Document:

Registrant's 2000 Incentive Stock Plan

 
EXHIBIT
10.3 
 
OPSWARE INC. 
 
AMENDED AND RESTATED 2000 INCENTIVE STOCK PLAN

 
1. Purposes of the
Plan.    The purposes of this 2000 Stock Plan are: 
 

	 	•	 	to attract and retain the best available personnel, 

 

	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and 

 

	 	•	 	to promote the success of the Company’s business. 

 
Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant. Stock Purchase Rights and Stock Appreciation Rights may also be granted under the Plan. 
 
2. Definitions.    As used herein, the following definitions shall apply: 
 
(a) “Administrator” means the Board or any
of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan. 
 
(b) “Applicable Laws” means the requirements relating to the administration of stock option plans under U. S. state corporate laws, U.S. federal and state securities laws, the Code,
any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options or Stock Purchase Rights are, or will be, granted under the Plan. 
 
(c) “Award” means, individually or
collectively, a grant under the Plan of Options, Stock Purchase Rights, or Stock Appreciation Rights. 
 
(d) “Award Agreement” means a written or electronic agreement between the Company and a Participant evidencing the terms
and conditions of each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan. 
 
(e) “Board” means the Board of Directors of the Company. 
 
(f) “Change of Control” means the occurrence of any of the following events: 
 
(i)    Any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company’s then outstanding voting securities; or 

 
(ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or 
 
(iii)    The consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

 
(iv)    A change in the
composition of the Board, as a result of which fewer than a majority of the Directors are Incumbent Directors. “Incumbent Directors” shall mean Directors who either (A) are Directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those Directors whose election or nomination was not in connection with any transaction described in subsections (i), (ii) or (iii) or in
connection with an actual or threatened proxy contest relating to the election of directors of the Company. 
 
(g) “Code” means the Internal Revenue Code of 1986, as amended. 
 
(h) “Committee” means a committee of
Directors appointed by the Board in accordance with Section 4 of the Plan. 
 
(i) “Common Stock” means the common stock of the Company. 
 
(j) “Company” means Opsware Inc., a Delaware corporation. 
 
(k) “Consultant” means any person, including an advisor, engaged by the Company or a Parent
or Subsidiary to render services to such entity; provided however, that an individual providing services only as a Director shall not be considered a Consultant. 
 
(l) “Director” means a member of the Board. 
 
(m) “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code. 
 
(n) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed ninety days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonstatutory Stock Option. Neither service as a 

Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

 
(o) “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
 
(p) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: 
 
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market
trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
 
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or 
 
(iii) In the
absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. 
 
(q) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated thereunder. 
 
(r) “Inside Director” means a Director who is an Employee. 
 
(s) “IPO Effective Date” means the date upon which the Securities and Exchange Commission declares the initial public
offering of the Company’s Common Stock as effective. 
 
(t) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option. 
 
(u) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder. 
 
(v) “Option” means a stock option granted pursuant to the Plan. 
 
(w) “Option Exchange Program” means a program whereby outstanding Options are surrendered in exchange for Options with a
lower exercise price or Restricted Stock. 
 
(x)
“Optioned Stock” means the Common Stock subject to an Option or Stock Purchase Right granted under the Plan. 

 
(y)
“Outside Director” means a Director who is not an Employee. 
 
(z) “Participant” means the holder of an outstanding Award granted under the Plan. 
 
(aa) “Plan” means this 2000 Incentive Stock Plan, as amended and restated. 
 
(bb) “Restricted Stock” means shares of
Common Stock acquired pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan. 
 
(cc) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. 
 
(dd) “Section 16(b)” means Section 16(b) of
the Exchange Act. 
 
(ee) “Service
Provider” means an Employee, Director or Consultant. 
 
(ff) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan. 
 
(gg) “Stock Appreciation Right” or “SAR”, means an award granted alone, in connection or in tandem with a
related Option, that pursuant to Section 14 is designated as a SAR. 
 
(hh) “Stock Purchase Right” means the right to purchase Common Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant. 
 
(ii) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter
existing, as defined in Section 424(f) of the Code. 
 
3. Stock Subject to the Plan.     Subject to the provisions of Section 14 of the Plan, the initial number of Shares that may be optioned and sold under the Plan is 12,500,000 Shares, plus any Shares
available for future issuance under the Company’s 1999 Stock Plan and the Company’s 2000 Stock Plan on the date the Securities and Exchange Commission declares the company’s registration statement effective and any Shares returned to
the 1999 Stock Plan and the 2000 Stock Plan. 
 
The
number of Shares reserved for issuance under the Plan shall increase annually on the first day of the Company’s fiscal year beginning in 2003 by an amount of Shares equal to the lesser of (i) 9,000,000 Shares, (ii) 8% of the outstanding Shares
on such date (which percentage shall decrease to 6% for fiscal years beginning after 2007 and remain constant thereafter) or (iii) an amount determined by the Board. The Shares may be authorized, but unissued, or reacquired Common Stock.

 
If an Award expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated).
However, Shares that have actually been issued under the Plan, pursuant to an Award, shall not be returned to the Plan and shall not become available for future distribution under the Plan, 

except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available
for future grant under the Plan. 
 
4.    Administration of the Plan. 
 
(a)    Procedure. 
 
(i)    Multiple Administrative Bodies.    The Plan may be administered by different Committees with respect to different groups of Service Providers.

 
(ii)    Section
162(m).    To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code. 
 
(iii)    Rule 16b-3.    To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. 
 
(iv)    Other Administration.    Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. 
 
(b)    Powers of the Administrator.    Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: 
 
(i)    to determine the Fair Market Value; 
 
(ii)    to select the Service Providers to whom Awards may be granted hereunder;

 
(iii)    to determine the
number of shares of Common Stock to be covered by each Award granted hereunder; 
 
(iv)    to approve forms of agreement for use under the Plan; 
 
(v)    to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted
hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Award or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; 

 
(vi)    to reduce the exercise price of any Award to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Award shall have declined since the date the Award was granted;

 
(vii)    to institute an
Option Exchange Program; 
 
(viii)    to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan; 
 
(ix)    to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations
relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws; 
 
(x)    to modify or amend each Award (subject to Section 17(c) of the Plan), including the discretionary authority to
extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan; 
 
(xi)    to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from
the Shares to be issued upon exercise of an Award that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax
to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; 
 
(xii)    to authorize any person to
execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator; 
 
(xiii)    to make all other determinations deemed necessary or advisable for administering the Plan. 
 
(c)    Effect of Administrator’s
Decision.    The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants. 
 
5.    Eligibility.    Nonstatutory Stock Options, Stock Purchase Rights and Stock
Appreciation Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 
 
6.    Limitations. 
 
(a)    Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory
Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be 

taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted. 
 
(b)    Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without Cause. 
 
(c)    The following limitations shall apply to grants of Options: 
 
(i)    No Service Provider shall be
granted, in any fiscal year of the Company, Options to purchase more than 1,000,000 Shares. 
 
(ii)    In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 2,000,000 Shares, which shall not count against the
limit, set forth in subsection (i) above. 
 
(iii)    The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 14. 
 
(iv)    In applying the limits of
subsections (i) and (ii), the Administrator, to the extent required to qualify Options as “performance-based compensation” within the meaning of Section 162(m) of the Code, shall apply the rules of Section 162(m) as necessary or
appropriate to reflect an Option that is cancelled or the exercise price of which is reduced. 
 
7.    Term of Plan.    Subject to Section 21 of the Plan, the Plan shall become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 17 of the Plan. 
 
8.    Term of Option.    The term of each Option shall be stated in the Award Agreement. In the case of an Incentive Stock Option, the term shall be ten
(10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter
term as may be provided in the Award Agreement. 
 
9.    Option Exercise Price and Consideration. 
 
(a)    Exercise Price.    The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following: 
 
(i)    In the case of an Incentive Stock Option 

 
(A)    granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. 
 
(B)    granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. 
 
(ii)    In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the
Administrator. In the case of a Nonstatutory Stock Option intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant. 
 
(iii)    Notwithstanding the preceding, in the event that the Company or a Subsidiary consummates a transaction described in section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated
corporation), persons who become Employees, Directors or Consultants on account of such transaction may be granted Options in substitution for options granted by their former employer. If such substitute Options are granted, the Administrator, in
its sole discretion and consistent with section 424(a) of the Code, shall determine the exercise price of such substitute Options. 
 
(b)    Waiting Period and Exercise Dates.    At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised. 
 
(c)    Form of Consideration.    The Administrator shall
determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of: 
 
(i)    cash; 
 
(ii)    check; 
 
(iii)    promissory note; 
 
(iv)    other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Participant for more than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; 
 
(v)    consideration received by the Company under a cashless exercise program implemented by the Company in
connection with the Plan; 

 
(vi)    a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or
arrangement; 
 
(vii)    any
combination of the foregoing methods of payment; or 
 
(viii)    such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. 
 
10.    Exercise of Option. 
 
(a)    Procedure for Exercise; Rights
as a Stockholder.    Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.
Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. 
 
An Option shall be deemed exercised when the Company receives:
(i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of
any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant,
in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any
other rights as a Stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made
for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan. 
 
Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is exercised. 
 
(b)    Termination of Relationship as a Service Provider.    Subject to Section 14, if a Participant ceases to be a Service Provider (but not in the event
of a Participant’s change of status from Employee to Consultant (in which case an Employee’s Incentive Stock Option shall automatically convert to a Nonstatutory Stock Option on the ninety-first (91st) day following such change of status) or from Consultant to Employee), such Participant may, but only within such period of time as is specified in
the Award Agreement (but in no event later than the expiration date of the term of such Option as set forth in the Award Agreement), exercise his or her Option to the extent that the Participant was entitled to exercise it at the date of such
termination. In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three (3) months following the Participant’s termination. If, on the date of termination, the Participant is not vested as

to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the
Participant does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. 
 
(c)    Disability of Optionee.    If a Participant ceases to
be a Service Provider as a result of the Participant’s Disability, the Participant may, but only within twelve (12) months from the date of such termination (and in no event later than the expiration date of the term of such Option as set forth
in the Award Agreement), exercise his or her Option to the extent that the Option is vested on the date of termination. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

 
(d)    Death of
Optionee.    If a Participant dies while a Service Provider, the Option may be exercised at any time within twelve (12) months following the date of death (but in no event later than the expiration of the term of such Option
as set forth in the Award Agreement), by the Participant’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. If, at the time of
death, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the
Participant’s estate or, if none, by the person(s) entitled to exercise the Option under the Participant’s will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan. 
 
(e)    Buyout Provisions.    The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted based on such
terms and conditions as the Administrator shall establish and communicate to the Participant at the time that such offer is made. 
 
11.    Stock Purchase Rights. 
 
(a)    Rights to Purchase.    Stock Purchase Rights may be
issued either alone, in addition to, or in tandem with other Awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the
Participant in writing or electronically, of the terms, conditions and restrictions related to the offer, including the number of Shares that the offeree shall be entitled to purchase, the price to be paid, and the time within which the offeree must
accept such offer. The offer shall be accepted by execution of an Award Agreement in the form determined by the Administrator. 
 
(b)    Repurchase Option.    Unless the Administrator determines otherwise, the Award
Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares
repurchased pursuant to the Award Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the 

purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator. 
 
(c)    Other
Provisions.    The Award Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. 
 
(d)    Rights as a
Stockholder.    Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a Stockholder, and shall be a Stockholder when his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan. 
 
12.    Non-Transferability of
Awards.    Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate.

 
13.    Formula Option
Grants to Outside Directors.    Outside Directors shall be granted Options in accordance with the following provisions: 
 
(a)    All Options granted pursuant to this Section shall be Nonstatutory Stock Options and, except as otherwise
provided herein, shall be subject to the other terms and conditions of the Plan. 
 
(b)    Except as provided in subsection (d) below: 
 
(i)    Each individual who first becomes an Outside Director after the IPO Effective Date automatically shall, on the
date he or she first becomes an Outside Director, be granted an Option to purchase 50,000 Shares. 
 
(ii)    Notwithstanding (i) above, an Inside Director who ceases to be an Inside Director but who remains a Director
shall not receive a First Option. 
 
(c)    Except as provided in subsection (d) below, each Outside Director shall be automatically granted an Option to purchase 25,000 Shares (a “Subsequent Option”) following each annual meeting of the
stockholders of the Company occurring after the end of the Company’s fiscal year 2002, if immediately after such meeting, he or she shall continue to serve on the Board and shall have served on the Board for at least the preceding six (6)
months. 
 
(d)    Notwithstanding the provisions of subsections (b) and (c) hereof, any exercise of an Option granted before the Company has obtained stockholder approval of the Plan in accordance with Section 21 hereof
shall be conditioned upon obtaining such stockholder approval of the Plan in accordance with Section 21 hereof. 

 
(e)    The terms of each First Option granted pursuant to this Section shall be as follows: 
 
(i)    the term of the Option shall be ten (10) years. 
 
(ii)    the exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the Option. 
 
(iii)    25% of the Shares subject to the Option shall vest twelve months after the date of grant and 1/48 of the Shares subject to the Option shall vest each month thereafter provided that the Outside Director
shall continue to serve on the Board on such dates. 
 
(f)    The terms of each Subsequent Option granted pursuant to this Section shall be as follows: 
 
(i)    the term of the Option shall be ten (10) years. 
 
(ii)    the exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the Option. 
 
(iii)    25% of the Shares subject to the Option shall vest twelve months after the date of grant and 1/48 of the Shares subject to the Option shall vest each month thereafter provided that the Outside Director
shall continue to serve on the Board on such dates. 
 
14.    Stock Appreciation Rights. 
 
(a)    Grant of SARs.    Subject to the terms and conditions of the Plan, SARs may be granted to Service Providers at any time and from time to time as
shall be determined by the Administrator, in its sole discretion. The Administrator shall have complete discretion to determine the number of SARs granted to any Participant. 
 
(b)    Exercise Price and Other Terms.    The Administrator,
subject to the provisions of the Plan, shall have complete discretion to determine the terms and conditions of SARs granted under the Plan. However, the exercise price of an SAR shall be not less than one hundred percent (100%) of the Fair Market
Value of a Share on the Grant Date. 
 
(c)    SAR Agreement.    Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, shall determine. 
 
(d)    Expiration of SARs.    A SAR granted under the Plan shall expire upon the date determined by the Administrator, in its sole discretion, and set
forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 10(b), 10(c) and 10(d) also shall apply to SARs. 
 
(e)    Payment of SAR Amount.    Upon exercise of a SAR, a Participant shall be entitled to
receive payment from the Company in an amount determined by multiplying: 

 
(i)    The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times 
 
(ii)    The number of Shares with respect to which the SAR is exercised. 
 
(f)    Payment Upon Exercise of
SAR.    At the discretion of the Administrator, payment for a SAR may be in cash, Shares or a combination thereof. 
 
15.    Adjustments Upon Changes in Capitalization, Merger or Asset Sale. 
 
(a)    Changes in
Capitalization.    Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Award and the number of shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Award, as well as the price per share of Common Stock covered by each such outstanding Award,
shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt
of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Award. 
 
(b)    Dissolution or
Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for a Participant to have the right to exercise his or her Award for a number of days (determined by the Administrator in its sole discretion) prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Award shall lapse as to
all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such
proposed action.  
 
(c)    Merger or Asset Sale.    In the event of a merger of the Company with or into another corporation, or the sale of all or substantially all of the assets of the Company (a
“Merger”), each outstanding Award shall be assumed or an equivalent award substituted by the successor corporation or a Parent or Subsidiary of the successor corporation (the “Successor Corporation”). In the event that the
Successor Corporation refuses to assume or substitute for the Award, the Optionee shall fully vest in and have the right to exercise the Award as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Award becomes fully 

vested and exercisable in lieu of assumption or substitution in the event of a Merger, the Administrator shall notify the Optionee in writing
or electronically that the Award shall be fully vested and exercisable for a period of time (determined by the Administrator in its sole discretion) from the date of such notice, and the Award shall terminate upon the expiration of such period. For
the purposes of this Section 14(c), the Award shall be considered assumed if, following the Merger, the award confers the right to purchase or receive, for each Share of Optioned Stock subject to the Award immediately prior to the Merger, the
consideration (whether stock, cash, or other securities or property) received in the Merger by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Merger is not solely common stock of the Successor Corporation or its Parent, the Administrator may, with the
consent of the Successor Corporation, provide for the consideration to be received upon the exercise of the Award, for each Share of Optioned Stock subject to the Award, to be solely common stock of the Successor Corporation or its Parent equal in
fair market value to the per share consideration received by holders of Common Stock in the Merger. 
 
16.    Change of Control.    In the event of a Change of Control, each outstanding Option
held by an Outside Director shall vest and become exercisable in full as to all of the Optioned Stock, including Shares as to which the Outside Director would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable
as provided in this paragraph, the Administrator shall notify the Optionee in writing or electronically that the Option shall be fully vested and exercisable for a period of time (determined by the Administrator in its sole discretion) from the date
of such notice, and the Option shall terminate upon the expiration of such period. 
 
17.    Date of Grant.    The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 
 
18.    Amendment and Termination of the
Plan. 
 
(a)    Amendment and Termination.    The Board may at any time amend, alter, suspend or terminate the Plan. 
 
(b)    Stockholder Approval.    The Company shall obtain
Stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. 
 
(c)    Effect of Amendment or Termination.    No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the
Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 

 
19.    Conditions Upon Issuance of Shares. 
 
(a)    Legal Compliance.    Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
 
(b)    Investment Representations.    As a condition to the
exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute
such Shares if, in the opinion of counsel for the Company, such a representation is required. 
 
20.    Inability to Obtain Authority.    The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is
deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained. 
 
21.    Reservation of Shares.    The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan. 
 
22.    Stockholder Approval.    The Plan shall be subject to approval by the Stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such Stockholder
approval shall be obtained in the manner and to the degree required under Applicable Laws.Registrant's Employee Stock Purchase Plan

 
EXHIBIT
10.4 
 
OPSWARE INC. 
 
EMPLOYEE STOCK PURCHASE PLAN 
 
(Amended and Restated as of February 25, 2003)

 
The following constitute the provisions
of the Employee Stock Purchase Plan of Opsware Inc. 
 
1.    Purpose.    The purpose of the Plan is to provide employees of the Company and its Designated Affiliates with an opportunity to purchase Common Stock of the Company through
accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Code. In addition, this Plan authorizes the grant of options which do not qualify
under Section 423 of the Code pursuant to rules, procedures or sub-plans adopted by the Administrator designed to achieve desired tax or other objectives in particular locations outside the United States. The provisions of the Plan shall be
construed so as to extend and limit participation in a uniform and nondiscriminatory basis consistent with the requirements of Section 423 of the Code; provided, however, that an Eligible Employee participating in a sub-plan or under special rules
pursuant to Section 15 not designed to qualify under Section 423 of the Code need not have the same rights and privileges as Eligible Employees participating in the Code Section 423 Plan. 
 
2.    Definitions.     
 
(a)    “Administrator”
shall mean the Board or any Committee designated by the Board to administer the plan pursuant to Section 14. 
 
(b)    “Affiliate” means (i) any Subsidiary and (ii) any other entity in which Company has an equity
interest or which Company has a significant business relationship. 
 
(c)    “Board” shall mean the Board of Directors of the Company. 
 
(d)    “Change of Control” shall mean the occurrence of any of the following events: 
 
(i)    Any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company’s then outstanding voting securities; or 
 
(ii)    The consummation of the sale or disposition by the Company of all or substantially all of the Company’s assets; or 
 
(iii)    The consummation of a merger or
consolidation of the Company, with any other corporation, other than a merger or consolidation which would result in the voting 

securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company, or such surviving entity or its
parent outstanding immediately after such merger or consolidation. 
 
(iv)    A change in the composition of the Board, as a result of which fewer than a majority of the Directors are Incumbent Directors. “Incumbent Directors” shall mean Directors who either (A)
are Directors of the Company, as applicable, as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those Directors whose election or nomination was not in connection
with any transaction described in subsections (i), (ii) or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company. 
 
(e)    “Code” shall mean the Internal Revenue Code of 1986 of the United
States, as amended. 
 
(f)    “Committee” means a committee of the Board appointed by the Board in accordance with Section 14 hereof. 
 
(g)    “Common Stock” shall mean the common stock of the Company.

 
(h)    “Company” shall mean Opsware Inc., a Delaware corporation. 
 
(i)    “Compensation” shall mean all base straight time gross earnings, commissions overtime, shift
premium, and incentive compensation, but exclusive of payments for bonuses and other compensation. The Committee, in its discretion, may establish a different definition of Compensation prior to an Enrollment Date for all options to be granted on
such Enrollment Date. 
 
(j)    “Designated Affiliate” shall mean any Affiliate selected by the Administrator as eligible to participate in the Plan. 
 
(k)    “Eligible Employee” shall mean any individual who is a common law
employee of the Company or any Designated Affiliate and whose customary employment with the Company or Designated Affiliate is at least twenty (20) hours per week and more than five (5) months in any calendar year. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. Where the period of leave exceeds 90 days and the individual’s right to reemployment is not
guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave. 
 
(l)    “Exercise Date” shall mean the last Trading Day in February and August of each year. The first
Exercise Date under the Plan shall be the last Trading Day in August 2001. 
 
(m)    “Fair Market Value” shall mean, as of any date, the value of Common Stock determined as follows: 
 

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(i)    If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable (including, without limitation, as quoted on the Nasdaq National Market website, www.nasdaq.com); 
 
(ii)    If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not
reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable; 
 
(iii)    In the absence of an established
market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board; or 
 
(iv)    For purposes of the Offering Date of the first Offering Period under the Plan, the Fair Market Value shall be
the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company’s Common Stock (the
“Registration Statement”). 
 
(n)    “Offering Date” shall mean the first Trading Day of each Offering Period. 
 
(o)    “Offering Periods” shall mean the periods of approximately twenty-four (24) months during
which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after March 1 and September 1 of each year and terminating on the first Trading Day on or after the February 28 and August 31 Offering Period
commencement date approximately twenty-four months later; provided, however, that the first Offering Period under the Plan shall commence with the first Trading Day on or after the date on which the Securities and Exchange Commission declares the
Company’s registration statement on Form S-1 effective and ending on the first Trading Day on or after the earlier of (i) February 28, 2003 or (ii) twenty-seven (27) months from the beginning of the first Offering Period. The duration and
timing of Offering Periods may be changed pursuant to Section 4 of this Plan. 
 
(p)    “Plan” shall mean this Employee Stock Purchase Plan. 
 
(q)    “Purchase Period” shall mean the approximately six (6) month period commencing on one Exercise
Date and ending with the next Exercise Date, except that the first Purchase Period of any Offering Period shall commence on the Offering Date and end with the next Exercise Date. 
 
(r)    “Purchase Price” shall mean 85% of the Fair Market Value of a
share of Common Stock on the Offering Date or on the Exercise Date, whichever is lower; provided however, that the Purchase Price may be adjusted by the Administrator pursuant to Section 20. 
 
(s)    “Subsidiary” shall
mean a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code. 
 

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(t)     “Trading Day” shall mean a day on which national stock exchanges and the Nasdaq System are open for trading. 
 
3.    Eligibility. 
 
(a)    First Offering Period.    Any individual who is an
Eligible Employee immediately prior to the first Offering Period shall be automatically enrolled in the first Offering Period. 
 
(b)    Subsequent Offering Periods.    Any Eligible Employee on a given Offering Date shall
be eligible to participate in the Plan. 
 
(c)    Limitations.    Any provisions of the Plan to the contrary notwithstanding, no Eligible Employee shall be granted an option under the Plan (i) to the extent that, immediately
after the grant, such Eligible Employee (or any other person whose stock would be attributed to such Eligible Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase such
stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock
purchase plans of the Company and its subsidiaries accrues at a rate which exceeds $25,000 worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year in which such option is
outstanding at any time. 
 
4.    Offering Periods.    The Plan shall be implemented by consecutive, overlapping Offering Periods with a new Offering Period commencing on the first Trading Day on or after March 1
and September 1 each year, or on such other date as the Board shall determine, and continuing thereafter until terminated in accordance with Section 21 hereof; provided, however, that the first Offering Period under the Plan shall commence with the
first Trading Day on or after the date upon which the Company’s registration statement on Form S-1 is declared effective by the Securities and Exchange Commission and ending on the first Trading Day on or after February 28, 2003. The Board
shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without shareholder approval if such change is announced prior to the scheduled beginning of the first
Offering Period to be affected thereafter. 
 
5.    Participation. 
 
(a)    First Offering Period.    An Eligible Employee shall be entitled to participate in the first Offering Period only if such individual submits a subscription agreement authorizing
payroll deductions in the form of Exhibit A to this Plan (i) no earlier than the effective date of the Form S-8 registration statement with respect to the issuance of Common Stock under this Plan and (ii) no later than a date determined by
the Administrator in its discretion (the “Enrollment Window”). An Eligible Employee’s failure to submit the subscription agreement during the Enrollment Window shall result in the automatic termination of such individual’s
participation in the Offering Period. 
 
(b)    Subsequent Offering Periods.    An Eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in the

 

4 

 
form of Exhibit A to
this Plan and filing it with the Company’s Benefits Department prior to the applicable Offering Date. 
 
6.    Payroll Deductions. 
 
(a)    At the time a participant files his or her subscription agreement, he or she shall
elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding 15% of the Compensation which he or she receives on each pay day during the Offering Period. A participant’s subscription agreement
shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof. 
 
(b)    Payroll deductions for a participant shall commence on the first payday following the Offering Date and shall
end on the last payday in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof; provided, however, that for the first Offering Period, payroll deductions shall
commence on the first payday on or following the end of the Enrollment Window. 
 
(c)    All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. A participant may not
make any additional payments into such account. 
 
(d)    A participant may discontinue his or her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the Offering Period by
completing or filing with the Company a new subscription agreement authorizing a change in payroll deduction rate. The Administrator may, in its discretion, limit the nature and/or number of participation rate changes during any Offering Period. The
Administrator, in its sole discretion, shall determine when the change in such participation rate is effective. 
 
(e)    Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section
3(c) hereof, a participant’s payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. 
 
(f)    At the time the option is exercised, in whole or in part, or at the time some or all of the Company’s
Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of
the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to
make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Eligible Employee. 
 
7.    Grant of Option.    On the Offering Date of each Offering Period, each Eligible
Employee participating in such Offering Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company’s Common Stock determined by
dividing such Eligible Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s account as of 
 

5 

 
the Exercise Date by the
applicable Purchase Price; provided that in no event shall an Eligible Employee be permitted to purchase during each Purchase Period more than 5,000 shares of the Company’s Common Stock (subject to any adjustment pursuant to Section 20), and
provided further that such purchase shall be subject to the limitations set forth in Sections 3(c) and 13 hereof. The Eligible Employee may accept the grant of such option by turning in a completed Subscription Agreement (attached hereto as
Exhibit A) to the Company on or prior to an Offering Date, or with respect to the first Offering Period, prior to the last day of the Enrollment Window. The Administrator may, for future Offering Periods, increase or decrease, in its absolute
discretion, the maximum number of shares of the Company’s Common Stock an Eligible Employee may purchase during each Purchase Period of such Offering Period. Exercise of the option shall occur as provided in Section 8 hereof, unless the
participant has withdrawn pursuant to Section 10 hereof. The option shall expire on the last day of the Offering Period. 
 
8.    Exercise of Option. 
 
(a)    Unless a participant withdraws from the Plan as provided in Section 10 hereof, his
or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated
payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full share shall be retained in the participant’s
account for the subsequent Purchase Period or Offering Period, subject to earlier withdrawal by the participant as provided in Section 10 hereof. Any other funds left over in a participant’s account after the Exercise Date shall be returned to
the participant. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him or her. 
 
(b)    If the Administrator determines that, on a given Exercise Date, the number of shares with respect to which
options are to be exercised may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Offering Date of the applicable Offering Period, or (ii) the number of shares available for sale under the Plan on
such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall make a pro rata allocation of the shares of Common Stock available for purchase on such Offering Date or Exercise Date, as applicable, in as uniform
a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and continue all Offering Periods then in effect, or (y)
provide that the Company shall make a pro rata allocation of the shares available for purchase on such Offering Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to
be equitable among all participants exercising options to purchase Common Stock on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 21 hereof. The Company may make pro rata allocation of the shares
available on the Offering Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s shareholders subsequent to such Offering
Date. 
 

6 

 
9.    Delivery.    As soon as reasonably practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange the delivery to each participant the shares
purchased upon exercise of his or her option in a form determined by the Administrator. 
 
10.     Withdrawal. 
 
(a)    A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at
any time by giving written notice to the Company in the form of Exhibit B to this Plan. All of the participant’s payroll deductions credited to his or her account shall be paid to such participant as soon as administratively practicable
after receipt of notice of withdrawal and such participant’s option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant
withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement. 
 
(b)    A participant’s withdrawal
from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering
Period from which the participant withdraws. 
 
11.    Termination of Employment.    In the event a participant ceases to be an Eligible Employee of the Company or any Designated Affiliate, as applicable, his or her option shall
expire on the date of such termination and any payroll deductions credited to such participant’s account during the Offering Period but not yet used to purchase shares under the Plan shall be returned to such participant or, in the case of his
or her death, to the person or persons entitled thereto under Section 15 hereof, and such participant’s option shall be automatically terminated. 
 
12.    Interest.    No interest shall accrue on the payroll deductions of a participant in
the Plan. 
 
13.    
Stock. 
 
(a)    Subject to adjustment upon changes in capitalization of the Company as provided in Section 20 hereof, the maximum number of shares of the Company’s Common Stock which shall be made available for sale
under the Plan shall be 3,017,877 shares plus an annual increase to be added on the first day of the Company’s fiscal year, equal to the lesser of (i) 5,000,000 shares, (ii) 2% of the outstanding shares on such date or (iii) an amount
determined by the Administrator. 
 
(b)    Until the shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), a participant shall only have the rights of an
unsecured creditor with respect to such shares, and no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to such shares. 
 

7 

 
(c)    Shares to be delivered to a participant under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse. 
 
14.    Administration.    The Administrator shall administer the Plan and shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to
determine eligibility and to adjudicate all disputed claims filed under the Plan, to establish deadlines enrollment in the Plan, to adopt sub-plans applicable to specified Affiliates or locations, and to designate which Affiliates will participate
in the Plan. Every finding, decision and determination made by the Administrator shall, to the full extent permitted by law, be final and binding upon all parties. 
 
15.    Administrator Rules for Foreign Jurisdictions. 
 
(a)    The Administrator may adopt rules
or procedures relating to the operation and administration of the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt
rules and procedures regarding handling of payroll deductions, payment of interest, conversion of local currently, payroll tax, withholding procedures and handling of stock certificates which vary with local requirements. 
 
(b)    The Administrator may also adopt
rules, procedures or sub-plan applicable to particular Affiliates or locations, which sub-plans may be designed to be outside the scope of Code Section 423. The rules of such sub-plans may take precedence over other provides of this Plan, with the
exception of Section 13(a) but unless otherwise superceded by the terms of such sub-plan, the provisions of this Plan shall govern the operation of such sub-plan. 
 
16.     Beneficiary.    In the event of the death of a
participant prior to the purchase of shares under the Plan, the Company shall deliver any cash received from the participant for the purchase of shares prior to such participant’s death to the executor or administrator of the estate of the
participant. 
 
17.    Transferability.    Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 16 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof. 
 
18.    Use of Funds.    All payroll deductions received or
held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. Until shares are issued, participants shall only have the rights of an unsecured
creditor. 
 
19.    Reports.    Individual accounts shall be maintained for each participant in the Plan. Statements of account shall be given to participating Eligible Employees at least annually,
which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any. 
 

8 

 
20.    Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Change of Control. 
 
(a)    Changes in Capitalization.    Subject to any required action by the shareholders of
the Company, the maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan, the maximum number of shares each participant may purchase each Purchase Period (pursuant to Section 7), the number
of shares that may be added annually to the shares reserved under the Plan (pursuant to Section 13(a)(i)), as well as the price per share and the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised
shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other change
in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. 
 
(b)    Dissolution or
Liquidation.    In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall
terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation.
The Administrator shall notify each participant in writing, at a time determined by the Administrator (in its discretion and on a uniform basis) prior to the New Exercise Date, that the Exercise Date for the participant’s option has been
changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof.

 
(c)    Merger or Change
of Control.    In the event of a merger or Change of Control, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation.
In the event that the successor corporation refuses to assume or substitute for the option, any Purchase Periods then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New
Exercise Date. The New Exercise Date shall be before the date of the Company’s proposed merger or Change of Control. The Administrator shall notify each participant in writing, at a time determined by the Administrator (in its discretion and on
a uniform basis) prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date,
unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof. 
 
21.    Amendment or Termination. 
 

9 

 
(a)    The Administrator may at any time and for any reason terminate or amend the Plan. Except as otherwise provided in the Plan, no such termination can affect options previously granted, provided that an
Offering Period may be terminated by the Administrator on any Exercise Date if the Administrator determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its shareholders. Except as provided in
Section 20 and this Section 21 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or
provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain shareholder approval in such a manner and to such a degree as required. 
 
(b)    Without shareholder consent and without regard to whether any participant rights
may be considered to have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange
ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly
completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts
withheld from the participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan. 
 
(c)    In the event the Administrator
determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such
accounting consequence including, but not limited to: 
 
(i)    increasing the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price; 
 
(ii)    shortening any Offering Period so that Offering Period ends on a new Exercise
Date, including an Offering Period underway at the time of the Board action; and 
 
(iii)    allocating shares. 
 
Such modifications or amendments shall not require stockholder approval or the consent of any Plan participants. 
 
22.    Notices.    All notices or other communications by a
participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form and manner specified by the Company at the location, or by the person, designated by the Company for the receipt
thereof. 
 
23.    Conditions Upon Issuance of Shares.    Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares
pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as 
 

10 

amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon
which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 
 
As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the
time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the
aforementioned applicable provisions of law. 
 
24.    Term of Plan.    The Plan shall become effective upon the earlier to occur of its adoption by the Board of Directors or its approval by the shareholders of the Company. It shall
continue in effect until terminated under Section 21 hereof. 
 
25.     Automatic Transfer to Low Price Offering Period.    To the extent permitted by any applicable laws, regulations, or stock exchange rules if the Fair Market Value of the
Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Offering Date of such Offering Period or if the Fair Market Value of the Common Stock on the Offering Date of the immediately
following Offering Period is lower than the Fair Market Value of the Common Stock on the Offering Date of the current Offering Period, then all participants in the current Offering Period shall be automatically withdrawn from such Offering Period
immediately after the exercise of their option on the Exercise Date and automatically re-enrolled in the immediately following Offering Period. In the event that the Fair Market Value of the Common Stock on the Offering Date of the March 1, 2002
Offering Period is lower than the Fair Market Value of the Common Stock on the Offering Date of the September 4, 2001 Offering Period, then all participants in the September 4, 2001 Offering Period shall be automatically enrolled in the March 1,
2002 Offering Period at a contribution rate of 0% of his or her Compensation. 
 
 

11 

 
EXHIBIT
A 
 
OPSWARE INC. 
 
EMPLOYEE STOCK PURCHASE PLAN 
 
SUBSCRIPTION AGREEMENT 
 

	              Original
Application
	 	 Offering Date:
                

	              Change
in Payroll Deduction Rate
	 	 

 

	1.	 	                         hereby elects
to participate in the Opsware Inc. Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”) and subscribes to purchase shares of the Company’s Common Stock in accordance with this Subscription Agreement and the Employee Stock
Purchase Plan. 

 

	2.	 	I hereby authorize payroll deductions from each paycheck in the amount of             % of my
Compensation on each payday (from 0 to 10%) during the Offering Period in accordance with the Employee Stock Purchase Plan. (Please note that no fractional percentages are permitted.) 

 

	3.	 	I understand that said payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance
with the Employee Stock Purchase Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option. 

 

	4.	 	I have received a copy of the complete Employee Stock Purchase Plan. I understand that my participation in the Employee Stock Purchase Plan is in all respects
subject to the terms of the Plan. I understand that my ability to exercise the option under this Subscription Agreement is subject to shareholder approval of the Employee Stock Purchase Plan. 

 

	5.	 	Shares purchased for me under the Employee Stock Purchase Plan should be issued in the name(s) of (Eligible Employee or Eligible Employee and Spouse only).

 

	6.	 	I understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Offering Date (the first day of the Offering Period during
which I purchased such shares) or one year after the Exercise Date, I will be treated for federal income tax purposes as having received ordinary income at the time of such disposition in an amount equal to the excess of the fair market value of the
shares at the time such shares were purchased by me over the price which I paid for the shares. I hereby agree to notify the Company in writing within 30 days after the date of any disposition of my shares and I will make adequate provision for
Federal, state or other tax withholding obligations, if any, which arise upon the disposition of the Common Stock. The Company may, but will not be obligated to, withhold 

 
 

12 

from my compensation the amount necessary to meet any applicable withholding obligation
including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year and
1-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal
to the lesser of (1) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (2) 15% of the fair market value of the shares on the first day of the Offering Period.
The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain. 
 

	7.	 	I hereby agree to be bound by the terms of the Employee Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Employee Stock Purchase Plan. 

 

	 Employe Number
	  	 __________________________________

	
	 Employee Name
	  	 __________________________________

	
	 Employee’s Social
 Security Number:
	  	 __________________________________

 
I UNDERSTAND THAT THIS
SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME. 
 

	 Dated:                                    
                                        
                 
	 	                                      
                                        
                           

	 	 	 Signature of Employee

 
 

13 

 
EXHIBIT
B 
 
OPSWARE INC. 
 
EMPLOYEE STOCK PURCHASE PLAN 
 
NOTICE OF WITHDRAWAL 
 
The undersigned participant in the Offering Period of the
Opsware Inc. Employee Stock Purchase Plan which began on             ,              (the “Offering Date”)
hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to
such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of
shares in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement. 
 

	 Name (Please
print):                                       
                                        
      
	    	 
	
	 Employee
Number:                         
	    	 
	
	 Signature:                                   
                                        
                            
	    	 
	
	 Date:                             
	    	 

 
 
 
 

14

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