[ARTICLE] 5
HELLO DIRECT, INC.
1995 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock
Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance
with the following schedule:
25% of the Shares subject to the Option shall vest twelve months
after the Vesting Commencement Date, and 1/48 of the Shares subject to
the Option shall vest each month thereafter.
Termination Period:
This Option may be exercised for _____ [days/months] after
termination of the Optionee's employment or consulting relationship
with the Company. Upon the death or Disability of the Optionee, this
Option may be exercised for such longer period as provided in the
Plan. In the event of the Optionee's change in status from Employee
to Consultant or Consultant to Employee, this Option Agreement shall
remain in effect. In no event shall this Option be exercised later
than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company
hereby grants to the Optionee named in the Notice of Grant attached as
Part I of this Agreement (the "Optionee"), an option (the "Option") to
purchase the number of Shares, as set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the
"Exercise Price"), subject to the terms and conditions of the Plan,
which is incorporated herein by reference. Subject to Section 15(c)
of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive
Stock Option under Section 422 of the Code. However, if this Option
is intended to be an Incentive Stock Option, to the extent that it
exceeds the $100,000 rule of Code Section 422(d) it shall be treated
as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable
during its term in accordance with the Vesting Schedule set out in the
Notice of Grant and the applicable provisions of the Plan and this
Option Agreement. In the event of Optionee's death, Disability or
other termination of Optionee's employment or consulting relationship,
the exercisability of the Option is governed by the applicable
provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit A (the
"Exercise Notice"), which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being
exercised (the "Exercised Shares"), and such other representations and
agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise Notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares.
This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such
aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant
provisions of law and the requirements of any stock exchange or
quotation service upon which the Shares are then listed. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
3. Vesting Acceleration on Change of Control.
(a) Vesting Acceleration. In the event of a "Change of
Control," all of the Optionee's rights to purchase stock under this
Option Agreement with the Company shall be automatically vested in
their entirety on an accelerated basis and be fully exercisable as of
the date immediately preceding the first to occur of the following:
(i) such "Change of Control," in the event any
such stock option agreement or restricted stock purchase agreement is
or will be terminated or canceled (except by mutual consent) or any
successor to the Company fails to assume and agree to perform all such
stock option agreements and restricted stock purchase agreements as
provided in Section 4(a) hereof at or prior to such time as any such
person becomes a successor to the Company; or
(ii) such "Change of Control"in the event Optionee
does not or will not receive upon exercise of the Optionee's stock
purchase rights under this Option Agreement the same identical
securities and/or other consideration as is received by all other
stockholders in any merger, consolidation, sale, exchange or similar
transaction occurring upon or after such "Change of Control"; or
(iii) any "Involuntary Termination" of the Optionee
occurring after any such "Change of Control."
(b) Change of Control. "Change of Control" means the
occurrence of any of the following events:
(i) Any "person" (as such term is used in Sec-
tions 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of
the Company representing 50% or more of the total voting power
represented by the Company's then outstanding voting securities; or
(ii) A change in the composition of the Board of
Directors of the Company occurring within a two-year period as a
result of which fewer than a majority of the directors are "Incumbent
Directors." "Incumbent Directors" shall mean directors who either
(A) are directors of the Company as of the date hereof, or (B) are
elected, or nominated for election, to the Board of Directors with the
affirmative votes (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a
nominee for election as a director without objection to such
nomination) of at least a majority of the Incumbent Directors at the
time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of
directors of the Company); or
(iii) The consummation of (A) a merger or
consolidation of the Company with any other entity, other than a
merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or the entity that controls
such surviving entity) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company, such
surviving entity or the entity that controls the Company or such
surviving entity outstanding immediately after such merger or
consolidation, or (B) the sale or disposition by the Company of all or
substantially all the Company's assets; or
(iv) The stockholders of the Company approve a plan
of complete liquidation of the Company.
(c) Involuntary Termination. "Involuntary Termination"
shall mean without the Optionee's written consent (i) a termination by
the Company of the Optionee's employment with the Company other than
for Cause; (ii) a material reduction of or variation in the Optionee's
duties, authority or responsibilities, relative to the Optionee's
duties, authority or responsibilities as in effect immediately prior
to such reduction or variation; (iii) a reduction by the Company in
the base salary of the Optionee as in effect immediately prior to such
reduction; (iv) a material reduction by the Company in the kind or
level of the Optionee benefits, including bonuses, to which the
Optionee was entitled immediately prior to such reduction, with the
result that the Optionee's overall benefits package is materially
reduced; (v) the relocation of the Optionee to a facility or a
location more than thirty (30) miles from the Optionee's then present
location; (vi) the failure of the Company to obtain the assumption of
this Option Agreement by any successor as required in Section 4(a), or
(vii) any act or set of facts that would under applicable law
constitute a constructive termination of the Optionee.
(d) Cause. "Cause" shall mean (i) any willful act of
personal dishonesty, fraud or misrepresentation taken by the Optionee
in connection with his or her responsibilities as an the Optionee
which was intended to result in substantial gain or personal
enrichment of the Optionee at the expense of the Company and was
materially and demonstrably injurious to the Company; (ii) the
Optionee's conviction of a felony on account of any act which was
materially and demonstrably injurious to the Company; or (iii) the
Optionee's willful and continued failure to substantially perform his
or her principal duties and obligations of employment (other than any
such failure resulting from incapacity due to physical or mental
illness), which failure is not remedied in a reasonable period of time
after receipt of written notice from the Company. For the purposes of
this Section 3(d), no act or failure to act shall be considered
"willful" unless done or omitted to be done in bad faith and without
reasonable belief that the act or omission was in or not opposed to
the best interests of the Company. Any act or failure to act based
upon authority given pursuant to a resolution duly adopted by the
Board of Directors of the Company or based upon the advice of counsel
for the Company shall be conclusively presumed to be done or omitted
to be done in good faith and in the best interests of the Company.
(e) Voluntary Resignation; Termination For Cause. If the
Optionee's continuous status as an employee of the Company terminates
(i) for any reason prior to a Change of Control, (ii) by reason of the
Optionee's voluntary resignation (and not Involuntary Termination) or
(iii) for Cause, then the Optionee shall not be entitled to receive
accelerated vesting under Section 3 hereof.
4. Successors.
(a) Company's Successors. Any successor to the Company
(whether direct or indirect and whether by purchase, merger or
consolidation) shall assume the obligations under Section 3 of this
Option Agreement and agree expressly to perform the obligations under
Section 3 in the same manner and to the same extent as the Company
would be required to perform such obligations in the absence of a
succession.
(b) Successors. The terms of Section 3 and all rights
of the Optionee thereunder shall inure to the benefit of, and be
enforceable by, the Optionee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees.
5. Method of Payment. Payment of the aggregate Exercise
Price shall be by any of the following, or a combination thereof, at
the election of the Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice
together with such other documentation as the Administrator 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; or
(d) surrender of other Shares which (i) in the case of
Shares acquired upon exercise of an option, have been owned by the
Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the
aggregate Exercise Price of the Exercised Shares.
6. 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 the Optionee. The terms of the Plan and this Option
Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
7. 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 Plan and the terms of this
Option Agreement.
8. Tax Consequences. Some of the federal and California tax
consequences relating to this Option, as of the date of this Option,
are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF
THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may
incur regular federal income tax and California income tax liability
upon exercise of a NSO. 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 Exercised
Shares on the date of exercise over their aggregate Exercise Price.
If the Optionee is an Employee or a former Employee, the Company will
be required to withhold from his or her compensation or collect from
Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of
exercise, and may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the time of
exercise.
(ii) Incentive Stock Option. If this Option
qualifies as an ISO, the Optionee will have no regular federal income
tax or California income tax liability upon its exercise, although the
excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for
federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise. In the event that the Optionee
undergoes a change of status from Employee to Consultant, any
Incentive Stock Option of the Optionee that remains unexercised shall
cease to qualify as an Incentive Stock Option and will be treated for
tax purposes as a Nonstatutory Stock Option on the ninety-first (91st)
day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at
least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at
least one year after exercise and two years after the grant date, any
gain realized on disposition of the Shares will be treated as long-
term capital gain for federal income tax purposes. If the Optionee
disposes of ISO Shares within one year after exercise or two years
after the grant date, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to
the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of
exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise
Price.
(c) Notice of Disqualifying Disposition of ISO Shares.
If the Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to an ISO on or before the later of (i) two years
after the grant date, or (ii) one year after the exercise date, the
Optionee shall immediately notify the Company in writing of such
disposition. The Optionee agrees that he or she may be subject to
income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in
cash or out of the current earnings paid to the Optionee.
9. Entire Agreement; Governing Law. The Plan is incorporated
herein by reference. The Plan and this Option Agreement constitute
the entire agreement of the parties with respect to the subject matter
hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject
matter hereof, and may not be modified adversely to the Optionee's
interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by California law except for
that body of law pertaining to conflict of laws.
By your signature and the signature of the Company's
representative below, you and the Company agree that this Option is
granted under and governed by the terms and conditions of the Plan and
this Option Agreement. Optionee has reviewed the Plan and this Option
Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option Agreement and fully
understands all provisions of the Plan and Option Agreement. Optionee
hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to
the Plan and Option Agreement. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.
OPTIONEE: HELLO DIRECT, INC.
_______________________________ By:_________________________
Signature
_______________________________ Title:______________________
Print Name
____________________________________
Residence Address
____________________________________
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves
the terms and conditions of the Plan and this Option Agreement. In
consideration of the Company's granting his or her spouse the right to
purchase Shares as set forth in the Plan and this Option Agreement,
the undersigned hereby agrees to be irrevocably bound by the terms and
conditions of the Plan and this Option Agreement and further agrees
that any community property interest shall be similarly bound. The
undersigned hereby appoints the undersigned's spouse as attorney-in-
fact for the undersigned with respect to any amendment or exercise of
rights under the Plan or this Option Agreement.
____________________________
Spouse of Optionee
EXHIBIT A
1995 STOCK PLAN
EXERCISE NOTICE
Hello Direct, Inc.
0000 Xxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today,
________________, 199__, the undersigned ("Purchaser") hereby elects
to purchase ______________ shares (the "Shares") of the Common Stock
of Hello Direct, Inc. (the "Company") under and pursuant to the 1995
Stock Plan (the "Plan") and the Stock Option Agreement dated
, 19___ (the "Option Agreement"). The purchase price for the
Shares shall be $ , as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the
Company the full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that
Purchaser has received, read and understood the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and
conditions.
4. Rights as Shareholder. Until the issuance (as evidenced
by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to
the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the
record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.
5. Tax Consultation. Purchaser understands that Purchaser
may suffer adverse tax consequences as a result of Purchaser's
purchase or disposition of the Shares. Purchaser represents that
Purchaser has consulted with any tax consultants Purchaser deems
advisable in connection with the purchase or disposition of the Shares
and that Purchaser is not relying on the Company for any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option
Agreement are incorporated herein by reference. This Agreement, the
Plan and the Option Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in
their entirety all prior undertakings and agreements of the Company
and Purchaser with respect to the subject matter hereof, and may not
be modified adversely to the Purchaser's interest except by means of a
writing signed by the Company and Purchaser. This agreement is
governed by California law except for that body of law pertaining to
conflict of laws.
Submitted by: Accepted by:
PURCHASER: HELLO DIRECT, INC.
_______________________________ By:_________________________
Signature
_______________________________ Title:______________________
Print Name
Address: Address:
___________________________ 0000 Xxx Xxxxxxx
___________________________ Xxx Xxxx, XX 00000
