As of June 30, 2019, the Company has the following share-based compensation plans:

The 2013 Equity Incentive Plan (the “2013 Plan”) was approved by stockholders on November 20, 2013. The 2013 Plan replaced the 2005 Equity Incentive Plan (the “2005 Plan”). Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, and other share-based or cash-based awards to employees and consultants. The 2013 Plan also authorizes the grant of awards of stock options, stock appreciation rights, restricted stock and restricted stock units to non-employee members of the Board of Directors and deferred compensation awards to officers, directors and certain management or highly compensated employees. The 2013 Plan authorized the issuance of 9.0 million shares of the Company’s common stock. In addition, up to 12.7 million shares subject to stock options and awards available for issuance under the 2005 Plan may be transferred to the 2013 Stock Plan and would be added to the number of shares available for future grant under the 2013 Plan. The 2013 Plan includes provisions upon the granting of certain awards defined by the 2013 Plan as Full Value Awards in which the shares available for grant under the 2013 Plan are decremented 1.5 shares for each such award granted. Upon forfeiture or cancellation of unvested awards, the same ratio is applied in returning shares to the 2013 Plan for future issuance as was applied upon granting. During the fiscal years ended June 30, 2018 an additional 9.0 million shares were authorized and made available for grant under the 2013 Plan. As of June 30, 2019, total options and awards to acquire 9.7 million shares were outstanding under the 2013 Plan and 8.5 million shares are available for grant under the 2013 Plan. Options granted under this plan have a contractual term of seven years.

Pursuant to the acquisition of Enterasys on October 31, 2013, the Company assumed the Enterasys 2013 Stock Plan (the “Enterasys Plan”). As of June 30, 2019, total options to acquire 0.7 million shares were outstanding under the Enterasys Plan. Options granted under this plan have a contractual term of seven years. No future grants may be made from the Enterasys Plan.

The 2005 Plan was adopted by the Company’s Board of Directors on October 20, 2005, and approved by stockholders on December 2, 2005. The 2005 Plan replaced the Amended 1996 Stock Option Plan (the “1996 Plan”), the 2000 Non-statutory Stock Option Plan and the 2001 Non-statutory Stock Option Plan. The 2005 Plan includes provisions upon the granting of certain awards defined by the 2005 Plan as Full Value Awards in which the shares available for grant under the 2005 Plan are decremented 1.5 shares for each such award granted. Upon forfeiture or cancellation of unvested awards, the same ratio is applied in returning shares to the 2005 Plan for future issuance as was applied upon granting. Effective November 20, 2013, the 2005 Plan was replaced with the 2013 Plan, and, as of June 30, 2019, total options to acquire 0.1 million shares were outstanding under the 2005 Plan. No future grants may be made from the 2005 Plan, however, outstanding options and awards forfeited or canceled were allowed to be transferred to the 2013 Plan until December 2, 2015, at which time, no further shares may be transferred. A total of 6.6 million shares were transferred to the 2013 Plan.

	June 30, 2019		June 30, 2018
2013 Equity Incentive Plan shares available for grant		8,462		9,957
Employee stock options and awards outstanding		10,455		12,060
2014 Employee Stock Purchase Plan		10,085		5,365
Total shares reserved for issuance		29,002		27,382

The following table summarizes stock option activity under all plans (shares and intrinsic value in thousands):

	Number of Shares			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Options outstanding at June 30, 2018		2,193		$	3.88		2.90	$	8,996
Granted		852			6.40
Exercised		(252	)		3.84
Cancelled		(74	)		6.01
Options outstanding at June 30, 2019		2,719		$	4.61		3.26	$	5,070
Vested and expected to vest at June 30, 2019		2,719		$	4.61		3.26	$	5,070
Exercisable at June 30, 2019		1,939		$	3.88		2.09	$	5,016

The total intrinsic value of options exercised in fiscal years 2019, 2018 and 2017 was $0.8 million, $6.3 million and $5.7 million, respectively.

The weighted average estimated fair value of stock options granted in fiscal year 2019 was $2.62 per share. There were no stock options granted in fiscal 2018 or 2017. As of June 30, 2019, there was $1.0 million of total unrecognized compensation cost related to unvested stock options that will be fully recognized in fiscal 2020.

During the first quarter of fiscal 2019, the Company granted 851,700 Performance Stock Options (“PSOs”) to certain officers and executive vice presidents that will vest if the Company’s stock price achieves a price hurdle of $10.00 during the three-year performance period from August 29, 2018 through August 31, 2021. The price hurdle will be deemed to have been achieved if, at any time over the performance period, the Company’s stock maintains a price of $10.00 for 30 consecutive days. If the price hurdle is achieved, the PSOs will vest as follows:

If the price hurdle is met before or on August 31, 2019, one-third of the PSOs will vest on August 31, 2019 and the remainder will vest quarterly over two years.

If the price hurdle is met after August 31, 2019, a number of the PSOs will vest (ratably calculated based upon the time elapsed between August 31, 2018 and the date the hurdle is met) and the remainder will vest quarterly through August 31, 2021. The grant date fair value was $2.62.

Stock awards may be granted under the 2013 Plan on terms approved by the Compensation Committee of the Board of Directors. Stock awards generally provide for the issuance of restricted stock units (“RSUs”), including performance or market-based restricted stock units (“PSUs”) which vest over a fixed period of time or based upon the satisfaction of certain performance criteria. The Company recognizes compensation expense on the awards over the vesting period based on the award’s intrinsic value as of the date of grant.

The following table summarizes stock award activity (shares and market value in thousands):

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Fair Market Value
Non-vested stock awards outstanding at June 30, 2018		7,764		$	8.60
Granted		4,698			6.39
Released		(3,637	)		7.72
Cancelled		(1,089	)		8.58
Non-vested stock awards outstanding at June 30, 2019		7,736		$	7.67	$	49,700
Vested and expected to vest at June 30, 2019		7,406		$	7.53	$	47,568

The aggregate fair value, as of the respective vesting dates of RSUs vested during the years ended 2019, 2018 and 2017 was $30.0 million, $51.2 million and $9.1 million, respectively.

During fiscal 2019, the Company approved the grant of 0.9 million stock awards to its named executive officers and directors. Of this amount, 0.2 million of these stock awards were in the form of PSUs and 0.7 million of the stock awards granted were in the form of service-based RSUs. In addition, approximately 0.4 million PSU’s were also granted to other vice president level employees for a total to all employees of 0.6 million PSU’s, all of which had a grant date fair value of $6.40. The RSUs vest from the original grant date as to one-third (1/3) on the one-year anniversary and one-twelfth (1/12) each quarter thereafter, subject to continued service to the Company.

The PSUs referenced in the preceding paragraph will be considered earned once the Company’s U.S. GAAP earnings aggregates at least $0.20 per share over two consecutive quarters (the “2019 Performance Threshold”). Upon satisfying the 2019 Performance Threshold, the PSUs will vest with respect to the same number of RSUs that have vested which were granted on the same date and thereafter, will vest on the same schedule as the RSUs, subject to continued service to the Company. If the 2019 Performance Threshold is not met by the third anniversary of the grant date, the award is canceled. In addition, the 2019 Performance Threshold will be deemed satisfied upon the closing of a Change in Control (within the meaning of the Company’s 2013 Equity Incentive Plan) in the event the per share consideration received by the Company’s stockholders equals or exceeds $10.00 per share. During the year ended June 30, 2019, none of the PSU grants referenced above achieved their 2019 Performance Threshold.

During fiscal 2018, the Company approved the grant of 1.2 million stock awards to its vice president level employees or above (“execs”), including 0.6 million stock awards to its named executive officers. Fifty percent (50%) of the stock awards granted to the execs, except the chief executive officer, were in the form of PSUs and fifty percent (50%) of the stock awards granted were in the form of service-based RSUs. The Company’s chief executive officer received sixty percent (60%) of his stock award grant in the form of PSUs, while forty percent (40%) of this award were in the form of RSUs. The RSUs vest from the original grant date as to one-third (1/3) on the one-year anniversary and one-twelfth (1/12) each quarter thereafter, subject to continued service to the Company.

The PSUs referenced in the preceding paragraph will be considered earned originally once the Company’s U.S. GAAP earnings aggregates at least $0.32 per share over two consecutive quarters (the Performance Threshold”). During the third quarter of fiscal 2019, the compensation committee of the Board of Directors modified the 2018 Performance Threshold of $0.32 earnings per share over two consecutive quarters for PSUs issued in fiscal 2018, to $0.20 earnings per share over two consecutive quarters. Upon satisfying the 2018 Performance Threshold, the PSUs will vest with respect to the same number of RSUs that have vested which were granted on the same date and thereafter, will vest on the same schedule as the RSUs, subject to continued service to the Company. If the 2018 Performance Threshold is not met by the third anniversary of the grant date, the award is canceled. In addition, the 2018 Performance Threshold will be deemed satisfied upon the closing of a Change in Control (within the meaning of the Company’s 2013 Equity Incentive Plan) in the event the per share consideration received by the Company’s stockholders equals or exceeds $16.00 per share; or, in the event the consideration is less than $16.00 per share, the number of PSUs deemed to be earned will be determined by multiplying the number of PSUs by the ratio of the aggregate earnings per share of the last two quarters prior to the Change of Control to the $0.32 Performance Threshold. The grant date fair value per share of the PSUs referenced above was $10.90. During the year ended June 30, 2019, none of the PSU grants referenced above achieved their 2018 Performance Threshold.

During fiscal 2018, the Company approved the grant of 0.1 million stock awards with market-based vesting criteria to certain execs with grant date fair values per share ranging from $10.61 to $12.19 determined by using the Monte-Carlo simulation model.

During fiscal 2017, the Company approved the grant of 1.5 million stock awards to its execs, including 0.7 million stock awards to its named executive officers. Fifty percent (50%) of the stock awards granted to the execs were in the form of PSUs and fifty percent (50%) of the stock awards granted were in the form of RSUs. The RSUs vest from the original grant date as to one-third (1/3) on the one-year anniversary and one-twelfth (1/12) each quarter thereafter, subject to continued service to the Company.

The PSUs referenced in the preceding paragraph were considered earned once the Company’s stock price equaled or exceeded $5.00 per share for 30 consecutive trading days after January 1, 2017 (the “2017 Performance Threshold”). The grant date fair values per share of the PSUs were determined by using the Monte-Carlo simulation model, ranging $3.02 to $3.09. The assumptions used in the Monte-Carlo simulation includes the expected volatility of 56%, risk-free rate of 0.9%, no expected divided yield, expected term of 3.0 years and possible future stock prices over the performance period based on historical stock and market prices. The assumptions used in the Monte-Carlo simulation includes the risk-free rate, expected divided yield, expected term, and possible future stock prices over the performance period based on historical stock and market prices. Once the 2017 Performance Threshold goal was attainted, the PSUs began to vest on the same schedule as the RSUs that were granted at the same time, subject to continued service to the Company. During the year ended June 30, 2017, all of the PSUs referenced above achieved their 2017 Performance Threshold and as such, began vesting and will be released on the schedule as noted, subject to continued service to the Company.

During fiscal 2017, the Company approved grants of 1.4 million stock awards in the form of PSUs to certain execs, including 0.9 million shares to its Executive Officers. Fifty percent (50%) of the PSUs are earned based on the Company’s stock price appreciation (the “Stock Price PSUs”) and fifty percent (50%) of the PSUs are earned based on the Company’s total stockholder return relative to the S&P Small Cap 600 Capped Information Technology Index (the “TSR PSUs”).

The Stock Price PSUs represent the right to receive a number of shares of common stock up to one and one-third of the target number of Stock Price PSUs. They are earned, and vest as follows based on the average adjusted closing stock price of the Company’s common stock for the 90 days ending as of May 4, 2020, subject to the grantees’ continued service through the certification of performance:

No PSUs are earned if such average adjusted closing stock price is less than $8.96.

The TSR PSUs represent the right to receive a number of shares of common stock up to 130% of the target number of TSR PSUs. They are earned, and vest as follows based on the positive percentage point difference between the Company’s total stockholder return and the total stockholder return for the S&P Small Cap 600 Capped Information Technology Index over the performance period from May 4, 2017 to May 4, 2020, subject to the grantees’ continued service through the certification of performance:

Level	Percentage point difference between Company TSR and index TSR			Shares earned
Threshold		0	%		0	%
Target		+ 25	%		100	%
Maximum		+ 35	%		130	%

Total stockholder return is calculated based on the 90-day average stock price at the beginning and end of the performance period. Linear interpolation is generally used to determine the number of shares earned for achievement between threshold and target levels and between target and maximum levels. However, if the Company’s total stockholder return over the performance period is negative, the number of shares earned will be capped at 100% of the target number of TSR PSUs.

The grant date fair values per share of the Stock Price PSUs and the TSR PSUs were determined by using the Monte-Carlo simulation model, ranging $7.01 to $8.76, respectively. The assumptions used in the Monte-Carlo simulation includes the expected volatility of 54%, risk-free rate of 1.5%, no expected divided yield, expected term of 3.0 years and possible future stock prices over the performance period based on historical stock and market prices.

For the fiscal years ended 2019, 2018 and 2017, the Company withheld an aggregate of 1.3 million shares, 1.0 million shares and 0.4 million shares, respectively, upon the vesting of RSUs, based upon the closing share price on the vesting date as settlement of the employees’ minimum statutory obligation for the applicable income and other employment taxes.

For fiscal years ended 2019, 2018 and 2017, the Company remitted cash of $8.4 million, $11.3 million and $2.0 million, respectively, to the appropriate taxing authorities on behalf of the employees. The payment of the taxes by the Company reduced the number of shares that would have been issued on the vesting date and was recorded as a reduction of additional paid-in capital in the consolidated balance sheets and as a reduction of “Proceeds from issuance of common stock” in the financing activity within the consolidated statements of cash flows.

As of June 30, 2019, there were $29.1 million in unrecognized compensation costs related to non-vested stock awards. This cost is expected to be recognized over a weighted-average period of 1.6 years

The following table summarizes PSU’s with market or performance based conditions granted and the number of awards that have satisfied the relevant market or performance criteria in each period (in thousands):

	Fiscal year 2019		Fiscal year 2018		Fiscal year 2017
Performance awards granted		635		714		2,106
Performance awards earned		342		566		839

In August 27, 2014, the Board of Directors approved the adoption of Extreme Network’s 2014 Employee Stock Purchase Plan (the “2014 ESPP”). On November 12, 2014, the stockholders approved the 2014 ESPP with the maximum number of shares of common stock that may be issued under the plan of 12.0 million shares. The Board of Directors unanimously approved an amendment to the 2014 ESPP to increase the maximum number of shares that will be available for sale by 7,500,000 shares which was ratified by the stockholders of the Company at the annual meeting of stockholders held on November 8, 2018. The 2014 ESPP replaced the 1999 Employee Stock Purchase Plan. The 2014 ESPP allows eligible employees to acquire shares of the Company’s common stock through periodic payroll deductions of up to 15% of total compensation, subject to the terms of the specific offering periods outstanding. Each purchase period had a maximum duration of six months. The price at which the common stock may be purchased is 85% of the lesser of the fair market value of the Company’s common stock on the first day of the applicable offering period or on the last day of the respective purchase period. During fiscal 2018, the 2014 ESPP had offerings periods of either 6 months or 24 months, commonly referred to as “look back periods”. During the fiscal years ended June 30, 2019 and 2018 , there were 2.8 million and 2.4 million shares issued under the 2014 ESPP. As of June 30, 2019, there have been 9.4 million shares issued under the 2014 ESPP.

Effective with the offering period beginning on February 1, 2016, the Company amended the 2014 ESPP to increase the maximum shares issuable for each purchase period from 1.0 million shares to 1.5 million shares. Effective with the offering period beginning on August 1, 2016, the Company amended the 2014 ESPP so that all future offering periods are limited to six months and to make certain other changes to the 2014 ESPP including adding new contribution limits for each offering period. Existing open offering periods prior to the effective date of the changes were unaffected by the amendments to the 2014 ESPP.

Share-based compensation expense recognized in the financial statements by line item caption is as follows (in thousands):

	Year Ended
	June 30, 2019		June 30, 2018		June 30, 2017
Cost of product revenue	$	844	$	564	$	333
Cost of service revenue		1,639		1,131		589
Research and development		10,443		7,642		3,312
Sales and marketing		11,747		9,843		4,253
General and administrative		8,224		8,453		4,146
Total share-based compensation expense	$	32,897	$	27,633	$	12,633

The amount of share-based compensation expense capitalized in inventory has been immaterial for each of the periods presented.

The Company uses the straight-line method for expense attribution other than the PSUs using the accelerated attribution method. Beginning in fiscal 2017, the Company no longer estimates forfeitures, but rather recognizes expense for those shares expected to vest and recognizes forfeitures when they occur. The Company’s estimated forfeiture rate in fiscal 2016 based on the Company’s historical forfeiture experience was 13% for non-executives and 19% for executives.

The fair value of each stock option grant under the Company’s 2013 Plan and 2005 Plan is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free rate is based upon the estimated life of the option and is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on a blended rate of the implied volatilities from traded options on the Company’s stock and historical volatility on the Company’s stock.

The Company uses the simplified method to estimate the life of options and awards. The Company uses the simplified method for all options and awards for all periods as it does not believe that historical exercise data provides a reasonable basis upon which to estimate the expected term.

The fair value of each RSU grant with performance-based vesting criteria (“PSUs”) under the 2013 Plan is estimated on the date of grant using the Monte-Carlo simulation model to determine the fair value and the derived service period of stock awards with market conditions, on the date of the grant.

The fair value of each share purchase option under the Company's 2014 ESPP is estimated on the date of grant using the Black-Scholes-Merton option valuation model with the weighted average assumptions noted in the following table. The expected term of the 2014 ESPP. The risk-free rate is based upon the estimated life and is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility on the Company’s stock.

The weighted-average estimated per share fair value of shares purchased under the 2014 ESPP in fiscal years 2019, 2018 and 2017, was $2.71, $3.25 and $1.24, respectively.

	Employee Stock Purchase Plan
	Year Ended
	June 30, 2019			June 30, 2018			June 30, 2017
Expected life	0.5 years			0.5 years			0.5 years
Risk-free interest rate	2.22%-2.46%			1.64%-1.15%				0.40	%
Volatility		70	%		42	%	46%-37%
Dividend yield		—	%		—	%		—	%

The Company provides a tax-qualified employee savings and retirement plan, commonly known as a 401(k) plan (the “Plan”), which covers the Company’s eligible employees. Pursuant to the Plan, employees may elect to reduce their current compensation up to the IRS annual contribution limit of $19,000 for calendar year 2019. Employees age 50 or over may elect to contribute an additional $6,000. The amount contributed to the Plan is on a pre-tax basis.

The Company provides for discretionary matching contributions as determined by the Board of Directors for each calendar year. All matching contributions vest immediately. In addition, the Plan provides for discretionary contributions as determined by the Board of Directors each year. The program during fiscal 2019 is to match $0.50 for every Dollar contributed by the employee up to the first 2.5% of pay. The Company’s matching contributions to the Plan totaled $4.2 million, $3.3 million and $1.4 million, for fiscal years ended 2019, 2018 and 2017, respectively. No discretionary contributions were made in fiscal years ended 2019, 2018 and 2017.