SOCKET COMMUNICATIONS, INC.
AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT
WHEREAS: The Company believes it is in the best interests of the Company
and the Optionee to amend Optionee's Stock Option Agreement attached hereto to
provide for a Change of Control provision; now therefore,
In consideration of the continued services of the Optionee to the Company,
the Company and the Optionee hereby agree that the following Sections 12 and 13
shall be added to the Stock Option Agreement entered into between the Company
and the Optionee:
12. 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 Agreement
with the Company shall be automatically vested in their entirety on an
accelerated basis and be fully exercisable:
(A) as of the date immediately preceding such "Change of Control" in
the event this stock option 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 such stock option agreement as
provided in Section 2(a) hereof at or prior to such time as any such
person becomes a successor to the Company; or
(B) as of the date immediately preceding such "Change of Control" in
the event the Optionee does not or will not receive upon exercise of
the Optionee's stock purchase rights under such stock option agreement
the same identical securities and/or other consideration as is
received by all other shareholders in any merger, consolidation, sale,
exchange or similar transaction occurring upon or after such "Change
of Control"; or
(C) as of the date immediately preceding any "Involuntary
Termination" of the Optionee occurring upon or after any such "Change
of Control"; or
(D) as of the date [one (1) year] following the first such "Change of
Control," provided that the Optionee shall have remained an employee
of the Company continuously throughout such one-year period, other
than a termination as a result of death or disability;
whichever shall first occur (all quoted terms as defined below); provided,
however, that if it is determined by the Company's independent public
accountants that the accelerated vesting and exercisability provided in this
Section 12(a) would preclude accounting for
the "Change of Control" as a pooling of interests for financial accounting
purposes, and it is a condition to the closing of the "Change of Control"
that the transaction be accounted for as a pooling of interests, then the
vesting and exercisability shall not be accelerated pursuant to this Section
12(a).
(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
Sections 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 fifty percent
(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; 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 the Company or such surviving
entity) at least fifty percent (50%) of the total voting power represented by
the voting securities of the Company or 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 shareholders 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 employee benefits, including bonuses, to which the
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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 Agreement by any successor as
required in Section 13, or (vii) any act or set of facts that would under
applicable law constitute a constructive termination of 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 employee 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 including under any written agreements (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 12(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 terminates employment as a result of an Involuntary Termination, the
Optionee shall be entitled to receive accelerated vesting under Section 12(a)
hereof. If the Optionee's continuous status as an employee of the Company
terminates by reason of the Optionee's voluntary resignation (and not
Involuntary Termination) or if the Optionee's continuous status as an employee
of the Company is terminated for Cause, in either case prior to such time as
accelerated vesting occurs as provided in Section 12(a) hereof, then the
Optionee shall not be entitled to receive accelerated vesting under
Section 12(a) hereof.
13. SUCCESSORS. Any successor to the Company
(whether direct or indirect and whether by purchase, merger or
consolidation) shall assume the obligations under this
Agreement and agree expressly to perform the obligations under
this Agreement 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. The terms of this Agreement and
all rights of the Optionee hereunder 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.
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IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement on the _____ day of ____________, 1998.
SOCKET COMMUNICATIONS, INC. OPTIONEE
By:
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