SOCKET MOBILE, INC. 2004 EQUITY INCENTIVE PLAN STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 2004 Equity Incentive
Plan ("Plan") shall have the same defined meanings in this Option
Agreement. Any conflicts between this Agreement and the Plan shall be resolved
in favor of the Plan.
1. NOTICE OF STOCK OPTION GRANT
[Name of person]
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:
Date of Grant [fill in date]
Vesting Commencement Date [fill in date]
Vesting Period (months) [fill in number of months]
Vesting completion date [fill in the last date of vesting]
Exercise Price per Share $[fill in dollar amount]
Total Number of Shares Granted [fill in total number]
Total Exercise Price
$[price
x shares = total exercise price]
(Exercise price per share X total number of shares granted)
Your Employment/Service Status [Employee, officer, director, consultant]
Type of Option: ____ Incentive Stock Option
____ Nonstatutory Stock Option
Term/Option Expiration Date: [fill in expiration date-10 years from grant date)
VESTING SCHEDULE:
Shares shall vest in equal monthly installments pro-rata over the Vesting Period. The vesting date shall be the same numeric day each month as the Vesting Commencement Date. The grant will be fully vested on the Vesting completion date.
TERMINATION PERIOD:
Unless specified otherwise in a
written agreement between the Optionee and the Company or as otherwise approved
by the Board of Directors, this Option may be exercised for 90 days after termination
of your employment or consulting relationship, or such longer period as may
be applicable upon death or disability of Optionee as provided in the Plan.
In the event of the Optionee's change in employment/service status (such as
from Employee to Consultant or Consultant to Employee), this Option Agreement
shall remain in effect, however the type of option may change as Incentive Stock
Options may only be granted to employees and officers of the Company who are
employees, and grants to consultants or directors are Nonstatutory Stock Options.
In no event shall this Option be exercised later than the Term/Option Expiration
Date as provided above.
2. AGREEMENT
(a) GRANT OF OPTION. Socket Mobile, 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 the 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") subject to the terms, definitions and provisions of the 2004 Equity Incentive Plan (the "Plan") adopted by the Company, which is incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.
If designated in the Notice of
Grant as an Incentive Stock Option ("ISO"), this Option is intended
to qualify as an Incentive Stock Option as defined in Section 422 of the U.S.
Tax Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code
Section 422(d), this Option shall be treated as a Nonstatutory Stock Option
("NSO"). Further, if for any reason this Option (or portion thereof)
will not qualify as an ISO, then, to the extent of such nonqualification, such
Option (or portion thereof) shall be regarded as a NSO granted under the Plan.
In no event will the Administrator, the Company or any Parent or Subsidiary
or any of their respective employees or directors have any liability to Optionee
(or any other person) due to the failure of the Option to qualify for any reason
as an ISO.
(b)
EXERCISE OF OPTION.
(i)
RIGHT TO EXERCISE. This Option shall be exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Grant and with the applicable
provisions of the Plan and this Option Agreement. In the event of Optionee's
death, disability or other termination of the employment or consulting relationship,
this Option shall be exercisable in accordance with the applicable provisions
of the Plan and this Option Agreement.
(ii) METHOD OF EXERCISE. This Option shall be exercisable by written notice which shall state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised, and shall provide for payment with respect to such shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan. 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 times the number of shares being exercised (Exercise Payment). This Option shall be deemed to be exercised upon receipt by the Company of such written notice accompanied by the Exercise Payment.
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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.
(c)
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;
(ii)
check;
(iii) surrender of other
shares of Common Stock of the Company which have a Fair Market Value on the
date of surrender equal to the aggregate Exercise Price of the Shares as to
which the Option is being exercised, provided that accepting such shares of
Common Stock, in the sole discretion of the Administrator, will not result in
any adverse accounting consequences to the Company; or
(iv) 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 by a broker.
(d) TERMINATION
OF RELATIONSHIP. In the event of Optionee's Continuous Status as an Employee,
Officer, Director or Consultant terminates, 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.
(e) DISABILITY
OF OPTIONEE. Notwithstanding the provisions of Section 6 above, in the event
of termination of an Optionee's consulting relationship or Continuous Status
as an Employee as a result of his or her disability, Optionee may, but only
within twelve (12) months from the date of such termination (and in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to exercise
it at the date of such termination; provided, however, that if such disability
is not a "disability" as such term is defined in Section 22(e)(3)
of the Code, in the case of an Incentive Stock Option such Incentive Stock Option
shall cease to be treated as an Incentive Stock Option and shall be treated
for tax purposes as a Nonstatutory Stock Option on the day three months and
one day following 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 so entitled within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
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(f) DEATH OF OPTIONEE.
In the event of termination of Optionee's Continuous Status as an Employee or
Consultant as a result of the death of Optionee, the Option may be exercised
at any time within twelve (12) 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 or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to the extent the
Optionee could exercise the Option at the date of death.
(g) 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 Optionee. The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the Optionee.
(h) 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. The limitations set out in Section 6 of the Plan regarding
Options designated as Incentive Stock Options and Options granted to more than
ten percent (10%) shareholders shall apply to this Option.
(i) 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 ISO OPTION. If this Option qualifies as an ISO, there will be
no regular federal income tax liability or California income tax liability upon
the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to the alternative minimum tax in the year of exercise.
(ii) EXERCISE OF ISO OPTION FOLLOWING DISABILITY. If the Optionee's Continuous
Status as an Employee or Consultant terminates as a result of disability that
is not a total and permanent disability as defined in Section 22(e)(3) of the
Code, to the extent permitted on the date of termination, the Optionee must
exercise an ISO within three months of such termination for the ISO to be qualified
as an ISO.
(iii) EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular federal
income tax liability and California income tax liability upon the exercise of
a Nonstatutory Stock 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 or a former 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 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.
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(iv) DISPOSITION OF SHARES. In the case of an NSO, if Shares are held for more
than 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. In
the case of an ISO, if Shares transferred pursuant to the Option are held for
more than one year after exercise and are disposed of more than two years after
the Date of Grant, any gain realized on disposition of the Shares will also
be treated as long-term capital gain for federal and California income tax purposes.
If Shares purchased under an ISO are disposed of within such one-year period
or within two years after the Date of Grant, any gain realized on such disposition
will be treated as compensation income (taxable at ordinary income rates) to
the extent of the difference between the Exercise Price and the lesser of (1)
the Fair Market Value of the Shares on the date of exercise, or (2) the sale
price of the Shares.
(v) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option granted
to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of
any of the Shares acquired pursuant to the ISO on or before (1) the date two
years after the Date of Grant, or (2) the date one year after the date of exercise,
the Optionee shall immediately notify the Company in writing of such disposition.
Optionee agrees that Optionee may be subject to income tax withholding by the
Company on the compensation income recognized by the Optionee.
(j) CHANGE OF CONTROL.
(i) Change of Control as defined in the Plan means the occurrence of any of
the following events:
(1) Any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes
the "beneficial owner" (as defined in Rule 13d-3 of 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; or
(2) The consummation
of the sale or disposition by the Company of all or substantially all of the
Company's assets; or
(3) 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 (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or its parent) at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or such surviving
entity or its parent outstanding immediately after such merger or consolidation.
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(ii) In the event of a Change in Control, each outstanding Award will be assumed
or an equivalent option or right substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Award, the Optionee will
fully vest in and have the right to exercise all of his or her outstanding Options.
In addition, if an Option becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a Change in Control, the Administrator will
notify the Optionee in writing or electronically that the Option will be fully
vested and exercisable for a period of time determined by the Administrator
in its sole discretion, and the Option will terminate upon the expiration of
such period.
With respect to Awards granted to a non-employee Directors that are assumed
or substituted for, if on the date of or following such assumption or substitution
the Optionee's status as a Director or a director of the successor corporation,
as applicable, is terminated other than upon a voluntary resignation by the
Optionee, then the Optionee will fully vest in and have the right to exercise
Options as to all of the Shares subject thereto.
For the purposes of this subsection (c), an Award will be considered assumed
if, following the Change in Control, the Award confers the right to purchase
or receive, for each Share subject to the Award immediately prior to the Change
in Control, the consideration (whether stock, cash, or other securities or property),
the fair market value of the consideration received in the merger or Change
in Control by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change
in Control is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of an Option for each
Share subject to such Award, to be solely common stock of the successor corporation
or its Parent equal in fair market value to the per share consideration received
by holders of Common Stock in the Change in Control.
(k) 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
thereof, 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:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL 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, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their 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 of interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below.
Dated:
Optionee
Residence Address:
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