Exhibit 10.29
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED IN A TRANSACTION NOT
INVOLVING ANY PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
VISUAL NETWORKS, INC.
NONSTATUTORY STOCK OPTION GRANT AGREEMENT
This Grant Agreement (the "Agreement") is entered into this 28th day of
April, 2003, by and between VISUAL NETWORKS, INC., a Delaware corporation (the
"Company"), and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Optionee"), effective as of April 28,
2003 (the "Grant Date").
WHEREAS the Optionee and the Company are entering into an employment
agreement on even date herewith and the Optionee and the Company acknowledge and
agree that the issuance of the Option pursuant to this Agreement is an
inducement essential to the Optionee's entering into that employment agreement.
NOW, THEREFORE, in consideration of the premises, mutual covenants and
agreements herein, the Company and the Optionee agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee a
nonstatutory stock option to purchase from the Company, at a price of $1.21 per
share (the "Exercise Price"), Eight Hundred Eleven Thousand, One Hundred Fifty
(811,150) shares of Common Stock of the Company, $0.01 par value per share
("Common Stock"), subject to the provisions of this Agreement (the "Option").
The Option will expire at 5:00 p.m. Eastern Time on the last business day
preceding the tenth anniversary of the Grant Date (the "Expiration Date"),
unless fully exercised or terminated earlier.
2. Terminology.
(a) Except where the context otherwise requires, the term "Company"
as used herein includes Visual Networks, Inc. and its affiliates.
(b) This Agreement will be administered by the Compensation
Committee of the Board of Directors of the Company or by the full Board of
Directors in its discretion (each hereinafter referred to as the
"Administrator").
(c) The term "Change in Control" as used herein means:
(i) the acquisition (other than from the Company) in one or more
transactions by any Person, as defined in this Section 2(c), of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, as amended) of 50% or more of (A) the
then outstanding shares of the securities of the Company, or (B) the
combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the "Company
Voting Stock");
(ii) the closing of a sale or other conveyance of all or
substantially all of the assets of the Company; or
(iii) the effective time of any merger, share exchange,
consolidation, or other business combination involving the Company if
immediately after such transaction persons who hold a majority of the
outstanding voting securities entitled to vote generally in the election
of directors of the surviving entity (or the entity owning 100% of such
surviving entity) are not persons who, immediately prior to such
transaction, held the Company Voting Stock.
For purposes of this Section 2(c), a "Person" means any individual, entity or
group within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended, other than: employee benefit plans sponsored
or maintained by the Company and corporations controlled by the Company.
(d) The term "Fair Market Value" as used herein means, with respect
to a share of Common Stock for any purpose on a particular date, the value
determined by the Administrator in good faith. However, if the Common Stock is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934
(the "Exchange Act") and listed for trading on a national exchange or market,
"Fair Market Value" means, as applicable, (i) either the closing price or the
average of the high and low sale price on the relevant date, as determined in
the Administrator's discretion, quoted on the New York Stock Exchange, the
American Stock Exchange, or the Nasdaq National Market; (ii) the last sale price
on the relevant date quoted on the Nasdaq SmallCap Market; (iii) the average of
the high bid and low asked prices on the relevant date quoted on the Nasdaq OTC
Bulletin Board Service or by the National Quotation Bureau, Inc. or a comparable
service as determined in the Administrator's discretion; or (iv) if the Common
Stock is not quoted by any of the above, the average of the closing bid and
asked prices on the relevant date furnished by a professional market maker for
the Common Stock, or by such other source, selected by the Administrator. If no
public trading of the Common Stock occurs on the relevant date, then Fair Market
Value shall be determined as of the next preceding date on which trading of the
Common Stock does occur. For all purposes under this Agreement, the term
"relevant date" as used in this Section 2(c) means either the date as of which
Fair Market Value is to be determined or the next preceding date on which public
trading of the Common Stock occurs, as determined in the Administrator's
discretion.
3. Exercise of Option.
(a) Right to Exercise. Except as otherwise provided in this
Agreement or applicable law, this Option may be exercised as to its vested
portion at any time and from time to time, in whole or in part, on or before the
Expiration Date or earlier termination of the Option. In the event of the
Optionee's death, disability, or other termination of employment or service
relationship, the exercisability is governed by Section 4 below.
(b) Vesting. The Option will become vested over forty-eight (48)
months, as follows; provided, however, that the Optionee is in the continuous
employ of or in a service relationship with the Company from the Grant Date
through the applicable date upon which vesting is scheduled to occur:
(i) 25% of the Option shall be vested on April 28, 2004 (the
"Initial Vesting Date"), and
(ii) 2.083% of the Option shall become vested each month during the
thirty-six (36) month period following the Initial Vesting
Date, on the 28th day of each such month (rounded down to the
nearest whole share
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each month, except for the thirty-sixth month, in which case
vesting is rounded up to 100%).
Unless the Option has earlier terminated, vesting of the Option will be
accelerated so that the outstanding unvested portion of the Option will become
100% vested immediately before the occurrence of a Change in Control in the
Company.
(c) Exercise Procedure. In order to exercise the Option, the
following items must be delivered to the Secretary of the Company or his
delegate before the expiration or termination of the Option: (i) an exercise
notice, in such form as the Administrator may require from time to time,
specifying the number of shares to be purchased, and (ii) full payment of the
Exercise Price for such shares or properly executed, irrevocable instructions,
in such form as the Administrator may require from time to time, to effectuate a
broker-assisted cashless exercise, each in accordance with Section 3(d) of this
Agreement. An exercise will not be effective until all of the foregoing items
are received by the Secretary of the Company or his delegate. The Option may be
exercised only in multiples of whole shares and may not be exercised at any one
time as to fewer than ten (10) shares (or such lesser number of shares as to
which the Option is then exercisable). No fractional shares will be issued
pursuant to this Option.
(d) Method of Payment. Payment of the Exercise Price may be made by
any combination of the following methods:
(i) delivery of cash, certified or cashier's check, money order or
other cash equivalent acceptable to the Administrator in its discretion;
(ii) a broker-assisted cashless exercise in accordance with
Regulation T of the Board of Governors of the Federal Reserve System
through a brokerage firm approved by the Administrator and in accordance
with such rules and procedures as the Administrator may determine;
(iii) by tender (via actual delivery or attestation) to the Company
of other shares of Common Stock of the Company which have a Fair Market
Value on the date of tender equal to the Exercise Price, provided that
such shares have been owned by the Optionee for a period of at least six
months free of any substantial risk of forfeiture or were purchased on the
open market without assistance, direct or indirect, from the Company; or
(iv) by any other method approved by the Administrator.
(e) Issuance of Shares upon Exercise. Upon due exercise of the
Option, in whole or in part, in accordance with the terms of this Agreement, the
Company will issue to the Optionee, the brokerage firm specified in the
Optionee's delivery instructions pursuant to a broker-assisted cashless
exercise, or such other person exercising the Option, as the case may be, the
number of shares of Common Stock so paid for, in the form of fully paid and
nonassessable stock and will deliver certificates therefor as soon as
practicable thereafter. The stock certificates for any shares of Common Stock
issued hereunder will, unless such shares are registered or an exemption from
registration is available under applicable federal and state law, bear a legend
restricting transferability of such shares.
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4. Termination of Employment or Service.
(a) Exercise Period Following Cessation of Employment or Service
Relationship, In General. If the Optionee ceases to be employed by, or in a
service relationship with, the Company for any reason other than death,
Disability (as defined in Section 4(b) below) or discharge for Cause (as defined
in Section 4(d) below), (i) this Option will terminate immediately upon such
cessation to the extent it is unvested, and (ii) this Option will be exercisable
during the three (3) month period following such cessation with respect its
vested portion, but in no event after the Expiration Date. Unless sooner
terminated, this Option will terminate in its entirety upon the expiration of
such three (3) month period.
(b) Disability of Optionee. Notwithstanding the provisions of
Section 4(a) above, if the Optionee ceases his employment or service
relationship with the Company as a result of his Disability, (i) this Option
will terminate immediately upon such cessation to the extent it is unvested, and
(ii) this Option will be exercisable during the one (1) year period following
such cessation with respect to its vested portion, but in no event after the
Expiration Date. Unless sooner terminated, this Option will terminate in its
entirety upon the expiration of such (1) year period. For purposes of this
Agreement, "Disability" shall have the meaning set forth in the employment
agreement entered into between the Optionee and the Company, as the same may be
amended from time to time, and shall be determined in a manner consistent with
the procedure set forth therein.
(c) Death of Optionee. If the Optionee dies prior to the Expiration
Date or other termination of the Option, including if the Optionee dies during
the three (3) month period following termination of service for reasons other
than Cause, (i) this Option will terminate immediately upon the Optionee's death
to the extent it is unvested, and (ii) this Option will be exercisable during
the one (1) year period following the date of death of the Optionee with respect
to its vested portion, but in no event after the Expiration Date, by the
Optionee's executor, personal representative, or the person(s) to whom this
Option is transferred by will or the laws of descent and distribution. Unless
sooner terminated, this Option will terminate in its entirety upon the
expiration of such one (1) year period.
(d) Cause. Notwithstanding anything to the contrary herein, this
Option will terminate in its entirety, regardless of whether the Option is
vested in whole or in part, immediately upon the Optionee's discharge of
employment or service relationship for Cause or upon the Optionee's commission
of conduct constituting Cause during any period following the cessation of
employment or service relationship during which the Option otherwise would be
exercisable. For purposes of this Agreement, "Cause" shall have the meaning set
forth in the employment agreement entered into between the Optionee and the
Company, as the same may be amended from time to time, and shall be determined
in a manner consistent with the procedure set forth therein.
5. Adjustments and Business Combinations.
(a) Adjustments for Events Affecting Common Stock. In the event of
changes affecting the Company, the capitalization of the Company or the Common
Stock of the Company by reason of any stock dividend, spin-off, split-up,
recapitalization, merger, consolidation, business combination or exchange of
shares and the like, the Administrator will, in its discretion, make appropriate
adjustments to the number, kind and price of shares covered by this Option, and
will, in its discretion and without the consent of the Optionee, make any other
adjustments in this Option, including but not limited to reducing the number of
shares subject to the Option or providing or mandating alternative settlement
methods such as settlement of the
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Option in cash or in shares of Common Stock or other securities of the Company
or of any other entity, or in any other matters which relate to the Option as
the Administrator, in its sole discretion, determines to be necessary or
appropriate.
(b) Reserved.
(c) Adjustments for Unusual Events. The Administrator is authorized
to make, in its discretion and without the consent of the Optionee, adjustments
in the terms and conditions of, and the criteria included in, the Option in
recognition of unusual or nonrecurring events affecting the Company, or the
financial statements of the Company or any affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Option.
(d) Binding Nature of Adjustments. Adjustments under this Section 5
will be made by the Administrator, whose determination as to what adjustments,
if any, will be made and the extent thereof will be final, binding and
conclusive. No fractional shares will be issued pursuant to this Option on
account of any such adjustments.
6. Compliance with Securities Laws; Listing and Registration. If at any
time the Administrator determines that the delivery of Common Stock under this
Agreement is or may be unlawful under the laws of any applicable jurisdiction,
or federal or state securities laws, the right to exercise the Option or receive
shares of Common Stock pursuant to the Option shall be suspended until the
Administrator determines that such delivery is lawful. The Company shall have no
obligation to effect any registration or qualification of the Common Stock under
federal or state laws.
The Company may require that the Optionee, as a condition to exercise of
the Option, and as a condition to the delivery of any share certificate, make
such written representations (including representations to the effect that such
person will not dispose of the Common Stock so acquired in violation of federal
or state securities laws) and furnish such information as may, in the opinion of
counsel for the Company, be appropriate to permit the Company to issue the
Common Stock in compliance with applicable federal and state securities laws.
7. Investment Representations. The Optionee represents, warrants and
covenants that:
(a) Any shares purchased upon exercise of this Option shall be acquired
for the Optionee's account for investment only and not with a view to, or for
sale in connection with, any distribution of the shares in violation of the
Securities Act of 1933 (the "Securities Act") or any rule or regulation under
the Securities Act, and that he will not distribute the same in violation of any
state or federal law or regulation.
(b) The Optionee has had such opportunity as he has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit the Optionee to evaluate the merits and risks of his investment in the
Company.
(c) The Optionee is able to bear the economic risk of holding shares
acquired pursuant to the exercise of this Option for an indefinite period.
(d) The Optionee understands that (i) the shares acquired pursuant to the
exercise of this Option will not be registered under the Securities Act or under
the securities laws of any state
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and are "restricted securities" within the meaning of Rule 144 under the
Securities Act; (ii) such shares cannot be sold, transferred or otherwise
disposed of unless they are subsequently registered under the Securities Act,
and such registration or qualification as may be necessary under the securities
laws of any state, or an exemption from registration is then available; (iii) in
any event, the exemption from registration under Rule 144 will not be available
for at least one year from date of exercise and even then will not be available
unless a public market then exists for the Common Stock, adequate information
concerning the Company is then available to the public and other terms and
conditions of Rule 144 are complied with; and (iv) there is as of the date of
this Agreement no registration statement on file with the Securities and
Exchange Commission with respect to any stock of the Company covered by this
Option and the Company has no obligation or current intention to register any
shares acquired pursuant to the exercise of this Option under the Securities
Act.
By making payment upon exercise of this Option, the Optionee shall be
deemed to have reaffirmed, as of the date of such payment, the representations
made in this Section 7.
8. Reservation of Shares. The Company will reserve and set apart and have
at all times, free from preemptive rights, a number of shares of authorized but
unissued Common Stock deliverable upon the exercise of this Option sufficient to
enable it at any time to fulfill all its obligations hereunder.
9. Non-Guarantee of Employment or Consulting Relationship. Nothing in this
Agreement alters the at-will or other employment or consulting status of the
Optionee, nor is to be construed as a contract of employment or consulting
relationship between the Company and the Optionee, or as a contractual right of
Optionee to continue in the employ of, or in a consulting relationship with, the
Company, or as a limitation of the right of the Company to discharge the
Optionee at any time with or without cause or notice and whether or not such
discharge results in the failure of any portion of the Option to vest or any
other adverse effect on the Optionee's interests under this Agreement.
10. No Rights as a Stockholder. The Optionee will not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option. No adjustment will be
made for dividends or distributions or other rights for which the record date is
prior to the date such certificate or certificates are issued.
11. Nonstatutory Nature of the Option. This Option is not intended to
qualify as an "incentive stock option" within the meaning of Code section 422,
and this Agreement will be so construed. The Optionee acknowledges that, upon
exercise of this Option, the Optionee will recognize taxable income in an amount
equal to the excess of the then Fair Market Value of the shares over the
Exercise Price and must comply with the provisions of Section 12 of this
Agreement with respect to any tax withholding obligations that arise as a result
of such exercise.
12. Withholding of Taxes. At the time the Option is exercised, in whole or
in part, or at any time thereafter as requested by the Company, the Optionee
hereby authorizes withholding from payroll or any other payment of any kind due
the Optionee and otherwise agrees to make adequate provision for foreign,
federal, state and local taxes required by law to be withheld, if any, which
arise in connection with the Option. The Company may require the Optionee to
make a cash payment to cover any withholding tax obligation as a condition of
exercise of the Option. If the Optionee does not make such payment when
requested, the Company may refuse to issue any stock certificate until
arrangements satisfactory to the Administrator for such payment have been made.
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The Company may, in its sole discretion, permit the Optionee to satisfy,
in whole or in part, any withholding tax obligation which may arise in
connection with the Option either by electing to have the Company withhold from
the shares to be issued upon exercise that number of shares, or by electing to
deliver to the Company already-owned shares, in either case having a Fair Market
Value equal to the amount necessary to satisfy the statutory minimum withholding
amount due.
13. The Company's Rights. The existence of this Option will not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of the
Company's assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
14. Optionee. Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed, as determined by the Administrator, to apply to the estate, personal
representative or beneficiary to whom this Option may be transferred by will or
by the laws of descent and distribution, the word "Optionee" will be deemed to
include such person.
15. Nontransferability of Option. This Option is nontransferable otherwise
than by will or the laws of descent and distribution and during the lifetime of
the Optionee, the Option may be exercised only by the Optionee or, during the
period the Optionee is under a legal disability, by the Optionee's guardian or
legal representative. Except as provided above, the Option may not be assigned,
transferred, pledged, hypothecated or disposed of in any way (whether by
operation of law or otherwise) and will not be subject to execution, attachment
or similar process.
16. Notices. All notices and other communications made or given pursuant
to this Agreement will be in writing and will be sufficiently made or given if
hand delivered or mailed by certified mail, addressed to the Optionee at the
address contained in the records of the Company, or addressed to the Company for
the attention of its Corporate Secretary at its principal office or, if the
receiving party consents in advance, transmitted and received via telecopy or
via such other electronic transmission mechanism as may be available to the
parties.
17. Effect of Administrator's Decision. All actions taken and decisions
and determinations made by the Administrator on all matters relating to this
Agreement pursuant to the powers vested in it hereunder shall be in the
Administrator's sole and absolute discretion and shall be conclusive and binding
on all parties concerned, including the Optionee, the Company, its stockholders,
director and officers, and their respective successors in interest.
18. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the stock option granted hereunder. Any oral or
written agreements, representations, warranties, written inducements, or other
communications made prior to the execution of this Agreement with respect to the
stock option granted hereunder will be void and ineffective for all purposes.
19. Amendment. This Agreement may be amended from time to time by the
Administrator in its discretion; provided, however, that this Agreement may not
be modified in a
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manner that would have a materially adverse effect on the Option as determined
in the discretion of the Board of Directors, except as provided in a written
document signed by each of the parties hereto.
20. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Maryland, other than the conflict of
laws principles thereof.
23. Headings. The headings in this Agreement are for reference purposes
only and will not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer as of the date first above written.
ATTEST: VISUAL NETWORKS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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The undersigned hereby acknowledges that he has carefully read this Agreement
and agrees to be bound by all of the provisions set forth herein.
WITNESS: OPTIONEE
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------- ----------------------------------------
Date: April 28, 2003
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