the loan will be immediately
repayable and the Company and/or the Employer may recover it at any time
thereafter by any of the means referred to above. Option Holder also authorizes
the Company to withhold the transfer of any shares unless and until the loan is
repaid in full.

 

9. Nature of Grant. In accepting the grant, Option Holder acknowledges that: (a)
the Sub Plan is established voluntarily by the Company, it is discretionary in
nature and it may be modified, amended, suspended or terminated by the Company
at any time, unless otherwise provided in the Sub Plan and this Agreement; (b)
the grant of the Options is voluntary and occasional and does not create any
contractual or other right to receive future grants of options, or benefits in
lieu of Options, even if Options have been granted repeatedly in the past; (c)
all decisions with respect to future Option grants, if any, will be at the sole
discretion of the Company; (d) Option Holder’s participation in the Sub Plan
shall not create a right to further employment with the Employer and shall not
interfere with the ability of the Employer to terminate Option Holder’s
employment relationship at any time with or without cause; (e) Option Holder is
voluntarily participating in the Sub Plan; (f) the Option is an extraordinary
item that does not constitute compensation of any kind for services of any kind
rendered to the Company or the Employer, and which is outside the scope of
Option Holder’s employment contract, if any; (g) the Options are not part of
normal or expected compensation or salary for any purposes, including, but not
limited to, calculating any severance,

 

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resignation, termination, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar payments; (h) in
the event that Option Holder is not an employee of the Company, the Option grant
will not be interpreted to form an employment contract or relationship with the
Company; and furthermore, the Option grant will not be interpreted to form an
employment contract with the Employer or any subsidiary or affiliate of the
Company; (i) the future value of the underlying shares is unknown and cannot be
predicted with certainty; (j) if the underlying shares do not increase in value,
the Option will have no value; (k) if Option Holder exercises the Option and
obtains shares, the value of those shares acquired upon exercise may increase or
decrease in value, even below the exercise price; (l) in consideration of the
grant of Options, no claim or entitlement to compensation or damages shall arise
from termination of the Options or diminution in value of the Options or shares
purchased through exercise of the options resulting from termination of Option
Holder’s employment by the Company or the Employer (for any reason whatsoever
and whether or not in breach of contract or local labor laws) and Option Holder
irrevocably releases the Company and the Employer from any such claim that may
arise; if, notwithstanding the foregoing, any such claim is found by a court of
competent jurisdiction to have arisen, then, by agreeing to be bound by the
terms of this Agreement, Option Holder shall be deemed irrevocably to have
waived any entitlement to pursue such claim; and (m) notwithstanding any terms
or conditions of the Sub Plan to the contrary, in the event of involuntary
termination of Option Holder’s employment (whether or not in breach of contract
or local labor laws), Option Holder’s right to receive Options and vest in
Options under the Sub Plan, if any, will terminate effective as of the date that
Option Holder is no longer actively employed and will not be extended by any
notice period mandated under local law (e.g., active employment would not
include a period of “garden leave” or similar period pursuant to local law);
furthermore, in the event of involuntary termination of employment (whether or
not in breach of local labor laws), Option Holder’s right to exercise the
options after termination of employment, if any, will be measured by the date of
termination of Option Holder’s active employment and will not be extended by any
notice period mandated under local law; the Board/Plan Administrator shall have
the exclusive discretion to determine when Option Holder is no longer actively
employed for purposes of the Option grant.

 

10. Data Privacy. Option Holder hereby explicitly and unambiguously consents to
the collection, use and transfer, in electronic or other form, of Option
Holder’s personal data as described in this document by and among, as
applicable, the Employer, and the Company and its Subsidiaries and affiliates
for the exclusive purpose of implementing, administering and managing Option
Holder’s participation in the Sub Plan. Option Holder understands that the
Company and the Employer hold certain personal information about Option Holder,
including, but not limited to, Option Holder’s name, home address and telephone
number, date of birth, social insurance number or other identification number,
salary, nationality, job title, any shares of stock or directorships held in the
Company, details of all Options or any other entitlement to shares of stock
awarded, cancelled, exercised, vested, unvested or outstanding in Option
Holder’s favor, for the purpose of implementing, administering and managing the
Sub Plan (“Data”). Option Holder understands that Data may be transferred to any
third parties assisting in the implementation, administration and management of
the Sub Plan, that these recipients may be located in Option Holder’s country or
elsewhere including outside the European Union, and that the recipient’s country
may have different data privacy laws and protections than Option Holder’s
country. Option Holder understands that Option Holder may request a list with
the names and addresses of any potential recipients of the Data by contacting
Option Holder’s local human resources representative. Option Holder

 

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authorizes the recipients to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the purposes of implementing,
administering and managing Option Holder’s participation in the Sub Plan,
including any requisite transfer of such Data as may be required to a broker or
other third party with whom Option Holder may elect to deposit any shares of
stock acquired upon exercise of the Option. Option Holder understands that Data
will be held only as long as is necessary to implement, administer and manage
Option Holder’s participation in the Sub Plan. Option Holder understands that
Option Holder may, at any time, view Data, request additional information about
the storage and processing of Data, require any necessary amendments to Data or
refuse or withdraw the consents herein, in any case without cost, by contacting
in writing Option Holder’s local human resources representative. Option Holder
understands, however, that refusing or withdrawing Option Holder’s consent may
affect Option Holder’s ability to participate in the Sub Plan. For more
information on the consequences of Option Holder’s refusal to consent or
withdrawal of consent, Option Holder understands that Option Holder may contact
Option Holder’s local human resources representative.

 

11. Governing Law. This Option grant is governed by, and subject to, the laws of
the State of California, as provided in the 1998 Plan. For purposes of
litigating any dispute that arises directly or indirectly from the relationship
of the parties evidenced by this Agreement, the parties hereby submit to and
consent to the exclusive jurisdiction of the State of California and agree that
such litigation shall be conducted only in the courts of Santa Clara County,
California, or the federal courts for the United States for the Northern
District of California, and no other courts, where this grant is made and/or to
be performed.

 

12. Electronic Delivery. The Company may, in its sole discretion, deliver any
documents related to the Option granted under and participation in the Sub Plan
or future Options that may be granted under the Sub Plan by electronic means or
to request Option Holder’s consent to participate in the Sub Plan by electronic
means. Option Holder hereby consents to receive such documents by electronic
delivery and, if requested, to agree to participate in the Sub Plan through an
on-line or electronic system established and maintained by the Company or
another third party designated by the Company.

 

13. Severability. The provisions of this Agreement are severable and if any one
or more provisions are determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.

 

14. Binding Effect. This Agreement shall inure to the benefit of the successors
and assigns of the Company and be binding upon Option Holder and Option Holder’s
heirs, executors, administrators, successors and assigns.

 

15. By clicking on the “Accept” button, Option Holder accepts the Option and
agrees to be bound by its terms.

 

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