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Exhibit 10.4
AUSPEX SYSTEMS, INC.
EMPLOYEE/DIRECTOR STOCK OPTION AGREEMENT
AS AMENDED APRIL 18, 2000
1. NOTICE OF STOCK OPTION XXXXX
Xxxx X. Xxxxx
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Optionee
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of this Option Agreement, as follows:
Date of Grant February 14, 2000
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Vesting Commencement Date February 15, 2000
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Exercise Price Per Share 9.4375
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Total Number of Shares Granted 2,400,000
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Total Exercise Price $22,650,000
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Term/Expiration Date February 14, 2005
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Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
1/12 of the options subject to this grant shall vest and become exercisable
at the end of each one month period after the Vesting Commencement Date,
provided that Optionee's status as an employee or director of the Company
has not terminated prior to any such date.
Notwithstanding the foregoing, this option shall vest and become fully
exercisable upon a Change of Control or if Optionee's employment with the
Company is terminated without Cause.
For the purpose of this section a "Change of Control" shall be deemed to
have occurred if: (i) the Company sells or otherwise disposes of all or
substantially all of its assets; (ii) there is a merger or consolidation of the
Company with any other corporation or corporations, provided that the
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shareholders of the Company, as a group, do not hold, immediately after such
event, more than 50% of the voting power of the surviving or successor
corporation as a result of their shareholdings immediately prior to such event;
or (iii) a person or entity, including any "person" as such term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), becomes the "beneficial owner" (as defined in the Exchange Act)
of Common Stock of the Company representing 50% or more of the combined voting
power of the voting securities of the Company.
For the purpose of this section, "Cause" means (i) the failure by Optionee
to substantially perform his material duties after a specific written demand for
substantial performance is delivered to Optionee by the Board of Directors (ii)
the failure (in material respect) by Optionee to follow reasonable policies or
directives established by the Board of Directors after written notice to
Optionee that Optionee is not following such policies or directives, (iii) bad
faith conduct that is materially detrimental to the Company, or (iv) the
conviction of Optionee of a felony.
Termination Period:
This Option may be exercised for one year after termination of Optionee's
status as an employee or director of the Company, or such longer period as may
be applicable upon death or Disability of Optionee as provided below, but in no
event later than the Term/Expiration Date as provided above.
AGREEMENT
1. Grant of Option. Auspex Systems, Inc., a Delaware corporation (the
"COMPANY"), hereby grants to the Optionee named in the Notice of Grant (the
"OPTIONEE"), an option (the "OPTION") to purchase a total number of shares of
Common Stock (the "SHARES") set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the "EXERCISE PRICE").
2. Exercise of Option. This Option shall be exercisable during its term
in accordance with the Exercise Schedule set out in the Notice of Grant and as
follows:
(i) Right to Exercise.
(a) This Option may not be exercised for a fraction of a share.
(b) In the event of Optionee's death, disability or other
termination of employment, the exercisability of the Option is governed by
Sections 6, 7 and 8 below, subject to the limitation contained in subsection
2(i)(c).
(c) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.
(ii) Method of Exercise. This Option shall be exercisable by written
notice (in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of
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Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such shares of Common Stock as may be required by the Company. Such written
notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant provisions
of law and the requirements of any stock exchange upon which the Shares may then
be listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Registration of Shares. The Company shall register the shares issuable
upon exercise of this Option on a Form S-8 Registration Statement within ninety
(90) days after the grant of this Option.
4. Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(i) cash; or
(ii) check; or
(iii) surrender of other shares of Common Stock of the Company which
(A) in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a fair market value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Company and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price.
5. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board. As a condition to the exercise of this
Option, the Company may require Optionee to make any representation and warranty
to the Company as may be required by any applicable law or regulation.
6. Termination of Relationship. In the event of termination of Optionee's
continuous status as an employee or director of the Company, Optionee may, to
the extent otherwise so entitled at the date of such termination (the
"TERMINATION DATE"), exercise this Option during the
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Termination Period set out in the Notice of Grant. To the extent that Optionee
was not entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's continuous status as an
employee or director of the Company as a result of total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within twelve (12) months from the date of termination of employment (but in no
event later than the date of expiration of the term of this Option as set forth
in Section 10 below), exercise the Option to the extent otherwise so entitled at
the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate.
8. Death of Optionee. In the event of termination of Optionee's
continuous status as an employee or director of the Company as a result of the
death of Optionee, the Option may be exercised at any time within twelve (12)
months following the date of death (but in no event later than the date of
expiration of the term of this Option as set forth in Section 10 below), by
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance, or by Optionee's legal representative on behalf of
Optionee, but only to the extent the Optionee could exercise the Option at the
date of death.
9. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him or by Optionee's
legal representative on behalf of Optionee. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.
10. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Option.
11. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a nonstatutory Option, he or she will recognize income for tax
purposes in an amount equal to the excess of the then fair market value of the
Shares over the exercise price. However, the timing of this income recognition
may be deferred for up to six months if Optionee is subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). If the
Optionee is an employee, the Company will be required to withhold from
Optionee's compensation, or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income.
Additionally, the Optionee may at some point be required to satisfy tax
withholding obligations with respect to the disqualifying disposition of an
Incentive Stock Option. The Optionee shall satisfy his or her tax withholding
obligation arising upon the exercise of this Option out of Optionee's
compensation or by payment to the Company.
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12. Tax Consequences. Set forth below is a brief summary as of the date of
this Option of some of the federal and California tax consequences of exercise
of this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(i) Exercise of Nonstatutory Stock Option. There may be a regular
federal income tax liability and California income tax liability upon the
exercise of the Option. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the fair market value of the Shares on the date of exercise over the
Exercise Price. If Optionee is an employee, the Company will be required to
withhold from Optionee's compensation or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
(ii) Disposition of Shares. In the case of an NSO, if Shares are held
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal and California income tax
purposes.
13. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.
(i) Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
this Option, as well as the Exercise Price, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company. The 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 Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance 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 this Option.
(ii) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Company shall notify Optionee as
soon as practicable prior to the effective date of such proposed transaction.
Optionee shall have the right to exercise this Option until fifteen (15) days
prior to such transaction as to all of the Shares covered hereby, including
Shares as to which the Option would not otherwise be exercisable. To the extent
it has not been previously exercised, this Option will terminate immediately
prior to the consummation of such proposed action.
AUSPEX SYSTEMS, INC.
a Delaware corporation
By: /s/ R. Xxxxxxx Xxxxxxx
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Title: Director
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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE OR DIRECTOR OF THE
COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT CONFERS UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF STATUS AS AN EMPLOYEE OR DIRECTOR OF THE COMPANY, NOR SHALL IT
INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS
STATUS AS AN EMPLOYEE OR DIRECTOR.
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Company upon any questions arising under this Option.
Dated: May 10, 2000 /s/ Xxxx X. Xxxxx
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Optionee
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