VMware 2007 Annual Report Download - page 104

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payroll periods from such date to the end of such option period, and (b) dividing that product by eighty-five percent (85%) of the fair market
value of a share of stock on such date.
Section 7. Purchase Price
The purchase price of stock issued pursuant to the exercise of an option shall be 85% of the fair market value of the stock at (a) the time of grant
of the option or (b) the time at which the option is deemed exercised, whichever is less. “Fair market value” shall mean the closing sales price
per share of the stock on the principal securities exchange on which the stock is traded or, if there is no such sale on the relevant date, then on the
last previous day on which a sale was reported; if the stock is not listed for trading on a national securities exchange, the fair market value of the
stock shall be determined in good faith by the Board of Directors. For purposes of the first option period under the Plan, the fair market value of
the stock at the time of the grant of the option will be the initial public offering price of the stock as set forth in VMware’s Form S-
1 Registration
Statement.
Section 8. Exercise of Options
If an employee is a participant in the Plan on the last business day of an option period, he or she shall be deemed to have exercised the
option granted to him or her for that period. Upon such exercise, the Company shall apply the balance of the participant’
s withholding account to
the purchase of the number of whole shares of stock determined under Section 6, and as soon as practicable thereafter shall issue and deliver
certificates for said shares to the participant. No fractional shares shall be issued hereunder. Any balance accumulated in the participant’s
withholding account that is not sufficient to purchase a full share shall be retained in such account for any remaining or subsequent option
period, subject to early withdrawal by the participant as provided in Section 10. Any other monies remaining in the participant’s withholding
account under the Plan after the date of exercise shall be retuned to the participant or his or her beneficiary (as applicable) in cash, without
interest.
Notwithstanding anything herein to the contrary, the Company shall not be obligated to deliver any shares unless and until, in the opinion
of the Company’s counsel, all requirements of applicable federal and state laws and regulations (including any requirements as to legends) have
been complied with, nor, if the outstanding stock is at the time listed on any securities exchange, unless and until the shares to be delivered have
been listed (or authorized to be added to the list upon official notice of issuance) upon such exchange, nor unless or until all other legal matters
in connection with the issuance and delivery of shares have been approved by the Company’s counsel.
4