Document:

Notice of Grant of Stock Option and Form of Stock Option Agreement

 EXHIBIT 10.5 

TRIPWIRE, INC. 

NOTICE OF GRANT OF STOCK OPTION 

Notice is hereby given of the following option grant (the “Option”) to purchase shares of the Common Stock of Tripwire, Inc.
(the “Corporation”): 
 Optionee:
                                        

 Grant Date:
                        , 20     

Vesting Commencement Date:
                  , 20     

Exercise Price: $         per share 

Number of Option Shares:              shares of Common Stock

 Expiration Date:
                    , 20     

Type of Option: Non-Statutory Stock Option 

Vesting Schedule: The Option shall vest and become exercisable with respect to
(i)            percent (      %) of the Option Shares upon Optionee’s completion of [one (1) year] of Service measured from the Vesting Commencement Date
and (ii) the balance of the Option Shares in a series of                    (            )
successive equal monthly installments upon Optionee’s completion of each additional month of Service over the               
(            )-month period measured from the [first] anniversary of the Vesting Commencement Date. Optionee may exercise this option only with respect to vested Option Shares. In no event
shall any additional Option Shares vest after Optionee’s cessation of Service. 
 Optionee understands and agrees that the
Option is granted subject to and in accordance with the terms of the Tripwire, Inc. 2000 Stock Option/Stock Issuance Plan (the “Plan”). Optionee further agrees to be bound by the terms of the plan and the terms of the Option as set forth
in the Stock Option Agreement attached to this Notice of Grant and incorporated by reference. 
 Optionee understands that any
Option Shares purchased under the Option will be subject to the terms set forth in the Stock Purchase Agreement which is available on the Corporation’s intranet at: 

Optionee hereby acknowledges he or she has reviewed a copy of the Plan which is available on the Corporation’s intranet at:

 RIGHTS OF FIRST REFUSAL. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THE OPTION
SHALL BE 
  

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SUBJECT TO CERTAIN RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE STOCK PURCHASE AGREEMENT. 

At Will Employment. Nothing in this Notice, the Stock Option Agreement or Plan shall confer upon Optionee any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by
each, to terminate Optionee’s Service at any time for any reason, with or without cause. 
 Definitions. All
capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the Stock Option Agreement. 

Dated:
                          , 20     

 

			
	TRIPWIRE, INC.
		
	By:	 	 
		
	 Title:
	 	 
	
	
	
	
	
	 

  

			
	OPTIONEE
		
	 Address
	 	
		 	 
		
		 	 

 Option Plan Documents: 

Stock Purchase Agreement available at: 

2000 Stock Option/Stock Issuance Plan available at: 
  

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 TRIPWIRE, INC. 

STOCK OPTION AGREEMENT 

RECITALS 

A.    The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee
members of the Board or the board of directors of any Parent or Subsidiary and consultants and other independent advisors in the service of the Corporation (or any Parent or Subsidiary). 

B.    Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee. 

C.    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

 NOW, THEREFORE, it is hereby agreed as follows: 

1.    Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to
purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall become purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price, according to the Vesting Schedule provided
in Optionee’s Grant Notice. 
 2.    Option Term. This option shall have a term of ten
(10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6. 

3.    Limited Transferability. 

(a)    This option shall be neither transferable nor assignable by Optionee other than as set forth in this Agreement
and the Plan. Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this
option may, pursuant to Paragraph 5, be exercised following Optionee’s death. 
 (b)    This option may
be assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s family or to a trust established for the exclusive benefit of one or more such family members or to Optionee’s former spouse, to the
extent such assignment is in connection with the Optionee’s estate plan or pursuant to a 
  

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domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment. 

4.    Dates of Exercise. This option shall become exercisable for the Option Shares in one or more
installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner
termination of the option term under Paragraph 5 or 6. 
 5.    Cessation of Service. The
option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: 

(a)    Should Optionee cease to remain in Service for any reason (other than death, Disability or Misconduct) while
holding this option, then Optionee shall have a period of three (3) months (commencing with the date of such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the
Expiration Date. 
 (b)    Should Optionee die while holding this option, then the personal representative
of Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance shall have the right to exercise this option. However, if Optionee has designated one or more
beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee’s death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the
earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s death or (ii) the Expiration Date. 

(c)    Should Optionee cease Service by reason of Disability while holding this option, then Optionee shall have a
period of twelve (12) months (commencing with the date of such cessation of Service) during which to exercise this option. In no event shall this option be exercisable at any time after the Expiration Date. 

(d)    During the limited period of post-Service exercisability, this option may not be exercised in the aggregate
for more than the number of Option Shares in which Optionee is, at the time of Optionee’s cessation of Service, vested pursuant to the Vesting Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6.
Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any vested Option Shares for which the option has not been exercised. To the extent Optionee is
not vested in one or more Option Shares at the time of Optionee’s cessation of Service, this option shall immediately terminate and cease to be outstanding with respect to those shares. 

 

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 (e)    Should Optionee’s Service be terminated for Misconduct or
should Optionee otherwise engage in Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding. 

6. Accelerated Vesting. 

(a)    In the event of any Corporate Transaction, the Option Shares at the time subject to this option but not
otherwise vested shall automatically vest in full so that this option shall, immediately prior to the effective date of the Corporate Transaction, become exercisable for all of the Option Shares as fully-vested shares and may be exercised for any or
all of those Option Shares as vested shares. However, the Option Shares shall not vest on such an accelerated basis if and to the extent: (i) this option is assumed by the successor corporation (or parent thereof) in the Corporate
Transaction and the Corporation’s repurchase rights with respect to the unvested Option Shares are assigned to such successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the
successor corporation which preserves the spread existing on the unvested Option Shares at the time of the Corporate Transaction (the excess of the Fair Market Value of those Option Shares over the Exercise Price payable for such shares) and
provides for subsequent payout in accordance with the same Vesting Schedule applicable to those unvested Option Shares as set forth in the Grant Notice. 

(b)    Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction. 

(c)    If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately
adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such
Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock
receive cash consideration for their Common Stock in consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market
value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction. 

(d)    This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. 

(e)    Notwithstanding any other provision of this Agreement, upon an Involuntary Termination of Optionee’s
Service within              months following the Corporate Transaction, all the Option Shares at the time subject to the Option shall automatically vest on an accelerated basis so that
the Option shall immediately become 
  

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exercisable for              of the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as
vested shares. The Option shall remain so exercisable until the earlier of (i) the Expiration Date, or (ii) the expiration of the              period measured from the date
of the Involuntary Termination. 
 7.    Adjustment in Option Shares. Should any change be
made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder. 
 8.    Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become the record holder of the purchased shares. 

(a)    In order to exercise this option with respect to all or any part of the Option Shares for which this option is
at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions: 

(i)    Execute and deliver to the Corporation a Purchase Agreement for the Option Shares for which
the option is exercised. 
 (ii)    Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms: 
 (A)    cash or check made payable to the
Corporation; or 
 (B)    a promissory note payable to the Corporation, but only to the
extent authorized by the Plan Administrator in accordance with Paragraph 14. 
 Should the Common Stock be
registered under Section 12 of the 1934 Act at the time the option is exercised, then the Exercise Price may also be paid as follows: 

(C)    in shares of Common Stock held by Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or 

(D)    to the extent the option is exercised for vested Option Shares, through a special sale and
remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (a) to a Corporation-designated 

 

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brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 
 Except
to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Purchase Agreement delivered to the Corporation in connection with the option exercise. 

(iii)    Furnish to the Corporation appropriate documentation that the person or persons exercising
the option (if other than Optionee) have the right to exercise this option. 

(iv)    Execute and deliver to the Corporation such written representations as may be requested by
the Corporation in order for it to comply with the applicable requirements of Federal and state securities laws. 

(v)    Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or
retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise. 

(b)    As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any
other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto. 

(c)    In no event may this option be exercised for any fractional shares. 

9.    RIGHTS OF FIRST REFUSAL. ALL OPTION SHARES ACQUIRED UPON THE EXERCISE OF THIS
OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF FIRST REFUSAL OF THE CORPORATION AND ITS ASSIGNS IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE PURCHASE AGREEMENT. 

10.    Compliance with Laws and Regulations. 

(a)    The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to
compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance. 
  

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 (b)    The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals. 

11.    Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 6, the
provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns and the legal representatives, heirs and legatees of Optionee’s estate.

 12.    Notices. Any notice required to be given or delivered to the Corporation under the
terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below
Optionee’s signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified. 

13.    Financing. The Plan Administrator may, in its absolute discretion and without any obligation to
do so, permit Optionee to pay the Exercise Price for the purchased Option Shares (to the extent such Exercise Price is in excess of the par value of those shares) by delivering a full-recourse, interest-bearing promissory note secured by those
Option Shares. The payment schedule in effect for any such promissory note shall be established by the Plan Administrator in its sole discretion. 

14.    Construction. This Agreement and the option evidenced hereby are made and granted pursuant to
the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons
having an interest in this option. 
 15.    Governing Law. The interpretation, performance
and enforcement of this Agreement shall be governed by the laws of the State of Oregon without resort to that State’s conflict-of-laws rules. 
  

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 APPENDIX 

The following definitions shall be in effect under the Agreement: 

A.    Agreement shall mean this Stock Option Agreement. 

B.    Board shall mean the Corporation’s Board of Directors. 

C.    Code shall mean the Internal Revenue Code of 1986, as amended. 

D.    Common Stock shall mean the Corporation’s common stock. 

E.    Corporate Transaction shall mean either of the following stockholder-approved transactions to
which the Corporation is a party: 
 (i)    a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such
transaction, or 
 (ii)    the sale, transfer or other disposition of all or substantially
all of the Corporation’s assets in complete liquidation or dissolution of the Corporation. 

F.    Corporation shall mean Tripwire, Inc., a Delaware corporation, and any successor corporation to
all or substantially all of the assets or voting stock of Tripwire, Inc. which shall be appropriate action assume this option. 

G.    Disability shall mean the inability of Optionee to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more. 

H.    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. 

I.    Exercise Date shall mean the date on which the option shall have been exercised in accordance
with Paragraph 9 of the Agreement. 
 J.    Exercise Price shall mean the exercise price
payable per Option Share as specified in the Grant Notice. 
 K.    Expiration Date shall mean
the date on which the option expires as specified in the Grant Notice. 
  

 A-1 

 L.    Fair Market Value per share of Common Stock on any
relevant date shall be determined in accordance with the following provisions: 
 (i)    If
the Common Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities
Dealers on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists. 
 (ii)    If the Common Stock is at the
time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common
Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which such quotation exists. 

(iii)    If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the
Nasdaq National Market, then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate. 

M.    Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

 N.    Grant Notice shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby. 

O.    Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

 (i)    Optionee’s involuntary dismissal or discharge by the Corporation for reasons
other than for Misconduct, or 
 (ii)    Optionee’s voluntary resignation following
(A) a change in Optionee’s position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces Optionee’s duties and responsibilities or the level of management to which he or she reports, (B) a
reduction in Optionee’s level of compensation (which consists of base salary) by more than fifteen percent (15%), or (C) a relocation of Optionee’s place of employment by more than fifty (50) miles, provided and only if such
change, reduction or relocation is effected by the Corporation without Optionee’s consent. 
  

 A-2 

 P.    Misconduct shall mean the commission of any act of
fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or
dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Agreement, to
constitute grounds for termination for Misconduct. 
 Q.    1934 Act shall mean the Securities
Exchange Act of 1934, as amended. 
 R.    Non-Statutory Option shall mean an option not
intended to satisfy the requirements of Code Section 422. 
 S.    Option Shares shall
mean the number of shares of Common Stock subject to the option. 
 T.    Optionee shall mean
the person to whom the option is granted as specified in the Grant Notice. 
 U.    Parent
shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

V.    Plan shall mean the Corporation’s 2000 Stock Option/Stock Issuance Plan. 

W.    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity
as administrator of the Plan. 
 X.    Purchase Agreement shall mean the stock purchase
agreement in substantially the form of Exhibit B to the Grant Notice. 
 Y.    Service shall
mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent consultant. 

A.    Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange. 

AA.    Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, 

 

 A-3 

 
stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 

BB.    Vesting Schedule shall mean the vesting schedule specified in the Grant Notice pursuant to which
this option is to vest and become exercisable in a series of installments over the Optionee’s period of Service. 
  

 A-4Letter Agreement, date January 27, 2003, between the company and Robert McCarthy

 EXHIBIT 10.6 

TRIPWIRE, INC. 

January 27, 2003 
 Dear
Robert McCarthy: 
 I am pleased to inform you that on January 16, 2003 the Board of Directors of Tripwire, Inc.
(“Tripwire”) approved an amendment to your outstanding stock option(s) identified on Exhibit A (the “Option”) as evidenced by a Notice of Grant and/or a Stock Option Agreement (the “Option
Agreement”) and approved the payment of additional benefits to you upon your termination under certain circumstances following a corporate transaction (as such term is defined below “Corporate Transaction”) to
provide you with additional protection in the event of a Corporate Transaction. 
  

	A.	Amendment to your Option(s). 

This amendment to your Option(s) provides accelerated vesting of your Option(s) in the event your employment terminates in an involuntary
termination (as such term is defined below “Involuntary Termination”) within twelve (12) months following a Corporate Transaction and provides you with an extended period in which to exercise your vested Option shares
following such Involuntary Termination. Specifically, upon your Involuntary Termination within twelve (12) months following a Corporate Transaction, all of the shares subject to your Option(s) will become fully vested and to the extent not
previously exercised, will become exercisable for fully vested shares. In addition, the shares subject to your Option(s) will remain exercisable until the earlier of (i) the Option expiration date or (ii) the expiration of the twelve
(12) month period following your Involuntary Termination. 
 Accordingly, your Option(s) is (are) hereby amended and the
following provisions are hereby incorporated into, and are hereby made a part of the Option Agreement(s) evidencing the Option(s), and such provisions shall be effective immediately. For each Option granted to you the capitalized terms in this
Amendment, to the extent not otherwise defined herein, shall have the meanings assigned to them in the Option Agreement, however, for each Option granted to you under the Tripwire 1998 Stock Option Plan, the term “Service”
used below shall have the meaning assigned to “Continuous Status as an Employee, Director or Consultant” in your Option Agreement. 

1.    If the Option is to be assumed or otherwise continued by the successor corporation (or the
parent thereof) in connection with a Corporate Transaction, then none of the Option Shares shall, in accordance with the Option Agreement, vest on an accelerated basis upon the occurrence of that Corporate Transaction, and Optionee shall accordingly
continue, over his or her period of Service following the Corporate Transaction, to vest in the Option Shares in one or more installments in accordance with the provisions of the Option Agreement. However, upon Optionee’s Involuntary
Termination within the twelve (12) month period following such Corporate Transaction, all of the Option Shares shall become fully vested and each Option shall become 

 

 -1- 

 
immediately exercisable for fully vested shares. The Option shall remain so exercisable until the earlier of (i) the Expiration Date or (ii) the expiration of the twelve
(12) month period measured from the date of the Involuntary Termination. 
 2.    A
Corporate Transaction shall mean either of the following stockholder-approved transactions to which the Corporation is a party: 

(i)    a merger, consolidation or other similar transaction in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or

 (ii)    the sale, transfer or other disposition of all or substantially all of the
Corporation’s’ assets in complete liquidation or dissolution of the Corporation. 

3.    An Involuntary Termination shall mean the termination of Optionee’s Service
by reason of: 
 (i)    Optionee’s involuntary dismissal or discharge by the
Corporation for reasons other than for Misconduct, or 
 (ii)    Optionee’s voluntary
resignation following (A) a change in Optionee’s position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces Optionee’s duties and responsibilities or the level of management to which he or she
reports, (B) a reduction in Optionee’s base salary by more than fifteen percent (15%), or (C) a relocation of Optionee’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without Optionee’s consent. 
 For purposes of the foregoing, the
term Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent
or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict
the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall
not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct. 

4.    The provisions of Paragraph 1 of Section A of this Amendment shall govern the period for which
the Option is to remain exercisable following the Involuntary Termination of Optionee’s Service within twelve (12) months after the Corporate Transaction and shall supersede any provisions to the contrary in the Option Agreement. The
provisions of this Letter shall also supersede any provisions to the contrary in the Option Agreement concerning the deferred exercisability of the Option. 
  

 -2- 

 All rights to the accelerated vesting of the Option shares subject to your Option(s) which
is (are) assumed in connection with a Corporate Transaction or other change in control of Tripwire are as set forth in this Letter agreement and the provisions of this Letter agreement shall supersede any other agreements, plans or arrangements,
including, without limitation, the provisions of your Option Agreement(s) or offer letter and any attachment or addendum thereto with respect to the accelerated vesting of your Option shares subject to your Option(s) which is (are) assumed in
connection with a Corporate Transaction or other change in control of Tripwire. All terms, conditions and limitations applicable to the Option(s) identified in Exhibit A, pursuant to the applicable Option Agreement(s) and as modified by this Letter
agreement shall remain in full force and effect and you have no other rights to purchase shares of common stock of Tripwire other than those Option(s). 

Please attach a copy of this Letter agreement to your Option Agreement(s) so that you will have a complete record of all the terms
applicable to your Option(s). 
 B.    Severance in the Event of Involuntary Termination Following a Corporate
Transaction. 
 In the event of your Involuntary Termination (as defined in Section A, Paragraph 3 of this Letter
“Involuntary Termination”) within twelve (12) months following a Corporate Transaction (as defined in Section A, Paragraph 2 of this Letter), you shall be entitled to the following benefits: 

(i)    Severance Payment. Within ten (10) calendar days of the effective date of the your
Involuntary Termination you will be paid a lump sum cash payment in an amount equal to six (6) times the sum of (a) your average monthly base salary during the twelve (12) month period immediately preceding the month of your
Involuntary Termination, plus (b) one twelfth (1/12) of the amount of any bonus received during the twelve (12) month period immediately preceding the month of your Involuntary Termination. Such payment shall be less all applicable
deductions and withholdings. 
 (ii)    Health Care Coverage. Tripwire shall pay to
continue coverage under the Tripwire medical and dental benefit plans for you and your eligible dependents for the six (6) month period beginning on the first day of the first month following the effective date of your Involuntary Termination,
upon your and/or your dependent’s election to receive such continued benefit plan coverage pursuant to the federal law known as COBRA. Any other coverage which you and/or your dependents may elect during or after the six (6) month period
of Tripwire-paid coverage, pursuant to COBRA, shall be at your sole cost and expense and/or the sole cost and expense of your eligible dependents. 

C.    Parachute Payments. 

Should one or more benefits under Section A or B of this Letter, or pursuant to any option granted to you subsequent to the date of this
Letter, be deemed to constitute an excess parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), then Tripwire will provide you with a full tax gross-up with respect to your
parachute 
  

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tax liability under Code Section 4999. The amount of such tax gross up will be determined pursuant to the following formula: 

X = Y ÷ 1 – (A + B + C), where 

X is the total dollar payment (the “Tax Gross-Up”) required to be paid under this Section, 

Y is the total excise tax (the “Parachute Tax”) imposed on you pursuant to Code Section 4999 (or any
successor provision) with respect to the excess parachute payment attributable to one or more of the benefits provided you under this Letter, other than the gross up payment, or under any other compensation agreement, arrangement or practice of
Tripwire in which you participate, 
 A is the excise tax rate in effect under Code Section 4999 for such excess
parachute payment, 
 B is the highest combined marginal federal income and applicable state income tax rate in effect
for you, after taking into account the deductibility of state income taxes against federal income taxes to the extent allowable, for the calendar year in which the Tax Gross-Up is paid, and 

C is the applicable Hospital Insurance (Medicare) Tax Rate in effect for you for the calendar year in which the Tax Gross-Up is
paid. 
 Within ninety (90) days after each determination is made by the Internal Revenue Service or your tax advisor that
you have received a parachute payment for which you are liable for a Parachute Tax, you will identify the nature of such parachute payment to Tripwire and submit to Tripwire the calculation of the Parachute Tax attributable to that payment and the
Tax Gross-Up to which you are entitled with respect to such tax liability. Tripwire will pay such Tax Gross-Up to you (net of all applicable withholding taxes, including any taxes required to be withheld under Code Section 4999) within ten
(10) business days after your submission of the calculation of such Parachute Tax and the resulting Tax Gross-Up, provided such calculations represent a reasonable interpretation of the applicable law and regulations. 

In the event that your actual Parachute Tax liability is determined by a Final Determination to be greater than the Parachute Tax
liability taken into account for purposes of the Tax Gross-Up paid to you pursuant to this Letter, then within ninety (90) days following the Final Determination, you will submit to Tripwire a new Parachute Tax calculation based upon the Final
Determination. Within ten (10) business days after receipt of such calculation, Tripwire will pay you the additional Tax Gross-Up attributable to such excess Parachute Tax liability. 

In the event that your actual Parachute Tax liability is determined by a Final Determination to be less than the Parachute Tax liability
taken into account for purposes of the Tax Gross-Up paid to you pursuant to this Letter, then you will refund to Tripwire, promptly upon receipt, any federal or state tax refund attributable to the Parachute Tax overpayment. 

 

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 For purposes of the foregoing a Final Determination means an audit adjustment by the
Internal Revenue Service that is either agreed to by you or your estate or an adjustment that is sustained by a court of competent jurisdiction in a decision with which you concur or with respect to which the period within which an appeal may be
filed has lapsed without a notice of appeal being filed. 
 All rights to a gross up payment with respect to your parachute tax
liability are as set forth in this Letter agreement and the provisions of this Letter agreement shall supersede any other agreements, plans or arrangements, including, without limitation, the provisions of your Option Agreement or offer letter and
any attachment or addendum thereto with respect to a gross up payment relating to your parachute tax liability or any reduction in your benefits that constitute parachute payments within the meaning of Section 280G of the Code. 

Should you have any questions concerning this Letter, please direct them to the undersigned. 

 

			
	TRIPWIRE, INC.
		
	By:	 	/s/ W. Wyatt Starnes
	Title:	 	President & CEO

ACKNOWLEDGMENT 

In consideration for the benefits provided in this Letter agreement, the undersigned hereby acknowledges the receipt of this Letter
agreement and agrees to all the terms and limitations set forth herein. 
  

	
	
	/s/ Robert McCarthy
	ROBERT MCCARTHY, OPTIONEE

DATED: Feb.12, 2003 
  

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 EXHIBIT A 

 

							
	 Name
	 	 Date of Grant
	 	 Exercise Price Per Share
	 	 Total Number of

Option Shares

Granted

	 Robert McCarthy
	 	          November 8, 2000	 	$0.22	 	20,000
	 Robert McCarthy
	 	          March 18, 2002	 	$0.75	 	10,000
	 Robert McCarthy
	 	          January 10, 2000	 	$0.10	 	15,000
	 Robert McCarthy
	 	          December 17, 1999	 	$0.10	 	75,000

  

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