<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
DDL Electronics, Inc.
---------------------
(Name of Issuer)
Common Stock
---------------------
(Title of Class of Securities)
233167 10 5
-----------
(CUSIP Number)
William E. Cook, 14775 Peachtree Drive, Tigard, Oregon 97224, (503) 590-3588
----------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 31, 1995
-------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box ____.
Check the following box if a fee is being paid with the statement: ____. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies should
be sent.
*The remainder of this cover page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the Notes).
<PAGE> 2
Schedule 13D
CUSIP No. 233167 10 5 Page 2 of 3 Pages
1. Name of reporting person
S.S. or I.R.S. identification no. of above person
William E. Cook
2. Check the appropriate box if a member of a group* (a) ____
(b) ____
3. SEC use only
___________________________________________________________________________
4. Source of funds*
PF
5. Check box if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e) _____
6. Citizenship or place of organization
U.S. Citizen
7. Number of shares beneficially owned by each reporting person with sole
voting power
880,262
8. Number of shares beneficially owned by each reporting person with shared
voting power
Not applicable
9. Number of shares beneficially owned by each reporting person with sole
dispositive power
880,262
10. Number of shares beneficially owned by each reporting person with shared
dispositive power
Not applicable
11. Aggregate amount beneficially owned by each reporting person
880,262
12. Check box if the aggregate amount in Row (11) excludes certain shares* ____
Not applicable
13. Percent of class presented by amount in Row (11)
5.53%
<PAGE> 3
CUSIP No. 233167 10 5 Page 3 of 3 Pages
14. Type of reporting person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
Item 1. Security and Issuer
This schedule relates to shares of common stock, $.01 par value, of DDL
Electronics, Inc., a Delaware corporation (the "Company"), whose principal
executive offices are located at 7320 S.W. Hunziker Road, Suite 300, Tigard,
Oregon 97223.
Item 2. Identity and Background
(a) The name of the person filing this schedule is William E. Cook.
(b) Mr. Cook's address is 14775 Peachtree Drive, Tigard, Oregon 97224.
(c) Mr. Cook's present principal occupation is to acquire, own, hold, and
dispose of investments for his own account.
(d) During the past five years, Mr. Cook has not been convicted in any
criminal proceeding.
(e) During the past five years, Mr. Cook has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction which
resulted in a judgment, decree, or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Mr. Cook is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
Mr. Cook has financed, and will continue to finance, the exercise of the
options described in Item 6 with personal funds.
Item 4. Purpose of Transaction
The purpose of this transaction is to exercise the options described in
Item 6 until Mr. Cook has exercised all such options before they terminate
under the 1991 Option Agreement (described below), as superseded by the 1993
Option Agreement (described below), the agreements under which the Company
granted such options to Mr. Cook, and then to dispose of all or substantially
all of the shares acquired thereby primarily through open market sales. Except
as set forth above, Mr. Cook does not have any plans or proposals which relate
to or would result in any of the matters described in subparagraphs (a) through
(j) of this Item 4.
Item 5. Interest in Securities of the Issuer
(a) Mr. Cook is the beneficial owner in the aggregate of 880,262 shares of
the common stock, $.01 par value, of the Company of which he is the owner and
holder of record of 190,800 shares and of which he has the option to purchase
689,462 shares, representing in the aggregate 5.53% of such class.
(b) Mr. Cook has the sole power to vote or to direct the vote and the sole
power to dispose or to direct the disposition of 190,800 shares of common
stock, $.01 par value, of the Company and, upon exercise of all of the options
to purchase 880,262 shares of such common stock, he will also have the sole
power to vote or direct the vote and sole power to dispose or direct the
disposition of such shares of common stock acquired thereby. Mr. Cook is not
the beneficial owner of any shares of stock in which he shares the power to
<PAGE> 5
vote or to direct the vote or shares the power to dispose or direct the
disposition.
(c) Mr. Cook effected the following transactions in the shares of common
stock, $.01 par value, of the Company during the past 60 days:
(1) On August 1, 1995, he exercised options to purchase 50,000 shares
of such common stock at $.50 per share, and
(2) On July 26, 1995, he sold 12,500 shares of such common stock at
$1.625 per share, on July 27, 1995, 2,000 shares at $1.625 per share,
on July 31, 1995, 30,000 shares at $1.875 per share, on August 1,
1995, 1,000 shares at $2.00 per share, on August 2, 1995, 7,700 shares
at $2.00 per share, on August 4, 1995, 1,500 shares at $1.875 per
share, on August 8, 1995, 15,500 shares at $2.00 per share, on August
18, 1995, 15,000 shares at $1.875 per share, and on September 14,
1995, 10,000 shares at $2.00 per share (all of which sales were open
market sales).
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
On December 3, 1991, Mr. Cook and the Company entered into a General
Nonstatutory Stock Option Agreement (the "1991 Option Agreement"), by the terms
of which the Company granted to him options to purchase 596,992 shares of its
common stock at $.50 per share. Certain antidilution provisions of the 1991
Option Agreement required that the Company grant additional options to Mr. Cook
upon the occurrence of specific events. The Company, pursuant to these
provisions, granted to Mr. Cook an additional 493,287 options. In 1993, the
Company terminated the 1991 Option Agreement and in its place adopted the 1993
Stock Incentive Plan and 1993 Nonemployee Director Stock Option Plan. It also
entered into a separate stock option agreement with Mr. Cook which incorporated
the antidilution provisions contained in the 1991 Option Agreement (the "1993
Option Agreement"). The Company granted to Mr. Cook an additional 4,183
options under the 1993 Option Agreement. In summary, the Company granted to
Mr. Cook 1,094,462 options. Mr. Cook as of the date of this schedule has
exercised 405,000 options under the 1991 Option Agreement, as superseded by the
1993 Option Agreement, and has sold 214,200 shares acquired thereby.
Item 7. Material to Be Filed as Exhibits
(a) 1993 Stock Incentive Plan and 1993 Non-Employee Directors Stock Option
Plan (incorporated by reference to Exhibits 4.7 and 4.8 to the Issuer's
Registration Statement on Form S-8, Commission File No. 33-74400).
(b) DDL Electronics, Inc. Stock Option Agreement 1993 Stock Incentive Plan
between DDL Electronics, Inc. and Mr. Cook dated January 10, 1994.
(c) Schedule 13D filed by Mr. Cook on January 21, 1994.
<PAGE> 6
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
September 30, 1995 /s/ William E. Cook
- ----------------------------- -------------------------------------
Date Signature
William E. Cook
-------------------------------------
Name/Title
The original statement shall be signed by each person on whose behalf the
statement is filed or his authorized representative. If the statement is
signed on behalf of a person by his authorized representative (other than an
executive officer or general partner of this filing person), evidence of the
representative's authority to sign on behalf of such person shall be filed with
the statement, provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by reference.
The name of any title of each person who signs the statement shall be typed or
printed beneath his signature.
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (See 18 U.S.C. 1001).
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
<S> <C> <C>
99.1 DDL Electronics, Inc. Stock Option Agreement
1993 Stock Incentive Plan between DDL Electronics,
Inc. and William E. Cook dated January 10, 1994
99.2 Schedule 13D filed by William E. Cook on January
21, 1994
</TABLE>
<PAGE> 1
Option Grant Date: January 10, 1994
Number of Shares: 1,431 shares
Exercise Price: $.50 per share
Vesting Schedule: * in ____ equal annual installments commencing on the first
anniversary of the Option Grant Date
Term: * Insert term into paragraph 3 below
DDL ELECTRONICS, INC.
STOCK OPTION AGREEMENT
1993 STOCK INCENTIVE PLAN
This Stock Option Agreement (this "Agreement") is made effective as of the
Option Grant Date set forth above by and between DDL Electronics, Inc., a
Delaware corporation (the "Company"), and the optionee named below
("Optionee").
The parties agree as follows:
1. Governing Plan. Optionee has received a copy of the DDL Electronics,
Inc. 1993 Stock Incentive Plan (the "1993 Plan"). This Agreement is subject in
all respects to the applicable provisions of the 1993 Plan which are
incorporated herein by reference, and in the case of any conflict between the
provisions of the 1993 Plan and this Agreement, the provisions of the 1993 Plan
shall be controlling.
2. Grant of Option. The Company hereby grants to Optionee a nonstatutory
stock option (the "Option") to purchase the number of shares of the Company's
Common Stock set forth above. The Exercise Price for such Option shall be paid
in cash, unless otherwise determined by the Board of Directors or Committee
administering the 1993 Plan.
3. Term and Termination. The Option shall expire on the earliest of (i)
ninety (90) days from the date on which Optionee ceases to be an employee or
consultant of the Company or its subsidiaries for any reason; or (ii) the ____
anniversary of the Option Grant Date. If Optionee ceases for any reason to be
an employee or consultant of the Company or its subsidiaries, that portion of
the Option which has not yet become exercisable shall be terminated, unless the
Board of Directors or Committee administering the 1993 Plan in its discretion
accelerates the vesting of the Option (in which case it may impose whatever
conditions it considers appropriate on the accelerated portion).*
4. Non-Assignability. Options granted under the 1993 Plan may not be
sold, pledged, hypothecated, assigned, encumbered, gifted or otherwise
transferred or alienated in any manner, either voluntarily or involuntarily or
by the operation of law, other than by will or laws of descent and
distribution, and may be exercised during the lifetime of the Optionee only by
such Optionee.
5. Governing Law. This Agreement shall be governed by, interpreted under
and construed and enforced in accordance with the internal laws, and not the
laws pertaining to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
* See Attached Amendment
<PAGE> 2
IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement
effective as of the date first written above.
DDL ELECTRONICS, INC. OPTIONEE
By: /s/ Alan Steel /s/ William E. Cook
------------------------ -----------------------------
Signature Signature
Alan R. Steel William E. Cook
- --------------------------- -----------------------------
Printed Name Printed Name
Vice President 1270 N.W. 167th Place, Beaverton, OR 97006
- --------------------------- ------------------------------------------
Title Street Address, City, State, Zip Code
<PAGE> 3
DDL ELECTRONICS, INC.
STOCK OPTION AGREEMENT
1993 STOCK INCENTIVE PLAN
Amendment to Stock Option Agreement for antidilution options granted
pursuant to the 1991 Nonstatutory Stock Option Agreement:
1. Number of Shares. This Stock Option Agreement covers the indicated
number of shares plus options granted in the future pursuant to the
antidilution provisions of the 1991 Nonstatutory Stock Option Agreement between
the Company and Optionee.
2. Term and Termination. Notwithstanding the provisions of this
paragraph, antidilution options will have the name vesting, exercise and
termination terms as stated in the related 1991 Nonstatutory Stock Option
Agreement.
IN WITNESS WHEREOF, the Company and Optionee have executed this Agreement
effective as of the date first written above.
DDL ELECTRONICS, INC. OPTIONEE
By: /s/ Alan Steel /s/ William E. Cook
------------------------ -----------------------------
Signature Signature
Alan R. Steel William E. Cook
- --------------------------- -----------------------------
Printed Name Printed Name
Vice President 1270 N.W. 167th Place, Beaverton, OR 97006
- --------------------------- ------------------------------------------
Title Street Address, City, State, Zip Code
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
DDL Electronics, Inc. (formerly Data-Design Laboratories, Inc.)
---------------------------------------------------------------
(Name of Issuer)
Common Stock
---------------------
(Title of Class of Securities)
233167 10 5
-----------
(CUSIP Number)
William E. Cook, 1270 N.W. 167th Place, Beaverton, OR 97006 (503/645-3807)
--------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
June 30, 1992
---------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box ____.
Check the following box if a fee is being paid with the statement: __x__. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies should
be sent.
*The remainder of this cover page shall not be deemed to be "filed" for the
purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or
otherwise subject to the liabilities of that section of the Act but shall be
subject to all other provisions of the Act (however, see the Notes).
This Schedule 13D contains 017 sequentially numbered pages.
The exhibit index appears at sequentially numbered page 005.
<PAGE> 2
Schedule 13D
1. Name of reporting person
S.S. or I.R.S. identification no. of above person
William E. Cook, President of DDL Electronics, Inc.
1270 N.W. 167th Place, Beaverton, OR 97006
2. Check the appropriate box if a member of a group* (a) ____
(b) ____
3. SEC use only
___________________________________________________________________________
4. Source of funds*
PF
5. Check box if disclosure of legal proceedings is required pursuant to Items
2(d) or 2(e) _____
Not Applicable
6. Citizenship or place of organization
USA
7. Number of shares beneficially owned by each reporting person with sole
voting power
1,093,814
8. Number of shares beneficially owned by each reporting person with shared
voting power
Not Applicable
9. Number of shares beneficially owned by each reporting person with sole
dispositive power
1,093,814
10. Number of shares beneficially owned by each reporting person with shared
dispositive power
Not Applicable
11. Aggregate amount beneficially owned by each reporting person
1,093,814
12. Check box if the aggregate amount in Row (11) excludes certain shares* ____
Not Applicable
<PAGE> 3
13. Percent of class presented by amount in Row (11)
7.6%
14. Type of reporting person*
IN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
Item 1. Security and Issuer.
This Statement relates to shares of Common Stock, $.01 par value, of DDL
Electronics, Inc., formerly Data-Design Laboratories, Inc., a Delaware
corporation (the "Company"), whose principal executive offices are located at
1270 N.W. 167th Place, Beaverton, Oregon 97006.
Item 2. Identity and Background.
(a) The name of the person filing this Statement is William E. Cook.
(b) Mr. Cook's address is DDL Electronics, Inc., 1270 N.W. 167th Place,
Beaverton, OR 97006.
(c) The present principal occupation of Mr. Cook is President and Chief
Executive Officer of DDL Electronics, Inc. DDL Electronics, Inc. performs
electronic manufacturing and printed circuit board fabrication services in
Beaverton, Oregon, Chatsworth, California and in Northern Ireland. Mr. Cook is
also a director of the Company.
(d) During the last five years, Mr. Cook has not been convicted in a
criminal proceeding.
(e) During the last five years, Mr. Cook has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction which
resulted in a judgment, decree, or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Mr. Cook is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
Mr. Cook currently anticipates that any exercise of the options described
in Item 6 would be financed through the use of personal funds. Since the
options are exercisable at a price of $.50 per shares, and since the options
cover 1,093,814 shares of the Company's Common Stock, Mr. Cook would require
the sum of $546,907 to exercise all such options.
Item 4. Purpose of Transaction.
Mr. Cook currently anticipates that any shares of the Company's Common
Stock obtained through the exercise of the options described in Item 6 would be
acquired for investment purposes. Except with respect to the possible exercise
of such options, Mr. Cook does not have any plans or proposals that relate to
or would result in the matters described in paragraphs (a)-(j) of Item 4 to
Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) Mr. Cook is deemed to beneficially own an aggregate of 1,093,814
shares of Common Stock, $.01 par value, of the Company, representing 7.6% of
the class. All such shares relate to an option granted to Mr. Cook to purchase
an aggregate of 1,093,814 shares of the Company's Common Stock.
<PAGE> 5
(b) Not applicable at this time. Upon exercise, Mr. Cook intends to
retain the sole power to vote and dispose of all shares of the Company's Common
Stock then owned by Mr. Cook.
(c) No transactions in the Company's Common Stock have been affected by
Mr. Cook in the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
On December 3, 1991, Mr. Cook was granted an option to purchase 596,992
shares of the Company's Common Stock. Such option has been increased to
1,093,814 shares of Common Stock pursuant to anti-dilution provisions of the
related General Nonstatutory Stock Option Agreement (the "Agreement"). One-
half of the originally granted options become exercisable on December 3, 1991,
25% on June 30, 1992 and 25% on June 30, 1993. Anti-dilution options became
exercisable retroactively or prospectively in the same proportion when issued.
None of these options have been exercised to date. One-half of the options
terminate on December 3, 1996, 25% on June 30, 1997 and 25% on June 30, 1998.
In the future, additional options may be granted pursuant to the Agreement,
which options will have the exercise and termination characteristics described
in this Item 6.
Item 7. Material to Be Filed as Exhibits.
(a) General Nonstatutory Stock Option Agreement dated December 3, 1991 by
and between the Company and William E. Cook.
Signature
---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
1/10/94 /s/ William E. Cook
- ----------------------------- -------------------------------------
Date Signature
<PAGE> 6
EXHIBIT INDEX
-------------
SEQUENTIALLY NUMBERED
PAGE WHERE EXHIBIT
CAN BE FOUND OR IS
INCORPORATED BY
EXHIBIT NUMBER DESCRIPTION REFERENCE
- -------------- ----------- ---------------------
1 General Nonstatutory Stock Option 006
Agreement dated December 3, 1991,
by and between Data-Design
Laboratories, Inc. (now known as
DDL Electronics, Inc.), a Delaware
corporation, and William E. Cook.
<PAGE> 7
EXHIBIT A
DATA-DESIGN LABORATORIES, INC.
GENERAL NONSTATUTORY STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made effective as of the 3rd
day of December, 1991, by and between Data-Design Laboratories, Inc., a
Delaware corporation ("Company"), and William E. Cook ("Optionee").
STATEMENT OF BACKGROUND FACTS
The Board of Directors of the Company ("Board") has, pursuant to its duly
adopted Resolutions of December 3, 1991, established the Data-Design
Laboratories, Inc. General Nonstatutory Stock Option Plan ("Plan") and has
granted full authority to the Compensation Committee of the Board ("Committee")
to make grants under the Plan.
Solely to induce the Optionee to agree to employment by the Company
pursuant to the terms of an Employment Agreement dated December 3, 1991
("Employment Agreement"), the Committee, by action taken on December 3, 1991
("Grant Date"), granted to the Optionee an option under the Plan ("Option") to
purchase shares of the common stock of the Company ("Common Stock") in the
amounts and on the terms and conditions set forth herein. This Agreement, the
form of which was approved by the Committee, is intended to memorialize the
terms and conditions upon which the Committee granted the Option to the
Optionee.
In consideration of the foregoing and of the mutual covenants set forth
herein and other good and valuable consideration, the parties hereto agree as
set forth below.
AGREEMENT
1. The Option.
----------
(a) The Optionee may, at the Optionee's option and subject to the
terms and conditions set forth herein, purchase under the Plan all or any part
of an aggregate of 596,992 shares of Common Stock ("Option Shares"),
representing 9% of the Company's currently issued and outstanding shares of
Common Stock, at the
<PAGE> 8
price per share set forth in Section 2(a) below and subject to adjustment as
provided in Section 2(c) below.
2. Exercise of Option.
------------------
(a) Option Price and Vesting. The Option shall vest and be
exercisable at $.50 per share ("Option Price") (such price being equal to the
lowest closing price of the Company's Common Stock during the thirty (30) day
period immediately preceding the date hereof) as to the percentage of the
Option Shares on and after the start dates and on or before the termination
dates set forth below ("Exercise Periods"):
Exercise Periods
% of Option ----------------
Shares Start Termination
----------- ----- -----------
50% December 1, 1991 December 3, 1996
25% June 30, 1992 June 30, 1997
25% June 30, 1993 June 30, 1998
Notwithstanding the foregoing, in the event that, prior to December 3,
1992, the Optionee's employment with the Company is terminated as a result of
either of his voluntary resignation (as defined in Section 4(b) of the
Employment Agreement) or an involuntary termination for Cause (as defined in
Section 4(c) of the Employment Agreement), then the 50% vested portion of the
Option shall be automatically reduced to the lower vested percentage ("Revised
Percentage") calculated as follows:
(50%) times (No. of days the Optionee was employed by the Company
divided by 365)
In the event the Revised Percentage becomes applicable but the Optionee has
previously exercised his Option as to a larger percentage than the Revised
Percentage, then the Company or its designee shall have the right and option,
exercisable within 30 days of the Optionee's employment termination, to
repurchase the Option Shares attributable to the difference between the Revised
Percentage and the percentage previously exercised by the Optionee at the
original Option Price.
(b) Option Exercise. The Option may be exercised when installments
vest as indicated by the start dates in Section 2(a) above with respect to all
or part of the Option Shares covered by such vested installments,
2
<PAGE> 9
subject, however, to further restrictions contained in this Agreement. In the
event that the Optionee shall exercise the Option for less than the full number
of Option Shares included within the vested installment at the time of
exercise, the Optionee shall be entitled to exercise the Option (in one or more
subsequent increments) for the balance of the Option Shares included in such
vested installment. In no event shall the Optionee be entitled to exercise the
Option for fractional shares of Common Stock or for a number of shares
exceeding the maximum number of Option Shares. The Optionee acknowledges that
the Optionee has no right whatsoever to exercise the Option granted hereunder
with respect to any Option Shares unless and until the right to exercise the
Option with respect to such Option Shares has vested as provided above.
(c) Option Adjustments.
(i) Except as provided otherwise in subparagraphs (ii), (iii)
and (iv) below, if the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number or kind
of shares of the Company through reorganization, recapitalization (other than
as a result of the conversion, exchange or exercise of the Company's currently
outstanding securities or options or the sale of new shares of Common Stock or
new securities convertible into shares of Common Stock), reclassification,
stock dividend, stock split or reverse stock split, an appropriate and
proportionate adjustment shall be made in the number or kind of shares and the
per share Option Price thereof subject to this Option; provided, however, that
no such adjustment need be made if, upon the advice of counsel, the Board or
the Committee determines that such adjustment may result in the receipt of
federally taxable income to the Optionee, to holders of other derivative
securities of the Company or holders of Common Stock or other classes of the
Company's securities.
(ii) If, at any time or from time to time after the date hereof
and until December 2, 1994, any holder of the Company's currently outstanding
7% Convertible Subordinated Debentures due 2001 or the Company's 8 1/2%
Convertible Subordinated Debentures due 2008 (together, the "Debentures")
converts or exchanges any of such Debentures into shares of Common Stock of the
Company, securities convertible into shares of Common Stock of the Company
("Convertible
3
<PAGE> 10
Securities") and/or preferred stock participating in the profits of the Company
on a basis which is substantially similar to that of Common Stock
("Participating Preferred"), then the number of Option Shares which the
Optionee shall be entitled to purchase pursuant to this Option shall be
increased by that number of shares of Common Stock equaling:
nine percent (9%) of the lesser of (a) the number of shares of Common
Stock into which any such Debentures are actually converted or exchanged
plus the number of shares of Common Stock into which any new Convertible
Securities which are actually issued by the Company in conjunction with
such Debenture conversion or exchange are themselves convertible plus the
number of shares of Participating Preferred actually issued in conjunction
with such Debenture exchange or conversion, or (b) two (2) times the
number of shares of Common Stock into which the Debentures that are
actually converted or exchanged were originally convertible pursuant to
the terms of such Debentures as in effect on the date hereof.
In addition, in the event that, in connection with such Debenture exchange or
conversion, equity or debt securities are issued ("PIK Securities"), whose
dividends or interest are payable, as a whole or in part, by shares of Common
Stock, then if, when and to the extent shares of Common Stock ("PIK Shares")
are actually issued in respect of PIK Securities between the date of the
issuance of the PIK Securities and the date the Optionee makes his Final
Exercise (as defined in subparagraph (iii) below), the number of Option Shares
which the Optionee shall be entitled to purchase pursuant to this Option shall
be increased by nine percent (9%) of the number of such PIK Shares which are
issued; provided, however, that the adjustment to the number of Option Shares
under all provisions of this subparagraph (ii) shall in no event exceed two (2)
times the number of shares of Common Stock into which the Debentures that are
actually converted or exchanged were originally convertible pursuant to the
terms of such Debentures as in effect on the date hereof.
(iii) If, at any time or from time to time, any holder of an
option to purchase Common Stock which is outstanding on the date hereof (other
than the Option granted pursuant to this Agreement) with an exercise price of
less than $1.00 per share ("Recent
4
<PAGE> 11
Options") exercises such option, then the number of Option Shares which the
Optionee shall be entitled to purchase pursuant to this Option shall be
increased by that number of shares of Common Stock equaling nine percent (9%)
of the number of shares of Common Stock actually issued upon the exercise of
such Recent Options.
In addition, at the time the Optionee exercises his final vested
installment ("Final Exercise") (whether such final installment be the last 25%
installment vesting June 30, 1993 or, because of an employment termination
prior to June 30, 1993, some prior vested installment), the number of Option
Shares which the Optionee shall be entitled to purchase pursuant to this Option
shall be increased by that number of shares of Common Stock subject to
"Unexercised, In-The-Money Recent Options" on the date of Final Exercise.
"Unexercised, In-The-Money Recent Options" shall mean those Recent Options
outstanding on the date of Final Exercise which (a) have not yet been
exercised, (b) have not been cancelled due to the recipient's employment
termination or otherwise, and (c) have an exercise price which is equal to or
lower than the closing price of the Company's Common Stock on the business day
immediately preceding the date of Final Exercise.
(iv) Notwithstanding the foregoing, upon the date of termination
of the Optionee's employment with the Company for any reason, the provisions
set forth in subparagraphs (ii) and (iii) of this Section 2 shall no long
remain in effect, and the Optionee shall no longer be entitled to the
protection afforded by such provisions; provided, however, that in the event
that Cook's employment is involuntarily terminated by the Company without Cause
(as defined in Section 4(c) of the Employment Agreement), the provisions of
subparagraph (ii) of this Section 2 shall remain in effect until ninety (90)
days after the date of the Optionee's employment termination at which time the
specific protections of subparagraph (ii) shall terminate.
(v) Example #1. Facts: No Recent Options have been exercised
and no stock splits or similar "automatic adjustment" events have occurred. In
1993 and while the Optionee is employed by the Company, an exchange offer is
consummated with some but not all of the holders of
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the Debentures. As a result of that exchange transaction, the holders of
Debentures which are currently convertible into 2,500,000 shares of Common
Stock of the Company exchange their Debentures for:
- 1,000,000 shares of Common Stock;
- Warrants for 7,000,000 shares of Common Stock; and
- Non-convertible promissory notes of the Company for a specified amount.
As a result of the provisions of paragraph (ii) above, the Optionee's number of
Option Shares would equal:
596,992 plus (9% of 5,000,000)
Example #2: No exchange has been made as to the Debentures and
no stock splits or comparable events have occurred. The Optionee fully
exercises his final vested installment of 25% in June 1998. Of the Recent
Options (which, as of December 3, 1991, covered 309,000 shares of Common
Stock), options covering 109,000 shares have been cancelled due to employee
terminations and options covering 200,000 shares are "in the money" (i.e., the
closing price of the Company's shares on the business day before the date of
Final Exercise exceeded the option or strike price of the Recent Options). No
outstanding Recent Options are not "in the money" and no Recent Options have
been exercised. At the time of the Optionee's final exercise as to the last
25% installment of his Option, and as a result of the provisions of paragraph
(iii) above, the Optionee's number of Option Shares would equal:
596,992 plus (9% of 200,000).
(d) Manner of Exercise. The Option shall be exercised by giving to
the Company written notice thereof during any applicable Exercise Period, and
specifying in such notice the number of Option Shares with respect to which
such Option is being exercised.
3. Termination of Option Because of Employment Termination. The Option
shall terminate before the applicable start dates set forth in Section 2 above
in the following circumstances:
(a) Death or Disability. If the Optionee's employment by the Company
is terminated by reason of the
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death or "disability" (as defined in the Employment Agreement) of the Optionee,
then:
(i) the Exercise Periods shall end on the applicable termination
dates specified in Section 2(a) above; and
(ii) the Optionee or legal representative (in the case of
disability) or the Optionee's executor or administrator, or the person or
persons to whom the Option's rights under this Option shall pass by will or by
the applicable laws of descent and distribution (in the case of death), may
exercise the unexercised portion (or any lesser amount) of the Option, only to
the extent that it was vested and therefore exercisable by the Optionee under
Section 2 on the date of such employment termination.
(b) Other Termination. If the Optionee's employment by the Company
is terminated for any reason other than death or disability as provided above,
then:
(i) the Exercise Periods shall end on the applicable termination
dates set forth in Section 2(a) hereof; and
(ii) the Option shall be exercisable only to the extent that it
was vested and therefore exercisable by the Optionee under Section 2 on the
date of such termination of employment.
4. Termination of Option Because of Other Grants. In the event that the
Committee approves the grant of any new options to purchase shares of Common
Stock under the Plan to any person commencing employment with the Company
subsequent to the date hereof (a "New Employee"), the grant of options to whom
was recommended to the Committee by the Optionee because of the need for
additional management in the turn-around team, the Optionee shall be required
to surrender for cancellation options covering that number of shares subject to
the Option equal to the number of shares approved by the Committee to be
granted to any such New Employee. Upon cancellation of any such Option Shares,
such shares shall be available for grant to any such New Employee by the
Committee. It is understood that options under the Plan will be granted solely
to induce the New Employee to agree to employment by the Company pursuant to
the terms of an employment agreement.
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5. Accelerated Vesting. Upon the occurrence of an "Acceleration Event"
prior to June 30, 1993, the shares of Common Stock subject to installments of
the Option which have not yet vested pursuant to Section 2(a) hereof will
automatically vest on the closing date of such Acceleration Event. For
purposes of this paragraph, "Acceleration Event" means:
(a) a sale of all or substantially all of the Company's assets;
(b) a sale to one person or entity, or two or more persons or
entities acting in concert, (other than to TBM Associates, Inc. and/or Alan
Patricof Associates or an affiliate of or fund managed by either of them, or in
connection with the conversion or exchange of the Debentures) of equity
securities of the Company representing more than 25% of the aggregate voting
power of all outstanding equity securities of the Company;
(c) the dissolution or liquidation of the Company; or
(d) a merger, consolidation or other reorganization of the Company
(other than a reincorporation of the Company or a reorganization described in
Section 368(a)(1)(F) of the Internal Revenue Code) with one or more other
corporations as a result of which the Company goes out of existence or becomes
a subsidiary of another corporation shall own, directly or indirectly, more
than 50% of the aggregate voting power of all outstanding equity securities of
the Company).
6. Delivery of Certificates. As soon as practicable after any proper
exercise of the Option in accordance with the provisions of this Agreement, the
Company shall deliver to the Optionee at the main office of the Company, or
such other place as shall be mutually acceptable, a certificate or certificates
representing such shares of Common Stock to which the Optionee is entitled upon
exercise of the Option.
7. Rights in Shares Before Issuance and Delivery. Upon proper exercise
of the Option (whether as a whole or in part) and payment of the Option Price
required by such exercise, the Optionee shall immediately have all stockholder
rights and privileges as to the Option Shares acquired by the Optionee in such
exercise
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notwithstanding any delays in issuance and delivery of the relevant
stock certificate(s).
8. Nontransferability of Option. The Option is not transferable
otherwise than to a grantor trust, plan or account created by the Optionee
solely for estate planning purposes, by will or the laws of descent and
distribution or for retirement planning purposes. The Option shall not be
otherwise transferred, assigned, pledged, hypothecated, or disposed of in any
way, whether by operation of law or otherwise, and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer the
Option otherwise than by will or the laws of descent and distribution, or to
assign, pledge, hypothecate or otherwise dispose of the Option, or upon the
levy of any execution, attachment or similar process thereon, the Option shall
become null and void and any subsequent attempted exercise of the Option shall
be ineffective against the Company. The terms of the Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
9. Certain Representations and Warranties. The Optionee expressly
acknowledges, represents and agrees:
(a) that if the Optionee uses Common Stock of the Company to pay the
exercise price of the Option, the Optionee has been advised to consult with a
competent tax advisor regarding the applicable tax consequences prior to
utilizing such Common Stock to exercise an Option; and
(b) that if the Optionee is a person subject to the provisions of
Section 16 of the Securities Exchange Act of 1934, the Optionee has been
advised to consult with a competent federal securities law advisor as to the
reporting obligations and potential liability for profits under said Section 16
with respect to the granting and exercise of the Option.
10. No Employment Rights or Obligations. Nothing in the Plan or in this
Agreement shall be construed to create or imply any contract of employment
between the Company, or any direct or indirect parent or subsidiary corporation
of the Company, (the "Participating Companies") and the Optionee. Nothing in
the Plan or in this Agreement shall confer upon the Optionee any right to
continue in the employ of the Company or any of the Participating Companies or
confer upon any of the Participating Companies any right to require continued
employment by the Optionee. Except as may be expressly
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<PAGE> 16
provided in a separate written agreement, the Optionee acknowledges and agrees
that the employment of the Optionee by such Participating Company is expressly
at the will of the Participating Company, and the Participating Company may
terminate the Optionee's employment by such Participating Company at any time
for any reason or for no reason. Similarly, except as may be expressly
provided in a separate written agreement, the Optionee may terminate his
employment with a Participating Company at any time for any reason or for no
reason.
11. Governing Law. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, and not the laws pertaining
to conflicts or choice or laws, of the State of California applicable to
agreements made and to be performed wholly within the State of California.
12. Agreement Binding on Successors. The terms of this Agreement shall be
binding upon the executors, administrators, heirs, successors, transferees and
assigns of the Company and the Optionee.
13. Necessary Acts. The Optionee agrees to perform all acts and execute
and deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement, including but not limited to all acts and
documents related to the cancellation of options in connection with the
issuance of options to New Employees and compliance with federal and/or state
securities and/or tax laws.
14. Registration of Shares. The Company will use all commercially
reasonable efforts to register the Option Shares on Form S-8 under the
Securities Act of 1933 and, if the Company's shares of Common Stock are listed
on the New York Stock Exchange at the time of such registration, to list the
Option Shares on the New York Stock Exchange.
15. Invalid Provisions. In the event that any provision of this Agreement
is found to be invalid or otherwise unenforceable under any applicable law,
such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though
the invalid and unenforceable provision was not contained herein.
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16. Counterparts. For convenience, this Agreement may be executed in any
number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for any other
purpose without the production of any other counterparts.
IN WITNESS WHEREOF, the Company and the Optionee have executed this
Agreement effective as of the date first written above.
DATA-DESIGN LABORATORIES, INC. OPTIONEE
By: /s/ Alan R. Steel /s/ William E. Cook
--------------------------- -----------------------------------
Alan R. Steel, William E. Cook
Chief Financial Officer
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By her signature below, the spouse of the Optionee, if such Optionee be
legally married as of the date of execution of this Agreement, acknowledges
that she has read this Agreement and is familiar with the terms and provisions
thereof, and agrees to be bound by all the terms and conditions of said
Agreement.
-----------------------------------
Spouse's Signature
-----------------------------------
Printed Name
Dated: _________________________________
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