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Sample Business Contracts

2001 Employee Stock Purchase Plan - NetScreen Technologies Inc.

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                          NETSCREEN TECHNOLOGIES, INC.

                        2001 EMPLOYEE STOCK PURCHASE PLAN

                          As Adopted September 28, 2001

     1.   Establishment of Plan. Netscreen Technologies, Inc. (the "Company")
proposes to grant options for purchase of the Company's Common Stock to eligible
employees of the Company and its Participating Subsidiaries (as hereinafter
defined) pursuant to this Employee Stock Purchase Plan (this "Plan"). For
purposes of this Plan, "Parent Corporation" and "Subsidiary" shall have the same
meanings as "parent corporation" and "subsidiary corporation" in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code"). "Participating Subsidiaries" are Parent Corporations or Subsidiaries
that the Board of Directors of the Company (the "Board") designates from time to
time as corporations that shall participate in this Plan. The Company intends
this Plan to qualify as an "employee stock purchase plan" under Section 423 of
the Code (including any amendments to or replacements of such Section), and this
Plan shall be so construed. Any term not expressly defined in this Plan but
defined for purposes of Section 423 of the Code shall have the same definition
herein. A total of 1,000,000 shares of the Company's Common Stock is reserved
for issuance under this Plan. In addition, on each October 1, the aggregate
number of shares of the Company's Common Stock reserved for issuance under the
Plan shall be increased automatically by the number of shares which were
purchased under the Plan in the preceding fiscal year; provided, that the Board
                                                       --------
or the Committee may in its sole discretion reduce the amount of the increase in
any particular year; and, provided further, that the aggregate number of shares
                          ----------------
issued over the term of this Plan shall not exceed 20,000,000 shares. Such
number shall be subject to adjustments effected in accordance with Section 14 of
this Plan.

     2.   Purpose. The purpose of this Plan is to provide eligible employees of
the Company and Participating Subsidiaries with a convenient means of acquiring
an equity interest in the Company through payroll deductions, to enhance such
employees' sense of participation in the affairs of the Company and
Participating Subsidiaries, and to provide an incentive for continued
employment.

     3.   Administration. This Plan shall be administered by the Compensation
Committee of the Board (the "Committee"). Subject to the provisions of this Plan
and the limitations of Section 423 of the Code or any successor provision in the
Code, all questions of interpretation or application of this Plan shall be
determined by the Committee and its decisions shall be final and binding upon
all participants. Members of the Committee shall receive no compensation for
their services in connection with the administration of this Plan, other than
standard fees as established from time to time by the Board for services
rendered by Board members serving on Board committees. All expenses incurred in
connection with the administration of this Plan shall be paid by the Company.

     4.   Eligibility. Any employee of the Company or the Participating
Subsidiaries is eligible to participate in an Offering Period (as hereinafter
defined) under this Plan except the following:

          (a) employees who are not employed by the Company or a Participating
Subsidiary prior to the beginning of such Offering Period or prior to such other
time period as specified by the Committee, except that employees who are
employed on the Effective Date of the Registration Statement filed by the
Company with the Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, as amended (the "Securities Act") registering the initial public
offering of the Company's Common Stock shall be eligible to participate in the
first Offering Period under the Plan;

          (b) employees who are customarily employed for twenty (20) hours or
less per week;

          (c) employees who are customarily employed for five (5) months or less
in a calendar year;

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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


          (d) employees who, together with any other person whose stock would be
attributed to such employee pursuant to Section 424(d) of the Code, own stock or
hold options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Participating Subsidiaries or who, as a result of being granted an option
under this Plan with respect to such Offering Period, would own stock or hold
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any of
its Participating Subsidiaries;

          (e) individuals who provide services to the Company or any of its
Participating Subsidiaries as independent contractors who are reclassified as
common law employees for any reason except for federal income and employment tax
                                    ----------
purposes; and

          (f) employees who reside in countries for whom such employees'
participation in the Plan would result in a violation under any corporate or
securities laws of such country of residence.

     5.   Offering Dates. The offering periods of this Plan (each, an "Offering
Period") shall be of twenty-four (24) months duration commencing on May 1 and
November 1 of each year and ending on April 30 and October 31 of each year;
provided, however, that the first such Offering Period shall commence on the
-----------------
first business day on which price quotations for the Company's stock are
available on the Nasdaq National Market (the "First Offering Date") and shall
end on October 31, 2003 (the "First Offering Period"). Except for the First
Offering Period, each Offering Period shall consist of four (4) six month
purchase periods (individually, a "Purchase Period") during which payroll
deductions of the participants are accumulated under this Plan. The First
Offering Period shall consist of no more than five and no fewer than three
Purchase Periods, any of which may be greater or less than six months as
determined by the Committee. The first business day of each Offering Period is
referred to as the "Offering Date". The last business day of each Purchase
Period is referred to as the "Purchase Date". The Committee shall have the power
to change the Offering Dates, the Purchase Dates and the duration of Offering
Periods or Purchase Periods without stockholder approval if such change is
announced prior to the relevant Offering Period or prior to such other time
period as specified by the Committee.

     6.   Participation in this Plan. Eligible employees may become participants
in an Offering Period under this Plan on the Offering Date after satisfying the
eligibility requirements by delivering a subscription agreement to the Company
prior to such Offering Date, or such other time period as specified by the
Committee; provided, however, that all eligible employees employed on or before
           -----------------
the First Offering Date will be automatically enrolled in the First Offering
Period. Notwithstanding the foregoing, (i) an eligible employee may elect to
decrease the number of shares of Common Stock that such employee would otherwise
be permitted to purchase pursuant to Section 7 below for the First Offering
Period and/or purchase shares of Common Stock for the First Offering Period
through payroll deductions by delivering a subscription agreement to the Company
within thirty (30) days following the First Offering Date after the filing of an
effective registration statement pursuant to Form S-8 and (ii) the Committee may
set a later time for filing the subscription agreement authorizing payroll
deductions for all eligible employees with respect to a given Offering Period.
Except as provided above with respect to the First Offering Period, an eligible
employee who does not deliver a subscription agreement to the Company after
becoming eligible to participate in an Offering Period shall not participate in
that Offering Period or any subsequent Offering Period unless such employee
enrolls in this Plan by filing a subscription agreement with the Company prior
to such Offering Period, or such other time period as specified by the
Committee. Once an employee becomes a participant in an Offering Period by
filing a subscription agreement, such employee will automatically participate in
the Offering Period commencing immediately following the last day of the prior
Offering Period unless the employee withdraws or is deemed to withdraw from this
Plan or terminates further participation in the Offering Period as set forth in
Section 11 below. Such participant is not required to file any additional
subscription agreement in order to continue participation in this Plan.

     7.   Grant of Option on Enrollment. Enrollment by an eligible employee in
this Plan with respect to an Offering Period will constitute the grant (as of
the Offering Date) by the Company to such employee of an option to purchase on
the Purchase Date up to that number of shares of Common Stock of the Company
determined by a fraction, the numerator of which is the amount accumulated in
such employee's payroll deduction account during such Purchase Period and the
denominator of which is the lower of (i) eighty-five percent (85%) of the fair
market


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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


value of a share of the Company's Common Stock on the Offering Date (but in no
event less than the par value of a share of the Company's Common Stock), or (ii)
eighty-five percent (85%) of the fair market value of a share of the Company's
Common Stock on the Purchase Date (but in no event less than the par value of a
share of the Company's Common Stock), provided, however, that for each Purchase
                                      --------  -------
Period within the First Offering Period the numerator shall be ten percent (10%)
of the eligible employee's compensation for such Purchase Period, unless
otherwise the employee elected to decrease the percentage of such employee's
compensation, and provided, further, that the number of shares of the Company's
                  --------  -------
Common Stock subject to any option granted pursuant to this Plan shall not
exceed the lesser of (x) the maximum number of shares set by the Committee
pursuant to Section 10(c) below with respect to the applicable Purchase Date, or
(y) the maximum number of shares which may be purchased pursuant to Section
10(b) below with respect to the applicable Purchase Date. The fair market value
of a share of the Company's Common Stock shall be determined as provided in
Section 8 below.

     8.   Purchase Price. The purchase price per share at which a share of
Common Stock will be sold in any Offering Period shall be eighty-five percent
(85%) of the lesser of:

          (a) the fair market value on the Offering Date; or

          (b) the fair market value on the Purchase Date.

     The term "fair market value" means, as of any date, the value of a share of
the Company's Common Stock determined as follows:

          (a) if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the date of determination as
reported in The Wall Street Journal;
            -----------------------

          (b) if such Common Stock is publicly traded and is then listed on a
national securities exchange, its closing price on the date of determination on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading as reported in The Wall Street Journal; or
                                      -----------------------

          (c) if such Common Stock is publicly traded but is not quoted on the
Nasdaq National Market nor listed or admitted to trading on a national
securities exchange, the average of the closing bid and asked prices on the date
of determination as reported in The Wall Street Journal.
                                -----------------------

Notwithstanding the foregoing, for purposes of the First Offering Date, fair
market value shall be the price per share at which shares of the Company's
Common Stock are initially offered for sale to the public by the Company's
underwriters in the initial public offering of the Company's Common Stock
pursuant to a registration statement filed with the SEC under the Securities
Act.

     9.   Payment Of Purchase Price; Changes In Payroll Deductions; Issuance Of
Shares.

          (a) The purchase price of the shares is accumulated by regular payroll
deductions made during each Offering Period, provided, however, that for the
                                             --------  -------
First Offering Period the purchase price of the shares shall be paid by the
eligible employee in cash on each Purchase Date within the First Offering Period
unless the eligible employee elects to purchase such shares through payroll
deductions after the filing of an effective Form S-8 registration statement
pursuant to the second sentence of Section 6 above within thirty (30) days
following the First Offering Period. The deductions are made as a percentage of
the participant's compensation in one percent (1%) increments not less than one
percent (1%), nor greater than ten percent (10%) or such lower limit set by the
Committee. Compensation shall mean all W-2 cash compensation, including, but not
limited to, base salary, wages, commissions, overtime, shift premiums, plus
draws against commissions; provided, however that compensation shall not include
                           --------  -------
any bonuses or incentive compensation; further provided, however, that for
                                       ----------------  -------
purposes of determining a participant's compensation, any election by such
participant to reduce his or her regular cash remuneration under Sections 125 or
401(k) of the Code shall be treated as if the participant did not make such
election. Payroll deductions shall commence on the first payday of the Offering
Period and shall continue to the end of the Offering Period unless sooner
altered or terminated as provided in this Plan.


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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


          (b) A participant may increase or decrease the rate of payroll
deductions during an Offering Period by filing with the Company a new
authorization for payroll deductions, in which case the new rate shall become
effective for the next payroll period commencing after the Company's receipt of
the authorization and shall continue for the remainder of the Offering Period
unless changed as described below. Such change in the rate of payroll deductions
may be made at any time during an Offering Period, but not more than one (1)
change may be made effective during any Purchase Period. A participant may
increase or decrease the rate of payroll deductions for any subsequent Offering
Period by filing with the Company a new authorization for payroll deductions
prior to the beginning of such Offering Period, or such other time period as
specified by the Committee.

          (c) A participant may reduce his or her payroll deduction percentage
to zero during an Offering Period by filing with the Company a request for
cessation of payroll deductions. Such reduction shall be effective beginning
with the next payroll period after the Company's receipt of the request and no
further payroll deductions will be made for the duration of the Offering Period.
Payroll deductions credited to the participant's account prior to the effective
date of the request shall be used to purchase shares of Common Stock of the
Company in accordance with Section (e) below. A participant may not resume
making payroll deductions during the Offering Period in which he or she reduced
his or her payroll deductions to zero.

          (d) All payroll deductions made for a participant are credited to his
or her account under this Plan and are deposited with the general funds of the
Company. No interest accrues on the payroll deductions. All payroll deductions
received or held by the Company may be used by the Company for any corporate
purpose, and the Company shall not be obligated to segregate such payroll
deductions.

          (e) On each Purchase Date, so long as this Plan remains in effect and
provided that the participant has not submitted a signed and completed
withdrawal form before that date which notifies the Company that the participant
wishes to withdraw from that Offering Period under this Plan and have all
payroll deductions accumulated in the account maintained on behalf of the
participant as of that date returned to the participant, the Company shall apply
the funds then in the participant's account to the purchase of whole shares of
Common Stock reserved under the option granted to such participant with respect
to the Offering Period to the extent that such option is exercisable on the
Purchase Date. The purchase price per share shall be as specified in Section 8
of this Plan. Any cash remaining in a participant's account after such purchase
of shares shall be refunded to such participant in cash, without interest;
provided, however that any amount remaining in such participant's account on a
Purchase Date which is less than the amount necessary to purchase a full share
of Common Stock of the Company shall be carried forward, without interest, into
the next Purchase Period or Offering Period, as the case may be. In the event
that this Plan has been oversubscribed, all funds not used to purchase shares on
the Purchase Date shall be returned to the participant, without interest. No
Common Stock shall be purchased on a Purchase Date on behalf of any employee
whose participation in this Plan has terminated prior to such Purchase Date.

          (f) As promptly as practicable after the Purchase Date, the Company
shall issue shares for the participant's benefit representing the shares
purchased upon exercise of his or her option.

          (g) During a participant's lifetime, his or her option to purchase
shares hereunder is exercisable only by him or her. The participant will have no
interest or voting right in shares covered by his or her option until such
option has been exercised.

     10.  Limitations on Shares to be Purchased.

          (a) No participant shall be entitled to purchase stock under this Plan
at a rate which, when aggregated with his or her rights to purchase stock under
all other employee stock purchase plans of the Company or any Subsidiary,
exceeds $25,000 in fair market value, determined as of the Offering Date (or
such other limit as may be imposed by the Code) for each calendar year in which
the employee participates in this Plan. The Company shall automatically suspend
the payroll deductions of any participant as necessary to enforce such limit
provided that when the Company automatically resumes such payroll deductions,
the Company must apply the rate in effect immediately prior to such suspension.


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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


          (b) No participant shall be entitled to purchase more than the Maximum
Share Amount (as defined below) on any single Purchase Date. Prior to the
commencement of any Offering Period or prior to such time period as specified by
the Committee, the Committee may, in its sole discretion, set a maximum number
of shares which may be purchased by any employee at any single Purchase Date
(hereinafter the "Maximum Share Amount"). The Maximum Share Amount shall be
2,000 shares. If a new Maximum Share Amount is set, then all participants must
be notified of such Maximum Share Amount prior to the commencement of the next
Offering Period. The Maximum Share Amount shall continue to apply with respect
to all succeeding Purchase Dates and Offering Periods unless revised by the
Committee as set forth above.

          (c) If the number of shares to be purchased on a Purchase Date by all
employees participating in this Plan exceeds the number of shares then available
for issuance under this Plan, then the Company will make a pro rata allocation
of the remaining shares in as uniform a manner as shall be reasonably
practicable and as the Committee shall determine to be equitable. In such event,
the Company shall give written notice of such reduction of the number of shares
to be purchased under a participant's option to each participant affected.

          (d) Any payroll deductions accumulated in a participant's account
which are not used to purchase stock due to the limitations in this Section 10
shall be returned to the participant as soon as practicable after the end of the
applicable Purchase Period, without interest.

     11.  Withdrawal.

          (a) Each participant may withdraw from an Offering Period under this
Plan by signing and delivering to the Company a written notice to that effect on
a form provided for such purpose. Such withdrawal may be elected at any time
prior to the end of an Offering Period, or such other time period as specified
by the Committee.

          (b) Upon withdrawal from this Plan, the accumulated payroll deductions
shall be returned to the withdrawn participant, without interest, and his or her
interest in this Plan shall terminate. In the event a participant voluntarily
elects to withdraw from this Plan, he or she may not resume his or her
participation in this Plan during the same Offering Period, but he or she may
participate in any Offering Period under this Plan which commences on a date
subsequent to such withdrawal by filing a new authorization for payroll
deductions in the same manner as set forth in Section 6 above for initial
participation in this Plan.

          (c) If the Fair Market Value on the first day of the current Offering
Period in which a participant is enrolled is higher than the Fair Market Value
on the first day of any subsequent Offering Period, the Company will
automatically enroll such participant in the subsequent Offering Period. Any
funds accumulated in a participant's account prior to the first day of such
subsequent Offering Period will be applied to the purchase of shares on the
Purchase Date immediately prior to the first day of such subsequent Offering
Period, if any.

     12.  Termination of Employment. Termination of a participant's employment
for any reason, including retirement, death or the failure of a participant to
remain an eligible employee of the Company or of a Participating Subsidiary,
immediately terminates his or her participation in this Plan. In such event, the
payroll deductions credited to the participant's account will be returned to him
or her or, in the case of his or her death, to his or her legal representative,
without interest. For purposes of this Section 12, an employee will not be
deemed to have terminated employment or failed to remain in the continuous
employ of the Company or of a Participating Subsidiary in the case of sick
leave, military leave, or any other leave of absence approved by the Board;
provided that such leave is for a period of not more than ninety (90) days or
--------
reemployment upon the expiration of such leave is guaranteed by contract or
statute.

     13.  Return of Payroll Deductions. In the event a participant's interest in
this Plan is terminated by withdrawal, termination of employment or otherwise,
or in the event this Plan is terminated by the Board, the Company shall deliver
to the participant all payroll deductions credited to such participant's
account. No interest shall accrue on the payroll deductions of a participant in
this Plan.


                                       5

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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


     14.  Capital Changes. Subject to any required action by the stockholders of
the Company, the number and type of shares of Common Stock covered by each
option under this Plan which has not yet been exercised and the number and type
of shares of Common Stock which have been authorized for issuance under this
Plan but have not yet been placed under option (collectively, the "Reserves"),
as well as the price per share of Common Stock covered by each option under this
Plan which has not yet been exercised, shall be proportionately adjusted for any
increase or decrease in the number of issued and outstanding shares of Common
Stock of the Company resulting from a stock split or the payment of a stock
dividend (but only on the Common Stock), any other increase or decrease in the
number of issued and outstanding shares of Common Stock effected without receipt
of any consideration by the Company or other change in the corporate structure
or capitalization affecting the Company's present Common Stock; 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 Committee, whose determination shall be final,
binding and conclusive. Except as expressly provided herein, no issue 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.

          In the event of the proposed dissolution or liquidation of the
Company, the Offering Period will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Committee. The Committee may, in the exercise of its sole discretion in such
instances, declare that this Plan shall terminate as of a date fixed by the
Committee and give each participant the right to purchase shares under this Plan
prior to such termination. In the event of (i) a merger or consolidation in
which the Company is not the surviving corporation (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings and the options under this Plan are assumed, converted or replaced by
the successor corporation, which assumption will be binding on all
participants), (ii) a merger in which the Company is the surviving corporation
but after which the stockholders of the Company immediately prior to such merger
(other than any stockholder that merges, or which owns or controls another
corporation that merges, with the Company in such merger) cease to own their
shares or other equity interest in the Company, (iii) the sale of all or
substantially all of the assets of the Company or (iv) the acquisition, sale, or
transfer of more than 50% of the outstanding shares of the Company by tender
offer or similar transaction, the Plan will continue with regard to Offering
Periods that commenced prior to the closing of the proposed transaction and
shares will be purchased based on the Fair Market Value of the surviving
corporation's stock on each Purchase Date, unless otherwise provided by the
Committee.

          The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event that
the Company effects one or more reorganizations, recapitalizations, rights
offerings or other increases or reductions of shares of its outstanding Common
Stock, or in the event of the Company being consolidated with or merged into any
other corporation.

     15.  Nonassignability. 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 this 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 22 below) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be void and
without effect.

     16.  Reports. Individual accounts will be maintained for each participant
in this Plan. Each participant shall receive promptly after the end of each
Purchase Period a report of his or her account setting forth the total payroll
deductions accumulated, the number of shares purchased, the per share price
thereof and the remaining cash balance, if any, carried forward to the next
Purchase Period or Offering Period, as the case may be.

     17.  Notice of Disposition. Each participant shall notify the Company in
writing if the participant disposes of any of the shares purchased in any
Offering Period pursuant to this Plan if such disposition occurs within two (2)
years from the Offering Date or within one (1) year from the Purchase Date on
which such shares were purchased (the "Notice Period"). The Company may, at any
time during the Notice Period, place a legend or


                                       6

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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


legends on any certificate representing shares acquired pursuant to this Plan
requesting the Company's transfer agent to notify the Company of any transfer of
the shares. The obligation of the participant to provide such notice shall
continue notwithstanding the placement of any such legend on the certificates.

     18.  No Rights to Continued Employment. Neither this Plan nor the grant of
any option hereunder shall confer any right on any employee to remain in the
employ of the Company or any Participating Subsidiary, or restrict the right of
the Company or any Participating Subsidiary to terminate such employee's
employment.

     19.  Equal Rights And Privileges. All eligible employees shall have equal
rights and privileges with respect to this Plan so that this Plan qualifies as
an "employee stock purchase plan" within the meaning of Section 423 or any
successor provision of the Code and the related regulations. Any provision of
this Plan which is inconsistent with Section 423 or any successor provision of
the Code shall, without further act or amendment by the Company, the Committee
or the Board, be reformed to comply with the requirements of Section 423. This
Section 19 shall take precedence over all other provisions in this Plan.

     20.  Notices. All notices or other communications by a participant to the
Company under or in connection with this Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.

     21.  Term; Stockholder Approval. After this Plan is adopted by the Board,
this Plan will become effective on the First Offering Date (as defined above).
This Plan shall be approved by the stockholders of the Company, in any manner
permitted by applicable corporate law, within twelve (12) months before or after
the date this Plan is adopted by the Board. No purchase of shares pursuant to
this Plan shall occur prior to such stockholder approval. This Plan shall
continue until the earlier to occur of (a) termination of this Plan by the Board
(which termination may be effected by the Board at any time), (b) issuance of
all of the shares of Common Stock reserved for issuance under this Plan, or (c)
ten (10) years from the adoption of this Plan by the Board.

     22.  Designation of Beneficiary.

          (a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
this Plan in the event of such participant's death subsequent to the end of an
Purchase Period but prior to delivery to him of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under this Plan in the event
of such participant's death prior to a Purchase Date.

          (b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under this Plan who is living at
the time of such participant's death, the Company shall deliver such shares or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares or cash to the
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.

     23.  Conditions Upon Issuance of Shares; Limitation on Sale 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, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange or automated quotation system 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.

     24.  Applicable Law. The Plan shall be governed by the substantive laws
(excluding the conflict of laws rules) of the State of California.


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                                                    Netscreen Technologies, Inc.
                                               2001 Employee Stock Purchase Plan


     25.  Amendment or Termination of this Plan. The Board may at any time
amend, terminate or extend the term of this Plan, except that any such
termination cannot affect options previously granted under this Plan, nor may
any amendment make any change in an option previously granted which would
adversely affect the right of any participant, nor may any amendment be made
without approval of the stockholders of the Company obtained in accordance with
Section 21 above within twelve (12) months of the adoption of such amendment (or
earlier if required by Section 21) if such amendment would:

          (a) increase the number of shares that may be issued under this Plan;
or

          (b) change the designation of the employees (or class of employees)
eligible for participation in this Plan.

          Notwithstanding the foregoing, the Board may make such amendments to
the Plan as the Board determines to be advisable, if the continuation of the
Plan or any Offering Period would result in financial accounting treatment for
the Plan that is different from the financial accounting treatment in effect on
the date this Plan is adopted by the Board.


                                       8