STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT dated as of October 4, 2000 (this "Agreement") among
Hello Direct, Inc., a Delaware corporation (the "Company"), GN Great Nordic
Ltd., a Danish corporation ("Parent"), and GN Acquisition Corporation, a
Delaware corporation and an indirect wholly owned subsidiary of Parent
("Purchaser").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this Agreement,
the parties hereto are entering into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement")
which provides, upon the terms and subject to the conditions set forth therein,
for (i) the commencement by the Purchaser of an offer (the "Offer") to purchase
any and all of the outstanding shares of the Company's common stock, par value
$0.001 per share (the "Shares"), at a price of $16.40 per Share (or any higher
price paid for each Share in the Offer, the "Offer Price"), and (ii) the
subsequent merger of the Purchaser with and into the Company (the "Merger"),
whereby each Share then outstanding (other than Shares owned by Parent or any of
its wholly-owned Subsidiaries or held by the Company and other than dissenting
Shares) will be converted into the right to receive the Offer Price;
WHEREAS, as a condition to the willingness of Parent and the Purchaser to
enter into the Merger Agreement, Parent and the Purchaser have required that the
Company agree, and in order to induce Parent and the Purchaser to enter into the
Merger Agreement, the Company has agreed, to grant to the Purchaser certain
options to purchase Shares upon the terms and subject to the conditions of this
Agreement; and
WHEREAS, capitalized terms used but not defined in this Agreement shall
have the meanings ascribed to them in the Merger Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
The Top-up Option
Section 1.01. Grant of Top-Up Stock Option. Subject to the terms and
conditions set forth herein, the Company hereby grants to the Purchaser an
irrevocable option (the "Top-Up Stock Option") to purchase that number of Shares
(the "Top-Up Option Shares") equal to the number of Shares that, when added to
the number of Shares owned by the Purchaser, Parent and their Subsidiaries
immediately following consummation of the Offer, shall constitute 90% of the
Shares then outstanding (assuming the issuance of the Top-Up Option Shares) at a
purchase price per Top-Up Option Share equal to the Offer Price; provided,
however, that the Top-Up Stock Option shall not be exercisable if the number of
Shares subject thereto exceeds the number of authorized Shares available for
issuance. The Company agrees to provide Parent and the Purchaser with
information regarding the number of Shares available for issuance on an ongoing
basis.
Section 1.02. Exercise of Top-Up Stock Option. (a) The Purchaser may, at
its election, exercise the Top-Up Stock Option in whole, but not in part, at any
one time after the occurrence of a Top-Up Exercise Event (as defined below) and
prior to the Top-Up Termination Date (as defined below).
(b) A "Top-Up Exercise Event" shall occur for purposes of this Agreement
upon the Purchaser's acceptance for payment pursuant to the Offer of Shares
constituting more than 75% but less than 90% of the Shares then outstanding on a
fully diluted basis.
(c) Except as provided in the last sentence of this Section 102, the
"Top-Up Termination Date" shall occur for purposes of this Agreement upon the
earliest to occur of: (i) the Effective Time; (ii the date which is 20 business
days after the occurrence of a Top-Up Exercise Event; and (ii the termination of
the Merger Agreement.
Notwithstanding the occurrence of the Top-Up Termination Date, the
Purchaser shall be entitled to purchase the Top-Up Option Shares if it has
exercised the Top-Up Stock Option in accordance with the terms hereof prior to
such occurrence. The occurrence of the Top-Up Termination Date shall not affect
any rights hereunder which by their terms do not terminate or expire prior to or
as of such date, unless the Merger Agreement has terminated by its terms prior
to the occurrence of the Top-Up Closing.
(d) In the event the Purchaser wishes to exercise the Top-Up Stock
Option, the Purchaser shall send to the Company a written notice (a "Top-Up
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Exercise Notice," the date of which notice is referred to herein as the "Top-Up
Notice Date") specifying the denominations of the certificate or certificates
evidencing the Top-Up Option Shares which the Purchaser wishes to receive, the
place for the closing of the purchase and sale pursuant to the Top-Up Stock
Option (the "Top-Up Closing") and a date not earlier than one day nor later than
ten business days from the Top-Up Notice Date for the Top-Up Closing; provided,
however, that (i) the Top-Up Closing shall occur concurrently with the
consummation of the Offer, (ii if the Top-Up Closing cannot be consummated by
reason of any applicable laws or orders, the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which such
restriction on consummation has expired or been terminated, and (ii without
limiting the foregoing, if prior notification to or approval of any governmental
entity is required in connection with such purchase, the Purchaser and the
Company shall promptly file the required notice or application for approval and
shall cooperate in the expeditious filing of such notice or application, and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated or (B) any required approval
has been obtained, and in either event, any requisite waiting period has expired
or been terminated. The Company shall, promptly after receipt of the Top-Up
Exercise Notice, deliver a written notice to the Purchaser confirming the number
of Top-Up Option Shares and the aggregate purchase price therefor.
ARTICLE 2
Closing
Section 2.01. Conditions to Closing. The obligation of the Company to
deliver Top-Up Option Shares upon the exercise of the Top-Up Stock Option is
subject to the following conditions:
(a) any applicable waiting period under the HSR Act relating to the
issuance of the Top-Up Option Shares hereunder shall have expired or been
terminated; and
(b) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the exercise of the Top-Up Stock
Option or the delivery of the Top-Up Option Shares in respect of any such
exercise.
Section 2.02. Closing. (a) At the Top-Up Closing (i) the Company shall
deliver to the Purchaser a certificate or certificates evidencing the applicable
number of Top-Up Option Shares (in the denominations designated by the
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Purchaser in the Top-Up Exercise Notice) and (ii the Purchaser shall purchase
each Top-Up Option Share from the Company at the Offer Price. Payment by the
Purchaser of the purchase price for the Top-Up Option Shares may be made, at the
option of the Purchaser, by delivery of (i) cash by wire transfer or (ii) a
promissory note, in form and substance reasonably satisfactory to the Company
and in a principal face amount equal to the aggregate amount of the purchase
price, which promissory note shall bear interest at a rate equal to 5% per annum
and shall be payable in full with accrued interest five business days following
written demand given by the Company to the Purchaser or Parent at any time
following the Effective Time.
(b) The Company shall pay all expenses, and any and all federal, state and
local taxes and other charges, that may be payable in connection with the
preparation, issuance and delivery of stock certificates under this Section
2.02.
(c) Certificates evidencing Top-Up Option Shares delivered hereunder may
include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY
IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Top-Up Option Shares pursuant to a registered public offering or Rule 144 under
the Securities Act, or any other sale as a result of which such legend is no
longer required.
ARTICLE 3
Additional Agreements
Section 3.01. Reasonable Best Efforts. Subject to the terms and conditions
of this Agreement, Parent, the Purchaser and the Company will use their
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this
Agreement.
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Section 3.02. Further Assurances. The Company shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in the Purchaser and Parent the power to carry out the
provisions of this Agreement. If the Purchaser shall exercise the Top-Up Stock
Option granted hereunder in accordance with the terms of this Agreement, the
Company shall, without additional consideration, execute and deliver all such
further documents and instruments and take all such further action as the
Purchaser or Parent may reasonably request to carry out the transactions
contemplated by this Agreement.
ARTICLE 4
Miscellaneous
Section 4.01. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including facsimile transmission) and
shall be given as specified in Section 8.4 of the Merger Agreement.
Section 4.02. Amendments; No Waivers. (a) Any provision of this Agreement
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed, in the case of an amendment, by each party to this Agreement or,
in the case of a waiver, by each party against whom the waiver is to be
effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 4.03. Expenses. Except as otherwise provided herein or in Section
8.1 of the Merger Agreement, all costs and expenses incurred in connection with
this Agreement shall be paid by the party incurring such cost or expense.
Section 4.04. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that the Purchaser may
transfer or assign, in whole or from time to time in part, to one or more of its
Affiliates, the right to purchase all or a portion of the Top-Up Option Shares
pursuant to this
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Agreement, but no such transfer or assignment will relieve the Purchaser of its
obligations under this Agreement.
Section 4.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware, without regard to
the conflicts of law rules of such state.
Section 4.06. Counterparts; Effectiveness; Benefit. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall
have received counterparts hereof signed by all of the other parties hereto. No
provision of this Agreement is intended to confer any rights, benefits,
remedies, obligations, or liabilities hereunder upon any Person other than the
parties hereto and their respective successors and assigns.
Section 4.07. Entire Agreement. This Agreement and the Merger Agreement
(including the documents and instruments referred to therein) constitute the
entire agreement between the parties with respect to the subject matter of this
Agreement and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter of this
Agreement.
Section 4.08. Captions. The captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.
Section 4.09. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party. Upon such a
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 4.10. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to
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enforce specifically the performance of the terms and provisions hereof, in
addition to any other remedy to which they are entitled at law or in equity.
Section 4.11. Termination. This Agreement will terminate upon the
earliest to occur of: (i) the Effective Time; (ii) the date which is 20 business
days after the occurrence of a Top-Up Exercise Event; and (iii) the termination
of the Merger Agreement.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the first date written above.
HELLO DIRECT, INC.
By: /s/ E. Xxxxxxxxx Xxxxxx
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Name: E. Xxxxxxxxx Xxxxxx
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Title: President and Chief Executive Officer
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GN GREAT NORDIC LTD.
By: /s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
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Title: President and Chief Executive Officer
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By: /s/ Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx
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Title: Executive Vice President
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GN ACQUISITION CORPORATION
By: Xxxxx X. Xxxxxxxxxxxx
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Name: Xxxxx X. Xxxxxxxxxxxx
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Title: President
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