EXHIBIT 10.5
BANYAN SYSTEMS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
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1. Grant of Options. Banyan Systems Incorporated, a Massachusetts
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corporation (the "Company"), hereby grants to Xxxxxxx X. Xxxxx (the
"Optionee"), an option to purchase an aggregate of 1,000,000 shares of
Common Stock ("Common Stock") of the Company at a price of $4.00 per
share, purchasable as set forth in and subject to the terms and
conditions of this option. The date of grant of this option is
February 4, 1997. Except where the context otherwise requires, the
term "Company" shall include the parent and all present and future
subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time
to time (the "Code").
2. Non-Qualified Stock Option. This option is not intended to qualify as
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an incentive stock option within the meaning of Section 422 of the
Code.
3. Exercise of Option and Provisions for Termination.
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a. Vesting Schedule. Except as otherwise provided in this
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Agreement, this option may be exercised prior to the tenth
anniversary of the date of grant (hereinafter the "Expiration
Date"), in whole or in part, from time to time, as to an
aggregate number of shares equal to 1,000,000 multiplied by a
fraction, the numerator of which is the number of full months
during which the Optionee has been employed by the Company (but
not more than 48) and the denominator of which is 48; provided
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that that period from the commencement of employment until
February 28, 1997 shall be considered a full month and the number
of additional shares as to which this option shall become
exercisable upon completion of the 48th month of employment shall
be 20,849.
b. Change in Control. Upon the occurrence of a Change in Control,
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as defined in the Employment Agreement of even date herewith
between the Company and the Employee (the "Employment
Agreement"), this option shall become vested and exercisable as
to 50% of the number of shares covered thereby that would not
otherwise then be vested and
exercisable (in reverse order of vesting), as provided for in
Section 3.3(b) of the Employment Agreement.
c. Certain Events. The vesting of this option shall also be subject
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to continuation and/or acceleration in accordance with the
provisions of Section 5 of the Employment Agreement.
d. Exercise Procedure. Subject to the conditions set forth in this
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Agreement, this option shall be exercised by the Optionee's
delivery of written notice of exercise to the Treasurer of the
Company, specifying the number of shares to be purchased and the
purchase price to be paid therefor and accompanied by payment in
full in accordance with Section 4.
e. Continuous Employment Required. Except as otherwise provided in
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this Section 3, this option may not be exercised unless Optionee,
at the time he or she exercises this option, is, and has been at
all times since the date of grant of this option, an employee of
the Company. For all purposes of this option, (i) "employment"
shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations or any successor
regulations, and (ii) if this option shall be assumed or a new
option substituted therefor in a transaction to which Section
424(a) of the Code applies, employment by such assuming or
substituting corporation (hereinafter called the "Successor
Corporation") shall be considered for all purposes of this option
to be employment by the Company.
f. Exercise Period Upon Termination of Employment. If the Optionee
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ceases to be employed by the Company for any reason, then, except
as provided in paragraphs (g) and (h) below, the right to
exercise this option shall terminate three months after the later
of cessation of employment or cessation of vesting (but in no
event after the Expiration Date), provided that this option shall
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be exercisable only to the extent that the Optionee was entitled
to exercise this option on the date of such cessation. The
Company's obligation to deliver shares upon the exercise of this
option shall be subject to the satisfaction of all applicable
federal,
state and local income and employment tax withholding
requirements, arising by reason of this option being treated as
a non-statutory option or otherwise.
g. Exercise Period Upon Death or Disability. If the Optionee dies
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or becomes disabled (within the meaning of Section 22(e)(3) of
the Code) prior to the Expiration Date while he is an employee of
the Company, or if the Optionee dies within three months after
the ptionee ceases to be an employee of the Company (other than
as a result of a discharge for "cause" as specified in paragraph
(h) below), this option shall become exercisable, within the
period of one year following the date of death or disability of
the Optionee (but in no event after the Expiration Date), by the
Optionee or by the person to whom this option is transferred by
will or the laws of descent and distribution, provided that this
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option shall be exercisable only to the extent that this option
was exercisable by the Optionee on the date of his death or
disability. Except as otherwise indicated by the context, the
term "Optionee", as used in this option, shall be deemed to
include the estate of the Optionee or any person who acquires the
right to exercise this option by bequest or inheritance or
otherwise by reason of the death of the Optionee.
h. Discharge for Cause. If the Optionee, prior to the Expiration
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Date, ceases his employment with the Company because he is
discharged for "cause" (as defined in the Employment Agreement),
the right to exercise this option shall terminate 30 days after
such cessation of employment.
4. Payment of Purchase Price.
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a. Method of Payment. Payment of the purchase price for shares
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purchased upon exercise of this option shall be made by delivery
of cash or check in the amount equal to the exercise price of
such options or, with the prior consent of the Company (which may
be withheld in its sole discretion), by (A) delivery of shares of
Common Stock owned by the Optionee for at least six months,
valued at their fair market value, as determined in (b) below,
(B) delivery of a promissory note of the Optionee to the Company
on terms determined by the Board, (C) delivery of an irrevocable
undertaking by a broker to deliver promptly to the Company
sufficient funds to pay the exercise price or delivery of
irrevocable instructions to a broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price, (D)
payment of such other lawful consideration as the Board may
determine, or (E) any combination of the foregoing.
b. Valuation of Shares or Other Non-Cash Consideration Tendered in
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Payment of Purchase Price. For the purposes hereof, the fair
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market value of any share of the Company's Common Stock or other
non-cash consideration which may be delivered to the Company in
exercise of this option shall be determined in good faith or in
the manner determined by the Board of Directors of the Company
from time to time.
c. Delivery of Shares Tendered in Payment of Purchase Price. If the
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Optionee exercises options by delivery of shares of Common stock
of the Company, the certificate or certificates representing the
shares of Common Stock of the Company to be delivered shall be
duly executed in blank by the Optionee or shall be accompanied by
a stock power duly executed in blank suitable for purposes of
transferring such shares to the Company. Fractional shares of
Common Stock of the Company will not be accepted in payment of
the purchase price of shares acquired upon exercise of this
option.
d. Restrictions on Use of Option Stock. Notwithstanding the
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foregoing, no shares of Common Stock of the Company may be
tendered in payment of the purchase price of shares purchased
upon exercise of this option if the shares to be so tendered were
acquired within six months before the date of such tender through
the exercise of this option or any other stock option or
restricted stock agreement.
5. Delivery of Shares; Compliance with Securities Laws, etc. The Company
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will not be obligated to deliver any shares of Common Stock or to
remove restriction from shares previously delivered (i) until all
conditions of the option have been satisfied or removed, (ii) until,
in the opinion of Company's counsel, all applicable federal and state
laws and regulations have been complied with, (iii) if the outstanding
Common Stock is at the time listed on any
stock exchange, until the shares to be delivered have been listed or
authorized to be listed on such exchange upon official notice of
notice of issuance, and (iv) until all other legal matters in
connection with the issuance and delivery of such shares have been
approved by the Company's counsel.
6. Non-transferability of Option. This option is personal and no rights
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granted hereunder may be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) nor
shall any such rights be subject to execution, attachment or similar
process, except that this option may be transferred (i) by will or the
laws of descent and distribution or (ii) pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code.
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or of such rights contrary to the provisions
hereof, or upon the levy of any attachment or similar process upon
this option or such rights, this option and such rights shall, at the
election of the Company, become null and void.
7. No Special Employment or Similar Rights. Nothing contained in this
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option shall be construed or deemed by any person under any
circumstances to bind the Company to continue the employment or other
relationship of Optionee with the Company for the period within which
this option may be exercised.
8. Rights as a Shareholder. The Optionee shall have no rights as a
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shareholder with respect to any shares which may be purchased by
exercise of this option (including, without limitation, any rights to
receive dividends or non-cash distributions with respect to such
shares) unless and until a certificate representing such shares is
duly issued and delivered to the Optionee. No adjustment shall be
made for dividends or other rights for which the record date is prior
to the date such stock certificate is issued.
9. Adjustment Provisions. In the event that the Board, in its sole
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discretion, determines that any stock dividend, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidate,
split-up, spin-off, combination or other similar transaction affects
the Common Stock such that an adjustment is required in order to
preserve the benefits or potential benefits intended to be made
available under the Plan, then the Board shall equitably adjust either
or both (i) the number and kind of shares subject to this
option, and (ii) the award, exercise or conversion price with respect
to the foregoing, and if considered appropriate, the Board may make
provision for a cash payment with respect to this option, provided
that the number of shares subject to this option shall always be a
whole number.
10. Mergers, Consolidation, Distributions, Liquidations, etc. Subject to
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the provisions of Section 3(b) above, in the event of a consolidation,
merger or other reorganization in which all of the outstanding shares
of Common Stock are exchanged for securities, cash or other property
of any other corporation or business entity (an "Acquisition") or in
the event of a liquidation of the Company, the Board of Directors of
the Company, or the board of directors of any corporation assuming the
obligations of the Company, may, in its discretion, take any one or
more of the following actions as to this option: (i) provide that this
option shall be assumed, or a substantially equivalent option shall be
substituted by the acquiring or succeeding corporation (or an
affiliate thereof) on such terms as the Board determines to be
appropriate, (ii) upon written notice to the Optionee, provide that if
unexercised, this option will terminate immediately prior to the
consummation of such transaction unless exercised by the Optionee
within a specific period following the date of such notice, (iii) in
the event of an Acquisition under the terms of which holders of the
Common Stock of the Company will receive upon consummation thereof a
cash payment for each share surrendered in the Acquisition (the
"Acquisition Price"), make or provide for a cash payment to the
Optionee equal to the difference between (A) the Acquisition Price
times the number of shares of Common Stock subject to outstanding
options (to the extent then exercisable at prices not in excess of the
Acquisition Price) and (B) the aggregate exercise price of all such
outstanding options in exchange for the termination of such options,
and (iv) provide that all or part of this option shall become
exercisable or realizable in full prior to the effective date of such
Acquisition.
11. Withholding Taxes. The Company's obligation to deliver shares upon
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the exercise of this option shall be subject to the Optionee's
satisfaction to all applicable federal, state and local income and
employment tax withholding requirements. The Optionee shall pay to
the Company, or make provision satisfactory to the Board for payment
of, any taxes required by law to be withheld in respect of options
under the Plan no later than the date of the event
creating the tax liability. In the Board's discretion, and subject to
such conditions as the Board may establish, such tax obligations may
be paid in whole or in part in shares of Common Stock, including
shares retained from the option creating the tax obligation, valued at
their fair market value. The Company may, to the extent permitted by
law, deduct any such tax obligations from any payment of any kind
otherwise due to the Optionee.
12. Miscellaneous.
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a. If any terms of this Option Agreement are contrary to or
otherwise conflict with the terms of the Employment Agreement,
the terms of the Employment Agreement shall control.
b. All notices under this option shall be mailed or delivered by
hand to the parties at their respective addresses set forth
beneath their names below or at such other address as may be
designated in writing by either of the parties to one another.
c. This option shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
BANYAN SYSTEMS INCORPORATED
BY: /s/ Xxxx X. Xxxxxx
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OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions hereof.
OPTIONEE: /s/ Xxxxxxx X. Xxxxx
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Address:
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