<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-11402
-----------
TELXON CORPORATION
----------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 74-1666060
- - ------------------------------- ------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3330 West Market Street, Akron, Ohio 44333
- - ----------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (216) 867-3700
-------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X . No .
--- ---
At September 30, 1994, there were 15,537,641 outstanding shares of the
registrant's Common Stock, $.01 par value per share ("Common Stock").
Page 1 of 70 Pages
Exhibit Index Appears on Page 20
<PAGE> 2
<TABLE>
TELXON CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<CAPTION>
Page No.
--------
<S> <C> <C> <C>
PART I. FINANCIAL INFORMATION:
Item 1: Consolidated Financial Statements
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . 6-8
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 9-11
PART II. OTHER INFORMATION:
Item 4: Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Item 6: Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
2
<PAGE> 3
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except per share amounts)
<CAPTION>
September 30, March 31,
1994 1994
------------ --------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash (including cash equivalents of $6,119
and $8,478) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 26,790 $ 24,041
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 825 764
Accounts receivable, net of allowance for
doubtful accounts of $1,893 and $1,635 . . . . . . . . . . . . . . . . . . . 69,839 64,009
Notes and other accounts receivable . . . . . . . . . . . . . . . . . . . . . . . 3,631 5,723
Refundable income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 754 1,848
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,029 79,267
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,454 10,288
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . 188,322 185,940
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,257 41,561
Goodwill, net of amortization of $9,218
and $7,551 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,533 19,354
Intangible and other assets, net . . . . . . . . . . . . . . . . . . . . . . . . 11,937 13,113
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $263,049 $259,968
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,281 $ 24,329
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,396 43,344
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . 1,332 244
Capital lease obligations due within one
year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 742 391
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,358 2,162
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,845 35,404
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . 97,954 105,874
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,989 463
Convertible subordinated debentures . . . . . . . . . . . . . . . . . . . . . . . 24,734 24,734
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,968 1,837
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,582 2,345
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 132,227 135,253
-------- --------
Stockholders' equity:
Preferred Stock, $1.00 par value per share;
500,000 shares authorized, none issued . . . . . . . . . . . . . . . . . . . -- --
Common Stock, $.01 par value per share;
50,000,000 shares authorized, 15,537,641
and 15,346,329 shares outstanding . . . . . . . . . . . . . . . . . . . . . 155 153
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,289 74,830
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,116 54,653
Equity adjustment for foreign currency
translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,979) (3,587)
Unearned compensation relating to restricted
stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (759) (1,334)
-------- --------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . 130,822 124,715
-------- --------
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $263,049 $259,968
======== ========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
3
<PAGE> 4
<TABLE>
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except shares and per share amounts)
(Unaudited)
<CAPTION>
Three Months Six Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Product . . . . . . . . . . . . . . . . . . . . . $78,652 $52,300 $153,587 $ 98,650
Customer service . . . . . . . . . . . . . . . . . . 13,234 10,785 25,732 20,976
------- ------- -------- --------
Total revenues . . . . . . . . . . . . . . . . . 91,886 63,085 179,319 119,626
Cost of revenues . . . . . . . . . . . . . . . . . . 53,553 37,649 104,270 69,745
------- ------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . . . 38,333 25,436 75,049 49,881
Operating expenses:
Selling expenses . . . . . . . . . . . . . . . . . . 16,764 13,624 32,945 26,246
Product development and engin-
eering expenses . . . . . . . . . . . . . . . . . . 8,807 6,021 16,589 12,081
General and administrative
expenses . . . . . . . . . . . . . . . . . . . 8,672 7,414 17,736 14,743
------- ------- -------- --------
Total operating expenses . . . . . . . . . . . . 34,243 27,059 67,270 53,070
Income (loss) from
operations . . . . . . . . . . . . . . . . . 4,090 (1,623) 7,779 (3,189)
Interest income . . . . . . . . . . . . . . . . . . . 146 178 261 413
Interest expense . . . . . . . . . . . . . . . . . . . (1,199) (536) (2,274) (1,076)
------- ------- -------- --------
Income (loss) before income
taxes . . . . . . . . . . . . . . . . . . . 3,037 (1,981) 5,766 (3,852)
Provision (benefit) for income
taxes . . . . . . . . . . . . . . . . . . . . . . . . 1,418 (891) 2,874 (785)
------- ------- -------- --------
Net income (loss) . . . . . . . . . . . . . . . $ 1,619 $(1,090) $ 2,892 $(3,067)
======= ======= ======== =======
Earnings per common and common
equivalent share:
Net income (loss) per share . . . . . . . . . . $ .10 $ (.07) $ .18 $ (.20)
======= ======= ======== =======
Average number of common and
common equivalent shares
outstanding . . . . . . . . . . . . . . 15,796,000 15,352,000 15,677,000 15,352,000
========== ========== ========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
4
<PAGE> 5
<TABLE>
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<CAPTION>
Six Months Ended September 30,
-----------------------------
1994 1993
-------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,892 $(3,067)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 10,665 10,165
Non-cash compensation related to
restricted stock awards . . . . . . . . . . . . . . . . . . . . . 283 332
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . 650 395
Provision for inventory obsolescence . . . . . . . . . . . . . . . . 3,774 1,551
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . (316) 684
Loss on disposal of assets . . . . . . . . . . . . . . . . . . . . . 565 352
Changes in assets and liabilities:
Accounts and notes receivable . . . . . . . . . . . . . . . . . (4,036) (3,786)
Refundable income taxes . . . . . . . . . . . . . . . . . . . . 1,094 2,139
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (1,024) (1,913)
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . 914 (1,129)
Intangible and other assets . . . . . . . . . . . . . . . . . . (396) 828
Accounts payable and accrued
liabilities . . . . . . . . . . . . . . . . . . . . . . . . (14,623) (6,904)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . 1,196 230
Other long-term liabilities . . . . . . . . . . . . . . . . . . (763) (574)
------- -------
Total adjustments . . . . . . . . . . . . . . . . . . . (2,017) 2,370
------- -------
Net cash provided by (used in) operating
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 875 (697)
Cash flows from investing activities:
Proceeds from disposal of fixed assets . . . . . . . . . . . . . . . . . . . -- 750
Additions to property and equipment . . . . . . . . . . . . . . . . . . . . . (8,501) (8,364)
Payments for acquisitions, net of cash
acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . (841) (4,996)
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (61) 645
Software investments . . . . . . . . . . . . . . . . . . . . . . . . . . . (446) (93)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- (295)
------- -------
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . (9,849) (12,353)
Cash flows from financing activities:
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,251 --
Principal payments on capital leases . . . . . . . . . . . . . . . . . . . . (280) (681)
Principal payments for long-term borrowing . . . . . . . . . . . . . . . . . (80) --
Proceeds from exercise of stock options
(includes tax benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . 1,323 24
------- -------
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,214 (657)
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . 509 78
------- -------
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,749 (13,629)
Cash and cash equivalents at beginning
of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,041 26,515
------- -------
Cash and cash equivalents at end of
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,790 $12,886
======= =======
<FN>
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
5
<PAGE> 6
TELXON CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Management Representation
The consolidated financial statements of Telxon Corporation and its
subsidiaries (the "Company") have been prepared without audit. In the
opinion of the Company, all adjustments, consisting of normal recurring
and other non-recurring adjustments (aggregating $418 and $.03 per share)
necessary for a fair statement of results for the interim periods, have
been made. The financial statements, which do not include all of the
information and notes required by generally accepted accounting principles
for complete financial statements, should be read in conjunction with the
audited consolidated financial statements as contained in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1994.
2. Earnings Per Share
Computations of earnings per common and common equivalent share of common
stock are based on the weighted average number of common shares outstanding
during the period increased by the net shares issuable on the assumed
exercise of stock options using the treasury stock method and the dilutive
effect of restricted stock awards. Common stock purchase rights
outstanding under the Company's stockholder rights plan, which potentially
have a dilutive effect, have been excluded from the weighted common shares
computation as preconditions to the exercisability of such rights were
not satisfied.
3. Inventories
Inventories consisted of the following (in thousands):
September 30, 1994
(Unaudited) March 31, 1994
------------------ --------------
Purchased components . . . . . . $40,740 $44,378
Work-in-process . . . . . . . . . 13,566 18,664
Finished goods . . . . . . . . . 22,723 16,225
------- -------
$77,029 $79,267
======= =======
4. Accrued Liabilities
<TABLE>
Accrued liabilities consisted of the following (in thousands):
<CAPTION>
September 30, 1994
(Unaudited) March 31, 1994
------------------ --------------
<S> <C> <C>
Current liability to former share-
holders of acquired companies . . . . . . . . . . . . . . $ 1,246 $ 1,533
Accrued payroll and other employee
compensation . . . . . . . . . . . . . . . . . . . . . . . 9,261 10,610
Accrued commissions . . . . . . . . . . . . . . . . . . . . . . 1,717 2,362
Accrued taxes other than payroll
and income taxes . . . . . . . . . . . . . . . . . . . . . 2,958 1,715
Deferred customer service revenues . . . . . . . . . . . . . . 9,993 9,240
Accrued royalties . . . . . . . . . . . . . . . . . . . . . . . 2,380 3,737
Other accrued liabilities . . . . . . . . . . . . . . . . . . . 7,290 6,207
------- -------
$34,845 $35,404
======= =======
</TABLE>
6
<PAGE> 7
5. Supplemental Cash Flow Information
<TABLE>
<CAPTION>
Six Months Ended September 30,
1994 1993
-------- ---------
(Unaudited)
(In thousands)
<S> <C> <C>
Cash paid during the period for:
Interest $2,161 $ 996
Income taxes 943 1,064
</TABLE>
Capital lease additions or disposals are non-cash transactions and,
accordingly, $2,157 has been excluded from property and equipment additions in
the fiscal year 1995 Statement of Cash Flows. The Company received federal
income tax refunds aggregating $807 during the second quarter of fiscal year
1995.
During the quarter ended September 30, 1994, the Company converted $5,438
borrowed under the revolving credit provisions of the Company's credit facility
to a 5 year term loan under that facility. Principal amounts due under the
term loan are funded as revolving credit advances. The conversion and
subsequent funding of $139 in principal due for the quarter ended September 30,
1994, have been treated as non-cash transactions and accordingly, have been
excluded from the fiscal year 1995 Statement of Cash Flows.
6. Litigation
In December 1992, four class action suits were filed in the United States
District Court, Northern District of Ohio, by certain alleged stockholders of
the Company on behalf of themselves and purported classes consisting of Telxon
stockholders, other than defendants and their affiliates, who purchased the
Company's common stock between May 20, 1992 and January 19, 1993. The
named defendants are the Company, former President and Chief Executive
Officer Raymond D. Meyo, and then current President, Chief Operating Officer
and Chief Financial Officer Dan R. Wipff. On February 1, 1993, the Plaintiffs
filed their Amended and Consolidated Class Action Complaint related to the four
actions, alleging claims for fraud on the market and negligent
misrepresentation, arising from alleged misrepresentations and omissions with
respect to the Company's financial performance and prospects, and alleged
trading activities of the named individual defendants. The Amended Complaint
seeks certification of the purported class, unspecified compensatory damages,
the imposition of a constructive trust on certain of the defendants' assets and
other unspecified extraordinary equitable and/or injunctive relief, interest,
attorneys' fees and costs. The defendants, including the Company, filed a
Motion to Dismiss, which was denied by the court on June 3, 1993.
On April 16, 1993, the Plaintiffs filed their Motion for Class
Certification. The defendants, including the Company, filed their briefs in
opposition to Class Certification on October 13, 1993. On December 17, 1993,
the District Court certified the class, consisting of Telxon stockholders,
other than defendants and their affiliates, who purchased Telxon common stock
between May 20, 1992 and December 14, 1992. The Court has ordered the parties
to complete discovery by December 31, 1994 and has scheduled the
Consolidated Class Action for
7
<PAGE> 8
trial commencing November 13, 1995. The defendants intend to vigorously
defend this Class Action; however, the ultimate outcome of this litigation
cannot presently be determined. Accordingly, no provision for any liability
that may result from adjudication has been made in the accompanying
consolidated financial statements.
On September 21, 1993, a derivative Complaint was filed in the Court of
Chancery of the State of Delaware, in and for Newcastle County, by an alleged
stockholder of Telxon derivatively on behalf of Telxon. The named defendants
are the Company; Robert F. Meyerson, Chairman of the Board and Chief Executive
Officer; Dan R. Wipff, President and Chief Executive Officer, Telxon Products,
Inc. and director; Robert A. Goodman, Corporate Secretary and outside director;
Norton W. Rose, outside director and Dr. Raj Reddy, outside director. The
Complaint alleges breach of fiduciary duty to the Company and waste of the
Company's assets in connection with certain transactions entered into by Telxon
and compensation amounts paid by the Company. The Complaint seeks an
accounting, injunction, rescission, attorneys' fees and costs. On November 12,
1993, Telxon and the individual director defendants filed a Motion to Dismiss.
The plaintiff filed his brief in opposition to the Motion on May 2, 1994. The
defendants have filed a responsive final brief, and the Motion to Dismiss
continues to be pending before the court. The defendants intend to vigorously
defend this action.
In the normal course of its operations, the Company is subject to
performance under contracts, and has various legal actions pending. However,
in management's opinion, any such outstanding matters have been reflected in
the consolidated financial statements, are covered by insurance or would not
have a material adverse effect on the Company's consolidated financial
position.
7. Short-Term and Long-Term Financing
The Company has a revolving credit, term loan and security agreement
expiring March 31, 1996. The agreement permits the Company to borrow up to
$50 million subject to availability based on qualifying accounts receivable and
inventory and bears interest at the bank's prime lending rate plus 1% or LIBOR
plus 2.5%. Outstanding amounts are secured by substantially all of the United
States assets of the Company. The agreement contains restrictive covenants,
certain of which require the Company to maintain specified levels of net worth
and working capital and to meet certain current ratios, debt to net worth
ratios, and fixed charge coverages. At September 30, 1994 and March 31, 1994
the Company had $34,580 and $24,573, respectively, outstanding under this
agreement and was in compliance with all restrictive covenants contained in the
agreement.
8
<PAGE> 9
TELXON CORPORATION AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
---------------------
Revenues
--------
Consolidated revenues for the quarter and six months ended September 30,
1994 increased $28.8 million or 46% and $59.7 million or 50% compared to
the same periods in the previous fiscal year. Product revenues increased
$26.4 million or 50% and $54.9 million or 56% for those same periods.
Product revenues include the sale of Portable Tele-Transaction Computer
("PTC") units (including pen-based and touch-screen workslates), hardware
accessories, custom application software and software license fees. The
increased product revenues were primarily due to increased PTC unit
volume supplemented by a minor increase in average selling price per PTC
unit due to sales mix changes.
Customer service revenues for the quarter and six months ended September
30, 1994 increased $2.4 million or 23% and $4.8 million or 23% as
compared to the same periods in the previous fiscal year. These revenue
increases were primarily due to volume increases and growth in the
installed base of the Company's products.
The Company continues to anticipate increases in consolidated revenues
for fiscal year 1995 as compared to fiscal year 1994.
Operating Expenses
------------------
Cost of revenues as a percentage of revenues decreased to 58% for the
quarter ended September 30, 1994 as compared to 60% for the same period
in the previous fiscal year. Cost of revenues as a percentage of
revenues remained constant at 58% for the six months ended September 30,
1994 as increased fixed manufacturing costs were offset by efficiencies
achieved due to volume increases.
Selling expenses for the quarter and six months ended September 30, 1994
increased $3.1 million or 23% and $6.7 million or 26% as compared to the
same periods in the previous fiscal year. These increases reflect the
impact of increased revenues on related variable expenses as well as
additional expenses of the Vertical Systems Group, which is composed of
five industry specific marketing groups established in the third quarter
of fiscal year 1994. Selling expenses as a percentage of revenues for
the quarter and six months ended September 30, 1994 decreased from 22% to
18% reflecting the leverage of fixed selling expenses over the increased
revenue base.
Product development and engineering expenses for the quarter and six
months ended September 30, 1994 increased $2.8 million or 46% and $4.5
million or 37% as compared to the same periods in the previous fiscal
year. These increases were primarily attributable to research and
development activities related to new product development including
9
<PAGE> 10
wireless data communications and spread spectrum technology, pen-based
technology, mobile workforce products and other product improvements.
Product development and engineering expenses as a percentage of revenues
for the quarter and six months ended September 30, 1994 remained constant
in accordance with management's target for such expenses.
General and administrative expenses for the quarter and six months ended
September 30, 1994 increased $1.3 million or 17% and $3.0 million or 20%
as compared to the same periods in the previous fiscal year reflecting
increased corporate resources necessary to support the Company's revenue
growth. General and administrative expenses as a percentage of revenues
for the quarter and six months ended September 30, 1994 decreased from
10% to 9% and 12% to 10%, respectively. These decreases reflect the
leverage of fixed corporate expenses over the increased revenue base.
The Company continues to anticipate decreases in selling, product
development and engineering and administrative expenses as a percentage
of revenues for fiscal year 1995 as compared to fiscal year 1994
primarily due to the anticipated increased revenue levels.
Income Taxes
------------
The Company's consolidated effective income tax rate was 47% and 50% for
the quarter and six months ended September 30, 1994, respectively. This
compares with an effective income tax rate of (45%) and (20%) for the
same periods in the previous fiscal year. The consolidated effective
income tax rate reflects the income before taxes increased by
nondeductible goodwill amortization and offset by foreign export
incentives, the sum of which is multiplied by the graduated United States
statutory rate and increased by international rate differentials.
Liquidity
---------
At September 30, 1994, the Company had cash, cash equivalents and
short-term investments of $27.6 million , as compared to $24.8 million
at March 31, 1994. The Company's current ratio (current assets divided
by current liabilities) was 1.9:1 and 1.8:1 at September 30, 1994 and
March 31, 1994, respectively. This improvement in the current ratio was
caused by the changes in current assets and liabilities as described
below.
Current assets increased $2.4 million, caused primarily by the increases
in cash, cash equivalents and short-term investments of $2.8 million and
accounts and notes receivable of $3.7 million. These increases were
partially offset by decreases in inventories of $2.2 million and
refundable income taxes and other current assets of $1.9 million. As
the Company has increased its investment in accounts and notes
receivable, days sales outstanding has also increased to 65 days at
September 30, 1994 from 57 at March 31, 1994 due primarily to the
granting of extended payment terms to selected customers.
Current liabilities decreased from $105.9 million at March 31, 1994 to
$98.0 million at September 30, 1994 or $7.9 million. This decrease was
due to decreases in accounts payable and accrued liabilities aggregating
$15.5 million. This decrease was partially offset by increased
short-term borrowings aggregating $6.4 million and an increase in income
taxes payable of $1.2 million.
10
<PAGE> 11
The Company believes that its existing resources, including available
cash, cash equivalents and short-term investments, internally generated
funds and the credit facility, will be sufficient to meet working capital
requirements for the next twelve months.
Cash Flows from Operating Activities
------------------------------------
Net cash flows provided by (used in) operating activities were $.9
million and $(.7) million for the six months ended September 30, 1994 and
1993, respectively. Cash flows from operating activities were positively
impacted by the $6.0 million change from the net loss incurred during the
six months ended September 30, 1993 to the net income recorded for the
six months ended September 30, 1994, the increased provision for
inventory obsolescence of $2.2 million, the net change in prepaid and
other assets of $2.0 million, and other positive cash flow items
aggregating $2.8 million. These positive cash flow impacts were
partially offset by the decrease in accounts payable and accrued
liabilities of $7.7 million, the increase in intangibles and other of
$1.2 million and other negative cash flow impacts aggregating $2.5
million.
Investing Activities
--------------------
Net cash used in investing activities decreased $2.5 million for the six
months ended September 30, 1994 as compared to the same period in the
previous fiscal year. The decrease was primarily caused by the decrease
in payments for acquisitions of $4.2 million which was partially offset
by a decrease in the proceeds from the disposal of fixed assets of $.8
million, decreased utilization of short-term investments of $.7 million,
and other uses of cash of $.2 million.
Financing Activities
--------------------
Cash flows from financing activities increased $11.9 million for the six
month period ended September 30, 1994 as compared to the same period in
the previous fiscal year. This increase was primarily due to the
borrowing under the Company's credit facility described below of $10.3
million and increased proceeds from the exercise of stock options of
$1.3 million.
The Company has a revolving credit, term loan and security agreement
expiring March 31, 1996. The agreement permits the Company to borrow up
to $50 million subject to availability based on qualifying accounts
receivable and inventory and bears interest at the prime lending rate
plus 1% or LIBOR plus 2.5%. At September 30, 1994, the Company had $34.6
million outstanding under this agreement. During the quarter, the
Company converted notes payable representing $5.4 million in revolving
borrowings to a term loan in a non-cash transaction. The Company
anticipates continued borrowing under this agreement during fiscal 1995.
11
<PAGE> 12
TELXON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- - ------- ---------------------------------------------------
(a) The Company held its Annual Meeting of Stockholders on August
19, 1994 (the "Annual Meeting").
(c) The following three matters were submitted to the Company's
stockholders for approval at the Annual Meeting:
(1) The election of two directors to hold office until
the 1997 Annual Meeting of Stockholders or until
their successors are elected and qualified. The
following votes were cast for each director nominee:
For election of Robert A. Goodman;
Votes for: 11,742,579
Votes withheld: 373,192
For election of Dr. Raj Reddy;
Votes for: 11,748,012
Votes withheld: 367,759
(2) Approval of an amendment to the Telxon Corporation
1990 Stock Option Plan. The following votes were cast:
Votes for: 5,959,190
Votes against: 4,052,255
Votes abstained: 192,539
Broker non-votes: 1,911,787
(3) Ratification and approval of the extension of
existing stock option grants to two directors. The
following votes were cast:
Votes for: 10,822,572
Votes against: 1,030,351
Votes abstained: 253,925
Broker non-votes: 8,923
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - ------- --------------------------------
(a) Exhibits
--------
4.1 Portions of the Restated Certificate of
Incorporation of Registrant pertaining to the
rights of holders of Registrant's Common Stock, par
value $.01 per share incorporated by reference to
Exhibit 3.1 to Registrant's Form 10-K for the year
ended March 31, 1993.
12
<PAGE> 13
4.2 Form of Certificate for the Registrant's Common
Stock, par value $.01 per share, incorporated
herein by reference to Exhibit 4.2 to Registrant's
Form 10-K filed for the year ended March 31, 1990.
4.3 Rights Agreement between Registrant and AmeriTrust
Company National Association, as Rights Agent,
dated as of August 25, 1987, incorporated herein by
reference to Exhibit 2(c) to Amendment No. 1, dated
May 21, 1992, to Registrant's Registration
Statement on Form 8-A, filed December 19, 1983,
with respect to Registrant's Common Stock.
4.3.1 Form of Rights Certificate (included
as Exhibit A to the Rights Agreement
included as Exhibit 4.3 to the
Annual Report on Form 10-K). Until
the Distribution Date (as defined in
the Rights Agreement), the Rights
Agreement provides that the common
stock purchase rights created
thereunder are evidenced by the
certificates for Registrant's Common
Stock (the form of which is included
as Exhibit 4.3 to this Quarterly
Report on Form 10-Q, which stock
certificates are deemed also to be
certificates for such common stock
purchase rights) and not by separate
Rights Certificates; as soon as
practicable after the Distribution
Date, Rights Certificates will be
mailed to each holder of
Registrant's Common Stock as of the
close of business on the
Distribution Date.
4.4 Indenture by and between the Registrant and
AmeriTrust Company National Association, as
Trustee, dated as of June 1, 1987, regarding
Registrant's 7-1/2% Convertible Subordinated
Debentures Due 2012, incorporated herein by
reference to Exhibit 4.2 to Registrant's
Registration Statement on Form S-3, Registration
No. 33-14348, filed May 18, 1987.
4.4.1 Form of the Registrant's 7-1/2%
Convertible Subordinated Debentures
Due 2012 (set forth in the Indenture
included as Exhibit 4.4 to this
Quarterly Report on Form 10-Q).
10.1 Compensation and Benefits Plans of the Registrant.
10.1.1 Amended and Restated Retirement and
Uniform Matching Profit-Sharing Plan
of Registrant, effective July 1,
1993, incorporated herein by
reference to Exhibit 10.1.1 to
Registrant's Form 10-K filed for the
year ended March 31, 1994.
10.1.1.a Amendment, dated January
1, 1994, incorporated
herein by reference to
Exhibit 10.1.1.a to
Registrant's Form 10-K
filed for the year ended
March 31, 1994.
13
<PAGE> 14
10.1.1.b Amendment, dated April 1, 1994, incorporated
herein by reference to Exhibit 10.1.1.b to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.2 1988 Stock Option Plan of Registrant, incorporated herein by
reference to Exhibit 10.1.2 to Registrant's Form 10-K filed for
the year ended March 31, 1994.
10.1.2.a Amendment, dated January 31, 1990, incorporated
herein by reference to Exhibit 10.1.2.a to
Registrant's Form 10-K filed for the year ended
March 31, 1994.
10.1.3 1990 Stock Option Plan of the Registrant, as amended, filed
herewith.
10.1.4 1990 Stock Option Plan of the Registrant for non-employee
directors, as amended, incorporated herein by reference to
Exhibit 10.1.4 to Registrant's Form 10-K filed for the year
ended March 31, 1994.
10.1.5 Non-Qualified Stock Option Agreement between the Registrant and
Dan R. Wipff, dated October 17, 1988, incorporated herein by
reference to Exhibit 10.1.5 to Registrant's Form 10-K filed for
the year ended March 31, 1994.
10.1.5.a Description of amendment extending option term,
filed herewith.
10.1.6 Non-Qualified Stock Option Agreement between the Registrant and
Raj Reddy, dated as of October 17, 1988, incorporated herein by
reference to Exhibit 10.1.6 to Registrant's Form 10-K filed for
the year ended March 31, 1994.
10.1.6.a Description of amendment extending option term,
filed herewith.
10.1.7 Description of compensation arrangements between the Registrant
and Robert F. Meyerson, Chairman of the Board of Registrant,
incorporated herein by reference to Exhibit 10.14 to
Registrant's Form 10-K filed for the year ended March 31, 1990.
10.1.8 Employment Agreement between Telxon Products, Inc., a wholly
owned subsidiary of the Registrant, and Dan R. Wipff, dated as
of September 29, 1994, filed herewith.
10.1.9 Consulting Agreement between the Registrant and Accipiter
Corporation, dated March 6, 1992, incorporated herein by
reference to Exhibit 10.17 to the Registrant's Form 10-K filed
for the year ended March 31, 1992.
14
<PAGE> 15
10.1.10 Services and Non-Competition Agreement, dated as of
January 18, 1993, among Accipiter Corporation,
Robert F. Meyerson and the Registrant, incorporated
herein by reference to Exhibit 10.28 to the Registrant's
Form 10-Q filed for the quarter ended December 31, 1992.
10.1.11 Employment Agreement between the Registrant and John H.
Cribb effective as of April 1, 1993, incorporated herein
by reference to Exhibit 10.1.11 to Registrant's Form
10-K filed for the year ended March 31, 1994.
10.1.12 Severance and Settlement Agreement, dated as of
December 23, 1992, between the Registrant and Raymond
D. Meyo, incorporated herein by reference to Exhibit
10.26 to the Registrant's Form 10-Q filed for the
quarter ended December 31, 1992.
10.1.13 Consulting Agreement, dated as of December 23, 1992,
between the Registrant and Raymond D. Meyo, incorporated
herein by reference to Exhibit 10.26 to the Registrant's
Form 10-Q filed for the quarter ended December 31, 1992.
10.1.14 Employment Agreement between the Registrant and D.
Michael Grimes, dated as of February 25, 1993,
incorporated herein by reference to Exhibit 10.1.14 to
the Registrant's Form 10-K filed for the year ended
March 31, 1993.
10.1.15 Employment Agreement between the Registrant and William
J. Murphy, dated as of March 12, 1993, incorporated
herein by reference to Exhibit 10.1.15 to the
Registrant's Form 10-K filed for the year ended March
31, 1993.
10.1.16 Employment Agreement between the Registrant and Frank
Brick, effective as of October 15, 1993, filed herewith.
10.1.17 1992 Restricted Stock Plan of the Registrant,
incorporated herein by reference to Exhibit 10.1.17 to
the Registrant's Form 10-Q filed for the quarter ended
December 31, 1993.
10.1.17.a Amendment, dated December 7, 1993,
incorporated herein by reference to
Exhibit 10.1.17.a to the Registrant's
Form 10-Q filed for the quarter ended
December 31, 1993.
10.1.17.b Amendment, dated July 18, 1994, filed
herewith.
10.1.18 Employment Agreement between the Registrant and David B.
Swank, effective as of August 22, 1994, filed herewith.
10.2 Material Leases of the Registrant.
15
<PAGE> 16
10.2.1 Lease between Registrant and 3330 W.
Market Properties, dated as of
December 30, 1986, incorporated
herein by reference to Exhibit
10.2.1 to Registrant's Form 10-K
filed for the year ended March 31,
1994.
10.2.2 Lease between Itronix Corporation, a
wholly owned subsidiary of the
Registrant, and Hutton Settlement,
Inc., dated as of April 5, 1993,
incorporated herein by reference to
Exhibit 10.2.3 to the Registrant's
Form 10-K filed for the year ended
March 31, 1993.
10.3 Credit Agreements of the Registrant.
10.3.1 Revolving Credit, Term Loan and
Security Agreement between the
Registrant and the Bank of New York
Commercial Corporation, dated as of
October 20, 1993, incorporated by
reference to Exhibit 10.3 to the
Registrant's Form 10-Q filed for the
quarter ended September 30, 1993.
10.3.1.a First Amendment to
Revolving Credit,
Term Loan and Security
Agreement between the
Registrant and the
Bank of New York
Commercial Corporation
dated as of March 30,
1994, incorporated
herein by reference to
Exhibit 10.3.1.a to
Registrant's Form 10-K
filed for the year
ended March 31, 1994.
10.3.1.b Second Amendment to
Revolving Credit, Term
Loan and Security
Agreement between the
Registrant and Bank of
New York Commercial
Corporation dated as
of June 10, 1994,
incorporated herein
by reference to Exhibit
10.3.1.b to
Registrant's Form 10-K
filed for the year
ended March 31, 1994.
10.4 Amended and Restated Agreement between the
Registrant and Symbol Technologies, Inc., dated as
of September 30, 1992, incorporated herein by
reference to Exhibit 10.4 to Registrant's Form 10-K
for the year ended March 31, 1993.
10.5 Stock Purchase Agreement by and among the
Registrant, Robert F. Meyerson and members of the
Meyerson family dated as of March 18, 1992,
incorporated herein by reference to Exhibit 10.22
to the Registrant's Form 10-K filed for the year
ended March 31, 1992.
10.6 Stock Purchase Agreement, dated December 31, 1992,
among the Registrant, Robert F. Meyerson and
certain members of Mr. Meyerson's family,
incorporated herein by reference to Exhibit 10.30
to the Registrant's Form 10-Q filed for the quarter
ended December 31, 1992.
16
<PAGE> 17
10.7 Plan and Agreement of Merger, dated as of January
18, 1993, among the Registrant, WSACO, Inc. and
Tele-transaction, Inc., incorporated herein by
reference to Exhibit 10.29 to the Registrant's Form
10-Q filed for the quarter ended December 31, 1992.
10.7.1 Notice of Termination by WSACO,
Inc., as contemplated by Section 5.7
of the Plan and Agreement of Merger,
of Amended and Restated Consulting
Agreement between Accipiter
Corporation and Teletransaction,
Inc., incorporated herein by
reference to Exhibit 10.7.1 to
Registrant's Form 10-K for the year
ended March 31, 1993.
10.8 Asset Purchase Agreement between the Registrant and
Retail Management Systems Corporation, dated as of
April 3, 1992, incorporated herein by reference to
Exhibit 10.23 to the Registrant's Form 10-K filed
for the year ended March 31, 1992.
10.9 Agreement of Merger among the Registrant,
Itracquico Corporation and Itronix Corporation
dated as of March 22, 1993, incorporated herein by
reference to Exhibit 10.10 to the Registrant's Form
10-K for the year ended March 31, 1993.
10.10 Agreement for Sale and Licensing of Assets between
AST Research, Inc. and PenRight! Corporation, a
wholly owned subsidiary of the Registrant, dated as
of January 26, 1994, incorporated herein by
reference to Exhibit 10.11 to the Registrant's Form
10-Q for the quarter ended December 31, 1993.
11.01 Computation of Common Shares outstanding and
earnings per share for the three and six month
periods ended September 30, 1993 and 1994, filed
herewith.
27.01 Financial Data Schedule as of September 30, 1994
and 1993 and three months and six months then
ended, filed herewith.
(b) Reports on Form 8-K
No Current Report on Form 8-K was filed by the Registrant during the
fiscal quarter ended September 30, 1994 for which this Quarterly
Report on Form 10-Q is filed.
17
<PAGE> 18
TELXON CORPORATION AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 12, 1994
TELXON CORPORATION
------------------
(Registrant)
/s/ Gerald J. Gabriel
---------------------------
Gerald J. Gabriel
Corporate Controller
(Principal Accounting Officer)
18
<PAGE> 19
TELXON CORPORATION
EXHIBITS TO
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1994
19
<PAGE> 20
INDEX TO EXHIBITS
-----------------
* 4.1 Portions of the Restated Certificate of
Incorporation of Registrant pertaining to the
rights of holders of Registrant's Common Stock, par
value $.01 per share incorporated by reference to
Exhibit 3.1 to Registrant's Form 10-K for the year
ended March 31, 1993.
* 4.2 Form of Certificate for the Registrant's Common
Stock, par value $.01 per share, incorporated
herein by reference to Exhibit 4.2 to Registrant's
Form 10-K filed for the year ended March 31, 1990.
* 4.3 Rights Agreement between Registrant and AmeriTrust
Company National Association, as Rights Agent,
dated as of August 25, 1987, incorporated herein by
reference to Exhibit 2(c) to Amendment No. 1, dated
May 21, 1992, to Registrant's Registration
Statement on Form 8-A, filed December 19, 1983,
with respect to Registrant's Common Stock.
* 4.3.1 Form of Rights Certificate (included
as Exhibit A to the Rights Agreement
included as Exhibit 4.3 to the
Annual Report on Form 10-K). Until
the Distribution Date (as defined in
the Rights Agreement), the Rights
Agreement provides that the common
stock purchase rights created
thereunder are evidenced by the
certificates for Registrant's Common
Stock (the form of which is included
as Exhibit 4.3 to this Quarterly
Report on Form 10-Q, which stock
certificates are deemed also to be
certificates for such common stock
purchase rights) and not by separate
Rights Certificates; as soon as
practicable after the Distribution
Date, Rights Certificates will be
mailed to each holder of
Registrant's Common Stock as of the
close of business on the
Distribution Date.
* 4.4 Indenture by and between the Registrant and
AmeriTrust Company National Association, as
Trustee, dated as of June 1, 1987, regarding
Registrant's 7-1/2% Convertible Subordinated
Debentures Due 2012, incorporated herein by
reference to Exhibit 4.2 to Registrant's
Registration Statement on Form S-3, Registration
No. 33-14348, filed May 18, 1987.
* 4.4.1 Form of the Registrant's 7-1/2%
Convertible Subordinated Debentures
Due 2012 (set forth in the Indenture
included as Exhibit 4.4 to this
Quarterly Report on Form 10-Q).
* 10.1 Compensation and Benefits Plans of the Registrant.
* 10.1.1 Amended and Restated Retirement and
Uniform Matching Profit-Sharing Plan
of Registrant, effective July 1,
1993, incorporated herein by
reference to Exhibit 10.1.1 to
Registrant's Form 10-K filed for the
year ended March 31, 1994.
20
<PAGE> 21
* 10.1.1.a Amendment, dated
January 1, 1994,
incorporated herein by
reference to Exhibit
10.1.1.a to
Registrant's Form 10-K
filed for the year
ended March 31, 1994.
* 10.1.1.b Amendment, dated April
1, 1994, incorporated
herein by reference to
Exhibit 10.1.1.b to
Registrant's Form 10-K
filed for the year
ended March 31, 1994.
* 10.1.2 1988 Stock Option Plan of
Registrant, incorporated herein by
reference to Exhibit 10.1.2 to
Registrant's Form 10-K filed for the
year ended March 31, 1994.
* 10.1.2.a Amendment, dated
January 31, 1990,
incorporated herein by
reference to Exhibit
10.1.2.a to
Registrant's Form 10-K
filed for the year ended
March 31, 1994.
** 10.1.3 1990 Stock Option Plan of the
Registrant, as amended, filed
herewith.
* 10.1.4 1990 Stock Option Plan of the
Registrant for non-employee
directors, as amended, incorporated
herein by reference to Exhibit
10.1.4 to Registrant's Form 10-K
filed for the year ended March 31,
1994.
* 10.1.5 Non-Qualified Stock Option Agreement
between the Registrant and Dan R.
Wipff, dated October 17, 1988,
incorporated herein by reference to
Exhibit 10.1.5 to Registrant's Form
10-K filed for the year ended March
31, 1994.
** 10.1.5.a Description of
amendment extending
option term, filed
herewith.
* 10.1.6 Non-Qualified Stock Option Agreement
between the Registrant and Raj
Reddy, dated as of October 17, 1988,
incorporated herein by reference to
Exhibit 10.1.6 to Registrant's Form
10-K filed for the year ended March
31, 1994.
** 10.1.6.a Description of
amendment extending
option term, filed
herewith.
* 10.1.7 Description of compensation
arrangements between the Registrant
and Robert F. Meyerson, Chairman of
the Board of Registrant,
incorporated herein by reference to
Exhibit 10.14 to Registrant's Form
10-K filed for the year ended March
31, 1990.
** 10.1.8 Employment Agreement between Telxon
Products, Inc., a wholly owned
subsidiary of the Registrant, and
Dan R. Wipff, dated September 29,
1994, filed herewith.
21
<PAGE> 22
* 10.1.9 Consulting Agreement between the
Registrant and Accipiter
Corporation, dated March 6, 1992,
incorporated herein by reference to
Exhibit 10.17 to the Registrant's
Form 10-K filed for the year ended
March 31, 1992.
* 10.1.10 Services and Non-Competition
Agreement, dated as of January 18,
1993, among Accipiter Corporation,
Robert F. Meyerson and the
Registrant, incorporated herein by
reference to Exhibit 10.28 to the
Registrant's Form 10-Q filed for the
quarter ended December 31, 1992.
* 10.1.11 Employment Agreement between the
Registrant and John H. Cribb
effective as of April 1, 1993,
incorporated herein by reference to
Exhibit 10.1.11 to Registrant's Form
10-K filed for the year ended March
31, 1994.
* 10.1.12 Severance and Settlement Agreement,
dated as of December 23, 1992,
between the Registrant and Raymond
D. Meyo, incorporated herein by
reference to Exhibit 10.26 to the
Registrant's Form 10-Q filed for
the quarter ended December 31,
1992.
* 10.1.13 Consulting Agreement, dated as of
December 23, 1992, between the
Registrant and Raymond D. Meyo,
incorporated herein by reference to
Exhibit 10.26 to the Registrant's
Form 10-Q filed for the quarter
ended December 31, 1992.
* 10.1.14 Employment Agreement between the
Registrant and D. Michael Grimes,
dated as of February 25, 1993,
incorporated herein by reference to
Exhibit 10.1.14 to the Registrant's
Form 10-K filed for the year ended
March 31, 1993.
* 10.1.15 Employment Agreement between the
Registrant and William J. Murphy,
dated as of March 12, 1993,
incorporated herein by reference to
Exhibit 10.1.15 to the Registrant's
Form 10-K filed for the year ended
March 31, 1993.
** 10.1.16 Employment Agreement between the
Registrant and Frank Brick,
effective as of October 15, 1993,
filed herewith.
* 10.1.17 1992 Restricted Stock Plan of the
Registrant, incorporated herein by
reference to Exhibit 10.1.17 to the
Registrant's Form 10-Q filed for the
quarter ended December 31, 1993.
22
<PAGE> 23
* 10.1.17.a Amendment, dated
December 7, 1993,
incorporated herein by
reference to Exhibit
10.1.17.a to the
Registrant's Form 10-Q
filed for the quarter
ended December 31, 1993.
** 10.1.17.b Amendment, dated
July 18, 1994, filed
herewith.
** 10.1.18 Employment Agreement between the
Registrant and David B. Swank,
effective as of August 22, 1994,
filed herewith.
* 10.2 Material Leases of the Registrant.
* 10.2.1 Lease between Registrant and 3330 W.
Market Properties, dated as of
December 30, 1986, incorporated
herein by reference to Exhibit
10.2.1 to Registrant's Form 10-K
filed for the year ended March 31,
1994.
* 10.2.2 Lease between Itronix Corporation, a
wholly owned subsidiary of the
Registrant, and Hutton Settlement,
Inc., dated as of April 5, 1993,
incorporated herein by reference to
Exhibit 10.2.3 to the Registrant's
Form 10-K filed for the year ended
March 31, 1993.
* 10.3 Credit Agreements of the Registrant.
* 10.3.1 Revolving Credit, Term Loan and
Security Agreement between the
Registrant and the Bank of New York
Commercial Corporation, dated as of
October 20, 1993, incorporated by
reference to Exhibit 10.3 to the
Registrant's Form 10-Q filed for the
quarter ended September 30, 1993.
* 10.3.1.a First Amendment to
Revolving Credit, Term
Loan and Security
Agreement between the
Registrant and the Bank
of New York Commercial
Corporation, dated as
of March 30, 1994,
incorporated herein by
reference to Exhibit
10.3.1.a to
Registrant's Form 10-K
filed for the year ended
March 31, 1994.
* 10.3.1.b Second Amendment to
Revolving Credit, Term
Loan and Security
agreement between the
Registrant and Bank of
New York Commercial
Corporation dated as of
June 10, 1994,
incorporated herein by
reference to Exhibit
10.3.1.b to
Registrant's Form 10-K
filed for the year ended
March 31, 1994.
* 10.4 Amended and Restated Agreement between the
Registrant and Symbol Technologies, Inc., dated as
of September 30, 1992, incorporated herein by
reference to Exhibit 10.4 to Registrant's Form 10-K
for the year ended March 31, 1993.
23
<PAGE> 24
* 10.5 Stock Purchase Agreement by and among the
Registrant, Robert F. Meyerson and members of the
Meyerson family dated as of March 18, 1992,
incorporated herein by reference to Exhibit 10.22
to the Registrant's Form 10-K filed for the year
ended March 31, 1992.
* 10.6 Stock Purchase Agreement, dated December 31, 1992,
among the Registrant, Robert F. Meyerson and
certain members of Mr. Meyerson's family,
incorporated herein by reference to Exhibit 10.30
to the Registrant's Form 10-Q filed for the quarter
ended December 31, 1992.
* 10.7 Plan and Agreement of Merger, dated as of January
18, 1993, among the Registrant, WSACO, Inc. and
Teletransaction, Inc., incorporated herein by
reference to Exhibit 10.29 to the Registrant's Form
10-Q filed for the quarter ended December 31, 1992.
* 10.7.1 Notice of Termination by WSACO,
Inc., as contemplated by Section 5.7
of the Plan and Agreement of Merger,
of Amended and Restated Consulting
Agreement between Accipiter
Corporation and Teletransaction,
Inc., incorporated herein by
reference to Exhibit 10.7.1 to
Registrant's Form 10-K for the year
ended March 31, 1993.
* 10.8 Asset Purchase Agreement between the Registrant and
Retail Management Systems Corporation, dated as of
April 3, 1992, incorporated herein by reference to
Exhibit 10.23 to the Registrant's Form 10-K filed
for the year ended March 31, 1992.
* 10.9 Agreement of Merger among the Registrant,
Itracquico Corporation and Itronix Corporation
dated as of March 22, 1993, incorporated herein by
reference to Exhibit 10.10 to the Registrant's Form
10-K for the year ended March 31, 1993.
* 10.10 Agreement for Sale and Licensing of Assets between
AST Research, Inc. and PenRight! Corporation, a
wholly-owned subsidiary of the Registrant, dated as
of January 26, 1994, incorporated herein by
reference to Exhibit 10.11 to the Registrant's Form
10-Q for the quarter ended December 31, 1993.
** 11.01 Computation of Common Shares outstanding and
earnings per share for the three and six month
periods ended September 30, 1993 and 1994, filed
herewith.
** 27.01 Financial Data Schedule as of September 30, 1994
and 1993 and three months and six months then
ended, filed herewith.
__________________________________________
* Previously filed.
** Filed herewith.
24
<PAGE> 1
EXHIBIT 10.1.3
TELXON CORPORATION
1990 STOCK OPTION PLAN
AS AMENDED
1. PURPOSE OF THE PLAN. The purpose of this plan is to promote the best
interests of the Company and its stockholders by enabling the Company and its
Subsidiaries to attract and retain highly qualified personnel through rewarding
valued employees with the opportunity, pursuant to Options granted under the
Plan, to acquire a proprietary interest in the Company and thereby encourage
them to put forth their maximum efforts for the continued success and growth of
the Company.
2. DEFINITIONS. In addition to such other capitalized terms as are defined
elsewhere in this Plan, the following terms shall when used in this Plan have
the respective meanings set forth below:
(a) "Act" means the Securities Exchange Act of 1934, as amended from
time to time.
(b) "Authorized Shares" means the maximum aggregate number of shares
of Common Stock specified in Section 3(a) as being authorized for issuance
and sale under Options granted pursuant to the Plan, subject to adjustment
thereof in accordance with Section 12 of the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Commission" means the United States Securities and Exchange
Commission.
(f) "Committee" means the Committee appointed by the Board in
accordance with Paragraph (a) of Section 4 of the Plan, if a Committee is
appointed. The members of such Committee may, but need not, be members of
the Board. If no Committee has been appointed, any reference to the
"Committee" shall be deemed a reference to the "Board".
(g) "Common Stock" means the Common Stock, par value $.01 per share,
of the Company.
(h) "Company" means Telxon Corporation, a Delaware corporation.
(i) "Continuous Employment" means with respect to any Employee, the
continued employment of such Employee by the Company or any Subsidiary
without interruption or termination after the grant of an Option to such
Employee. Continuous Employment shall not be considered interrupted in the
case of sick leave, military leave or any other leave of absence approved
by the Board (provided that such leave is for a period of not more than
ninety (90) days or re-employment upon the expiration of such leave is
mandated by contract or statute) or in the cause of transfers between
locations of the Company or between the Company, any Subsidiary or any of
their respective successors.
(j) "Employee" means any person, including officers and directors who
are also officers, employed by the Company or any Subsidiary. The payment
of director's fees by the Company shall not be sufficient to constitute a
person as an "Employee" of the Company.
(k) "Option" means a right granted to an Employee pursuant to the Plan
to purchase a specified number of shares of Common Stock at a specified
price during a specified period and on such other terms and conditions as
may be specified pursuant to the Plan. Options
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may be granted as Tax Qualified Options or as Options which do not
qualify as Tax Qualified Options.
(l) "Option Agreement" means the written agreement evidencing an
Option by and between the Company and the Optionee as required by Section
14.
(m) "Optioned Stock" means the Company Stock subject to an Option.
(n) "Optionee" means an Employee who receives an Option.
(o) "Plan" means this 1990 Stock Option Plan.
(p) "Predecessor Plan" means the Company's 1988 Stock Option Plan.
(q) "Rule 16b-3" means Rule 16b-3 promulgated by the Commission under
the Act or any similar successor regulation exempting certain transactions
involving stock-based compensation arrangements from the liability
provisions of Section 16 of the Act, as adopted and amended from time to
time and as interpreted by formal or informal opinions of, and releases
published or other interpretive advice provided by, the Staff of the
Commission.
(r) "Section 16 Person" means an Employee who is subject to Section 16
of the Act, as interpreted by the rules and regulations promulgated by the
Commission thereunder, as adopted and amended from time to time, and by
formal or informal opinions of, and releases published or other
interpretive advice provided by, the Staff of the Commission.
(s) "Securities Law Requirements" means the Act and the rules and
regulations promulgated by the Commission thereunder, as adopted and
amended from time to time, including but not limited to Rule 16b-3, and as
interpreted by formal or informal opinions of, and releases published or
other interpretive advice provided by, the Staff of the Commission, and the
requirements of any stock exchange, automated interdealer quotation system
or other recognized securities market on which the Common Stock is listed
or traded or in which the Common Stock is included, as adopted and amended
from time to time and as interpreted by formal or informal opinions of, and
other interpretive advice, provided by the representatives of such stock
exchange, quotation system or other securities market.
(t) "Shares" means the Common Stock as adjusted in accordance with
Section 12 of the Plan.
(u) "Subsidiary" means a corporation of which not less than fifty
percent (50%) of the voting shares are owned by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(v) "Successor" means the estate of an Optionee or a person who
succeeds by will or the laws of descent and distribution to an Optionee's
right to exercise an Option.
(w) "Tax Qualified Option" means an Option which is intended at the
time of grant to qualify for special tax treatment under Section 422A or
other particular provisions of the Code and the regulations, rulings and
procedures promulgated, published or otherwise provided thereunder, as
adopted and amended from time to time.
3. STOCK SUBJECT TO THE PLAN.
(a) NUMBER OF SHARES ISSUABLE. Subject to adjustment in accordance
with the provisions of Section 12 of the Plan, the maximum aggregate number
of Authorized Shares which may be issued and sold under Options granted
pursuant to the Plan is 2,500,000 shares of Common Stock, plus such number
of the 1,200,000 shares of Common Stock authorized for issuance and sale
under the Predecessor Plan which (i) as of the date this Plan is approved
by the stockholders of the Company, are not subject to grants (including
conditional grants) of stock options then outstanding under the Predecessor
Plan (from and after
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stockholder approval of this Plan, no further grants shall be made
under the Predecessor Plan, but any grants (including conditional grants)
of stock options outstanding under the Predecessor Plan at the time of
such approval shall continue in full force and effect in accordance with
their respective terms) or (ii) to the extent grants (including
conditional grants) outstanding under the Predecessor Plan as of the date
of stockholder approval of this Plan are not exercised in full, are, as of
any subsequent date, (A) issued pursuant to the exercise of a stock option
granted under the Predecessor Plan in an amount equal to the number of
Shares already owned by the person exercising such stock option which are
delivered by such person to the Company in payment of the exercise price
and/or related withholding taxes, (B) withheld by the Company, in payment
of the withholding taxes with respect to the exercise of a stock option
granted under the Predecessor Plan, from the total number of Shares with
respect to which such option is exercised, or (C) no longer subject to
grants under the Predecessor Plan by reason of such grants having expired
or lapsed or having been cancelled, surrendered, forfeited or otherwise
terminated. The inclusion under this Plan of such shares reserved for
issuance and sale under the Predecessor Plan as hereinabove provided shall
not be affected by the expiration or other termination of the Predecessor
Plan. The Shares issued and sold upon the exercise of Options may be
treasury Shares, Shares of original issue or a combination thereof.
(b) COMPUTATION OF SHARES AVAILABLE FOR GRANT. For purposes of
computing the number of Authorized Shares available from time to time under
the Plan for the grant of Options, the number of Shares subject to each
Option granted pursuant to the Plan shall be provisionally counted against
the Authorized Shares from and after the grant of such Option but only for
so long as and to the extent that such Option shall remain outstanding and
unexercised. Upon the exercise, in whole or in part, of an Option, the
number of Shares issued upon such exercise shall be permanently deducted
from the authorized Shares, provided that no such permanent deduction shall
be made, and the provisional deduction against the Authorized Shares shall
be reversed, to the extent that the exercise price and/or the withholding
taxes with respect to such exercise are paid through the delivery to the
Company by the person exercising the option of Shares already owned by such
person and/or through the withholding by the Company of Shares from the
total number of Shares with respect to which the Option is exercised. The
provisional deduction against the Authorized Shares shall likewise be
reversed to the extent of the unexercised portion of an Option upon the
expiration, lapse, cancellation, surrender, forfeiture or other termination
of such Option. The Shares covered by any such reversal of a provisional
deduction against the Authorized Shares shall immediately become available
for the granting of new Options under the Plan with respect thereto.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board or the
Board may, in its discretion, appoint a Committee to administer the Plan
subject to such terms and conditions as the Board may prescribe; provided
that the terms upon which, including the time or times at or within which,
and the price or prices at which Shares may be purchased upon the exercise
of Options shall be approved or ratified by such action of the Board or a
committee duly designated by the Board from its members as may be required
by the Delaware General Corporation Law, as amended from time to time; and
provided further, that neither the Board nor any such Committee shall make
any decision concerning the Plan with respect to any Section 16 Person
unless the Board or such Committee making such decision is constituted so
that such decision complies with the applicable requirements of Rule 16b-3.
Once appointed, the Committee shall continue to serve until otherwise
directed by the Board. From time to time the Board may increase the size of
the Committee and may appoint additional members thereof, remove members
(with or without cause), fill vacancies however caused and remove all
members of the Committee and thereafter directly administer the Plan.
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(b) POWERS OF THE COMMITTEE. Subject to the provisions of this Plan,
the Committee shall have the authority, in its sole discretion:
(i) To determine, upon review of relevant information in accordance
with Section 7(b) of the Plan, the "Fair Market Value" (as defined in
said Section 7(b)) of the Shares;
(ii) To determine the Employees to whom, and the time or times at
which, Options shall be granted and the number of Shares subject to
purchase upon exercise of each Option (there being no limit on the time
following the adoption or approval of this Plan within which Options may
be granted under the Plan so long as it remains in effect, on the number
of Options which may be granted to any one Employee or on the aggregate
number of Shares subject to purchase thereunder, except such
restrictions thereon as may be imposed by applicable tax laws which will
have to be observed if the Committee intends that a particular Option
qualify as a Tax Qualified Option);
(iii) To determine the terms and provisions of each Option (which
terms and provisions need not be identical), including, but not limited
to, the following:
(A) The exercise price per Share, subject to the provisions of
Section 7 of the Plan; and
(B) Whether Options shall become exercisable over a period of
time and when they shall be fully exercisable;
(iv) To accelerate the time as of which any Option may be
exercised;
(v) To amend any outstanding Option, subject to the provisions of
Section 19 of the Plan;
(vi) To authorize any person to prepare and execute on behalf of
the Company any instrument deemed by the Committee to be necessary or
advisable to evidence or effectuate the Plan, any Option granted
thereunder or any amendment to the Plan or any Option;
(vii) To interpret the Plan;
(viii) To prescribe, amend and rescind, if deemed necessary or
appropriate, rules and regulations relating to the Plan; and
(ix) To make all other determinations the Committee may deem
necessary or advisable in connection with the administration of the
Plan.
(c) EFFECTS OF BOARD AND COMMITTEE DECISIONS. All decisions,
determinations and actions of the Board and the Committee in connection
with the construction, interpretation, administration, application,
operation and implementation of the Plan shall be final, conclusive and
binding on the Company, its stockholders and Subsidiaries, all Employees
and Optionees and the respective legal representatives, heirs, successors
and assigns of all of the foregoing and all other persons claiming under or
through any of them.
(d) EXCULPATION AND INDEMNIFICATION. No member of the Board on the
Committee, and no Employee or other agent acting on behalf of the Board or
the Committee, shall be personally liable for any decision, determination
or action made or taken, or failed to be made or taken, with respect to
this Plan or any Option granted hereunder, and the Company shall fully
protect each such person in respect of any such decision, determination or
action and shall indemnify each such person against any and all claims,
losses, damages, expenses and liabilities arising from or in connection
with any such decision, determination or action.
5. ELIGIBILITY. Options may be granted only to Employees who, in the sole
judgment of the Committee, have contributed or will contribute to the success
and growth of the Company.
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An Employee to whom the Company has previously granted a stock option pursuant
to this Plan or otherwise may, if he is otherwise eligible, be granted
additional Options.
The existence of this Plan shall not create in any Employee any right to be
granted an Option hereunder, and neither the existence of this Plan nor the
granting of any Options to any Employee hereunder shall confer upon such
Employee any right with respect to continuation of the employment of such
Employee by the Company or any Subsidiary or shall in any way interfere with or
limit the right which such Employee, the Company or any Subsidiary may otherwise
have to terminate such employment at any time with or without cause. Upon the
termination of any Employee's employment with the Company or any Subsidiary,
neither the Company nor any Subsidiary shall have any liability or obligation to
such Employee under this Plan or any Options granted to such Employee hereunder
except to issue the appropriate number of Shares to such Employee upon the
exercise of any Option granted to such Employee under this Plan prior to such
termination of employment, provided that such exercise is duly and timely made
in accordance with the provisions of this Plan and such Option.
6. TERM OF OPTIONS. Except as may otherwise be specified by the Committee
in its sole discretion at the time of grant thereof and reflected in the Option
Agreement evidencing such Option, the term of each Option shall be ten (10)
years from the date of grant thereof, provided that the Committee, if it
intends that a particular Option qualify as a Tax Qualified Option, will have
to observe such restrictions on the term of such Option as may be imposed by
the applicable tax laws in order for such Option so to qualify. Each Option
shall continue in effect in accordance with its terms notwithstanding that the
Plan may be terminated prior to the expiration of the term of such Option.
7. EXERCISE PRICE.
(a) MINIMUM PRICE REQUIRED. The per Share exercise price for the
Shares subject to an Option shall be such price as is determined by the
Committee at the time of grant of an Option and reflected in the Option
Agreement evidencing the same; provided that in no event shall such
exercise price per Share be less than the Fair Market Value per Share as of
the day prior to the date of grant of such Option.
(b) DEFINITION OF "FAIR MARKET VALUE". For all purposes under the
Plan, "Fair Market Value" per Share shall be determined by the Committee in
its sole discretion; provided that if the Shares are included in the NASDAQ
National Market System or listed on a stock exchange on the date as of
which the same is to be determined, the Fair Market Value per Share shall
be the closing price on such quotation system or exchange which is the
principal trading market for the Shares on the date of determination or, if
no sale price was reported for the Shares on the date of determination, the
closing price on such principal trading market for the last trading day
prior to the date of determination for which a sale price was reported;
provided further, however, that if the foregoing method of determining Fair
Market Value is inconsistent with the then existing tax law requirements
with respect to any Option which the Committee intends to qualify as a Tax
Qualified Option, then the Fair Market Value per Share shall be determined
by the Committee in such manner as is required for such Tax Qualified
Option to qualify as such.
8. WITHHOLDING TAXES. Before a stock certificate evidencing the Shares
being acquired through exercise of an Option will be issued to the Optionee, the
Optionee must pay, or make arrangements acceptable to the Company for the
payment of, any and all federal, state and local withholding taxes, whether
domestic or foreign, required to be withheld in connection with the exercise of
an Option.
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9. FORM OF PAYMENT.
(a) ACCEPTABLE FORMS OF CONSIDERATION. Except as may otherwise be
specified by the Committee in its sole discretion at the time of grant
thereof and reflected in the Option Agreement evidencing such Option, the
following forms of consideration will be accepted in payment of the
exercise price for the Shares to be issued upon exercise of an Option and
of the taxes required to be withheld in connection with such exercise: (i)
cash, (ii) personal check, (iii) bank cashier's check, (iv) already owned
Shares (duly endorsed for transfer with signature guaranteed), or (v) any
combination of the foregoing. Except as may otherwise be specified by the
Committee in its sole discretion at the time of grant thereof and
reflected in the Option Agreement evidencing such Option, Shares withheld
from the Shares to be issued upon exercise of the Option, either alone or
in any combination with any of the other acceptable forms of consideration
recited in this Paragraph (a), will also be an accepted form of
consideration for payment of the taxes required to be withheld in
connection with the exercise of an Option. In addition to the acceptable
forms of consideration hereinabove recited in this Paragraph (a), the
Committee may determine in its sole discretion at the time of grant of an
Option, and if the Committee so determines, shall provide in the Option
Agreement evidencing such Option, that one or both of the following
additional forms of consideration will be accepted, either alone or in any
combination with any of the other acceptable forms of consideration
recited in this Paragraph (a), in payment of the items specified: (vi) in
payment of the exercise price for the Shares to be issued upon exercise of
an Option, Shares withheld from the Shares to be issued upon such
exercise, and/or (vii) in payment of the exercise price for the Shares to
be issued upon exercise of an Option and the taxes required to be withheld
in connection with such exercise, a commitment for the delivery to the
Company of proceeds from the sale, pursuant to a brokerage or similar
arrangement approved in advance by the Committee in its sole discretion,
of Shares to be issued upon exercise of the Option. The forms of
consideration which will be accepted in payment of the exercise price for
an Option and related withholding taxes shall be specified in the Option
Agreement evidencing such Option, and the person or persons entitled to
exercise the Option shall be entitled to elect from those so specified the
form(s) to be used in effecting payment with respect to a particular
exercise; provided that any election by a Section 16 Person to use already
owned Shares or have Shares withheld from those issuable upon such
exercise shall be effective only if made in accordance with the applicable
requirements of Rule 16b-3; and provided further that a commitment for the
delivery to the Company of proceeds from the sale, pursuant to a brokerage
or similar arrangement, of Shares to be issued upon exercise of an Option
will not be accepted from a Section 16 Person if under Securities Law
Requirements such a sale would be matched with such exercise to result in
"shortswing" profit liability under Section 16(b) of the Act on the part
of such Section 16 Person with respect to such transaction.
(b) WITHHOLDING TAX LOANS. In addition to any one or more of the
acceptable forms of consideration recited in Paragraph (a) of this Section
9 which the Committee may permit in the Option Agreement to be used for the
payment of withholding taxes, the Committee may determine in its discretion
at the time of grant of an Option to permit the Optionee (but not any
Successor) to, and if the Committee so determines, shall provide in the
Option Agreement evidencing such Option that such Optionee may, borrow from
the Company an amount sufficient to pay the taxes required to be withheld
in connection with the exercise of such an Option, with each such borrowing
to be evidenced by a promissory note of the Optionee payable to the order
of the Company. Except as may otherwise be specified by the Committee in
its sole discretion at the time of grant thereof and reflected in the
Option Agreement evidencing an Option, each such loan shall be for a term
of five (5) years at a rate of interest equal to the Company's then primary
domestic commercial lender's prime or base rate as in effect from time to
time, with payments of interest on such loan due quarterly and payments
toward the principal of such loan due, to the extent of the net proceeds
therefrom, within fifteen (15) days after any disposition by the Optionee
of any
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Shares acquired upon exercise of any stock option granted by the
Company to the Optionee pursuant to this Plan or otherwise (excluding any
disposition of such Shares by gift or to the Company in payment of the
exercise price of a stock option granted by the Company to the Optionee
pursuant to this Plan or otherwise and/or any related withholding taxes),
provided that the entire unpaid principal balance shall be due at the
earlier of (i) the expiration of the five (5) year term, or (ii) the
termination of the Optionee's Continuous Employment (other than by reason
of Optionee's "disability" (as defined in Section 10(d)) or "retirement"
(as defined in Section 10(e)).
(c) COMPANY WITHHOLDING OF TAXES. If, upon being notified by the
Company of the amount of the taxes required to be withheld in connection
with an exercise of an Option, the Optionee fails promptly to pay, or to
make arrangements acceptable to the Company for the payment of, such taxes,
the Company shall have the right to elect (but shall be under no
obligation) to cover such taxes through:
(i) withholding Shares from those issuable upon such exercise,
provided that any such election so to withhold Shares with respect to
the exercise of an Option by a Section 16 Person shall be effective only
if made in accordance with the applicable requirements of Rule 16b-3;
and/or
(ii) deducting such taxes from any amounts payable in cash to the
Optionee by the Company for any reason as of the time of such exercise
or any time thereafter.
(d) VALUATION OF SHARES DELIVERED OR WITHHELD. Where already owned
Shares, or Shares withheld from those issuable upon such exercise, are used
in payment of the exercise price and/or related withholding taxes, such
Shares shall be valued (i) with respect to the payment of the exercise
price, at Fair Market Value as of the day immediately preceding the date of
exercise and (ii) with respect to the payment of withholding taxes, at Fair
Market Value as of the day immediately preceding the date tax withholding
is required to be made.
(e) OPTIONEE CERTIFICATION OF ALREADY OWNED SHARES. Already owned
Shares which were acquired through a previous exercise of a stock option
granted to an Optionee by the Company pursuant to this Plan or otherwise
may be used in payment of the exercise price of an Option and/or related
withholding taxes only if the previous exercise through which such Shares
were acquired was made as of a date not less than six (6) months prior to
the date of the exercise of the Option in connection with which such
Shares are being tendered as payment. A tender of already owned Shares in
payment of the exercise price of an Option and/or related withholding
taxes will not be accepted by the Company unless accompanied by a written
statement signed by the person or persons entitled to exercise such Option
certifying that either (i) the Shares tendered in payment were acquired
other than through the exercise of a stock option granted by the Company
or (ii) the Shares tendered in payment were acquired through the exercise,
on such date(s) as shall be recited in such statement (which date(s) shall
be not less than six (6) months prior to the date of tender), of stock
option(s) granted by the Company.
(f) DELIVERY OF ALREADY OWNED SHARES. Where the person exercising an
Option elects to use already owned Shares in full or partial payment of the
exercise price and/or related withholding taxes, the Committee may, in its
sole discretion, accept, in lieu of physical delivery of the stock
certificates evidencing such Shares, such constructive delivery of such
Shares as may be satisfactory to the Committee.
10. METHOD OF EXERCISE.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Committee and as permitted under the Plan.
An Option may not be exercised for a fraction of a Share. In order to
exercise an Option, the person or persons entitled to exercise it shall
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deliver to the Company written notice of the number of shares with respect
to which the Option is being exercised, accompanied by payment in full of
the aggregate exercise price for the Shares so to be acquired. To
constitute an effective exercise of an Option, such notice and payment
shall be addressed to the attention of the Treasurer of the Company and
must be received at the principal executive office of the Company (i) with
respect to an Option that is terminated for "Misconduct" (as defined below)
pursuant to Paragraph (b) of this Section 10 or for "Prohibited Conduct"
(as defined in Section 16(a)) pursuant to Section 16(a), prior to the time
of the occurrence of the event constituting such Misconduct or Prohibited
Conduct or (ii) with respect to any other Option, by 5:00 p.m., local time,
on the date of expiration or termination of the Option. 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 nor any other
rights as a stockholder shall exist with respect to the Optioned Stock
notwithstanding the 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 12.
Exercise of an Option shall result in a decrease in the number of
Shares which thereafter shall be available for sale under such Option by
the number of Shares as to which the Option is exercised, including any
shares withheld from the Shares to be issued pursuant to such exercise to
cover the exercise price and/or related withholding taxes.
(b) TERMINATION OF EMPLOYMENT. Except as may otherwise be specified by
the Committee in its sole discretion at the time of grant thereof and
reflected in the Option Agreement evidencing such Option, upon the
termination of an Optionee's Continuous Employment (other than by reason
of the Optionee's death, disability or retirement), he may exercise his
Option (to the extent that he was entitled to exercise it at the time of
such termination of employment) until the earlier of (i) the date thirty
(30) days (or such longer period of time as is determined by the Committee
in its sole discretion at the time of such termination of employment,
provided that if the Committee intends that a particular Option continue
to qualify as a Tax Qualified Option, the Committee will have to observe
such restrictions as may be imposed by applicable tax laws on the
post-termination period within which a Tax Qualified Option may be
exercised if it wishes to ensure that any post-termination exercise of
such Option is made only within the period permitted by such laws) after
the effective date of the termination of his employment or (ii) the
expiration date of such Option, and the Option shall terminate on the
earlier of such dates; provided, however, that if the Optionee is
terminated by the Company for Misconduct, then such Option shall terminate
effective as of the time of the conduct constituting such Misconduct. As
used in this Plan, "Misconduct: means that the Optionee has engaged in
Prohibited Conduct, committed an act of embezzlement, fraud or theft with
respect to the property or business of the Company or a Subsidiary or
deliberately disregarded the rules of the Company or a Subsidiary in such
a manner as to cause material loss, damage or injury to or otherwise
endanger the property, reputation, employees or business prospects of the
Company or a Subsidiary. The Committee shall determine whether an
Optionee's employment was terminated by reason of Misconduct. In making
such determination, the Committee may, but shall not be required to, give
the Optionee an opportunity to be heard and to present evidence on his
behalf.
(c) DEATH OF OPTIONEE. Except as may otherwise be specified by the
Committee in its sole discretion at the time of grant thereof and reflected
in the Option Agreement evidencing such Option, upon the death of an
Optionee:
(i) who is at the time of his death in the employ of the Company or
a Subsidiary and who shall have been in Continuous Employment since the
date of grant of the Option, the Option may be exercised (to the extent
the Optionee would have been entitled to do so had he continued living
and terminated employment six (6) months after the date of death) by his
Successor until the earlier of (A) the date six (6)
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months (or, if the Committee intends that a particular Option
qualify as a Tax Qualified Option, such lesser period of time within
which the applicable tax laws may require that the Option be exercised
in order for such Option so to qualify) following the date of the
Optionee's death or (B) the expiration date of such Option, and the
Option shall terminate on the earlier of such dates; or
(ii) within one (1) month after the termination of Continuous
Employment other than termination by the Company or a Subsidiary for
Misconduct or due to disability, the Option may be exercised (to the
extent the Optionee was entitled to do so at the date of termination of
Continuous Employment) by his Successor until the earlier of (A) the
date six (6) months following the date of the Optionee's death (or, if
the Committee intends that a particular Option qualify as a Tax
Qualified Option, such lesser period of time within which the applicable
tax laws may require that the Option be exercised in order for such
Option so to qualify) or (B) the expiration date of such Option, and the
Option shall terminate on the earlier of such dates.
(d) DISABILITY OF OPTIONEE. Except as may otherwise be specified by
the Committee in its sole discretion at the time of grant thereof and
reflected in the Option Agreement evidencing such Option, if an Optionee's
Continuous Employment terminates due to his having become permanently and
totally disabled within the meaning of Section 22(e)(3) of the Code
("disability"), the Option may be exercised (to the extent the Optionee was
entitled to do so as of the effective date of the termination of his
employment by reason of such disability) until the earlier of (i) the date
one (1) year after the effective date of such termination of his employment
or (ii) the expiration date of such Option, and the Option shall terminate
on the earlier of such dates.
(e) RETIREMENT OF OPTIONEE. Except as may otherwise be specified by
the Committee in its sole discretion at the time of grant thereof and
reflected in the Option Agreement evidencing such Option, if an Optionee's
Continuous Employment terminates by reason of (A) his retirement at any age
entitling him to benefits under the provisions of any retirement plan of
the Company or any Subsidiary in which such Optionee participates; or (B)
retirement at any time after attaining age 65 (whichever circumstance is
applicable constituting "retirement"), the Option may be exercised (to the
extent the Optionee shall be entitled to do so as of the effective date of
the termination of his employment by reason of such retirement) until the
earlier of (i) the date three (3) months after the effective date of the
termination of his employment or (ii) the expiration date of such Option,
and the Option shall terminate on the earlier of such dates.
11. NONTRANSFERABILITY OF OPTIONS. Options may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner by the Optionee
except at death by will or by the laws of descent and distribution and may be
exercised during the life of the Optionee only by the Optionee. No lien,
obligation or liability of an Optionee or a Successor shall attach to or
otherwise encumber the right and interest of such Optionee or Successor in and
to any Options outstanding under the Plan.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) ADJUSTMENTS, IN GENERAL. Subject to the provisions of Paragraph
(b) of this Section 12 and to any required action by the stockholders of
the Company, the number of Shares covered by each outstanding Option, and
the number of Shares which have been authorized for issuance under the Plan
but as to which no Options have yet been granted or which due to the
expiration, lapse, cancellation, surrender, forfeiture or other termination
of a stock option under this Plan or the Predecessor Plan are again
available for grant, as well as the price per Share covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding Shares resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of Shares or
9
<PAGE> 10
any other increase or decrease in the aggregate number of issued and
outstanding Shares effected without receipt of consideration by the
Company; provided, however, that the issuance of Shares pursuant to the
conversion or exchange of any securities of the Company convertible into
or exchangeable for Shares shall not be deemed to have been "effected
without receipt of consideration." Any fractional Shares which would
otherwise result from any such adjustments shall be eliminated either by
deleting all fractional Shares or by appropriate rounding to the next
higher (fractions of one-half or more) or lower (fractions of less than
one-half) whole Share. All such adjustments shall be made by the Board in
its sole discretion. Except as expressly provided herein, no issuance by
the Company of shares of stock of any class, or securities convertible
into or exchangeable for shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made to, the number of or
exercise price for Shares subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, all outstanding Options will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
Board. The Board may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by
the Board and give each Optionee the right to exercise his Option as to all
or any part of the Optioned Stock, including Shares as to which the Option
would not otherwise then be exercisable.
Subject to the provisions of Paragraph (b) of this Section 12, in the
event of a sale of all or substantially all of the assets of the Company,
or the merger or consolidation of the Company with or into another
corporation, each outstanding Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Board, in the exercise
of its sole discretion, determines that, in lieu of such assumption or
substitution, the Optionee shall have the right to exercise the Option as
to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise then be exercisable. If in the event of a
merger, consolidation or sale of assets the Board makes an Option fully
exercisable in lieu of assumption or substitution, the Company shall notify
the Optionee that the Option shall be fully exercisable for a period of
thirty (30) days from the date of such notice, and the Option will
terminate upon the expiration of such period.
(b) SPECIAL ADJUSTMENTS UPON CHANGE IN CONTROL. In the event of a
"Change in Control" of the Company (as defined in Paragraph (c) of this
Section 12), unless otherwise determined by the Board in its sole
discretion prior to the occurrence of such Change in Control, the following
acceleration and valuation provisions shall apply:
(i) Any Options outstanding as of the date of such Change in
Control that are not yet fully vested on such date shall become fully
vested; and
(ii) The value of all outstanding Options, measured by the excess
of the "Change in Control Price" (as defined in Paragraph (d) of this
Section 12) over the exercise price, shall be cashed out. The cash out
proceeds shall be paid to the Optionee or, in the event of death of an
Optionee prior to payment, to his Successor.
(c) DEFINITION OF "CHANGE IN CONTROL." For purposes of this Section
12, a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d) and
14(d) of the Act (other than the Company, a Subsidiary or a Company or
Subsidiary employee benefit plan, including any trustee of such a plan
acting as trustee) becomes the "beneficial owner" (as defined in Rule
13d-3 promulgated by the Commission under the Act, as adopted and
amended from time to time and as interpreted by formal or informal
opinions of, and releases published or other interpretive advice
provided by, the Staff of the Commission), directly or indirectly, of
securities of the Company
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<PAGE> 11
representing fifty percent (50%) or more of the combined voting power
of the Company's then outstanding securities; or
(ii) The consummation of a transaction requiring stockholder
approval and involving the sale of all or substantially all of the
assets of the Company or the merger or consolidation of the Company with
or into another corporation.
(d) DEFINITION OF "CHANGE IN CONTROL PRICE." For purposes of this
Section 12, "Change in Control Price" shall be, as determined by the Board,
(i) the highest closing sale price of a Share, as reported by the NASDAQ
National Market System, any stock exchange on which the Shares are listed
or any other recognized securities market on which the Shares are traded,
at any time within the sixty (60) day period immediately preceding the date
of the Change in Control (the "Sixty-Day Period"), or (ii) the highest
price paid or offered, as determined by the Board, in any bona fide
transaction or bona fide offer related to the Change in Control, at any
time within the Sixty-Day Period.
13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Committee makes the determination granting
such Option. Notice of such determination shall be given to each Employee to
whom an Option is so granted within a reasonable time after the date of such
grant.
14. OPTION AGREEMENTS. As a condition to the effectiveness of each grant of
an Option (including, but not limited to, a Replenishment Option) under this
Plan, the Optionee shall enter into a written Option Agreement in such form as
may be authorized by the Committee from time to time. Subject to the provisions
of Section 20(a), each such Option Agreement shall contain such provisions as
are required by the terms of this Plan and may contain such additional
provisions not inconsistent with the terms of this Plan as the Committee in its
sole discretion may from time to time authorize. Each Option Agreement
evidencing an Option granted to a Section 16 Person shall also provide for such
minimum waiting period from the date of grant before the Option may be
exercised, and such minimum holding period from the date of the acquisition of
Shares upon exercise of an Option for which such Shares must be held before
making any disposition of such Shares, as may be required by Rule 16b-3.
15. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
Securities Law Requirements and all other applicable provisions of law,
including, without limitation, any applicable state "blue sky" laws and foreign
(national and provincial) securities laws and the rules and regulations
promulgated under any of such laws, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option or the issuance of Shares upon
exercise of an Option, the Company may require the person exercising such Option
to make such representations and warranties to the Company as may be required,
in the opinion of counsel for the Company, by any of the aforementioned
Securities Law Requirements and other laws, which may include, without
limitation, representations and warranties that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares.
The Company shall not have any liability to any Optionee in respect of any
delay in the sale or issuance of Shares hereunder until the Company is able to
obtain authority from any governmental authority (domestic or foreign) or
self-regulatory organization having jurisdiction thereover, which authority is
deemed by the Company's counsel to be necessary to the lawful sale and issuance
of such Shares, or any failure to sell or issue such Shares as to which such
requisite authority the Company is unable to obtain.
11
<PAGE> 12
16. FORFEITURE OF OPTIONS AND REALIZED BENEFITS.
(a) LOSS OF UNEXERCISED OPTIONS. If an Optionee holding an outstanding
Option, without the written consent of the Company as authorized by the
Committee in its sole discretion, engages in any of the following conduct
(any such conduct being referred to as "Prohibited Conduct") at any time
during the period beginning on the date the Optionee first entered the
employ of the Company or a Subsidiary and continuing for so long as any
portion of such Option remains outstanding and unexercised (the "Grant
Period"):
(i) rendering services for any organization or engaging directly or
indirectly in any business which, in the sole judgment of the Committee,
is or becomes competitive with the Company or a Subsidiary, or where
such rendering of services or engaging in business, in the sole judgment
of the Committee, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company or a Subsidiary; provided that the
ownership of a not more than ten percent (10%) equity interest in any
organization or business whose equity is listed on a recognized
securities exchange or traded over-the-counter shall not constitute
Prohibited Conduct within the meaning of this Subparagraph (i);
(ii) disclosing to anyone outside the company or any Subsidiary, or
use in other than the business of the Company or any Subsidiary, any
confidential or proprietary information relating to the business of the
Company or any Subsidiary, acquired by the Optionee either during or
after employment with the Company or a Subsidiary;
(iii) except as may otherwise be permitted by any agreement
otherwise made by the Company or a Subsidiary with the Optionee, failing
to disclose fully and promptly in writing and assign to the Company or
to the Subsidiary by which the Optionee is or was employed all right,
title and interest in any discovery, invention, process, method,
improvement or idea, whether or not patentable or subject to copyright
protection and whether or not reduced to tangible form or reduced to
practice, made or conceived by such person during employment by the
Company or such Subsidiary, relating in any manner to the actual or
contemplated business, research or development work of the Company or
such Subsidiary or to do anything reasonably necessary to enable the
Company or such Subsidiary to secure a patent, copyright or similar
protection in the United States of America and/or in foreign countries
as the Company or such Subsidiary may elect; or
(iv) inducing or attempting to induce any customer or supplier of
the Company or a Subsidiary to breach any contract with the Company or a
Subsidiary or otherwise terminate its relationship with the Company or a
Subsidiary; then the Committee shall have the right, upon determining
that the Optionee has engaged in any Prohibited Conduct at any time
during the Grant Period (in making such determination, the Committee
may, but shall not be required to, give the Optionee an opportunity to
be heard and to present evidence on his behalf), to declare the Option
forfeited and cancelled effective as of the time of the conduct
constituting such Prohibited Conduct.
(b) OPTIONEE CERTIFICATION UPON EXERCISE. Each time an Optionee
exercises an Option, the Optionee shall be deemed to certify to the Company
that such Optionee did not, without the written consent of the Company as
authorized by the Committee in its sole discretion, engage in any
Prohibited Conduct at any time during the period beginning on the date the
Optionee first entered the employ of the Company or a Subsidiary and ending
on the date of such exercise (the "Pre-Exercise Period").
(c) LOSS OF REALIZED BENEFITS. In the event that the Committee
determines with respect to a particular exercise of an Option that the
Optionee engaged in any Prohibited Conduct at any time during the
Pre-Exercise Period or within one (1) year after such exercise (in making
such determination, the Committee may, but shall not be required to, give
the
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<PAGE> 13
Optionee an opportunity to be heard and to present evidence on his
behalf), such Optionee shall be liable to the Company (i) to the extent
such Optionee has, prior to his receipt of the "Forfeiture Notice" (as
defined below), disposed of the Shares acquired through such exercise, for
payment to the Company of an amount in cash equal to the excess of (A) the
net cash proceeds from such disposition (or if such Shares were disposed
of other than for cash, the aggregate Fair Market Value of such Shares as
of the date of disposition) over (B) that portion of the sum of the cash
and the aggregate Fair Market Value as of the exercise date of any already
owned Shares used by the Optionee to pay the exercise price for such
Shares (such sum being referred to as the "Exercise Payment") which is
allocable to the Shares disposed of in the portion that such number of
Shares bears to the total number of Shares issued pursuant to such Option
exercise and (ii) to the extent such Optionee still owns at the time he
receives the Forfeiture Notice the Shares acquired through such exercise,
at the option of the Committee, either (A) for the return of such Shares
to the Company in exchange for a cash refund from the Company to such
Optionee in an amount equal to that portion of the Exercise Payment which
is allocable to the Shares still owned in the proportion that such number
of Shares bears to the total number of Shares issued pursuant to such
Option exercise (such portion being referred to as the "Retained Shares
Exercise Payment") or (B) for payment to the Company of an amount in cash
equal to the excess of the aggregate Fair Market Value as of the exercise
date of the Shares still owned over the Retained Shares Exercise Payment.
To enforce such liability against such Optionee, the Committee shall
notify the Optionee thereof in writing within three (3) years of the date
of the affected Option exercise, which notice (the "Forfeiture Notice")
shall include a statement of the form of payment which the Committee has
elected to receive from the Optionee with respect to Shares still owned by
the Optionee. Within ten (10) days after receiving the Forfeiture Notice,
the Optionee shall make full payment of such liability to the Company in
cash, or to the extent such Optionee still owns Shares acquired through
the affected exercise and the Committee elects in the Forfeiture Notice to
receive such Shares, stock certificates evidencing such Shares still owned
by the Optionee (duly endorsed for transfer with signature guaranteed). In
the event that the Committee elects to receive, and the Optionee returns,
Shares, the Company shall make the refund payment required to be made to
the Optionee with respect to such Shares upon the Company's receipt of
such Shares as hereinabove required.
(d) CUMULATIVE RIGHTS. The obligation of an Optionee under this
Section 16 to refrain from Prohibited Conduct is in addition to, and does
not in any way supersede or diminish, any other obligation of such Optionee
with respect to such matters which such Optionee may owe to the Company,
any Subsidiary or any other person under any agreement, applicable law or
otherwise (a "Similar Obligation"). Any action taken by the Company or the
Committee to enforce, compromise, settle or waive the provisions of this
Section 16 with respect to any particular event constituting Prohibited
Conduct shall not in any way affect the rights of the Company, the
Committee, any Subsidiary or any person against an Optionee with respect to
any other event constituting Prohibited Conduct or any Similar Obligation,
nor shall any action taken or failed to be taken by the Company, any
Subsidiary or any other person against an Optionee to enforce, compromise,
settle or waive any Similar Obligation have any effect on the rights of the
Company and the Committee under this Section 16.
17. RESERVATION OF SHARES. The Company, during the term of this Plan, shall
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
18. EFFECTIVENESS OF PLAN. This Plan was adopted by the Board on, and shall
be effective as of, August 27, 1990; provided, however, that any Options granted
hereunder shall not be exercisable unless and until, and this Plan and all such
Options shall automatically
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<PAGE> 14
terminate if, the Plan is not approved, within one (1) year of the date
of adoption of the Plan, by the holders of the outstanding Shares of the
Company present and voting, in person or by proxy, at a duly held meeting of
the Company's stockholders or any adjournment thereof and by such percentage of
such quorum of such stockholders as may be required by applicable Securities
Law Requirements. Once so approved by the stockholders of the Company, the Plan
shall continue in full force and effect until (i) terminated by resolution of
the Board or (ii) both (A) all Options granted under the Plan have been
exercised in full and (B) no Authorized Shares remain available for the
granting of additional Options. The termination of the Plan shall not affect
Options already granted, which Options shall remain in full force and effect in
accordance with their respective terms as if this Plan had not been terminated.
19. AMENDMENT OF PLAN AND OUTSTANDING OPTIONS. The Board may, in its sole
discretion, amend the Plan from time to time, provided that any amendment which
Rule 16b-3 or any other Securities Law Requirement requires be approved by the
stockholders of the Company shall be made only with the approval of such
stockholders. Amendments to the Plan shall apply prospectively to all Options
then outstanding under the Plan, except in the case of any amendment which is
adverse to an Optionee, in which case the amendment shall apply with respect to
the outstanding Options held by the adversely affected Optionee only upon the
consent of such Optionee to such amendment. In exercising its authority under
Section 4(b)(vi) to amend outstanding Options, the Committee likewise may make
an amendment which adversely affects the Optionee only upon the consent of such
Optionee to such amendment. Notwithstanding the provisions of this Section 19,
the consent of the Optionee shall not be required with respect to an amendment
to the Plan or to any outstanding Option which is made in order to comply with
Securities Law Requirements or which causes a Tax Qualified Option no longer to
qualify as such.
20. GENERAL PROVISIONS.
(a) GRANTS TO FOREIGN EMPLOYEES. Notwithstanding any other provision
of this Plan to the contrary but subject to applicable Securities Law
Requirements and tax laws, to the extent deemed necessary or appropriate by
the Committee in its sole discretion in order to further the purposes of
the Plan with respect to Employees who are foreign nationals and/or
employed outside the United States of America, an Option granted to any
such Employee may be on terms and conditions different from those specified
in this Plan in recognition of the differences in the laws, tax policies
and customs applicable to such an Employee, without the necessity of the
Plan being amended to provide for such different terms and conditions.
(b) NATURE OF BENEFITS. Benefits realized by an Optionee under this
Plan or any Option granted hereunder shall not be deemed a part of such
Optionee's regular, recurring compensation for purposes of the termination,
indemnity or severance pay law of any country and shall not be included in,
nor have any effect on, the determination of benefits under any other
employee benefit plan or similar arrangement provided to such Optionee by
the Company or a Subsidiary unless expressly so provided by such other plan
or arrangement, or except where the Committee expressly determines in its
sole discretion that an Option or portion thereof should be so included in
order accurately to reflect competitive compensation practices or to
recognize that an Option has been granted in lieu of a portion of
competitive annual cash compensation.
(c) DETERMINATION OF DEADLINES. If any day on or before which action
under this Plan or any Option granted hereunder must be taken falls on a
Saturday, Sunday or Company-recognized holiday, such action may be taken on
the next succeeding day which is not a Saturday, Sunday or
Company-recognized holiday; provided, however, that the provisions of this
Paragraph (c) shall not apply to, and shall not extend the time for
exercise of, any
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<PAGE> 15
Option which is terminated for Misconduct pursuant to
Section 10(b) or for Prohibited Conduct pursuant to Section 16(a).
(d) GOVERNING LAW. To the extent that federal laws (such as the Act or
the Code) or the Delaware General Corporation Law do not otherwise control,
this Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Ohio and construed
accordingly.
(e) GENDER AND NUMBER. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural
and vice versa.
(f) CAPTIONS. The captions contained in this Plan are for convenience
of reference only and do not affect the meaning of any term or provision
hereof.
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<PAGE> 1
EXHIBIT 10.1.5.a
On September 14, 1993, the Company's Board of Directors approved, subject to
stockholder approval at the 1994 Annual Meeting, an extension of the
Non-Qualified Stock Option Agreement permitting it to be exercised for an
additional five year term ending October 17, 1998 at the same $14.625 exercise
price per share at which the option was originally granted. The extension was
approved by the Company's stockholders at the Annual Meeting held August 19,
1994.
<PAGE> 1
EXHIBIT 10.1.6.a
On September 14, 1993, the Company's Board of Directors approved, subject to
stockholder approval at the 1994 Annual Meeting, an extension of the
Non-Qualified Stock Option Agreement permitting it to be exercised for an
additional five year term ending October 17, 1998 at the same $14.625 exercise
price per share at which the option was originally granted. The extension was
approved by the Company's stockholders at the Annual Meeting held August 19,
1994.
<PAGE> 1
EXHIBIT 10.1.8
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is executed this 29th day of
September, 1994, at Akron, Ohio, by and between TELXON PRODUCTS, INC. ("TPI"),
a Delaware corporation with offices at 3330 West Market Street, Akron, Ohio
44333-3352, and a wholly owned subsidiary of TELXON CORPORATION ("Parent"), a
Delaware corporation with offices at 3330 West Market Street, Akron, Ohio
44333-3352, and DAN R. WIPFF ("Employee"), and is made effective April 1, 1994
(the "Effective Date").
WITNESSETH:
WHEREAS, TPI and Parent desire to employ Employee initially as President of
TPI and Senior Executive Vice President of Parent, and thereafter, in such
capacity as the Board of Directors of Parent (the "Board") shall direct, and
Employee desires to be so employed, upon the terms and conditions herein
contained; and
WHEREAS, Parent and Employee desire to have this Agreement supersede any and
all prior agreements, oral or written, relating to the employment of Employee
by either Parent or TPI.
NOW, THEREFORE, in consideration of the foregoing and in consideration of the
mutual promises and agreements contained herein, the parties hereto agree as
follows:
1. EMPLOYMENT PERIOD. Parent and TPI agree to employ Employee and Employee
agrees to serve TPI for the period (the "Employment Period") beginning on the
Effective Date and ending March 31, 1997, subject to prior termination of this
Agreement pursuant to section 4 hereof.
2. NATURE OF DUTIES.
----------------
a. Employee's duties and responsibilities shall be to serve in such
capacity as the Board shall direct, in conformity with management policies,
guidelines and directions issued by TPI and approved by Parent, and shall
have general charge and supervision of those functions and such other
responsibilities as the Board shall determine. Employee shall report to the
Chief Executive Officer of Parent or such other officer as the Board shall
direct (the "Supervisor").
b. Employee shall work exclusively for Parent and TPI on a full-time basis
in such capacity and shall carry on his employment at such location as shall
be required by the Board, except for time spent traveling on business on
behalf of Parent or TPI. During normal business hours, Employee shall devote
all of his time and attention to TPI and Parent business.
<PAGE> 2
c. Employee shall perform his duties and responsibilities hereunder
diligently, faithfully and loyally in order to cause the proper, efficient
and successful operation of TPI business.
3. COMPENSATION AND BENEFITS.
a. BASE SALARY AND EXPENSES. As compensation for Employee's services,
Parent shall cause TPI to pay to Employee during the Employment Period a
salary (the "Base Salary") at the annual rate of:
i. from April 1, 1994 through July 15, 1994: $500,000 per
year;
ii. from July 16, 1994 through March 31, 1995: $350,000 per
year; and
iii. from April 1, 1995 through March 31, 1997: $275,000 per
year.
All payments will be in arrears, in equal installments every second
Friday, or at such other interval as the Board shall direct. TPI shall
reimburse Employee for all reasonable out-of-pocket expenses incurred by
Employee on TPI and Parent's behalf during the Employment Period and approved
by the Supervisor, or such other officer as the Board shall direct.
b. BONUS COMPENSATION. In addition to the Base Salary,
Employee shall, at the discretion of the Board, be eligible to receive
bonus compensation ("Bonus Compensation") during the Employment Period
on a basis to be approved by the Board; provided that:
i. for each fiscal year the individual potential
bonus will not exceed $150,000;
ii. any bonus will be on an annual basis, paid after the year-end
audit has concluded; and
iii. the bonus criteria will be based upon goals
and achievements agreed upon by Employee and the Parent's
Chief Executive Officer and approved by the Board.
c. VACATION. During the Employment Period, Employees shall be entitled to
take vacation time in accordance with TPI and Parent's policies, which for
Employee is five (5) weeks per year. In the event that all or any part of
said vacation is not taken for any reason during any such year, there will be
no compensation paid in lieu thereof, and accrued and unused vacation time
shall not be carried over and added to the vacation time for the succeeding
year in accordance with such policy.
d. HEALTH, DISABILITY, RETIREMENT AND DEATH BENEFITS. TPI shall
provide Employee with the same health, disability, retirement and death and
other fringe benefits as are generally provided to the executive employees of
TPI and Parent in accordance with such terms, conditions and
2
<PAGE> 3
eligibility requirements as may from time to time be established or modified
by TPI and approved by Parent.
e. RESTRICTED STOCK. The 60,000 shares of the Parent's restricted
stock included in the larger grant previously made to Employee in December
1992 which is still subject to restriction shall, upon the Effective Date of
this Agreement, be treated as follows:
i. the 20,000 shares for which forfeiture would otherwise lapse
on December 31, 1994 will now be subject to forfeiture only if Employee's
employment is terminated by Parent for cause prior to December 31, 1994;
ii. the 20,000 shares for which forfeiture would otherwise lapse
on December 31, 1995 will remain subject to the original forfeiture
provisions of the December 1992 grant.
iii. the 20,000 shares for which forfeiture would otherwise lapse on
December 31, 1996 will automatically be forfeited and returned to the
Parent upon the Effective Date of this Agreement.
iv. in all other respects, the restricted stock herein referenced
shall remain under the restrictions and terms imposed at the time of the
original December 1992 grant.
4. TERMINATION.
-----------
a. This Agreement shall terminate automatically upon
Employee's death.
b. Parent may terminate Employee's employment under this Agreement at
any time, upon five (5) days written notice to Employee, other than for
cause, or if Employee becomes permanently disabled. Permanent disability
shall be determined by Parent according to the same standards applicable to
the employees of TPI and Parent generally under the disability benefits
referred to in paragraph 3(d) hereof.
c. Parent shall have the right to terminate Employee's employment under
this Agreement at any time, immediately, for "cause," which shall mean for
behavior of Employee which is adverse to Parent's or TPI's interests,
including, without limitation, Employee's dishonesty, grossly negligent
misconduct, willful misconduct, disloyalty, acts of bad faith, neglect of
duty or material breach of this Agreement.
5. EFFECTS OF TERMINATION.
----------------------
a. In the event of automatic termination by reason of Employee's
death pursuant to paragraph 4(a), or by Parent by reason of Employee's
permanent disability pursuant to paragraph 4(b), all of Parent's and TPI's
obligations under this Agreement shall end except for TPI's obligations to
pay Employee's Base Salary and Bonus Compensation, if any, in each case
earned and accrued but unpaid to the date of death or permanent disability.
Employee shall have the right to receive any payments under the death or
3
<PAGE> 4
disability benefits, as the case may be, provided to Employee pursuant to
paragraph 3(d), if any.
b. In the event Parent exercises its right of
termination other than for cause pursuant to paragraph 4(b),
or if this Agreement expires, all of Parent's and TPI's
obligations under this Agreement shall end except for TPI's
obligations under paragraph 5(c) of this Agreement and its
obligations to pay Employee's Base Salary and Bonus
Compensation, if any, in each case earned and accrued but
unpaid to the date of termination (which, for purposes of this
paragraph 5(b), shall be five (5) days after the date on which
notification is provided by Parent to Employee pursuant to
paragraph 4(b) or at the expiration of this Agreement,
whichever the case may be).
c. In the event Parent exercises its right of
termination other than for cause pursuant to paragraph 4(b), TPI shall
be obligated to pay Employee the greater of the Base Salary for and
over the remaining unexpired term of the Agreement, or $250,000; all
such payments to be made in arrears, in the normal course, on every
second Friday until completed.
d. In the event Parent exercises its right of
termination pursuant to paragraph 4(c) for "cause," or Employee
otherwise leaves the employ of TPI prior to the expiration of this
Agreement (which, for the purposes of this paragraph 5(d) shall be at
the date of termination or at the date Employee otherwise leaves the
employ of TPI), all of Parent's and TPI's obligations under this
Agreement shall end except for TPI's obligations to pay Employee's
Base Salary, if any, earned and accrued but unpaid to the date of
termination.
e. Any payments otherwise to be made to Employee under
this section 5 shall be subject to offset by TPI or the Parent for any
claims for damages, liabilities or expenses which either may have
against Employee.
6. COVENANT NOT TO COMPETE.
-----------------------
a. For the purposes of this section 6, and of section 7,
the term "TPI" shall mean Telxon Products, Inc., its parent company,
Telxon Corporation, and their wholly or partially owned subsidiaries,
together with their respective successors and assigns.
b. INDUCEMENT. This covenant between Employee and TPI
is being executed and delivered by Employee in consideration of
Employee's employment with TPI and TPI's obligations hereunder
(including, without limitation, the Base Salary, the Bonus
Compensation and other benefits and payments set forth herein).
Employee acknowledges that TPI's business and Employee's
responsibilities are international in scope. Employee further
acknowledges that the covenant not to compete with TPI contained in
this section 6 was and has been a condition of his employment since
Employee was originally employed by TPI and Parent.
c. RESTRICTED ACTIVITIES--DURATION. Except as otherwise
consented to or approved by the Board in writing, Employee agrees
that, in addition
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to being operative during the term of this Agreement, the provisions of
paragraph 6(c)(i) through (iii) hereof, inclusive, shall be operative for a
period of the greater of twelve (12) months after Employee's termination of
employment with TPI, or the remaining unexpired term of this Agreement,
regardless of the time, manner or reasons for termination. During such
periods, Employee will not, directly or indirectly, acting alone or as a
member of a partnership or as an owner (provided that ownership of not more
than one percent (1%) of the stock of any publicly traded company shall not be
deemed violative of this paragraph), director, officer, employee, manager,
representative or consultant of any corporation or other business entity:
i. engage in any business in competition with or
adverse to the business that is conducted by TPI, or, without
limiting the generality of the foregoing, engage in any
business which manufactures, distributes, services or supports
products which are of a type manufactured, sold, marketed,
serviced or supported by TPI, or which are in the process of
development in which Employee has participated, at the time of
the termination of this Agreement or Employee's employment
with TPI, in the United States, Canada or any European, Asian,
Pacific or other foreign country in which TPI then or
thereafter transacts business or is making a bona fide attempt
to do so;
ii. induce, request or attempt to influence any
customers or suppliers of TPI to curtail or cancel their
business with TPI or in any way interfere with TPI's business
relationships; or
iii. induce, request or attempt to influence any
other employee, agent or representative of TPI to terminate
their respective relationships with TPI or in any way
interfere with TPI's employee, agency or representative
relationships.
d. TOLLING; RELIEF OF OBLIGATIONS. In the event that
Employee breaches any provision of this section 6, such violation (1)
shall toll the running of the twelve (12) month period set forth in
paragraph 6(c) from the date of commencement of such violation until
such violation ceases, and (ii) shall relieve TPI of any obligations
to Employee under this Agreement.
e. "BLUE PENCILLING" OR MODIFICATION. If either the
length of time, geographic area or scope of restricted business
activity set forth in paragraph 6(c) is deemed unreasonably
restrictive or unreasonable in any other respect in any court
proceeding, Employee and TPI agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed
reasonable under the circumstances then presented.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
-----------------------------------------
a. For purposes of this Agreement, "Confidential
Information" means all information or trade secrets of any type or
description belonging to TPI which are proprietary and confidential to
TPI and which are not publicly disclosed or are only disclosed with
restrictions. Without
5
<PAGE> 6
limiting the generality of the foregoing, "Confidential Information" includes
strategic plans for carrying on business, other business plans, cost data,
internal financial information, customer lists, employee lists, vendor lists,
manufacturing methods or processes, product research or engineering data,
drawings, designs, schematics, flow charts, computer programs, program decks,
routines, subroutines, translators, compilers, operation systems, object and
source codes, specifications, inventions, calculations, discoveries and any
letters, papers, documents or instruments disclosing or reflecting any of
the foregoing, and all information revealed to, acquired or created by
Employee during Employee's employment by TPI relating to any of the foregoing.
b. Employee acknowledges that the discharge of
Employee's duties under this Agreement will necessarily involve his
access to Confidential Information. Employee acknowledges that the
unauthorized use by him or disclosure by him of such Confidential
Information to third parties might cause irreparable damage to TPI and
TPI's business. Accordingly, Employee agrees that at all times after
the date hereof he will not copy, publish, disclose, divulge to or
discuss with any third party nor use for his own benefit, without the
prior express written consent of the Board, except in the normal
conduct of his duties under this Agreement, any Confidential
Information, it being understood and acknowledged by Employee that all
Confidential Information created, compiled or obtained by Employee or
TPI, or furnished to Employee by any person while Employee is
associated with TPI remains its exclusive property.
c. Promptly upon termination of his employment,
irrespective of the time or manner thereof or reason therefor,
Employee agrees to return and surrender to TPI all Confidential
Information in any manner in his control or possession, as well as all
other TPI property.
8. REMEDIES INADEQUATE.
-------------------
a. Employee acknowledges that the services to be
rendered by him to TPI as contemplated by this Agreement are special,
unique and of extraordinary character. Employee expressly agrees and
understand that the remedy at law for any breach by him of section 6
or section 7 of this Agreement will be inadequate and that the damages
flowing from such breach are not readily susceptible to being measured
in monetary terms. Accordingly, upon adequate proof of Employee's
violation of any legally enforceable provision of section 6 or section
7 hereof, TPI shall be entitled to immediate injunctive relief,
including, without limitation, a temporary order restraining any
threatened or further breach. In the event any equitable proceedings
are brought to enforce the provisions of any of section 6, section 7
or section 8 hereof, Employee agrees that he will not raise in such
proceedings any defense that there is an adequate remedy at law, and
Employee hereby waives any such defense. Nothing in this Agreement
shall be deemed to limit TPI's remedies at law or in equity for any
breach by Employee of any of the provisions of section 6 or section 7
hereof which may be pursued or availed of by TPI. Without limiting
the generality of the immediately preceding sentence, any covenant on
Employee's part contained in section 6 or section 7 hereof, which may not
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<PAGE> 7
be specifically enforceable shall nevertheless, if breached, give rise to a
cause of action for monetary damages.
b. Employee has carefully considered, and has had adequate time and
opportunity to consult with his own counsel or other advisors regarding the
nature and extent of the restrictions upon him and the rights and remedies
conferred upon TPI under sections 6, 7, and 8 hereof, and hereby acknowledges
and agrees that such restrictions are reasonable in time, territory and
scope, are designed to eliminate competition which otherwise would be unfair
to TPI, do not stifle the inherent skill and experience of Employee, would
not operate as a bar to Employee's sole means of support, are fully required
to protect the legitimate interests of TPI and do not confer a benefit upon
TPI disproportionate to the detriment to Employee.
c. The covenants and agreements made by Employee in sections 6, 7,
and 8 hereof shall survive full payment by TPI to Employee of the amounts to
which Employee is entitled under this Agreement, the expiration of the
Employment Period and this Agreement.
9. RIGHTS. Employee acknowledges and agrees that any procedure,
design feature, schematic, invention, improvement, development discovery, know
how, concept, idea or the like (whether or not patentable, registrable under
copyright or trademark laws, or otherwise protectable under similar laws) that
Employee may conceive of, suggest, make, invent, develop or implement, during
the course of his service pursuant to this Agreement (whether individually or
jointly with any other person or persons), relating in any way to the business
of TPI or to the general industry of which TPI is a part, as shall all physical
embodiments and manifestations thereof, and all patent rights, copyrights,
trademarks (or applications therefor) and similar protections therein (all of
the foregoing referred to as "Work Product"), shall be the sole, exclusive and
absolute property of TPI. All Work Product shall be deemed to be works for
hire, and to the extent that any Work Product may not constitute a work for
hire, Employee hereby assigns to TPI all right, title and interest in, to and
under such Work Product, including without limitation, the right to obtain such
patents, copyright registrations, trademark registrations or similar
protections as TPI may desire to obtain. Employee will immediately disclose
all Work Product to TPI and agrees, at any time, upon TPI's request and without
additional compensation, to execute any documents and otherwise to cooperate
with TPI respecting the perfection of its right, title and interest in, to and
under such Work Product, and in any litigation or controversy in connection
therewith, all expenses incident thereto to be borne by TPI.
10. ASSIGNMENT OF EMPLOYEE'S RIGHTS. In no event shall TPI be
obligated to make any payment under this Agreement to any assignee or creditor
of Employee. Prior to the time of payment under this Agreement, neither
Employee nor his legal representative shall have any right by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
this Agreement.
11. TPI'S OBLIGATIONS UNFUNDED; GUARANTEE OF PARENT. Except as to
any benefits that may be required to be funded under any benefit plan of TPI
pursuant to law or pursuant to other agreements and which are not for the sole
benefit of Employee, the obligations of TPI under this Agreement are not funded
and TPI
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<PAGE> 8
shall not be required to set aside or deposit in escrow any monies in advance
of the due date for payment thereof to Employee. Parent hereby irrevocably
guarantees the prompt and full payment when due of any obligations
of TPI to Employee under this Agreement.
12. NOTICES. Any notice to be given hereunder by TPI to Employee
shall be deemed to be given if delivered to Employee in person, or if mailed to
Employee, by certified mail, postage prepaid, return receipt requested, at his
address last known on the records of TPI, and any notice to be given by
Employee to TPI or to Parent shall be deemed to be given if delivered in person
or by mail, postage prepaid, return receipt requested, to the Supervisor at
Parent's offices in Akron, Ohio, unless Employee, Parent or TPI shall have duly
notified the other parties in writing of a change of address. If mailed, such
notice shall be deemed to have been given when deposited in the mail as set
forth above.
13. AMENDMENTS. This Agreement shall not be modified or
discharged, in whole or in part, except by an agreement in writing signed by
the parties hereto.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties. The parties are not relying on any other
representation, express or implied, oral or written. This Agreement supersedes
any prior employment agreement, written or oral, between Employee and TPI or
Parent.
15. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not affect the meaning of any terms or
provisions hereof.
16. BINDING EFFECT. The rights and obligations of Parent and TPI
hereunder shall inure to the benefit of, and shall be binding upon, Parent, TPI
and their respective successors and assigns, and the rights and obligations of
Employee hereunder shall inure to the benefit of, and shall be binding upon,
Employee and his heirs, personal representatives and estate.
17. SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially enforceable provision shall be binding and enforceable to the extent
enforceable in any jurisdiction.
18. GOVERNING LAW AND VENUE. The validity, construction and
performance of this Agreement shall be governed in accordance with the laws of
the State of Ohio without regard to conflict of laws principles. All actions
arising hereunder shall be brought in the courts, state and federal, sitting in
Cuyahoga or Summit County, Ohio, and the parties each hereby submit to the
jurisdiction of such courts.
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<PAGE> 9
IN WITNESS WHEREOF, the undersigned have executed this Agreement on
the day and year first above written, effective the Effective Date.
TELXON PRODUCTS, INC.
By: /s/ Robert F. Meyerson
-------------------------------------
Chairman
TELXON CORPORATION
By: /s/ Robert F. Meyerson
-------------------------------------
Chief Executive Officer
EMPLOYEE:
/s/ Dan R. Wipff
----------------------------------------
DAN R. WIPFF
9
<PAGE> 1
Exhibit 10.1.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is executed this 30th day of
December, 1993, at Akron, Ohio, by and between TELXON CORPORATION, a Delaware
corporation ("Telxon"), with offices at 3330 West Market Street, Akron, Ohio
44333-3352, and FRANK BRICK ("Employee"), and is made effective October 15,
1993 (the "Effective Date").
WITNESSETH:
WHEREAS, Telxon desires to employ Employee initially as Senior Executive
Vice President of Telxon, and thereafter, in such capacity as the Board of
Directors of Telxon (the "Board") shall direct, and Employee desires to be so
employed, upon the terms and conditions herein contained.
NOW, THEREFORE, in consideration of the foregoing and in consideration of
the mutual promises and agreements contained herein, the parties hereto agree
as follows:
1. EMPLOYMENT PERIOD. Telxon agrees to employ Employee and Employee
agrees to serve Telxon for the period (the "Employment Period") beginning on
the Effective Date and ending March 31, 1995, subject to prior termination of
this Agreement pursuant to Paragraph 4 hereof.
2. NATURE OF DUTIES.
(a) Employee's duties and responsibilities shall be to serve as Senior
Executive Vice President of Telxon, in conformity with management policies,
guidelines and directions issued by Telxon, and shall have general charge and
supervision of those functions and such other responsibilities as the Board
shall determine. Employee shall report to the President and Chief Operating
Officer of Telxon or such other officer as Telxon shall direct (the
"Supervisor").
(b) Employee shall work exclusively for Telxon on a full-time basis in
such capacity and shall carry on his employment in Akron, Ohio or at such other
location as shall be required by the Board, except for time spent traveling on
business on behalf of Telxon. During normal business hours, Employee shall
devote all of his time and attention to the business of Telxon.
(c) Employee shall perform his duties and responsibilities hereunder
diligently, faithfully and loyally in order to cause the proper, efficient and
successful operation of Telxon's business.
3. COMPENSATION AND BENEFITS.
(a) BASE SALARY AND EXPENSES. As compensation for Employee's services,
Telxon shall pay to Employee during the Employment Period a salary (the "Base
Salary") at the annual rate of Three Hundred Fifty Thousand Dollars ($350,000),
payable in arrears, in equal installments,
<PAGE> 2
every second Friday, or at such other interval as the Board shall direct.
Telxon shall reimburse Employee for all reasonable out-of-pocket expenses
incurred by Employee on Telxon's behalf during the Employment Period and
approved by the Supervisor, or such other officer as the Board shall direct.
(b) INCENTIVE COMPENSATION. In addition to the Base Salary, Employee
shall, at the discretion of the Board, be eligible to receive incentive
compensation ("Incentive Compensation") during the Employment Period, on a
basis to be negotiated by Telxon and Employee as soon as practicable after the
date of this Agreement; provided, that the Incentive Compensation, if any,
shall be at a maximum annual amount of One Hundred Fifty Thousand Dollars
($150,000), which amount shall be prorated for the first fiscal year of this
Agreement.
(c) STOCK OPTIONS. During the Employment Period, subject to Board
approval, Employee is eligible to receive a grant or grants of options under
the Telxon Corporation 1990 Stock Option Plan (the "Plan") to purchase up to
50,000 shares of the common stock, par value $.01 per share, of Telxon (the
"Common Stock") at the fair market value of the Common Stock at the date of
grant. Any such option shall vest in equal amounts over a three (3) year period
in accordance with the Plan.
(d) RESTRICTED STOCK. Employee shall be entitled, at the Board's
discretion, to an award or awards of up to 50,000 shares of restricted Common
Stock, pursuant to stock award agreements in substantially the form attached
hereto as Exhibit A. Employee's right to ownership of the shares of Common
Stock shall vest as to the shares awarded in equal increments of one-fifth, on
each of the five anniversary dates of the date of the original award as
proposed on Exhibit B, so long as Employee is employed by Telxon on such
anniversary dates, and a certificate or certificates representing such vested
shares shall be delivered to Employee on such dates.
(e) VACATION. During the Employment Period, Employee shall be entitled
to take vacation time in accordance with Telxon policy. In the event that all
or any part of said vacation is not taken for any reason during any such year,
there will be no compensation paid in lieu thereof, and accrued and unused
vacation time shall not be carried over and added to the vacation time for the
succeeding year in accordance with such policy.
(f) HEALTH, DISABILITY, RETIREMENT AND DEATH BENEFITS. Telxon shall
provide Employee with the same health, disability, retirement, death and other
fringe benefits as are generally provided to the executive employees of Telxon
in accordance with such terms, conditions and eligibility requirements as may
from time to time be established or modified by Telxon.
4. TERMINATION.
(a) This Agreement shall terminate automatically upon Employee's death.
(b) Telxon may terminate Employee's employment under this Agreement at
any time, upon five (5) days written notice to Employee, other than for cause,
or if Employee becomes
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<PAGE> 3
permanently disabled. Permanent disability shall be determined by Telxon
according to the same standards applicable to other employees of Telxon.
(c) Telxon shall have the right to terminate Employee's employment
under this Agreement at any time, immediately, for "cause," which shall mean
for behavior of Employee which is adverse to Telxon's interests, including,
without limitation, Employee's dishonesty, grossly negligent misconduct,
willful misconduct, disloyalty, acts of bad faith, neglect of duty or material
breach of this Agreement.
5. EFFECTS OF TERMINATION.
(a) In the event of automatic termination by reason of Employee's death
pursuant to Paragraph 4(a), or by Telxon by reason of Employee's permanent
disability pursuant to Paragraph 4(b), all of Telxon's obligations under this
Agreement shall end except for Telxon's obligations to pay Employee's Base
Salary and Incentive Compensation, if any, in each cash earned and accrued but
unpaid to the date of death or permenant disability. Employee shall have the
right to receive any payments under the death or disability benefits, as the
case may be, provided to Employees pursuant to Paragraph 3(f), if any. Telxon
may offset any claims by it against Employee for damages or otherwise against
any amount payable by it to Employee under this Paragraph 5(a).
(b) In the event Telxon exercises its right of termination other than
for cause pursuant to Paragraph 4(b), or if this Agreement expires, all of
Telxon's obligations under this Agreement shall end except for Telxon's
obligations under Section 5(c) of this Agreement (in the case of termination)
and its obligatoins to pay Employee's Base Salary and Incentive Compensation,
if any, in each case earned and accured but unpaid to the date of termination
(which, for purposes of this Paragraph 5(b), shall be five (5) days after the
date on which notification is provided by Telxon to Employee pursuant to
Paragraph 4(b) or at the expiration of this Agreement, whichever the case may
be), subject to offset of any claims by Telxon against Employee for damages or
otherwise.
(c) In the event Telxon exercises its right of termination other than
for cause pursuant to Paragraph 4(b), then Telxon shall be obligated to pay
Employee, as severance pay, for the twelve (12) month period following the date
of such termination, annualized compensation at a rate which shall be equal to
the Base Salary at that time, subject to offset of any claims by Telxon against
Employee for damages or otherwise. Such payments shall be made in equal
installments in such intervals as the Board shall direct.
(d) In the event Telxon exercises its right of termination pursuant to
Paragraph 4(c) for "cause," or Employee otherwise leaves the employ of Telxon
prior to the expiration of this Agreement (which, for the purposes of this
Paragraph 5(d), shall be at the date of termination or at the date Employee
otherwise leaves the employ of Telxon), then all of Telxon's obligations under
this Agreement shall end except for Telxon's obligations to pay Employee's Base
Salary, if any, earned and accrued but unpaid to the date of termination,
against which obligation Telxon may offset any claims by it against Employee
for damages or otherwise.
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<PAGE> 4
6. COVENANT NOT TO COMPETE.
(a) DEFINITION. For the purposes of this Paragraph 6, and of Paragraph
7, the term "Telxon" shall mean Telxon Corporation, and its wholly or partially
owned subsidiaries, together with their respective successors and assigns.
(b) INDUCEMENT. This covenant between Employee and Telxon is being
executed and delivered by Employee in consideration of Employee's employment
with Telxon and Telxon's obligations hereunder (including, without limitation,
the Base Salary, the Incentive Compensation and other benefits and paymetns set
forth herein). Employee acknowledges that Telxon's business and Employee's
responsibilities are international in scope. Employee further acknowledges that
the covenant not to compete with Telxon contained in this Seciton 6 was and has
been a condition of his employment since Employee was originally employed by
Telxon.
(c) RESTRICTED ACTIVITIES -- DURATION. Except as otherwise consented to
or approved by the Board in writing, Employee agrees that, in addition to being
operative during the term of this Agreement, the provisions of Paragraph
6(c)(i) through (iii) hereof, inclusive, shall be operative for a period of
twelve (12) months after Employee's termination of employment with Telxon
regardless of the time, manner or reasons for termination. During such periods,
Employee shall not, directly or indirectly, acting alone or as a member of a
partnership or as an owner (provided that the ownership of not more than one
percent (1%) of the stock of any publicly traded company shall not be deemed
violative of this Paragraph), director, officer, employee, manager,
representative or consultant of any corporation or other business entity:
(i) engage in business in competition with the business of Telxon,
including, without limiting the generality of the foregoing, the
manufacture, distribution, service or support of products or systems which
are of a type manufactured, sold, marketed, services or supported by
Telxon, or which are in the process of development in which Employee has
participated, at the time of the termination of this Agreement or
Employee's employment with Telxon, in the United States, Canada or any
European, Asian, Pacific or other foreign country in which Telxon then
transacts business or is making a bona fide attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers
of Telxon to curtail or cancel their business with Telxon or in any way
interfere with Telxon's business relationships; or
(iii) induce, request or attempt to influence any other employee, agent
or representative of Telxon to terminate their respective relationships
with Telxon or in any way interfere with Telxon's employee, agency or
representative relationships.
(d) TOLLING; RELIEF OF OBLIGATIONS. In the event that Employee breaches
any provision of this Paragraph 6, such violation (i) shall toll the running of
the twelve (12) month period
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<PAGE> 5
set forth in Paragraph 6(c) from the date of commencement of such violation
until such violation ceases, and (ii) shall relieve Telxon of any obligations
to Employee under this Agreement.
(e) "BLUE PENCILLING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in Paragraph
6(c) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, Employee and Telxon agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
7. NONDISCLOSURE FOR CONFIDENTIAL INFORMATION.
(a) For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description belonging to Telxon
which are proprietary and confidential to Telxon and which are not publicly
disclosed or are only disclosed with restrictions. Without limiting the
generality of the foregoing, "Confidential Information" includes strategic
plans for carrying on business, other business plans, cost data, internal
financial information, customer lists, employee lists, vendor lists,
manufacturing methods or processes, product research or engineering data,
drawings, designs, schematics, flow charts, computer programs, program decks,
routines, subroutines, translators, compilers, operation systems, object and
source codes, specifications, inventions, calculations, discoveries and any
letters, papers, documents or instruments disclosing or reflecting any of the
foregoing, and all information revealed to, acquired or created by Employee
during Employee's employment by Telxon relating to any of the foregoing.
(b) Employee acknowledges that the discharge of Employee's duties under
this Agreement will necessarily involve his access to Confidential Information.
Employee acknowledges that the unauthorized use by him or disclosure by him of
such Confidential Information to third parties might cause irreparable damage
to Telxon and Telxon's business. Accordingly, Employee agrees that at all times
after the date hereof he will not copy, publish, disclose, divulge to or
discuss with any third party, nor use for his own benefits, without the prior
express written consent of the Board, except in the normal conduct of his
duties under this Agreement, any Confidential Information, it being understood
and acknowledged by Employee that all Confidential Information created,
compiled or obtained by Employee or Telxon, or furnished to Employee by any
person while Employee is associated with Telxon remains its exclusive property.
(c) Promptly upon termination of his employment, irrespective of the
time or manner thereof or reason therefor, Employee agrees to return and
surrender to Telxon all Confidential Information in any manner in his control
or possession, as well as all other Telxon property.
8. REMEDIES INADEQUATE.
(a) Employee acknowledges that the servides to be rendered by him to
Telxon as contemplated by this Agreement are special, unique and of
extraordinary character. Employee expressly agrees and understands that the
remedy at law for any breach by him of Paragraph 6 or
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<PAGE> 6
Paragraph 7 of this Agremeent will be inadequate and that the damages flowing
from such breach are not readily susceptible to being measured in monetary
terms. Accordingly, upon adequate proof of Employee's violation of any legally
enforceable provision of Paragraph 6 or Paragraph 7 hereof, Telxon shall be
entited to immediate injunctive relief, including, without limitation, a
temporary order restraining any threatened or further breach. In the event any
equitable proceedings are brought to enforce the provisions of any of Paragraph
6, Paragraph 7 or Paragraph 8 hereof, Employee agrees that he will not raise in
such proceedings any defense that there is an adequate remedy at law, and
Employee hereby waives any such defense. Nothing in this Agreement shall be
deemed to limit Telxon's remedies at law or in equity for any breach by
Employee of any of the provisions of Paragraph 6 or Paragraph 7 hereof which
may be pursued or availed of by Telxon. Without limiting the generality of the
immediately preceding sentence, any covenant on Employee's part contained in
Paragraph 6 or Paragraph 7 hereof, which may not be specifically enforceable
shall nevertheless, if breached, give rise to a cause of action for monetary
damages.
(b) Employee has carefully considered, and has had adequate time and
opportunity to consult with his own counsel or other advisors regarding the
nature and extent of the restrictions upon him and the rights and remedies
conferred upon Telxon under Paragraphs 6, 7, and 8 hereof, and hereby
acknowledges and agrees that such restrictions are reasonable in time,
territory and scope, are designed to eliminate competition which otherwise
would be unfiar to Telxon, do not stifle the inherent skill and experience of
Employee, would not operate as a bar to Employee's sole means of support, are
fully required to protect the legitimate interests of Telxon and do not confer
a benefit upon Telxon disproportionate to the detriment to Employee.
(c) The covenants and agreements made by Employee in Paragraph 6, 7,
and 8 hereof shall survive full payments by Telxon to Employee of the amounts
to which Employee is entitled under this Agreement, the expiration of the
Employment Period and this Agreement.
9. RIGHTS. Employee acknowledges and agrees that any procedure, design
feature, schematic, invention, improvement, development, discovery, know how,
concept, idea or the like (whether or not patentable, registrable under
copyright or trademark laws, or otherwise protectable under similar laws) that
Employee may conceive of, suggest, make, invent, develop or implement, during
the course of his service pursuant to this Agreement (whether individually or
jointly with any other person or persons), relating in any way to the business
of Telxon or to the general industry of which Telxon is a part, as shall all
physical embodiments and manifestations thereof, and all patent rights,
copyrights, trademarks (or applications therefor) and similar protections
therein (all the foregoing referred to as "Work Product"), shall be the sole,
exclusive and absolute property of Telxon. All Work Product shall be demed to
be works for hire, and to the extent that any Work Product may not constitute a
work for hire, Employee hereby assigns to Telxon all right, title, and interest
in, to, and under such Work Product, including without limitation, the right to
obtain such patents, copyright registrations, trademark registrations or
similar protections as Telxon may desire to obtain. Employee will immediately
disclose all Work Products to Telxon and agrees, at any time, upon Telxon's
request and without additional compensation, to execute any documents and
otherwise to cooperate with Telxon respecting the perfection of its right,
title and interest in, to and under such Work Product, and
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<PAGE> 7
in any litigation or controversy in connection therewith, all expenses incident
thereto to be borne by Telxon.
10. ASSIGNMENT OF EMPLOYEE'S RIGHTS. In no event shall Telxon be obligated
to make any payment under this Agreement to any assignee or creditor of
Employee. Prior to the time of payment under this Agreement, neither Employee
nor his legal representative shall have any right by way of anticipation or
otherwise dispose of any interest under this Agreement.
11. TELXON'S OBLIGATIONS UNFUNDED. Except as to any benefits that may be
required to be funded under any benefit plan of Telxon pursuant to law or
pursuant to other agreements and which are not for the sole benefit of
Employee, the obligations of Telxon under this Agreement are not funded and
Telxon shall not be required to set aside or deposit in escrow any monies in
advance of the due date for payment thereof to Employee.
12. NOTICES. Any notice to be given hereunder by Telxon to Employee shall
be deemed to be given if delivered to Employee in person, or if mailed to
Employee, by certified mail, postage prepaid, return receipt requested, at his
address last known on the records of Telxon, and any notice to be given by
Employee to Telxon shall be deemed to be given if delivered in person or by
mail, postage prepaid, return receipt requested, to the Supervisor at Telxon's
offices in Akron, Ohio, unless Employee or Telxon shall have duly notified the
other parties in writing of a change of address. If mailed, such notice shall
be deemed to have been given when deposited in the mail as set forth above.
13. AMENDMENTS. This Agreement shall not be modified or discharged, in
whole or in part, except by an agreement in writing signed by the parties
hereto.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties. The parties are not relying on any other representation,
expressor implied, oral or written. This Agreement supersedes any prior
employment agreement, written or oral, between Employee and Telxon.
15. CAPTIONS. The captions contained in this Agreement are for convenience
of reference only and do not affect the meaning of any terms or provisions
hereof.
16. BINDING EFFECT. The rights and obligations of Telxon hereunder shall
inure to the benefit of, and shall be binding upon, Telxon and its respective
successors and assigns, and the rights and obligations of Employee hereunder
shal linure to the benefit of, and shall be binding upon, Employee and his
heirs, personal represenatives and estate.
17. SEVERABLE PROVISIONS. The provisions of this Agremeent are severable,
and if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
enforceable provision shall be binding and enforceable to the extent
enforceable in any jurisdiction.
7
<PAGE> 8
18. GOVERNING LAW AND VENUE. Except to the extent that the laws of another
jurisdiction mandatorily apply, all questions concerning the validity or
meaning of this Agreement or relating to the rights and obligations of the
parties with respect to performance under this Agreement shall be construed and
resolved under the laws of the State of Ohio applicable to agreements made and
to be performed therin, without regard to any conflicts or choice of law rules
or any presumption or construction against the party causing this Agreement to
be drafted. Any action, suit or proceeding relating to or arising out of this
Agreement or any of the transactions contemplated hereby shall be brought in,
and each of the parties irrevocably submits to the jurisdiction of, any court
of the State of Ohio sitting in Cuyahoga County, Ohio or the Federal District
Court for the Northern District of Ohio, Eastern Division, sitting in
Cleveland, Ohio. Each party hereby irrevocably waives any objection, including,
without limitation, any objection to the laying of venue or based on the
grounds of FORUM NON CONVENIENS, which such party may now or hereafter have to
the bringing of any such action, suit or proceeding in any such court and
irrevocably agrees that process in any such action, suit or proceeding may be
served upon such party personally or by certified or registered mail, return
receipt requested, provided that nothing contained herein shall be deemed to
affect the right of any party to serve process in any manner permitted by law.
19. FORMER EMPLOYER. Employee represents that he is not now, and by
entering into this Agreement will not be, in violation of any employment,
consulting or other agreement with, or in breach of any common law fiduciary
duty to, Employee's former employer, Basicomputer Corporation. Employee agrees
to indemnify and hold harmless Telxon for any action, claim, damages or any
costs incurred by Telxon in connection with Employee's employment with his
former employer and/or in defense of any action or claim (including reasonable
attorneys' fees) made against Telxon in connection therewith.
20. SURVIVAL. The terms and provisions contained in Paragraphs 5, 6, 7, 8,
9, 18 and 19 of this Agreement shall survive any termination or expiration of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written, effective the Effective Dat.
TELXON CORPORATION
By: /s/ Dan R. Wipff
----------------------------------
Dan R. Wipff
President and Chief Operating Officer
EMPLOYEE:
/s/ Frank Brick
----------------------------------
FRANK BRICK
8
<PAGE> 1
EXHIBIT 10.1.17.b
AMENDMENT
OF
TELXON CORPORATION
1992 RESTRICTED STOCK PLAN
ADOPTED BY ACTION OF
THE BOARD OF DIRECTORS
ON JULY 18, 1994
WHEREAS, under the terms of the Telxon Corporation 1992 Restricted
Stock Plan, as adopted by the Board of Directors (the "Board") of Telxon
Corporation (the "Company") on June 25, 1992 and by the Company's stockholders
at the annual meeting thereof held August 19, 1992 and amended by the Board (in
respects not requiring further stockholder approval) on December 7, 1993 (as so
amended, the "Plan"), 250,000 shares of the Company's Common Stock are made
available for award to key employees of the Company and its subsidiaries and
affiliates subject to such conditions as are required by, or may be imposed in
accordance with, the terms of the Plan.
NOW, THEREFORE, BE IT RESOLVED by the Board, pursuant to the authority
conferred upon it to amend the Plan as set forth in Section 14 thereof:
That Section 3 of the Plan is hereby deleted in its entirety and shall
be and hereby is superseded and replaced by the following amendment and
restatement thereof:
3. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7, the
total number of Shares available for Awards under the Plan
shall be 250,000 Shares. In the event and to the extent that
the Shares which are the subject of any Award granted under
the Plan are forfeited back to or are otherwise reacquired by
the Company under the terms of the Plan or the applicable
Restricted Stock Plan Award Agreement, such Shares shall again
be available for the granting of further Awards under the
Plan, except that such forfeited or reacquired Shares shall
not become available for such granting of further Awards under
the Plan to any Section 16 Person without the approval thereof
by the stockholders of the Company if and to the extent that
Rule 16b-3 or any other Securities Law Requirement requires
that such stockholder approval be obtained on grounds that the
Awardee whose Shares are forfeited or otherwise reacquired is
deemed to have received any benefits of ownership from such
Shares (such as dividends paid thereupon) or otherwise
requires that stockholder approval be obtained.
1
<PAGE> 2
That, except as amended by the foregoing, all of the
provisions of the Plan shall continue in full force and effect.
And that the officers of the Company are hereby authorized to restate
the Plan in its entirety to reflect the foregoing amendment thereto.
2
<PAGE> 1
Exhibit 10.1.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is executed this 11th day of
November, 1994, at Akron, Ohio, by and between TELXON CORPORATION, a Delaware
corporation ("Telxon"), with offices at 3330 West Market Street, Aron, Ohio
44333, and DAVID B. SWANK ("Employee"), and is made effective August 22, 1994
(the "Effective Date").
WITNESSETH:
WHEREREAS, Telxon desires to employ Employee initially as Chief Financial
Officer of Telxon Corporation, and thereafter, in such capacity as the Board of
Directors of Telxon (the "Board") shall direct, and Employee desires to be so
employed, upon the terms and conditions herein contained; and
WHEREREAS, Telxon and Employee desire to have this Agreement supersede any
and all prior agreements, oral or written, relating to the employment of
Employee by Telxon;
NOW, THEREFORE, in consideration of the foregoing and in consideration of
the mutual promises and agreements contained herein, the parties hereto agree as
follows:
1. EMPLOYMENT PERIOD. Telxon agrees to employ Employee and Employee
agrees to serve Telxon for the period (the "Employment Period") beginning on the
Effective Date and ending March 31, 1996, subject to prior termination of this
Agreement pursuant to Paragraph 4 hereof.
2. NATURE OF DUTIES.
-----------------
(a) Employee's duties and responsibilities shall be to serve in such
capacity as the Board shall direct, in conformity with management policies,
guidelines and directions issued by Telxon, and shall have general charge and
supervision of those functions and such other responsibilities as the Board
shall determine. Employee shall report to the Chief Executive Officer of Telxon
or such other officer as the Board shall direct (the "Supervisor").
(b) Employee shall work exclusively for Telxon on a full-time basis in such
capacity and shall carry on his employment at such location as shall be required
by the Board, except for time spent traveling on business on behalf of Telxon.
During normal business hours, Employee shall devote all of his time and
attention to Telxon business.
(c) Employee shall perform his duties and responsibilities hereunder
diligently, faithfully and loyally in order to cause the proper, efficient and
successful operation of Telxon's business.
<PAGE> 2
3. COMPENSATION AND BENEFITS.
--------------------------
(a) SIGNING BONUS. Within 30 days of the Effective Date of this Agreement,
Employee shall receive from Telxon a signing bonus in the nonrefundable amount
of Fifteen Thousand Dollars ($15,000), payable in immediately available funds.
(b) BASE SALARY AND EXPENSES. As compensation for Employee's services, Telxon
shall pay to Employee during the Employment Period a salary (the "Base Salary")
at the annual rate of One Hundred Fifty Thousand Dollars ($150,000), payable in
arrears, in equal installments, every second Friday, or at such other interval
as the Board shall direct. Telxon shall reimburse Employee for all reasonable
out-of-pocket expenses incurred by Employee on Telxon's behalf during the
Employment Period and approved by the Supervisor, or such other officer as the
Board shall direct.
(c) BONUS COMPENSATION. In addition to the Base Salary, Employee shall, at
the discretion of the Board, be eligible to receive performance bonus
compensation ("Bonus Compensation"), on a basis to be agreed upon by the
Supervisor and Employee; provided, that the Bonus Compensation, if any, shall
be at an annual amount not to exceed Fifty Thousand Dollars ($50,000).
(d) STOCK OPTIONS. Subject to Board approval, Employee is eligible to receive
a grant or grants of options under the Telxon Corporation 1990 Stock Option
Plan (the "Plan") to purchase up to 10,000 shares of the common stock, par
value $.01 per share, of Telxon (the "Common Stock") at the fair market value
of the Common Stock at the close of the date preceding the date of grant, which
options shall vest in three equal amounts over a three year period from the
initial grant date in accordance with the Plan.
(e) RESTRICTED STOCK. Employee shall be entitled, at the Board's discretion,
to an award of up to 10,000 shares of the Common Stock, purusant to a stock
award agreement in substantially the form attached hereto as Exhibit A.
Employee's right to ownership of the shares of Common Stock shall be immediate,
subject to a right of forfeiture as to the shares awarded in increments of
one-fifth, on each of the five consecutive anniversary dates of the date of the
original award, in the event that Employee is no longer employed by Telxon on
any of such anniversary dates, and a certificate or certificates representing
such shares shall be delivered to Employee on such dates, or earlier if
requested by Employee.
(f) VACATION. During the Employment Period, Employee shall be entitled to
take vacation time in accordance with Telxon policy. In the event that all or
any part of said vacation is not taken for any reason during any such year,
there will be no compensation paid in lieu thereof, and accrued and unused
vacation time shall not be carried over and added to the vacation time for the
succeeding year in accordance with such plicy.
(g) HEALTH, DISABILITY, RETIREMENT AND DEATH BENEFITS. Telxon shall provide
Employee with the same health, disability, retirement, death and other fringe
benefits as are generally provided to the executive employees of Telxon in
accordance with such terms, conditions and eligibility requirement as may from
time to time be established or modified by Telxon.
2
<PAGE> 3
4. TERMINATION.
------------
(a) This Agreement shall terminate automatically upon Employee's death.
(b) Telxon may terminate Employee's employment under this Agreement at any
time, upon five (5) days written notice to Employee, other than for cause, or
if Employee becomes permanently disabled. Permanent disability shall be
determined by Telxon according to the same standards applicable to the
employees of Telxon generally under the disability benefits referred to in
Paragraph 3(d) hereof.
(c) Telxon shall have the right to terminate Employee's employment under this
Agreement at any time, immediately, for "cause," which shall mean for behavior
of Employee which is adverse to Telxon's interest, including, without
limitation, Employee's dishonesty, grossly negligent misconduct, willful
misconduct, disloyalty, acts of bad faith, neglect of duty or material breach
of this Agreement.
5. EFFECTS OF TERMINATION.
-----------------------
(a) In the event of automatic termination by reason of Employee's death
pursuant to Paragraph 4(a), or by Telxon by reason of Employee's permanent
disability pursuant to Paragraph 4(b), all of Telxon's obligations under this
Agreement shall end except for Telxon's obligations to pay Employee's Base
Salary and Bonus Compensation, if any, in each case earned and accrued by
unpaid to the date of death or permanent disability. Employee shall have the
right to receive any payments under the death or disability benefits, as the
case may be, provided to Employee pursuant to Paragraph 3(g), if any.
(b) In the event Telxon exercises its right of termination other than for
cause pursuant to Paragraph 4(b), or if this Agreement expires, all of Telxon's
obligations under this Agreement shall end except for Telxon's obligations
under Section 5(c) of this Agreement and its obligations to pay Employee's Base
Salary and Bonus Compensation, if any, in each case earned and accrued but
unpaid to the date of termination (which, for purposes of this Paragraph 5(b),
shall be five (5) days after the date on which notification is provided by
Telxon to Employee pursuant to Paragraph 4(b) or at the expiration of this
Agreement, whichever the case may be).
(c) In the event Telxon exercises its right of terminatin other than for
cause pursuant to Paragraph 4(b), then Telxon shall be obligated to pay
Employee, as severance pay, for the six (6) month period following the date of
such termination, compensation at an annualized rate equal to the Base Salary
at that time. Such payments shall be made in equal installments in such
intervals as the Board shall direct.
3
<PAGE> 4
(d) In the event Telxon exercises its right of termination pursuant to
Paragaph 4(c) for "cause," or Employee otherwise leaves the employ of Telxon
prior to the expiration of this Agreement (which, for the purposes of this
Paragraph 5(d), shall be at the date of termination or at the date Employee
otherwise leaves the employee of Telxon), then all of Telxon's obligations
under this Agreement shall end except for Telxon's obligations to pay
Employee's Base Salary, if any, earned and accrued but unpaid to the date of
termination.
(e) Any amount that Telxon is obligated to pay to Employee under this
Paragraph 5 may be offset by Telxon against any claims for damages, liability
or otherwise.
6. COVENANT NOT TO COMPETE.
-----------------------
(a) DEFINITION. For the purposes of this Paragraph 6, and of Paragraph 7, the
term "Telxon" shall mean Telxon Corporation, and its wholly or partially owned
subsidiaries, together with their respective successors and assigns.
(b) INDUCEMENT. This covenant between Employee and Telxon is being executed
and delivered by Employee in consideration of Employee's employment with Telxon
and Telxon's obligations hereunder (including, without limitation, the Base
Salary, the Bonus Compensation and other benefits and payments set forth
herein). Employee acknowledges that Telxon's business and Employee's
responsibilities are international in scope.
(c) RESTRICTED ACTIVITIES -- DURATION. Except as otherwise consented to or
approved by the Board in writing, Employee agrees that, in addition to being
operative during the term of this Agreement, the provisions of Paragraph
6(c)(i) through (iii) hereof, inclusive, shall be operative for a period of
twelve (12) months after Employee's termination of employment with Telxon
regardless of the time, mannner or reasons for termination. During such
periods, Employee shall not, directly or indirectly, acting alone or as a
member of a partnership or as an owner (provided that ownership of not more
than one percent (1%) of the stock of any publicly traded company shall not be
deemed violative of this Paragraph), director, officer, employee, manager,
representative or consultant of any corporation or other business entity.
(i) engage in any business in competition with the business of Telxon,
including, without limiting the generality of the foregoing, the manufacture,
distribution, service or support of products or systems which are of a type
manufactured, sold, marketed, serviced or supported by Telxon, or which are
in the process of development in which Employee has participated, at the time
of the termination of this Agreement or Employee's employment with Telxon, in
the United States, Canada or any European, Asian, Pacific or other foreign
country in which Telxon then transacts business or is making a bona fide
attempt to do so;
(ii) induce, request or attempt to influence any customers or suppliers of
Telxon to curtail or cancel their business with Telxon or in any way
interfere with Telxon's business relationsips; or
4
<PAGE> 5
(iii) induce, request or attempt to influence any other employee, agent or
representative of Telxon to terminate their respective relationships with
Telxon or in any way interfere with Telxon's employee, agency or
representative relationships.
(d) TOLLING; RELIEF OF OBLIGATIONS. In the event that Employee breaches any
provision of this Paragraph 6, such violation (i) shall toll the running of the
twelve (12) month period set forth in Paragraph 6(c) from the date of
commencement of such violation until such violation ceases, and (ii) shall
relieve Telxon of any obligations to Employee under this Agreement.
(e) "BLUE PENCILLING" OR MODIFICATION. If either the length of time,
geographic area or scope of restricted business activity set forth in Paragraph
6(c) is deemed unreasonably restrictive or unreasonable in any other respect in
any court proceeding, Employee and Telxon agree and consent to such court's
modifying or reducing such restriction(s) to the extent deemed reasonable under
the circumstances then presented.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
-----------------------------------------
(a) For purposes of this Agreement, "Confidential Information" means all
information or trade secrets of any type or description belonging to Telxon
which are proprietary and confidential to Telxon and which are not publicly
disclosed or are only disclosed with restrictions. Without limiting the
generality of the foregoing. "Confidential Information" includes strategic
plans for carrying on business, other business plans, cost data, internal
financial information, customer lists, employee lists, vendor lists,
manufacturing methods or processes, product research or engineering data,
drawings, designs, schematics, flow charts, computer programs, program decks,
routines, subroutines, translators, compliers, operation systems, object and
source codes, specifications, inventions, calculations, discoveries and any
letters, papers, documents or instruments disclosing or reflecting any of the
foregoing, and all information revealed to, acquired or created by Employee
during Employee's employment by Telxon relating to any of the foregoing.
(b) Employee acknowledges that the discharge of Employee's duties under this
Agreement will necessarily involve his access to Confidential Information.
Employee acknowledges that the unauthorized use by him or disclosure by him of
such Confidential Information to third parties might cause irreparable damage
to Telxon or Telxon's business. Accordingly, Employee agrees that at all times
after the date hereof he will not copy, publish, disclose, divulge to or
discuss with any third party, nor use for his own benefit, without the prior
express written consent of the Board, except in the normal conduct of his
duties under this Agreement, any Confidential Information, it being understood
and acknowledged by Employee that all Confidential Information created,
complied or obtained by Employee or Telxon, or furnished to Employee by any
person while Employee is associated with Telxon remains its exclusive property.
(c) Promptly upon termination of his employment, irrespective of the time or
manner thereof or reason therefor, Employee agrees to return and surrender to
Telxon all Confidential Information in any manner in his control or possession,
as well as all other Telxon property.
5
<PAGE> 6
8. REMEDIES INADEQUATE.
-------------------
(a) Employee acknowledges that the services to be rendered by him to Telxon
as contemplated by this Agreement are special, unique and of extraordinary
character. Employee expressly agrees and understands that the remedy at law for
any breach by him of Paragraph 6 or Paragraph 7 of this Agreement will be
inadequate and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, upon adequate
proof of Employee's violation of any legally enforceable provision of Paragraph
6 or Paragraph 7 hereof, Telxon shall be entitled to immediate injunctive
relief, including, without limitation, a temporary order restraining any
threatened or further breach. In the event any equitable proceedings are
brought to enforce the provisions of any of Paragraph 6, Paragraph 7 or
Paragraph 8 hereof, Employee agrees that he will not raise in such proceedings
any defense that there is an adequate remedy at law, and Employee hereby waives
any such defense. Nothing in this Agreement shall be deemed to limit Telxon's
remedies at law or in equity for any breach by Employee of any of the
provisions of Paragraph 6 or Paragraph 7 hereof which may be pursued or availed
of by Telxon. Without limiting the generality of the immediately proceding
sentence, any covenant on Employee's part contained in Paragraph 6 or Paragraph
7 hereof, which may not be specifically enforceable shall nevertheless, if
breached, give rise to a cause of action for monetary damages.
(b) Employee has carefully considered, and has had adequate time and
opportunity to consult with his own counsel or other advisors regarding the
nature and extent of the restrictions upon him and the rights and remedies
conferred upon Telxon under Paragraphs 6, 7 and 8 hereof, and hereby
acknowledges and agrees that such restrictions are reasonable in time,
territory and scope, are designed to eliminate competition with otherwise would
be unfair to Telxon, do not stifle the inherent skill and experience of
Employee, would not operate as a bar to Employee's sole means of support, are
fully required to protect the legitimate interests of Telxon and do not confer
a benefit upon Telxon disproportionate to the detriment to Employee.
(c) The convenants and agreements made by Employee in Paragraphs 6, 7 and 8
hereof shall survive full payment by Telxon to Employee of the amounts to which
Employee is entitled under this Agreement, the expiration of the Employment
Period and this Agreement.
9. RIGHTS. Employee acknowledges and agrees that any procedure, design
feature, schematic, invention, improvement, development, discovery, know how,
concept, idea or the like (whether or not patentable, registrable under
copyright or trademark laws, or otherwise protectable under similar laws) that
Employee may concieve of, suggest, make, invent, develop or implement, during
the course of his service pursuant to this Agreement (whether individually or
jointly with any other person or persons), relating in any way to the business
of Telxon or to the general industry of which Telxon is a part, as shall all
physical embodiments and manifestations thereof, and all patent rights,
copyrights, trademarks (or applications therefor) and similar protections
therein, (all the foregoing referred to as "Work Product"), shall be the sole,
exclusive and absolute property of Telxon. All Work Product shall be deemed to
be works for hire, and to the extent that any Work Product may not constitute a
work for hire, Employee hereby assigns to Telxon all right, title and interest
in, to and
6
<PAGE> 7
under such Work Product, including without limitation, the right to obtain such
patents, copyright, registrations, trademark registrations or similar
protections as Telxon may desire to obtain. Employee will immediately disclose
all Work Product to Telxon and agrees, at any time, upon Telxon's request and
without additional compensation, to execute any documents and otherwise to
cooperate with Telxon respecting the perfection of its right, title and
interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by Telxon.
10. ASSIGNMENT OF EMPLOYEE'S RIGHTS. In no event shall Telxon be obligated to
make any payment under this Agreement to any assignee or creditor of Employee.
Prior to the time of payment under this Agreement, neither Employee nor his
legal representative shall have any right by way of anticipation or otherwise
to assign or otherwise dispose of any interest under this Agreement.
11. TELXON'S OBLIGATIONS UNFUNDED. Except as to any benefits that may be
required to be funded under any benefit plan of Telxon pursuant to law or
pursuant to other agreements and which are not for the sole benefit of Employee,
the obligations of Telxon under this Agreement are not funded and Telxon shall
not be required to set aside or deposit in escrow any monies in avance of the
due date for payment thereof to Employee.
12. NOTICES. Any notice to be given hereunder by Telxon to Employee shall be
deemed to be given if delivered to Employee in person, or if mailed to
Employee, by certified mail, postage prepaid, return receipt requested, at his
address last known on the records of Telxon, and any notice to be given by
Employee to Telxon shall be deemed to be given if delivered in person or by
mail, postage prepaid, return receipt requested, to the Supervisor at Telxon's
offices in Akron, Ohio, unless Employee or Telxon shall have duly notified the
other parties in writing of a change of address. If mailed, such notice shall
be deemed to have been given when deposited in the mail as set forth above.
13. AMENDMENTS. This Agreement shall not be modified or discharged, in whole
or in part, except by an agreement in writing signed by the parties hereto.
14. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties. The parties are not relying on any other representation, express
or implied, oral or written. This Agreement supersedes any prior employment
agreement, written or oral, between Employee and Telxon.
15. CAPTIONS. The captions contained in this Agreement are for convenience of
reference only and do not affect the meaning of any terms or provisions hereof.
16. BINDING EFFECT. The rights and obligations of Telxon hereunder shall
inure to the benefit of, and shall be binding upon, Telxon and its respective
successors and assigns, and the rights and obligations of Employee hereunder
shall inure to the benefit of, and shall be binding upon, Employee and his
heirs, personal representatives and estate.
7
<PAGE> 8
17. SEVERABLE PROVISIONS. The provisions of this Agreement are servable, and
if any one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any partially
enforceable provision shall be binding and enforceable to the extent
enforceable in any jurisdiction.
18. GOVERNING LAW AND VENUE. Except to the extent that the laws of another
jurisdiction mandatorily apply, all questions concerning the validity or
meaning of this Agreement or relating to the rights and obligations of the
parties with respect to performance under this Agreement shall be construed and
resovled under the laws of the State of Ohio applicable to agreements made and
to be performed therein, without regard to any conflicts or choice of law rules
or any presumption or construction against the party causing this Agreement to
be drafted. Any action, suit or proceeding relating to or arising out of this
Agreement or any of the transactions contemplated hereby shall be brought in,
and each of the parties irrevocably submits to the jurisdiction of, any court
of the State of Ohio sitting in Cuyahoga County. Ohio or the Federal District
Court for the Northern District of Ohio, Eastern Division, sitting in
Cleveland, Ohio. Each party hereby irrevocably waives any objection including,
without limitation, any objection to the laying of venue or based on the
grounds of FORUM NON CONVENIENS, which such party may now or hereafter have to
the bringing of any such action, suit or proceeding in any such court and
irrevocably agrees that process in any such action, suit or proceeding may be
served upon such party personally or by certified or registered mail, return
receipt requested, provided that nothing contained herein shall be deemed to
affect the right of any party to serve process in any manner permitted by law.
19. FORMER EMPLOYER. Employee represents that he is not now, and by entering
into this Agreement will not be, in violation of any employment, consulting or
other agreement with, or in breach of any common law fiduciary duty to,
Employee's former employer. Employee agrees to indemnify and hold harmless
Telxon for any action, claim, damages or any costs incurred by Telxon in
connnection with Employee's employment with his former employer and/or in
defense of any action or claim (including reasonable attorney's fees) made
against Telxon in connection therewith.
20. SURVIVAL. The terms and provisions contained in Paragraphs 5, 6, 7, 8,
9, 18 and 19 of this Agreement shall survive any termination or expiration of
this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the day
and year first above written, effective the Effective Date.
TELXON CORPORATION EMPLOYEE
By: /s/ Robert F. Meyerson /s/ David B. Swank
--------------------------------- -------------------------------
Robert F. Meyerson David B. Swank
Chief Executive Officer
8
<PAGE> 1
EXHIBIT 11.01
-------------
EXHIBIT 11.01* TO REPORT ON FORM 10-Q
TELXON CORPORATION AND SUBSIDIARIES
COMPUTATION OF COMMON SHARES OUTSTANDING
AND EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
------------------ ----------------
1994 1993 1994 1993
-------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income (loss) applicable to
common shares $ 1,619 $(1,090) $ 2,892 $(3,067)
======= ======= ======= =======
Weighted average common shares
outstanding for the period 15,796 15,352 15,677 15,352
Increase in weighted average
from dilutive effect of stock
options 0 0 0 15
------- ------- ------- ------
Weighted average common shares,
assuming issuance of the
above securities 15,796 15,352 15,677 15,367
======= ======= ======= =======
Earnings (loss) per common share:
On the weighted average
common shares outstand-
ing for the year $ .10 $ (.07) $ .18 $ (.20)
Assuming issuance of shares
for dilutive stock
options** $ .10 $ (.07) $ .18 $ (.20)
<FN>
* Numbered in accordance with Item 601 of Regulation S-K.
** This calculation is submitted in accordance with Regulation S-K Item
601(b)(1) although not required for income statement presentation
because it results in dilution of less than three percent. The
Company's 7 1/2% Convertible Debentures were omitted from the fully
diluted calculation due to their antidilutive effect.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> SEP-30-1994
<CASH> 26,790
<SECURITIES> 825
<RECEIVABLES> 71,732
<ALLOWANCES> 1,893
<INVENTORY> 77,079
<CURRENT-ASSETS> 188,322
<PP&E> 100,459
<DEPRECIATION> 55,202
<TOTAL-ASSETS> 263,049
<CURRENT-LIABILITIES> 97,954
<BONDS> 32,691
<COMMON> 155
0
0
<OTHER-SE> 130,667
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<SALES> 153,587
<TOTAL-REVENUES> 179,319
<CGS> 89,899
<TOTAL-COSTS> 104,270
<OTHER-EXPENSES> 67,270
<LOSS-PROVISION> 650
<INTEREST-EXPENSE> 2,013
<INCOME-PRETAX> 5,766
<INCOME-TAX> 2,874
<INCOME-CONTINUING> 2,892
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,892
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
