Exhibit 10.38
BANYAN SYSTEMS INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
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1. Grant of Options. Banyan Systems Incorporated, a Massachusetts corporation
(the "Company"), hereby grants to Xxxxxxx X. Xxxxx (the "Optionee"), an
option to purchase an aggregate of 300,000 shares of Common Stock ("Common
Stock") of the Company at a price of $8.75 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 October 21, 1999. 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 an
incentive stock option within the meaning of Section 422 of the Code.
3. Exercise of Option and Provisions for Termination.
a. Vesting Schedule. Except as otherwise provided in this 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 300,000
multiplied by a fraction, the numerator of which is the number of full
months during which the Optionee has been employed by the Company from
the date of grant (but not more than 36) and the denominator of which
is 36; provided that that period from the commencement of this
agreement until October 31, 1999 shall be considered a full month and
the number of additional shares as to which this option shall become
exercisable upon completion of the 36th month of this agreement shall
be 8,310.
b. Change in Control. Upon the occurrence of a Change in Control, 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 to
continuation and/or acceleration in accordance with the provisions of
Section 5 of the Employment Agreement.
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d. Exercise Procedure. Subject to the conditions set forth in this
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 therefore and accompanied by payment in full in accordance
with Section 4.
e. Continuous Employment Required. Except as otherwise provided in 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 therefore 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 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 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 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 Optionee 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 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
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"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 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.
a. Method of Payment. Payment of the purchase price for shares 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
Payment of Purchase Price. For the purposes hereof, the fair 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
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.
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d. Restrictions on Use of Option Stock. Notwithstanding the 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 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
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 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 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 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
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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 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 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.
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12. Miscellaneous.
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/ Xxxxxxx X. Xxxxxxxxx
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Xxxxxxx X. Xxxxxxxxx
Senior Vice President and
Chief Financial Officer
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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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Xxxxxxx X. Xxxxx
Address:
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