AUSPEX SYSTEMS INC
EXHIBIT 10.7
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>10
<FILENAME>f66898ex10-7.txt
<DESCRIPTION>EXHIBIT 10.7
<TEXT>

<PAGE>   1

                                                                    EXHIBIT 10.7

                              AUSPEX SYSTEMS, INC.
                         EMPLOYEE STOCK OPTION AGREEMENT
                           DATED AS OF AUGUST 1, 2000

1.      NOTICE OF STOCK OPTION GRANT

        Michael S. Worhach
        ----------------------
        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                               August 1, 2000
                                                    ----------------------------


        Vesting Commencement Date                   August 1, 2000
                                                    ----------------------------


        Exercise Price Per Share                    7.3438
                                                    ----------------------------


        Total Number of Shares Granted              1,000,000
                                                    ----------------------------


        Total Exercise Price                        $7,343,800
                                                    ----------------------------


        Term/Expiration Date                        August 1, 2010
                                                    ----------------------------



        Vesting Schedule:

        This Option may be exercised, in whole or in part, in accordance with
the following schedule:

        The Option shall vest and become exercisable as to 1/24 of the Shares
        subject to the Option at the end of each of the 12 one-month periods
        immediately following the Vesting Commencement Date, and as to 1/2 of
        the Shares subject to the Option on the two-year anniversary of the
        Vesting Commencement Date, provided that Optionee's status as an
        employee 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 purposes of this Agreement, the term "Change of Control" shall mean
the occurrence of any of the following events: (i) Any "person" (as such term is
used in Sections 13(d) and 14(d) of

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the Securities Exchange Act of 1934, as amended (the "Exchange Act")) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the total voting power represented by the Company's
then outstanding voting securities; (ii) the consummation of a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or (iii) the consummation of the sale or disposition by the
Company of all or substantially all of the Company's assets.

        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.

        Notwithstanding the above, in the event it is determined by the
Company's independent public accountants that the acceleration of vesting of
Shares subject to the Option upon a merger pursuant to this Section would
preclude accounting for such merger as a pooling of interests, and the Board of
Directors desires to approve such merger which requires as a condition to the
closing of such transaction that it be accounted for as a pooling of interests,
then any such option acceleration shall be null and void, but only if the
absence of such option acceleration would preserve the pooling treatment.

        Termination Period:

        This Option may be exercised for 30 days after termination of Optionee's
status as an employee 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.



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                        (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 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



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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 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 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 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 six (6)
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 of the Company as a result of the death of
Optionee, the Option may be exercised at any time within six (6) 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



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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.

        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 Nonstatutory Stock
Option, 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, Change of Control.

                (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



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previously exercised, this Option will terminate immediately prior to the
consummation of such proposed action.



                                       AUSPEX SYSTEMS, INC.
                                       a Delaware corporation

                                       By:  /s/ DENNIS J. DUNMGAN
                                           -------------------------------------
                                       Title:  COO
                                              ----------------------------------



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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 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 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.

        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:  November 1, 2000                [SIGNATURE ILLEGIBLE]
       ----------------------          -----------------------------------------
                                       Optionee









                   [ACKNOWLEDGMENT OF STOCK OPTION GRANT]



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