<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, 1995
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, 1995, there were 15,919,133 outstanding shares of the
registrant's Common Stock, $.01 par value per share ("Common Stock").
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TELXON CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page No.
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<S> <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........... 6-9
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 10-13
PART II. OTHER INFORMATION:
Item 1: Legal Proceedings........................................ 14
Item 4: Submission of Matters to a
Vote of Security-Holders............................. 14-15
Item 6: Exhibits and Reports on Form 8-K......................... 15-20
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
September 30, March 31,
1995 1995
------------- ---------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash (including cash equivalents of $11,266
and $21,872)................................... $ 18,984 $ 31,364
Short-term investments............................. 3,790 --
Accounts receivable, net of allowance for
doubtful accounts of $2,018 and $1,832......... 102,901 84,468
Notes and other accounts receivable................ 9,146 6,256
Refundable income taxes............................ 1,833 935
Inventories........................................ 99,672 72,078
Prepaid expenses and other......................... 11,127 10,192
-------- --------
Total current assets.................. 247,453 205,293
Property and equipment, net........................ 48,428 45,887
Intangible and other assets, net................... 26,519 24,947
-------- --------
Total................................. $322,400 $276,127
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable...................................... $ 49,735 $ 25,395
Current portion of long-term debt.................. 2,227 1,343
Accounts payable................................... 49,473 33,466
Capital lease obligations due within one
year........................................... 849 769
Income taxes payable............................... 5,949 8,315
Accrued liabilities................................ 33,048 34,388
-------- --------
Total current liabilities 141,281 103,676
Capital lease obligations.......................... 1,734 1,729
Convertible subordinated debentures................ 24,724 24,734
Long-term debt..................................... 4,577 5,246
Other long-term liabilities........................ 2,779 2,164
-------- --------
Total liabilities..................... 175,095 137,549
-------- --------
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, 15,919,133
and 15,623,249 shares outstanding.............. 159 156
Additional paid-in capital......................... 82,838 78,548
Retained earnings.................................. 67,026 62,954
Equity adjustment for foreign currency
translation.................................... (1,631) (1,525)
Unearned compensation relating to restricted
stock awards................................... (1,087) (1,555)
-------- --------
Total stockholders' equity............ 147,305 138,578
-------- --------
Commitments and contingencies...................... -- --
-------- --------
Total................................. $322,400 $276,127
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except shares and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Product ........................................ $ 90,191 $ 78,652 $ 178,135 $ 153,587
Customer service..................................... 16,825 13,234 32,422 25,732
---------- ---------- ---------- ----------
Total revenues.............................. 107,016 91,886 210,557 179,319
Cost of revenues:
Product......................................... 52,063 45,713 103,474 89,889
Customer service................................ 9,437 7,840 18,440 14,381
---------- ---------- ---------- ----------
Total cost of revenues...................... 61,500 53,553 121,914 104,270
---------- ---------- ---------- ----------
Gross profit ................................... 45,516 38,333 88,643 75,049
---------- ---------- ---------- ----------
Operating expenses:
Selling expenses................................ 18,748 16,764 38,416 32,945
Product development and engin-
eering expenses............................... 12,029 8,807 21,614 16,589
General and administrative
expenses...................................... 9,105 8,672 18,241 17,736
---------- ---------- ---------- ----------
Total operating expenses.................... 39,882 34,243 78,271 67,270
Income from operations...................... 5,634 4,090 10,372 7,779
Interest income...................................... 151 146 294 261
Interest expense..................................... (1,532) (1,199) (2,698) (2,274)
Other non-operating income........................... 355 -- 355 --
---------- ---------- ---------- ----------
Income before income taxes.................. 4,608 3,037 8,323 5,766
Provision for income taxes........................... 1,797 1,418 3,283 2,874
---------- ---------- ---------- ----------
Net income.................................. $ 2,811 $ 1,619 $ 5,040 $ 2,892
========== ========== ========== ==========
Earnings per common and common
equivalent share:
Net income per share........................ $ .17 $ .10 $ .31 $ .18
========== ========== ========== ==========
Average number of common and
common equivalent shares
outstanding....................................... 16,248,000 15,796,000 16,066,000 15,677,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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TELXON CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended September 30,
------------------------------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income ............................................... $ 5,040 $ 2,892
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization ...................... 10,683 10,665
Non-cash compensation related to
restricted stock awards .......................... 468 283
Provision for doubtful accounts .................... 1,139 650
Provision for inventory obsolescence ............... 2,770 3,774
Deferred income taxes .............................. (606) (316)
Gain on sale of subsidiary stock ................... (355) --
Loss on disposal of assets ......................... 227 565
Changes in assets and liabilities:
Short-term investments.......................... (3,790) --
Accounts and notes receivable .................. (22,055) (4,036)
Refundable income taxes ........................ (898) 1,094
Inventories .................................... (30,362) (1,024)
Prepaid expenses and other ..................... (236) 914
Intangible and other assets .................... (1,169) (396)
Accounts payable and accrued
liabilities ................................ 15,032 (14,623)
Income taxes payable ........................... (2,366) 1,196
Other long-term liabilities .................... 249 (763)
-------- --------
Total adjustments ..................... (31,269) (2,017)
-------- --------
Net cash (used in) provided by operating
activities ......................................... (26,229) 875
Cash flows from investing activities:
Additions to property and equipment ...................... (9,294) (8,501)
Payments for acquisitions, net of cash
acquired ........................................... (2,401) (841)
Short-term investments ................................... -- (61)
Software investments ..................................... (792) (446)
-------- --------
Net cash used in investing
activities ............................................ (12,487) (9,849)
Cash flows from financing activities:
Notes payable ............................................ 23,796 10,251
Principal payments on capital leases ..................... (424) (280)
Principal payments for long-term borrowing ............... (125) (80)
Proceeds from exercise of stock options
(includes tax benefit) ................................ 3,315 1,323
-------- --------
Net cash provided by financing activities ................ 26,562 11,214
Effect of exchange rate changes on cash .................. (226) 509
-------- --------
Net (decrease) increase in cash and cash
equivalents ........................................... (12,380) 2,749
Cash and cash equivalents at beginning
of period ............................................. 31,364 24,041
-------- --------
Cash and cash equivalents at end of
period ................................................ $ 18,984 $ 26,790
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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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 necessary for a fair statement of
results for the interim periods have been made. The 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, 1995.
2. Short-term Investments
Short-term investments consist of trading securities.
3. 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. All securities
having a dilutive effect on earnings per share have been excluded from such
computations. 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.
4. Inventories
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, 1995
(Unaudited) March 31, 1995
------------------ --------------
<S> <C> <C>
Purchased components....... $46,930 $40,958
Work-in-process............ 28,772 16,376
Finished goods............. 23,970 14,744
------- -------
$99,672 $72,078
======= =======
</TABLE>
5. Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
September 30, 1995
(Unaudited) March 31, 1995
------------------ --------------
<S> <C> <C>
Accrued payroll and other employee
compensation.......................... $ 8,024 $10,130
Accrued commissions....................... 2,214 2,355
Accrued taxes other than payroll
and income taxes...................... 3,663 2,570
Deferred customer service revenues........ 12,206 11,924
Accrued royalties......................... 2,019 2,280
Other accrued liabilities................. 4,922 5,129
------- -------
$33,048 $34,388
======= =======
</TABLE>
6
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6. Supplemental Cash Flow Information
<TABLE>
<CAPTION>
Six Months Ended September 30,
1995 1994
------ ------
(Unaudited)
(In thousands)
<S> <C> <C>
Cash paid during the period for:
Interest $2,445 $2,161
Income taxes 3,749 943
</TABLE>
Capital lease additions are non-cash transactions and, accordingly, $509
and $2,157 has been excluded from property and equipment additions in the
1996 and 1995 Statement of Cash Flows, respectively.
7. 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.
Following the completion of discovery (other than of experts), each
defendant filed a Motion for Summary Judgment on May 19, 1995, all of which
were opposed by the plaintiffs. On September 14, 1995, the Court granted
each defendant summary judgment on all counts. The plaintiffs have filed a
notice of appeal from the granting of summary judgment to the defendants
with the United States Sixth Circuit Court of Appeals, and the Company
presently expects that the parties' briefing of the appeal may be completed
during the fourth quarter of fiscal 1996. No date for oral argument of the
appeal has been set. The defendants intend to continue vigorously defending
the Consolidated Class Action. Though there can be no assurance that the
Company's summary judgment
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will be upheld on appeal on all counts or as to the ultimate outcome of any
portion of the case with respect to which the summary judgment may be
reversed, no provision has been made in the accompanying consolidated
financial statements for any liability that may result to the Company in
such an event.
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, then President, Operating Officer
and Chief Financial Officer 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. While the Company is nominally a defendant in
this derivative action, no monetary relief is sought by the plaintiff from
the Company; accordingly, no provisions for any loss nor any related
insurance recovery therefor have been made in the accompanying consolidated
financial statements. 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, and the defendants filed
a final responsive brief. The Motion was argued before the Court on March
29, 1995, and on July 18, 1995, the Court issued its ruling. The Court
dismissed all of the claims relating to the plaintiff's allegations of
corporate waste. The claims relating to breach of fiduciary duty survived
the Motion to Dismiss and are now the subject of discovery, which is in its
early stages. The defendants believe that the remaining claims lack merit,
and they intend to vigorously defend this action. While the ultimate
outcome of this action cannot presently be determined, the Company does not
anticipate that this matter will have a material adverse effect on the
Company's consolidated financial position, results of operations or cash
flows.
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, results of operations or cash flows.
8. Short-Term and Long-Term Financing
Effective March 31, 1995, the Company amended and restated its revolving
credit, term loan and security agreement with two banks. This agreement
expires on March 31, 1996 and includes a provision for the extension of the
agreement in one-year increments. The agreement provides the Company with a
maximum revolving credit facility of $50,000, subject to availability on
qualifying accounts receivable and inventory, reduced by the $5,500 term
loan exercised by the Company, and bears interest at LIBOR plus 2.5% or the
higher of the banks' prime lending rate plus 1% or Federal Funds Rate plus
1.5%. The facility is collateralized by substantially all of the Company's
domestic assets. The agreement also contains restrictive covenants, certain
of which require the Company
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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 and March 31, 1995, the Company had $29,668 and
$25,395 of short-term borrowings outstanding under the revolving credit
facility and was in compliance with all restrictive covenants contained in
the agreement.
Principal amounts due under the term loan are funded as revolving credit
advances. The funding of $272 in principal due for the quarter ended June
30, 1995 has been treated as non-cash transactions and, accordingly, has
been excluded from the 1996 Statement of Cash Flows.
Effective September 8, 1995, the Company entered into an unsecured
revolving credit facility with a third bank maturing April 30, 1996. The
agreement provides the Company with a maximum credit facility of $20,000
and bears interest at the bank's Money Market Rate plus 1.75% or LIBOR plus
1.75%, as elected by the Company. As of September 30, 1995, the Company had
$20,000 outstanding under this revolving credit facility.
9. Minority Interests
The difference between the proceeds resulting from the sale of stock by a
subsidiary and the Company's carrying value of such stock is recorded as
non-operating gains or losses at the time of the sale. Minority interests
then represent the outside shareholders' interest in the cumulative
earnings of such subsidiary subsequent to that time.
10. Non-recurring Transactions and Events
During the quarter ended September 30, 1995, the Company sold a minority
interest in a subsidiary to certain key employees and a third-party
business partner. The resulting pre-tax gain of $355 was recorded as other
non-operating income.
Additionally, during the quarter ended September 30, 1995, the Company sold
non-exclusive software licenses and manufacturing rights to a third-party
business partner. The sale of these rights has been recorded as product
revenues. The Company also reduced its estimates of future warranty costs.
Revenues recorded under the non-exclusive software licenses and
manufacturing rights agreement and the benefit of reduced estimates for
warranty costs combined to improve gross profit margins, as a percentage of
revenues, by approximately 1%.
11. Acquisition
Effective July 13, 1995, the Company acquired the assets and assumed
certain liabilities of Virtual Vision, Inc. for $1,900 cash plus a $1,000
promissory note and other obligations of $200. This acquisition was
accounted for as a purchase and the resulting goodwill of $3,100 will be
amortized over a useful life of 7 years. Virtual Vision is a leading
developer of certain "augmented reality" head-mounted systems technology.
12. Reclassifications
Certain items in the 1995 consolidated financial statements and notes
thereto have been reclassified to conform to the 1996 presentation.
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TELXON CORPORATION AND SUBSIDIARIES
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Revenues
Total consolidated revenues for the second quarter and first half of
fiscal 1996 increased $15.1 million or 17% and $31.2 million or 17% as
compared to the same periods in fiscal 1995. Product revenues increased
$11.5 million or 15% and $24.5 million or 16% over those same periods.
Product revenues include the sale of Portable Tele-Transaction Computer
("PTC") units, pen-based and touch-screen workslates, hardware
accessories, custom application software and software license fees. These
increases in product revenues were primarily due to increases in average
selling price per PTC unit offset by minor decreases in PTC unit volume
due to sales mix trending towards more comprehensive products and systems.
Customer service revenues for the second quarter and first half of fiscal
1996 increased $3.6 million or 27% and $6.7 million or 26% as compared to
the same periods in fiscal 1995. This revenue increase was primarily due
to volume increases and growth in the installed base of the Company's
products.
Revenues for the Company's international operations (including Canada) for
the second quarter and first half of fiscal 1996 increased $1.2 million or
5% and $6.3 million or 13% as compared to the same periods in fiscal 1995.
Changes in currency exchange rates and intercompany hedging activities did
not materially affect the results of the Company's international
operations.
The Company anticipates increased consolidated revenues for fiscal 1996 as
compared to fiscal 1995.
Costs of Revenues
Cost of product revenues as a percentage of product revenues remained
substantially unchanged at 58% for the second quarter of fiscal 1996 as
compared to the same period in fiscal 1995. Cost of product revenues as a
percentage of product revenues decreased to 58% for the first half of
fiscal 1996 as compared to 59% for the first half of fiscal 1995. Included
in the fiscal 1996 results were adjustments to estimated amounts accrued
for warranty costs and revenues related to the sale of non-exclusive
software licenses and manufacturing rights to a third-party business
partner. These adjustments combined to reduce the second quarter fiscal
1996 cost percentage by approximately 1%.
Cost of customer service revenues as a percentage of customer service
revenues decreased to 56% for the quarter ended September 30, 1995
compared to 59% for the same period in the previous fiscal year.
Cost of customer service revenues as a percentage of customer service
revenues increased to 57% for the first half of fiscal 1996 as compared to
56% for the same period in the previous fiscal year.
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Inventory valuation accounts for the second quarter of fiscal 1996 were
increased to cover the risk of obsolescence due to new product
introductions and continuing technological change. As of September 30,
1995 inventory valuation accounts increased to $13.5 million or 12% of
gross inventory as compared to $10.9 million or 13% or gross inventory as
March 31, 1995. The Company anticipates provisions for obsolescence as
revenue volumes from new product offerings replace revenue from older
products.
Operating Expenses
Selling expenses for the second quarter and first half of fiscal 1996
increased $2.0 million or 12% and $5.5 million or 17% as compared to the
same periods in fiscal 1995. These increases primarily reflect the
increased revenues and related variable expenses.
Product development and engineering expenses for the second quarter and
first half of fiscal 1996 increased $3.2 million or 37% and $5.0 million
or 30% as compared to the same periods in fiscal 1995. These increases are
primarily attributable to research and development activities related to
new product development including wireless data communications and spread
spectrum technology, pen-based technology and other product improvements.
During the first quarter of fiscal 1996, the Company recognized $1.0
million of development expense reimbursement funding related to a large
order from a major customer. The expense reimbursement was offset against
the related development expenses incurred, resulting in the net research
and development expense amount shown in the Statement of Income. This
large order is expected to be delivered primarily in the second half of
fiscal 1996.
General and administrative expenses for the second quarter and first half
of fiscal 1996 increased $.4 million or 5% and $.5 million or 3% as
compared to the same periods in fiscal 1995. As a percentage of revenues,
general and administrative expenses decreased approximately 1% as compared
to the same periods in fiscal 1995 as increased corporate resources were
offset by the absence of certain severance charges recorded in the first
quarter of the prior fiscal year aggregating approximately $.5 million.
Income Taxes
The Company's consolidated effective income tax rate for the second
quarter and first half of fiscal 1996 was 39%. The consolidated effective
income tax rate reflects income before taxes plus nondeductible goodwill
amortization, which sum is multiplied by the United States statutory rate
and increased by international rate differentials and partially offset by
research and development credits.
Liquidity
At September 30, 1995, the Company had cash and cash equivalents of $19.0
million, as compared to $31.4 million at March 31, 1995. The Company's
current ratio (current assets divided by current liabilities) was 1.8:1 at
September 30, 1995 as compared to 2.0:1 at March 31, 1995. The Company's
current ratio decreased as working capital (current assets less current
liabilities) increased for the changes in inventories of $27.6 million,
accounts and notes receivable of $21.3 million, short-term investments
of $3.8 million, income taxes payable of
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$2.4 million, accrued liabilities of $1.4 million and other current assets
and liabilities of $1.8 million. These working capital increases were
offset by a decrease to working capital as a result of the decrease to
cash and cash equivalents of $12.4 million and increases in notes payable
of $24.3 million and accounts payable and other of $17.0 million.
Inventory levels, in total, increased at September 30, 1995 as compared to
those recorded at March 31, 1995 as purchased components were procured and
work-in process inventories were increased for anticipated increased
production levels in the second half of fiscal 1996. Investments in
accounts receivable increased due to the high revenue volumes experienced
in the later half of the second quarter. Days sales outstanding increased
to 88 days at September 30, 1995 as compared to 77 days at March 31, 1995.
Accounts and notes payable increased primarily due to increased
manufacturing inventory levels and other working capital requirements.
The Company believes that available cash and cash equivalents, internally
generated funds and credit availability, will be sufficient to meet
working capital requirements for the next twelve months.
Cash Flows from Operating Activities
Net cash used in operating activities was $26.2 million for the six months
ended September 30, 1995 as compared to net cash provided by operating
activities of $.9 million for the same period in fiscal 1995. Cash flows
for first half of fiscal 1996, as compared to the same period in fiscal
1995, were positively impacted by the change in cash flow impact of
accounts payable and accrued liabilities of $29.7 million, the increase in
net income of $2.1 million, and other positive cash flow items aggregating
$1.7 million. These positive impacts were offset by negative cash flow
impacts in inventories of $29.3 million, accounts and notes receivable of
$18.0 million, income taxes payable of $3.6 million, short-term
investments of $3.8 million, refundable income taxes of $2.0 million,
non-cash charges of $2.0 million and other items aggregating $1.9 million.
Investing Activities
The Company invested $9.3 million in capital equipment during the second
quarter of fiscal 1996, an increase of $.8 million as compared to the same
period of fiscal 1995. Payments related to acquisitions increased $1.6
million to $2.4 million due to the acquisition of Virtual Vision, a
leading developer of certain "augmented reality" head-mounted systems
technology during the second quarter.
Financing Activities
Cash flows from financing activities increased $15.3 million during the
first half of fiscal 1996 as compared with the same period in fiscal 1995.
This increase was primarily due to the borrowing on notes payable of $13.5
million and increased proceeds from the exercise of stock options of
$2.0 million.
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Effective March 31, 1995, the Company amended and restated its revolving
credit, term loan and security agreement with two banks which expires
March 31, 1996. The agreement calls for a credit limit of $50 million
subject to availability on qualifying accounts receivable and inventory
and bears interest at LIBOR plus 2.5% or the higher of the banks' prime
rate plus 1% or the Federal Funds Rate plus 1.5%. At September 30, 1995,
the Company had $33.9 million outstanding under this agreement. The
Company anticipates continued borrowing under this agreement during fiscal
1996.
Effective September 8, 1995, the Company entered into an unsecured
revolving credit facility with a third bank maturing April 30, 1996. The
agreement provides the Company with a maximum credit facility of $20
million and bears interest at the bank's Money Market Rate plus 1.75% or
LIBOR 1.75%, as elected by the Company. As of September 30, 1995, the
Company had $20 million outstanding under this revolving credit facility.
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TELXON CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See footnote 6 to the consolidated financial statements provided in Part
I of this Quarterly Report on Form 10-Q for a discussion of the material
pending legal proceedings to which the Company is a party, which
footnote discussion is incorporated in this Part II by this reference.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Stockholders on August 31,
1995 (the "Annual Meeting").
(b) The matters voted upon by the Company's stockholders at the
Annual Meeting included the election of two directors of the
class to hold office until the 1998 annual meeting of
stockholders. Proxies for the Annual Meeting were solicited
pursuant to Regulation 14 under the Securities Exchange Act of
1934, there was no solicitation in opposition to management's
nominees as listed in the proxy statement, and all of such
nominees were elected.
(c) The following five matters were voted upon by the Company's
stockholders at the Annual Meeting:
(1) The election of two directors of the class to hold office
until the 1998 Annual Meeting of Stockholders or until
their successors are elected and qualified. The following
votes were cast for each director nominee:
For the election of John H. Cribb;
<TABLE>
<S> <C>
Votes for: 14,458,405
Votes withheld: 47,522
</TABLE>
For the election of Richard J. Bogomolny;
<TABLE>
<S> <C>
Votes for: 14,447,471
Votes withheld: 58,456
</TABLE>
(2) The approval of amendments to the Telxon Corporation 1990
Stock Option Plan for employees. The following votes were
cast:
<TABLE>
<S> <C>
Votes for: 7,427,938
Votes against: 3,914,615
Votes abstained: 51,675
Broker non-votes: 3,111,699
</TABLE>
14
<PAGE> 15
(3) The approval of amendments to the Telxon Corporation 1990
Stock Option Plan for Non-Employee Directors. The
following votes were cast:
<TABLE>
<S> <C>
Votes for: 7,772,804
Votes against: 3,347,209
Votes abstained: 62,059
Broker non-votes: 3,323,855
</TABLE>
(4) The approval of the Telxon Corporation 1995 Employee
Stock Purchase Plan. The following votes were cast:
<TABLE>
<S> <C>
Votes for: 9,511,344
Votes against: 894,047
Votes abstained: 49,834
Broker non-votes: 4,050,702
</TABLE>
(5) The consideration of a stockholder proposal "that the
Board of Directors shall be requested to take steps to
establish a meaningful dividend on the common stock." The
following votes were cast:
<TABLE>
<S> <C>
Votes for: 759,534
Votes against: 8,692,765
Votes abstained: 1,085,837
Broker non-votes: 3,967,791
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation of Registrant,
incorporated herein by reference to Exhibit No. 3.1 to
Registrant's Form 10-K filed for the year ended March
31, 1993.
3.2 Amended and Restated By-Laws of Registrant, as amended,
incorporated herein by reference to Exhibit No. 2(b) to
Registrant's Registration Statement on Form 8-A with
respect to its Common Stock filed pursuant to Section
12(g) of the Securities Exchange Act, as amended by
Amendment No. 1 thereto filed under cover of a Form 8.
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 herein by reference to Exhibit 3.1 to
Registrant's Form 10-K for the year ended March 31,
1993.
4.2 Text of form of Certificate for the Registrant's Common
Stock, par value $.01 per share, and description of
graphic and image material appearing thereon,
incorporated herein by reference to Exhibit 4.2 to the
Registrant's Form 10-Q filed for the quarter ended June
30, 1995.
15
<PAGE> 16
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 this Quarterly Report on
Form 10-Q). 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 text of which
and description thereof is included as
Exhibit 4.2 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.
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.
16
<PAGE> 17
10.1.1.c Amendment, dated January 1,
1994, incorporated herein by
reference to Exhibit 10.1.1.c
to Registrant's Form 10-Q
filed for the quarter ended
December 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 for employees of the
Registrant, as amended, filed herewith.
10.1.4 1990 Stock Option Plan for Non-Employee
Directors of the Registrant, as amended,
filed herewith.
10.1.5 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.
10.1.5.a Description of amendment
extending option term,
incorporated herein by
reference to Exhibit 10.1.6.a
to Registrant's Form 10-Q
filed for the quarter ended
September 30, 1994.
10.1.6 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.
10.1.6.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.
10.1.6.b Amendment, dated July 18,
1994, incorporated herein by
reference to Exhibit
10.1.17.b to Registrant's
Form 10-Q filed for the
quarter ended September 30,
1994.
10.1.7 1995 Employee Stock Purchase Plan of the
Registrant, as amended, filed herewith.
10.1.8 Description of compensation arrangements
between the Registrant and Robert F.
Meyerson, Chairman of the Board of
Registrant, incorporated herein by
reference to 10.1.7 to Registrant's Form
10-Q filed for the quarter ended June
30, 1995.
17
<PAGE> 18
10.1.9 Employment Agreement between Telxon
Products, Inc., a wholly owned subsidiary of
the Registrant, and Dan R. Wipff, dated
September 29, 1994, incorporated herein by
reference to Exhibit 10.1.8 to Registrant's
Form 10-Q filed for the quarter ended
September 30, 1994.
10.1.10 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.
10.1.11 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.
10.1.12 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.
10.1.13 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.
10.1.14 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.
10.1.15 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.
10.1.16 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.
10.1.17 Employment Agreement between the Registrant
and Frank Brick, effective as of October 15,
1993, incorporated herein by reference to
Exhibit 10.1.16 on Registrant's Form 10-Q
filed for the quarter ended September 30,
1994.
18
<PAGE> 19
10.1.18 Employment Agreement between the Registrant
and David B. Swank, effective as of August
22, 1994, incorporated herein by reference
to Exhibit 10.1.18 to Registrant's Form 10-Q
filed for the quarter ended September 30,
1994.
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.
10.2.3 Commercial Lease and Condominium Lease
Agreement between Itronix Corporation, a
wholly owned subsidiary of the Registrant,
and Metropolitan Mortgage & Securities
Company, Inc., dated May 26, 1994,
incorporated herein by reference to Exhibit
10.2.3 to Registrant's Form 10-K for the
year ended March 31, 1995.
10.3 Credit Agreements of the Registrant.
10.3.1 Amended and Restated Revolving Credit,
Term Loan and Security Agreement between
the Registrant and the Bank of New York
Commercial Corporation, dated as of March
31, 1995, incorporated herein by reference
to Exhibit 10.3 to Registrant's Form 10-K
for the year ended March 31, 1995.
10.3.1a Amendment No. 1, dated as of June 16, 1995,
to the Amended and Restated Revolving
Credit, Term Loan and Security Agreement
between the Registrant and the Bank of New
York Commercial Corporation, incorporated
herein by reference to Exhibit 10.3.1 to
Registrant's Form 10-K for the year ended
March 31, 1995.
10.3.2 Business Purpose Revolving Promissory Note
made by the Registrant in favor of Bank
One, Akron, NA, dated September 8, 1995,
and related Letter Agreement between them
of even date, filed herewith.
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 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.
19
<PAGE> 20
10.5.1 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.
10.6 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.
10.7 Agreement of Purchase and Sale of Assets by and among
Vision Newco, Inc., a wholly owned subsidiary of the
Registrant, Virtual Vision, Inc., as debtor and debtor
in possession, and the Official Unsecured Creditors'
Committee, on behalf of the bankruptcy estate of Virtual
Vision, dated as of July 13, 1995, incorporated herein by
reference to Exhibit 10.8 to Registrant's Form 10-Q
filed for the quarter ended June 30, 1995.
10.8 Subscription Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the
Registrant, and certain officers of the Registrant as
Purchasers, filed herewith.
10.9 Shareholder Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the
Registrant, and its Shareholders, including the officers
of the Registrant party to the Subscription Agreement
included as Exhibit 10.8 to this Quarterly Report on
Form 10-Q, filed herewith.
11 Computation of Common Shares outstanding and earnings
per share for the six months ended September 30, 1995
and 1994, filed herewith.
27 Financial Data Schedule as of September 30, 1995, 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, 1995 for which this Quarterly Report
on Form 10-Q is filed.
20
<PAGE> 21
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 14, 1995
TELXON CORPORATION
------------------
(Registrant)
/s/ Kenneth W. Haver
------------------------------------
Kenneth W. Haver
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
and Treasurer
21
<PAGE> 22
TELXON CORPORATION
EXHIBITS TO
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
22
<PAGE> 23
INDEX TO EXHIBITS
Page
- ----
* 3.1 Restated Certificate of Incorporation of Registrant,
incorporated herein by reference to Exhibit No. 3.1 to
Registrant's Form 10-K filed for the year ended March
31, 1993.
* 3.2 Amended and Restated By-Laws of Registrant, as amended,
incorporated herein by reference to Exhibit No. 2(b) to
Registrant's Registration Statement on Form 8-A with
respect to its Common Stock filed pursuant to Section
12(g) of the Securities Exchange Act, as amended by
Amendment No. 1 thereto filed under cover of a Form 8.
* 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 herein by reference to Exhibit 3.1 to
Registrant's Form 10-K for the year ended March 31,
1993.
* 4.2 Text of form of Certificate for the Registrant's Common
Stock, par value $.01 per share, and description of
graphic and image material appearing thereon,
incorporated herein by reference to Exhibit 4.2 to the
Registrant's Form 10-Q filed for the quarter ended June
30, 1995.
* 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 this Quarterly Report on
Form 10-Q). 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 text of which
and description thereof is included as
Exhibit 4.2 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.
23
<PAGE> 24
Page
- ----
* 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.
* 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.
* 10.1.1.c Amendment, dated January 1,
1994, incorporated herein by
reference to Exhibit 10.1.1.c
to Registrant's Form 10-Q
field for the quarter ended
December 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 for employees of the
Registrant, as amended, filed herewith.
** 10.1.4 1990 Stock Option Plan for Non-Employee
Directors of the Registrant, as amended,
filed herewith.
24
<PAGE> 25
Page
- ----
* 10.1.5 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.
10.1.5.a Description of amendment
extending option term,
incorporated herein by
reference to Exhibit 10.1.6.a
to Registrant's Form 10-Q
filed for the quarter ended
September 30, 1994.
* 10.1.6 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.
* 10.1.6.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.
* 10.1.6.b Amendment, dated July 18,
1994, incorporated herein by
reference to Exhibit
10.1.17.b to Registrant's
Form 10-Q filed for the
quarter ended September 30,
1994.
** 10.1.7 1995 Employee Stock Purchase Plan of the
Registrant, as amended, filed herewith.
* 10.1.8 Description of compensation arrangements
between the Registrant and Robert F.
Meyerson, Chairman of the Board of
Registrant, incorporated herein by
reference to Exhibit 10.1.7 to
Registrant's Form 10-Q filed for the
quarter ended June 30, 1995.
* 10.1.9 Employment Agreement between Telxon
Products, Inc., a wholly owned subsidiary of
the Registrant, and Dan R. Wipff, dated
September 29, 1994, incorporated herein by
reference to Exhibit 10.1.8 to Registrant's
Form 10-Q filed for the quarter ended
September 30, 1994.
* 10.1.10 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.
* 10.1.11 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.
25
<PAGE> 26
Page
- ----
* 10.1.12 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.
* 10.1.13 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.
* 10.1.14 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.
* 10.1.15 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.
* 10.1.16 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.
* 10.1.17 Employment Agreement between the Registrant
and Frank Brick, effective as of October 15,
1993, incorporated herein by reference to
Exhibit 10.1.16 on Registrant's Form 10-Q
filed for the quarter ended September 30,
1994.
* 10.1.18 Employment Agreement between the Registrant
and David B. Swank, effective as of August
22, 1994, incorporated herein by reference
to Exhibit 10.1.18 to Registrant's Form 10-Q
filed for the quarter ended September 30,
1994.
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.
26
<PAGE> 27
Page
- ----
* 10.2.3 Commercial Lease and Condominium Lease
Agreement between Itronix Corporation, a
wholly owned subsidiary of the Registrant,
and Metropolitan Mortgage & Securities
Company, Inc., dated May 26, 1994,
incorporated herein by reference to Exhibit
10.2.3 to Registrant's Form 10-K for the
year ended March 31, 1995.
* 10.3 Credit Agreements of the Registrant.
10.3.1 Amended and Restated Revolving Credit, Term
Loan and Security Agreement between the
Registrant and the Bank of New York
Commercial Corporation, dated as of March
31, 1995, incorporated herein by reference
to Exhibit 10.3 to Registrant's Form 10-K
for the year ended March 31, 1995.
* 10.3.1a Amendment No. 1, dated as of June 16, 1995,
to the Amended and Restated Revolving
Credit, Term Loan and Security Agreement
between the Registrant and the Bank of New
York Commercial Corporation, incorporated
herein by reference to Exhibit 10.3.1 to
Registrant's Form 10-K for the year ended
March 31, 1995.
** 10.3.2 Business Purpose Revolving Promissory Note
made by the Registrant in favor of Bank
One, Akron, NA, dated September 8, 1995,
and related Letter Agreement between them
of even date, filed herewith.
* 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 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.
* 10.5.1 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.
* 10.6 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.
* 10.7 Agreement of Purchase and Sale of Assets by and among
Vision Newco, Inc., a wholly owned subsidiary of the
Registrant, Virtual Vision, Inc., as debtor and debtor in
possession, and the Official Unsecured Creditors'
Committee, on behalf of the bankruptcy estate of Virtual
Vision dated as of July 13, 1995, incorporated herein by
reference to Exhibit 10.8 to Registrant's Form 10-Q filed
for the quarter ended June 30, 1995.
27
<PAGE> 28
Page
- ----
** 10.8 Subscription Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the Registrant,
and certain officers of the Registrant as Purchasers,
filed herewith.
** 10.9 Shareholder Agreement by and among New Meta Licensing
Corporation, a wholly owned subsidiary of the Registrant,
and its Shareholders, including the officers of the
Registrant party to the Subscription Agreement included
as Exhibit 10.8 to this Quarterly Report on Form 10-Q,
filed herewith.
** 11 Computation of Common Shares outstanding and earnings
per share for the six months ended September 30, 1995 and
1994, filed herewith.
** 27 Financial Data Schedule as of September 30, 1995, filed
herewith.
- -----------------------------------
* Previously filed
** Filed herewith
28
<PAGE> 1
EXHIBIT 10.1.3
RESTATED
TELXON CORPORATION
1990 STOCK OPTION PLAN
AS AMENDED THROUGH AND EFFECTIVE
AS OF AUGUST 31, 1995
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. If, with respect to any
individual grant of Options under this Plan, any member or
members of the Committee would cause such Committee not to
satisfy the disinterested administration requirement of
Rule 16b-3, as then applicable to the Company under the Act,
or the "outside director" administration requirement of Code
Section 162(m)(4)(C) and the regulations thereunder, then in such
event the Committee shall be comprised of the Committee
without such member or members. If no Committee has been
appointed, any reference to the "Committee" shall be deemed a
reference to the "Board".
<PAGE> 2
(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 case 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 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) "Repricing Transaction" means any grant(s) of
Option(s) reasonably related to any prior or potential
Option(s), whether by an exchange of existing Options or
Options with new terms; the grant of new Options in tandem
with previously granted Options that will operate to cancel
the previously granted Options upon exercise, repricing of
previously granted Options or any other grant which would be
required to be reported as a repricing under Item 402(i) of
Regulation S-K promulgated under the Act; but excluding any
repricing occurring through the operation of the antidilution
provisions of Section 12 of the Plan.
(r) "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
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<PAGE> 3
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.
(s) "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.
(t) "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.
(u) "Shares" means the Common Stock as adjusted in
accordance with Section 12 of the Plan.
(v) "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.
(w) "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.
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<PAGE> 4
(x) "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
equal to the sum of the following:
(i) Pre-1995 Authorized Shares. 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 (A) as of the October 18,
1990 date this Plan was originally approved by the
stockholders of the Company, were not subject to grants
(including conditional grants) of stock options then
outstanding under the Predecessor Plan (from and after
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 (B) to the extent grants (including conditional
grants) outstanding under the Predecessor Plan as of the date
of original stockholder approval of this Plan are not
exercised in full, are, as of any subsequent date, (x) 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, (y) 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 (z) 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, plus
(ii) 1995 Authorized Shares. 850,000 Shares of
Common Stock (the "1995 Authorized Shares").
The inclusion under this Plan of such shares reserved for
issuance and sale under the Predecessor Plan as hereinabove
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<PAGE> 5
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; provided,
however, that any Shares covered by any such reversal which
were 1995 Authorized Shares shall be subject to the
restrictions set forth in Section 4(c) of the Plan.
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. 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
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<PAGE> 6
caused and remove all members of the Committee and thereafter
directly administer the Plan.
(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 (up to a maximum of 500,000 Shares with
respect to which Options may be granted to any individual
in any one fiscal year of the Company) subject to
purchase upon exercise of each Option (except as expressly
set forth above in this Section 4(b)(ii) and 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, there is 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);
(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;
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<PAGE> 7
(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) Certain Limitations Applicable To Options Granted
With Respect to 1995 Authorized Shares. Notwithstanding any
other provision of the Plan, neither the Committee nor the
Board shall, with respect to any Option granted under the Plan
with respect to any 1995 Authorized Shares, provide for an
"Option Term" (as defined in Section 6 of the Plan) of greater
than eight (8) years from the date of grant thereof or approve
any Repricing Transaction.
(d) 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.
(e) 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. 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
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<PAGE> 8
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 at the end of which each Option shall expire (the "Option
Term") shall be ten (10) years (eight (8) years in the
case of Options with respect to 1995 Authorized Shares) 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
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
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<PAGE> 9
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.
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
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<PAGE> 10
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 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
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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
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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
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
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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
13
<PAGE> 14
after the date of death) by his Successor until the
earlier of (A) the date six (6) 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
14
<PAGE> 15
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 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
15
<PAGE> 16
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:
16
<PAGE> 17
(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 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,
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
17
<PAGE> 18
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.
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
18
<PAGE> 19
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.
19
<PAGE> 20
(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 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
20
<PAGE> 21
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 effective as of, August 27, 1990, subject to the approval
hereof by the vote of the Company's stockholders required therefor by the
Delaware General Corporation Law and applicable Securities Law Requirements
within one (1) year of such adoption by the Board, which approval was obtained
at the Annual Meeting of such stockholders held October 18, 1990. The Board
has subsequently approved increases in the number of Authorized Shares and,
with respect to the increase by the 1995 Authorized Shares, certain related
amendments to this Plan subject to and which received such required approval
of the Company's stockholders at the Annual Meetings thereof held August 19,
1992, August 19,1994 and August 31, 1995. 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
21
<PAGE> 22
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
22
<PAGE> 23
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 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.
23
<PAGE> 1
EXHIBIT 10.1.4
RESTATED
TELXON CORPORATION
1990 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
(As Amended Through and Effective
as of August 31, 1995)
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 to attract and retain the services of
experienced and knowledgeable independent directors by providing
such directors 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 4(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 5 of the
Plan, if a Committee is appointed. The members of such
Committee shall 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.
<PAGE> 2
(i) "Director" means any person elected or duly
appointed in accordance with the certificate of incorporation
or by-laws of the Company, or applicable law, to serve on the
Board.
(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 a non-Employee
Director 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 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 Common Stock subject to
an Option.
(n) "Optionee" means a non-Employee Director who
receives an Option.
(o) "Plan" means this Telxon Corporation 1990 Stock
Option Plan for Non-Employee Directors.
(p) "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.
(q) "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 inter-dealer 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
2
<PAGE> 3
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.
(r) "Shares" means the Common Stock as adjusted in
accordance with Section 12 of the Plan.
(s) "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.
(t) "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.
(u) "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. QUALIFICATION OF PLAN. The Plan is intended to qualify
for an exemption from the operation of Section 16(b) of the Act,
pursuant to Rule 16b-3. Further, the Plan is structured to comply
with the requirements of Rule 16b-3(c)(2)(ii) regarding
disinterested administration and formula awards to ensure that
Directors receiving grants under the Plan continue to be
"disinterested persons," as that term is defined in Rule
16b-3(c)(2)(i), for the purpose of administering the Company's
employee stock option plans.
4. 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
400,000 shares of Common Stock. 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
3
<PAGE> 4
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.
5. 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 the provisions of the
Plan, the Committee has authority to manage and control the
operation of the Plan, interpret the provisions of the Plan,
and prescribe, amend and rescind rules and regulations
relating to the Plan. 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.
(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 8(b) of the Plan,
the "Fair Market Value" (as defined in said Section 8(b))
of the Shares;
(ii) To determine the terms and provisions of
each Option;
(iii) To amend any outstanding Option;
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<PAGE> 5
(iv) 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;
(v) To interpret the Plan;
(vi) To prescribe, amend and rescind, if deemed
necessary or appropriate, rules and regulations relating
to the Plan, to the extent not inconsistent with the
Plan;
(vii) To make all other determinations the
Committee may deem necessary or advisable in connection
with the administration of the Plan; and
(viii) To accelerate the time as of which any
Option shall vest and may be exercised by the Optionee;
provided, however, that the Optionee shall not
participate in any decision regarding acceleration of
vesting of any Option held by him or her.
(c) Effect 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 Directors 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 or 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.
6. ELIGIBILITY; FORMULA GRANTS.
(a) Eligibility. Each Director who is not an Employee
shall be eligible to receive grants of Options under the Plan.
(b) Formula Grants.
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<PAGE> 6
(i) Initial Grants. Each eligible Director who
is newly elected or appointed to the Board after May 19,
1992 shall automatically be granted an Option (the
"Initial Grant") to purchase 25,000 Shares of Common
Stock (subject to adjustment as provided in Section 12)
on the day he or she joins the Board.
(ii) Continuing Grants. Each non-Employee
Director shall automatically be granted an Option (the
"Continuing Grant") to purchase 10,000 Shares of Common
Stock (subject to adjustment as provided in Section 12)
on each anniversary of his or her election or last
re-election to the Board so long as such Director is
serving on the Board on the date of such anniversary.
7. TERM OF OPTIONS; VESTING.
(a) Term of Options. The term of each Option shall be
seven (7) years from the date of grant thereof, provided that
the Committee, if it intends that a particular Option qualify
as a Tax Qualified Option, shall observe such restrictions on
the term of such Option as may be imposed by 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.
(b) Vesting.
(i) Initial Grants. Each Option constituting an
Initial Grant shall be exercisable as to one-third of the
Shares subject to the Option after the first anniversary
of the grant date, exercisable as to two-thirds of the
Shares subject to the Option after the second anniversary
of the grant date, and exercisable as to all or any part
of the Shares subject to the Option after the third
anniversary of the grant date.
(ii) Continuing Grants. Each Option constituting
a Continuing Grant shall be exercisable as to all or any
part of the Shares subject to the Option after the third
anniversary of the grant date.
8. EXERCISE PRICE.
(a) Fair Market Value. The per Share exercise price for
the Shares subject to an Option shall be the Fair Market Value
per Share as of the day prior to the date of grant of such
Option.
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<PAGE> 7
(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
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.
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:
(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. 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 exercise price for the Shares
to be issued upon exercise of an Option, (vi) Shares withheld
from the Shares to be issued upon such exercise, and/or (vii)
subject to compliance with applicable law, 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 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
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<PAGE> 8
from those so specified the form(s) to be used in effecting
payment with respect to a particular exercise; provided that
any election by an Optionee 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 an Optionee if under Securities Law Requirements
such a sale would be matched with such exercise to result in
"short-swing" profit liability under Section 16(b) of the Act
on the part of such Optionee with respect to such transaction.
(b) 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,
such Shares shall be valued at Fair Market Value as of the day
immediately preceding the date of exercise.
(c) 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, 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
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 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 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
8
<PAGE> 9
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.
(b) Termination of Service. 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, in the event that an Optionee shall
cease to be a Director (other than by reason of the Optionee's
death or disability), he may exercise his Option (to the
extent that he was entitled to exercise it at the time he
ceased to be a Director) until the earlier of (i) the date
three (3) months after the date Optionee ceased to be a
Director or (ii) the expiration date of such Option, and the
Option shall terminate on the earlier of such dates.
(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 a Director
of the Company, the Option may be exercised (to the
extent the Optionee would have been entitled to do so had
he continued living and terminated his directorship six
(6) months after the date of death) by his Successor
until the earlier of (A) the date six (6) 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 thirty (30) days after the
termination of Optionee's directorship (other than
termination due to disability), the Option may be
exercised (to the extent the Optionee was entitled to do
so at the date of termination of his directorship) 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
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<PAGE> 10
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 directorship
terminates due to Optionee having become permanently and
totally disabled within the meaning of Section 23(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 Optionee's directorship by reason
of such disability) until the earlier of (i) the date one (1)
year after the effective date of such termination or (ii) the
expiration date of such Option, and the Option shall terminate
on the earlier of such dates.
11. NONTRANSFERABILITY OF OPTIONS. Options granted under the
Plan may not be sold, pledged, assigned, hypothecated, disposed of
or otherwise transferred in any manner by the Optionee other than
by will or the laws of descent and distribution or pursuant to a
"qualified domestic relations" order (as defined by the Code) or
Title I of the Employee Retirement Income Securities Act, or the
rules thereunder. The designation of a beneficiary by an Optionee
shall not be deemed to constitute a transferee. 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 an Option under this 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 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
10
<PAGE> 11
"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:
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<PAGE> 12
(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 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,
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 members of the Board other than the Optionees,
in any bona fide transaction or bona fide offer, related to
the Change in Control, at any time within the Sixty-Day Period.
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13. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the dates for the automatic granting of
Initial Grants and Continuing Grants, respectively, as specified
in Section 6(b).
14. OPTION AGREEMENTS. As a condition to the effectiveness
of each grant of an 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 19(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 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.
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<PAGE> 14
16. 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.
17. EFFECTIVENESS OF PLAN. This Plan was adopted by the
Board on, and effective as of, October 18, 1990, subject to the
approval hereof by the vote of the Company's stockholders required
therefor by the Delaware General Corporation Law and applicable
Securities Law Requirements within one (1) year of such adoption
by the Board, which approval was obtained at the Annual Meeting of
such stockholders held September 5, 1991. Certain amendments to this
Plan were adopted by the Board subject to and which received such
required approval of the Company's stockholders at the Annual
Meeting thereof held August 19, 1992. The Board also approved an
increase in the number of Authorized Shares and certain other
amendments to this Plan subject to and which received such required
approval of the Company's stockholders at the Annual Meeting
thereof held August 31, 1995. 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.
18. 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 5(b)(vii) 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 18, 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. Notwithstanding the
foregoing, the provisions of Sections 6, 7 and 8 shall not be
amended more than once every six months, other than as required to
comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder.
19. GENERAL PROVISIONS.
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(a) Grants to Foreign Directors. 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 Directors who are foreign nationals and/or
employed outside the United States of America, an Option
granted to any such Director 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 a Director, without the necessity of the
Plan being amended to provide for such different terms and
conditions.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) As provided in Section 3, transactions under this
Plan are intended to comply with all applicable conditions
of Rule 16b-3. To the extent that any provision of the Plan
or action by the Committee fails to so comply, such provision
or action shall be deemed null and void to the extent permitted
by law and deemed advisable by the Committee.
15
<PAGE> 1
EXHIBIT 10.1.7
TELXON CORPORATION
1995 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED THROUGH SEPTEMBER 26, 1995)
1. PURPOSE OF THE PLAN. The Plan is intended as an incentive to and
to encourage stock ownership by all Eligible Employees of the Company and
Participating Subsidiaries so that they may share in the fortunes of the
Company by acquiring or increasing their proprietary interest in the Company.
The Plan is designed to encourage Eligible Employees to remain in the employ of
the Company. It is intended that options granted pursuant to this Plan shall
constitute options issued pursuant to an "employee stock purchase plan" within
the meaning of Section 423 of the Code.
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) "Business Day" means a day on which there is trading in
the Common Stock on the Principal Market.
(b) "Base Compensation" means an employee's annual base
salary, or if not salaried, annualized amount of hourly pay (including
any shift or other compensatory premium which employee will regularly
receive) based on the employee's regular weekly or biweekly hours, for
services rendered to the Company and Participating Subsidiaries,
including paid vacation and holidays and before adjustment for salary
reduction contributions to the Company's 401(k) plan, health care or
dependent care spending accounts and similar pre-tax plans but excluding
bonuses and commissions.
(c) "Closing Price" means the closing price for one share of
Common Stock on the Principal Market.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" means the Stock Option and Restricted Stock
Committee of the Board of Directors.
(f) "Common Stock" means the Common Stock, par value $.01 per
share, of the Company.
(g) "Company" means Telxon Corporation, a Delaware
corporation.
<PAGE> 2
(h) "Covered Compensation" means an employee's Base
Compensation plus bonuses, commissions, overtime and other premium
payments, sick pay, and short- and long-term disability payments but
excluding severance pay and taxable fringe benefits (such as club dues,
excess life insurance and personal automobile use); provided, however,
that no more than $150,000 in cumulative aggregate amount of all of the
foregoing forms of included compensation during any single Payment
Period or two Payment Periods together comprising a single calendar year
may be counted as Covered Compensation for purposes of any payroll
deductions, stock purchases or other computations under this Plan with
respect to such Payment Period(s).
(i) "Eligible Employees" shall have the meaning set forth in
Section 3.
(j) "Option Price" means, in respect of each Payment Period,
the dollar amount (carried out to one one-thousandth of a cent
($0.00001)) equal to 85% of the lesser of (i) the Closing Price of the
Common Stock on the first Business Day of the Payment Period and (ii)
the Closing Price of the Common Stock on the last Business Day of the
Payment Period.
(k) "Participating Subsidiaries" means any majority-owned
subsidiary of the Company which is designated by the Committee to
participate in the Plan. The Committee shall have the power to make
such designation before or after the Plan is approved by the Company's
stockholders.
(l) "Payment Period" means the six month periods during which
payroll deductions will be accumulated under the Plan.
(m) "Plan" means this Telxon Corporation 1995 Employee Stock
Purchase Plan.
(n) "Principal Market" means The Nasdaq Stock Market's
National Market or stock exchange which is then the principal trading
market for the Common Stock (if the Common Stock is traded on more than
one market, that market which the Committee determines to be the
principal trading market).
(q) "Securities Law Requirements" means the Securities Act of
1933, the Securities and Exchange Act of 1934 and the rules and
regulations promulgated by the Securities and Exchange Commission
thereunder, including but not limited to Rule 16b-3, as adopted and
amended from time to time and as interpreted by formal or informal
opinions of and releases published or other interpretative advice
provided by the Staff of the Securities and Exchange 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 on 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 interpretative
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<PAGE> 3
advice provided by, the representatives of such stock exchange,
quotation system or other securities market.
3. ELIGIBLE EMPLOYEES. Each full-time employee of the Company or any
of its Participating Subsidiaries, and each part-time employee thereof
regularly working at least 20 hours per week or 40 hours every two weeks, who
has completed 12 months of continuous employment with the Company and/or one or
more of its Participating Subsidiaries and whose Base Compensation does not
exceed $150,000 shall be eligible to receive options under this Plan to
purchase Common Stock (except employees in countries whose laws make
participation impractical). Persons who have been so employed for 12 months or
more on the first day of a Payment Period shall receive their options as of
such day. The determination of an employee's Plan eligibility with respect to
the Base Compensation limitation will be made only as of the beginning of each
Payment Period, based on the rate of Base Compensation he or she is then
receiving, without regard to any changes in his or her Base Compensation that
may subsequently be made during that Payment Period (including any changes
given retroactive effect to a date prior to the commencement of the Payment
Period). Except as otherwise provided in Section 14, all other eligibility
requirements must be satisfied at all times throughout the Payment Period until
and including the third Friday of the last month of such Payment Period or, in
the case of the requirement that a participant be employed by the Company or a
Participating Subsidiary, up until and including the last Business Day of such
Payment Period (provided that, after the third Friday of the last month of the
Payment Period, satisfaction of said employment conditions shall be determined
without regard to the full-time and part-time minimum hour requirements of the
first sentence of this Section 3, which full-time and part-time minimum shall
apply for that Payment Period only through said third Friday). All
participating employees satisfying the eligibility requirements of the Plan as
of said third Friday or last Business Day of the Payment Period as provided in
the preceding sentence shall be entitled to purchase shares on the last
Business Day of such Payment Period as provided in this Plan. Any employee
eligible to and duly participating in the Plan as of the beginning of a Payment
Period but who at any time during that Payment Period loses his or her status
as an Eligible Employee will be deemed to have lost such status, and to have
withdrawn from participation in the Plan as described in Section 10, effective
as of the beginning of the regular payroll period during which he or she ceases
to satisfy any such requirement; provided, however, that if such ineligibility
is the result of the termination of his or her employment, the provisions of
Section 15 shall, subject to the provisions of Section 14, control over the
foregoing provisions of this sentence.
In no event may an employee be granted an option if such employee,
immediately after the option is granted, owns stock representing 5% or more of
the total combined voting power or value of all classes of stock of the
Company. For purposes of determining stock ownership under this paragraph, the
rules of Section 425(d) of the Code shall apply, and stock which the employee
may purchase under outstanding options shall be treated as stock owned by the
employee.
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<PAGE> 4
4. STOCK SUBJECT TO THE PLAN. The total number of shares of Common
Stock that may be optioned under the Plan is 500,000 shares, which may consist,
in whole or in part, of unissued shares or treasury shares.
5. PAYMENT PERIODS AND GRANT OF OPTIONS. The six-month periods,
January 1 to June 30 and July 1 to December 31, are the Payment Periods during
which payroll deductions will be accumulated under the Plan.
Two times each year, on the first Business Day of each Payment Period,
each Eligible Employee who is then a participant in the Plan will automatically
be granted by the Company an option to purchase, on the last Business Day of
such Payment Period, at the applicable Option Price, such number of whole or
fractional shares of the Common Stock reserved under this Plan as such employee
is entitled to purchase under this Plan with the payroll deductions authorized
and credited to his or her account during each Payment Period in accordance
with the terms hereof, up to that number of shares which does not exceed 15% of
the employee's Covered Compensation during the Payment Period divided by the
Option Price, provided that such employee remains eligible to participate in
the Plan as provided herein. The participant shall be entitled to exercise
such options as granted only to the extent of his or her unused payroll
deductions accumulated as of the third Friday of the last month of a Payment
Period. Deductions after the third Friday of the last month of a Payment
Period shall be included in the subsequent Payment Period.
No employee shall be granted an option which permits his or her rights
to purchase Common Stock under the Plan and any similar plans of the Company or
any parent or subsidiary corporations to accrue at a rate which exceeds $25,000
of fair market value of such stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding at any
time. The purpose of the limitation in the preceding sentence is to comply
with Section 423(b)(8) of the Code.
6. EXERCISE OF OPTIONS. Each Eligible Employee who continues to
qualify as such as of the last Business Day of a Payment Period, or would have
been a continuing participant in the Plan as of such date had he or she not
withdrawn, or been deemed to have withdrawn, from participation pursuant to
Section 10, shall be deemed by his or her payroll deduction contributions to
the Plan during such Payment Period to have irrevocably stated his or her
intention to exercise his or her option on the last Business Day of such
Payment Period and shall be deemed to have purchased from the Company such
number of whole shares of the Common Stock reserved for the purposes of the
Plan as his or her unused payroll deductions accumulated as of the third Friday
of the last month of such Payment Period will pay for at the Option Price. If
a participant is not an employee of the Company or any Participating Subsidiary
on the last Business Day of a Payment Period, he or she shall not be entitled
to exercise his or her option.
7. AUTHORIZATION FOR ENTERING PLAN. An employee may enter the Plan
by filling out, signing and delivering to the Company's Employee Services
Department a written "Authorization", in form and manner satisfactory to the
Company:
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<PAGE> 5
(a) stating the whole percentage of Covered Compensation to be
deducted regularly from his or her pay; and
(b) authorizing the purchase of stock for him or her in each
Payment Period in accordance with the terms of the Plan.
Such Authorization must be received by the Company's Employee Services
Department no later than the third Friday of the last month of a Payment Period
in order to be effective for the following Payment Period.
The Company will accumulate as a credit for the employee's account the
authorized deductions made from his or her pay. No interest will be paid on
such accumulated amounts.
8. AMOUNT OF PAYROLL DEDUCTIONS. An employee may authorize payroll
deductions in a whole percentage amount not less than 1% but not more than 15%
of his or her Covered Compensation received during the Payment Period. Covered
Compensation is considered received on the date a payroll check for, or direct
deposit of, the net amount thereof due employee is issued or made by the
Company (provided, however, that any commission or other advances are not
considered Covered Compensation received until the date such advanced amount
has been actually earned and would have regularly been paid had such amount not
been advanced), and deductions therefrom authorized for purchases of Common
Stock under this Plan are considered made at the time of the issuance or making
of the related check or deposit and not as of the date as of which the
associated Base Compensation was earned or accrued.
9. CHANGE IN PAYROLL DEDUCTIONS. An employee may increase or
decrease (including to zero) his or her rate of payroll deduction effective
only as of the beginning of a Payment Period and, except as otherwise provided
in Section 10, not as of any other time. A new written Authorization will be
required to effect any such change and must be received by the Company's
Employee Services Department no later than the third Friday of the last month
of a Payment Period in order to be effective for the following Payment Period.
10. WITHDRAWAL FROM PARTICIPATION. An employee may withdraw from
participation in the Plan, in whole but not in part, at any time by delivering
to the Company's Employee Services Department a written "Withdrawal", in form
and manner satisfactory to the Company, indicating such employee's intent to
withdraw. Deductions will be stopped as soon as practicable, and deductions
accumulated during such Payment Period prior to the discontinuation of
deductions will be applied to the purchase of stock as of the end of the
Payment Period. Once made, a Withdrawal is irrevocable for the balance of that
Payment Period, and no further contributions can be made during that Payment
Period.
An employee who withdraws or is deemed to have withdrawn from the Plan
as provided in this Section 10 will be treated (other than with respect to the
purchase of stock with his or her
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<PAGE> 6
accumulated pre-withdrawal deductions) as an employee who has never entered the
Plan. To resume participation in the Plan in any future Payment Period (which
resumed participation will be effective only as of the beginning of such
Payment Period), he or she must file a new Authorization by the third Friday of
the last month of the preceding Payment Period.
11. ESTABLISHMENT OF BROKERAGE ACCOUNT. By enrolling in the Plan,
each participating employee will be deemed to have authorized the establishment
of a brokerage account in his or her name at such securities brokerage firm as
may be designated from time to time by the Committee and to have consented to
the sharing by such brokerage firm with the Company of information regarding
the disposition of shares from said brokerage account.
12. ISSUANCE OF STOCK. Stock purchased under the Plan will be
issued, or in the event the Committee establishes brokerage accounts pursuant
to Section 11, held in an account, in the name of the employee, or if his or
her Authorization so designates, in the name of the employee and another person
of legal age as joint tenants with rights of survivorship, unless prohibited by
state or local law. Stock will be issued to or for the account of a
participating employee or his or her designee as of the end of each Payment
Period in an amount equal to the number of shares calculated by dividing his or
her unused payroll deductions accumulated as of the third Friday of the last
month of such Payment Period by the Option Price, rounded down to the nearest
whole share. No fractional shares will be issued or accrued, but the excess of
an employee's accumulated payroll deductions over the aggregate Option Price
for the whole number of shares that can be purchased with such accumulated
deductions with respect to such Payment Period will be carried forward for the
employee's account under the Plan until applied to the purchase of shares in
future Payment Periods or refunded pursuant to the provisions of the Plan. The
Committee may establish a procedure for the refund of such carried-forward
balance to requesting employees who do not continue participation in the Plan
during the Payment Period (or number of Payment Periods specified by the
Committee) subsequent to the Payment Period with respect to which such excess
arises.
13. NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS. An employee's
rights under the Plan are his or hers alone and may not be transferred,
assigned, or be availed of by any other person. Any option granted to an
employee may be exercised only by him or her.
14. SUSPENSION OF PARTICIPATION. An employee's leave of absence
(absence from active employment not involving authorized vacation, death,
retirement, resignation, discharge, reduction-in-force or layoff, such as due
to disability, illness, compensable or non-compensable injury, personal
emergency or other approved personal leave) shall not have any effect on his or
her eligibility to participate in the Plan, and if such employee was
participating in the Plan at the time such leave commenced, his or her
deductions shall be automatically suspended for the duration of such leave
(which suspension shall not constitute a withdrawal from the Plan subject to
Section 10) and, upon such employee's resumption of an eligible level of active
employment, shall automatically resume at the pre-suspension amount authorized
by the employee
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<PAGE> 7
unless the employee has properly submitted a revised Authorization in the
interim; provided that if the employee receives Covered Compensation, or
payments in lieu thereof, from the Company during any such leave of absence
(such as, for example, short-term disability benefits), the deduction rate
authorized by the employee prior to such leave (or if the employee has properly
submitted a revised Authorization, at the level specified therein) shall be
applied to all such amounts so paid during such leave of absence.
15. TERMINATION OF EMPLOYEE'S RIGHTS. Except as otherwise provided
in Section 14, an employee's rights under the Plan will terminate when he or
she is no longer employed by the Company or any Participating Subsidiary,
whether because of retirement, resignation, discharge, death, or for any other
reason. All accumulated payroll deductions not used to purchase stock as of
the date of such cessation of employment will be refunded to the former
employee or, in the event of an employee's death, to his or her estate as an
adjustment to such former employee's final paycheck.
16. TERMINATION OF AND AMENDMENTS TO THE PLAN. The Plan may be
terminated at any time by the Committee. It will terminate in any case when
all or substantially all of the shares of stock reserved for the purposes of
the Plan have been purchased. If at any time shares of stock reserved for the
purpose of the Plan remain available for purchase but not in sufficient number
to satisfy all then unfilled purchase requirements, the available shares shall
be apportioned among participants in proportion to their options, and the Plan
shall terminate. Upon such termination or any other termination of the Plan,
all payroll deductions not used to purchase stock will be refunded.
The Committee also has authority to amend the Plan from time to time
in any respect; provided, however, that no amendment shall be effective without
prior approval of the stockholders of the Company, which would (a) except as
provided in Section 23, increase the number of shares of Common Stock to be
offered above, or (b) change the class of employees eligible to receive options
under the Plan.
17. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN. The Plan
is intended to provide Common Stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any employee in the
conduct of his or her own affairs. An employee may, therefore, sell or
otherwise dispose of stock purchased under the Plan at any time he or she
chooses; provided, however, so that the Company is able to properly account for
the consequences that a disposition of shares purchased under the Plan under
the United States income tax laws, each employee agrees by his or her
participation in the Plan to (a) notify the Company in writing of any
withdrawal of shares from the brokerage account established pursuant to Section
11 and any related sale or other disposition of the withdrawn shares within ten
days thereof, (b) provide such further information, and otherwise cooperate
with the Company in taking such further steps (which may include the legending
of the withdrawn shares), as the Company may reasonably request to enable it to
properly account for such tax consequences of the transaction described in the
notification and any subsequent sale or other disposition of the withdrawn
stock,
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<PAGE> 8
and (c) if the withdrawal does not involve a sale or other disposition which is
reported on that initial notification, provide the Company with written notice
of any subsequent sale or other disposition of that withdrawn stock within ten
days after the making thereof. An employee shall be obligated to provide such
notices and cooperation under the preceding sentence where such withdrawal,
sale or other disposition occurs within (i) two years after the date of grant
of the applicable option, or (ii) one year after the transfer of such stock to
such employee. The Company may waive such written notification requirement to
the extent that it is able to obtain the necessary information from the
brokerage firm designated and serving pursuant to Section 11. The employee
assumes the risk of all market fluctuations in the price of all stock acquired
hereunder.
18. PLAN EXPENSES. The Company will bear all costs of administering
and carrying out the Plan.
19. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Committee. Acts by a majority of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be the
valid acts of the Committee.
The interpretation and construction of the Plan are entrusted to the
discretion of the Committee, and its interpretation and construction of any
provisions of the Plan or of any option granted under it shall be final. The
Committee may from time to time adopt such rules and regulations for carrying
out the Plan as it may deem best. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
20. NO EMPLOYMENT RIGHTS. The existence of this Plan shall not
create in any employee any right to be granted an option or to purchase Common
Stock hereunder. Neither the existence of this Plan nor the granting of any
option hereunder to any employee shall confer upon such employee any right to
the continuation of his or her employment with the Company or any subsidiary
thereof or shall in any way interfere with or otherwise 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. Any benefits realized by an
employee under this Plan or any option granted hereunder shall not be deemed a
part of such employee's regular, recurring compensation for purposes of the
termination, indemnity or severance pay laws of any jurisdiction and shall not
be included in, or have any effect on, the determination of benefits under any
such law or, except as otherwise expressly provided thereby or determined in
the discretion of the person or group authorized to administer the same, any
other employee benefit plan or similar arrangement in which an employee may
otherwise be eligible to participate.
21. OPTIONEES NOT STOCKHOLDERS. Neither the granting of an option to
an employee nor the deductions from his or her pay shall constitute such
employee the owner of the shares covered by an option until such shares have
been purchased by him or her.
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<PAGE> 9
22. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of Common Stock pursuant to options granted under the Plan may be used
by the Company for any corporate purpose. The Company shall have no obligation
to segregate employees' payroll deductions from any other funds of the Company
or to hold funds representing the same pending the application thereof in
accordance with this Plan.
23. CHANGES IN CAPITAL. If the Common Stock subject to the Plan
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation or
other corporate reorganization in which the Company is the surviving
corporation, the number and kind of shares subject to this Plan and the Option
Price shall be appropriately and equitably adjusted. In the event of a
dissolution or liquidation of the Company or a merger, consolidation, sale of
all or substantially all of its assets, or other corporate reorganization in
which the Company is not the surviving corporation, or any merger in which the
Company is the surviving corporation but the holders of its Common Stock
receive securities of another corporation, the then current Payment Period
shall be deemed to end as of the Business Day prior to the effective date of
such transaction such that all then accumulated payroll deductions shall be
applied to the purchase of Common Stock in accordance with the provisions
hereof. Other than giving effect to the provisions of this Section 23, the
existence of the Plan or options hereunder shall not in any way prevent any
transaction described herein, and no holder of an option shall have the right
to prevent such transaction.
24. 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 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 local) 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 Plan participant in
respect of any delay in the sale or issuance of Shares hereunder until the
Company is able to obtain governmental authority (domestic or foreign) or the
authority of a self-regulatory organization having jurisdiction over it, 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.
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<PAGE> 10
25. GOVERNING LAW. To the extent the laws of the United States (such
as 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, without regard to principles of
conflicts of laws, and construed accordingly.
26. CAPTIONS. The captions contained in this Plan are for
convenience of reference only and shall not affect the meaning of any term or
provisions hereof.
27. APPROVAL OF STOCKHOLDERS; IMPLEMENTATION OF PLAN. This Plan was
adopted by the Company's Board of Directors subject to and to become effective
only upon approval hereof by the Company's stockholders, which approval was
obtained at the Annual Meeting of such stockholders held August 31, 1995. The
Plan shall begin operation using an initial three month transitional Payment
Period ending December 31, 1995, for the purposes of which initial Payment
Period the Closing Price on September 1, 1995 shall be used as the initial
Closing Price called for by Section 2(j)(i) for purposes of determining the
Option Price, October 1, 1995 shall be used as the date for measuring
employees' length of continuous service and Base Compensation for purposes of
determining their eligibility to participate in the Plan, and October 20, 1995
shall be used as the inital date as of which payroll deductions shall begin to
accumulate under the Plan. Except as specifically provided otherwise in this
Section 27, the Plan shall, during and with respect to said initial Payment
Period, be governed by and administered in accordance with the provisions of
the foregoing Sections 1 through 26 of this Plan. With respect to all Payment
periods beginning on or after January 1, 1996, the Payment Periods, related
determinations of the Option Price and employee eligibility and accumulation of
payroll deductions, and all other matters arising under the Plan shall be
governed by and administered in accordance with the provisions of this Plan
without regard to the transitional rules set forth for the initial
implementation of the Plan as set forth in this Section 27.
10
<PAGE> 1
EXHIBIT 10.3.2
BUSINESS PURPOSE REVOLVING PROMISSORY NOTE
[BANK1ONE(R) logo]
Date: September 8, 1995 Executed at Akron, Ohio
Amount $20,000,000.00
For value received, receipt of which is hereby acknowledged, the undersigned
jointly and severally promises to pay to the order of Bank One, Akron, NA
("Bank One") at its principal office located at 50 South Main Street, Akron,
Ohio or at such other place as Bank One may designate from time to time, in
lawful money of the United States of America, the principal sum of Twenty
Million and 00/100 Dollars or such lesser portion thereof as may have from time
to time been disbursed to, or for the benefit of the undersigned, and remaining
unpaid pursuant to the books or records of Bank One, together with interest on
the unpaid balance of principal advanced from the date(s) of disbursement until
paid in full as set forth below. The principal amount of this Note may be
advanced, repaid and readvanced in full or part during the term of this Note
provided no event of default or demand for payment exists hereunder.
RATE OF INTEREST AND ITS CALCULATION
/X/ Fixed: SEE ATTACHED EXHIBIT A percent (________%) per annum
/__/ Variable: Prime rate plus _____________________ percent (_____%) per
annum which will be adjusted to reflect the change in the
Prime Rate:
/_/ on the first day of each month following the month
in which the Prime Rate changes
/_/ on the same day as the Prime Rate changes
"Prime Rate" means the rate announced from time to time by Bank One as its
prime rate.
Interest shall be calculated on a 360 day year basis and shall be calculated by
dividing the actual number of days which elapsed during the period interest
accrued by a year of 360 days times the interest rate in effect.
After this Note becomes due and payable, whether at maturity, by acceleration
or otherwise, the interest rate on the outstanding principal sum and accrued
interest will be the rate stated above plus five percent (5%) per annum.
Bank One shall have the right to assess a late payment processing fee in the
amount of the greater of $50.00 or five (5)% of the schedule payment in the
event of a default in payment that remains uncured for a period of at least ten
(10) days.
<PAGE> 2
TIME AND METHOD OF PAYMENT
/X/ PRINCIPAL DUE AND PAYABLE ON THE MATURITY DATE, INTEREST DUE AND
PAYABLE ON THE MATURITY DATE OR PERIODICALLY:
MATURITY DATE: April 30, 1996
PRINCIPAL: The principal balance is immediately due and payable on the
MATURITY DATE
INTEREST: Interest is immediately due and payable:
/_/ on the MATURITY DATE
/X/ beginning SEE ATTACHED EXHIBIT A and continuing
(see attached Exhibit A) until the MATURITY DATE
on which date all accrued and unpaid interest shall
be immediately due and payable.
/_/ PRINCIPAL AND INTEREST DUE AND PAYABLE ON DEMAND. Principal and interest
are immediately due and payable on demand but until such time as demand for
payment is made, accrued interest thereon is due and payable as hereinafter
provided:
INTEREST: Date of first interest payment: and continuing
-------------------,
/_/ Monthly /_/ Quarterly thereafter, until demand is made.
This Note /X/ is /_/ is not issued in conjunction with an agreement or letter
dated ______________________, 19_____, to which reference is made, and /_/ is
/X/ is not supported by other security documents.
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE
TELXON CORPORATION
By: /s/ Kenneth W. Haver
Additional terms and conditions of this Promissory Note
are contained on the reverse side of this document.
<PAGE> 3
[reverse side]
ADDITIONAL TERMS AND CONDITIONS OF PROMISSORY NOTE
1. All credits, deposits, accounts, securities or moneys of any
signer, endorser or guarantor hereof ("Obligor", meaning each jointly and
severally), and all other property or rights belonging to or in which Obligor
has any interest, now or hereafter pledged or hypothecated to Bank One or in
the possession or control of Bank One ("Collateral") shall be held by Bank One
as security for the payment of this Note, and of every other liability now or
hereafter existing of Obligor, absolute or contingent, due or to become due,
and in whatsoever manner acquired by or accruing to Bank One ("Obligations").
Bank One shall have the right to setoff any such Collateral at any time without
prior notice of Obligor.
2. If this Note is due and payable on demand it is subject to
being called at any time upon actual demand by Bank One. The inclusion of a
payment schedule is merely to provide terms for payment in the absence of
actual demand and does not affect or impair Bank One's absolute right to demand
payment of this Note at any time. Obligor agrees that Bank One may delay
demand until, or make demand at anytime before, any payment date specified in
the demand payment section of this Note.
3. At the option of Bank One, and without in any way limiting its
right to demand payment in full of this Note if it is due and payable on
demand, all Obligations shall become immediately due and payable without prior
notice or demand upon the occurrence of any of the following events of default:
(a) failure of Obligor to make payment when due of the principal or interest of
this Note and/or any of the Obligations; (b) failure of Obligor to furnish
satisfactory collateral or additional collateral, as the case may be, as
hereinafter agreed; (c) failure of Obligor to comply with any of the terms and
conditions of this Note and/or any of the Obligations or contained in any
security agreement or instrument securing this Note and/or any of the
Obligations; (d) death of Obligor; (e) dissolution of, termination of existence
of, insolvency of, business failure of, appointment of a receiver for, or
assignment for the benefit of creditors or a commencement of any proceeding
under any bankruptcy, reorganization, arrangement or liquidation law by or
against Obligor or any property of Obligor; (f) failure of Obligor to pay when
due any premium on any policy of life or other insurance pledged hereunder, or
held in connection with any Collateral; (g) [deleted by interlineation]; (h)
the institution of any garnishment proceedings by attachment, levy or otherwise
against any deposit balance or Collateral maintained or deposited with Bank One
by Obligor; (i) failure of Obligor to either furnish Bank One within thirty
(30) days after written request by Bank One, current financial statements,
including income tax returns, in form satisfactory to Bank One or to permit
inspection of any of Obligor's books or records; (j) any representation,
warranty, statement, report, or application made, or furnished, by Obligor
proving to have been false, erroneous or misleading, in any material respect at
the time of the making thereof; (k) the issuance of any tax levy or lien
against Obligor or Obligor's failure to pay, withhold, collect or remit any tax
when assessed or due; (l) sale or transfer of Collateral out of Obligor's
ordinary course of business; (m) a bulk sale of Obligor's assets; or (n)
suspension or liquidation of Obligor's business.
<PAGE> 4
4. No delay or omission on the part of Bank One in exercising any
right hereunder shall operate as a waiver of such right or of any other right
under this Note. A waiver on any one occasion shall not be construed as a bar
to or waiver of any such right and or remedy on any future occasion.
5. Obligor waives presentment, demand, notice, protest and all
other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note; and assents to any extension
or postponement of the time of payment, modification or waiver of any payment
amount or any other indulgence, and/or to the addition or release of any other
party or person liable hereon or of any Collateral herefore.
6. This Note shall be governed by and construed in accordance
with the laws of the State of Ohio in all respects.
7. Obligor will pay on demand all costs of collection and
attorneys' fees incurred or paid by Bank One in enforcing this Note when the
same have become due, whether by acceleration or otherwise, if allowable by
law.
8. Bank One shall have the right to charge interest on the amount
of any interest payment not paid as provided in this Note at the same rate as
applicable to the principal sum.
9. Payments shall be allocated between principal, interest and
fees, if any, in the discretion of Bank One, and, when applicable, any
prepayments will be applied to principal in the inverse order of scheduled
maturity.
10. All rights, powers, privileges and immunities herein granted
to Bank One shall extend to its successors and assigns and any other legal
holder of this Note. All rights, powers, privileges and immunities of Obligor
hereunder may not in any way be assigned, transferred or sold. Bank One at any
time is authorized to correct patient errors and fill in any blanks herein.
11. Obligor acknowledges that this Note evidences a loan made
primarily for business, commercial or agricultural purposes and not primarily
for personal, family or household purposes.
12. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One shall have all of the remedies
provided in the security documents including the remedies of a secured party
under the Uniform Commercial Code. Unless the Collateral is perishable or
threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Bank One will give Obligor reasonable notice of the time and
place of any public sale thereof or of the time after which any private sale or
other intended disposition is to be made. The requirement of reasonable notice
shall be met if such notice is mailed, postage prepaid, to the last known
address of Obligor at least ten (10) days before the time of the sale or
disposition.
<PAGE> 5
13. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One is empowered to collect, sell,
assign, transfer, set over and deliver the whole or any part of any Collateral
through any stock exchange, broker or agent or at any public or private sale,
either for cash or credit or for future delivery, without assumption of credit
risk, and at any such sale Bank One may become the purchaser of any part of the
Collateral discharged from right of redemption. Upon any such sale, after
deducting all costs and expenses of every kind related to retaking, storing and
selling the Collateral, the residue of the proceeds thereof may be applied as
Bank One may determine toward the payment of any or all of the Obligations,
whether due or not, returning the overage, if any, to Obligor and Obligor shall
be and remain liable to Bank One for every and any deficiency after application
of such proceeds.
14. Right is expressly granted to Bank One at its option to
transfer at any time to itself or to its nominee any securities pledged
hereunder, to receive and retain the income thereon, all splits, substitutions
and divisions, and hold the same as security herefore, or apply it on the
principal or interest which has become due on any Obligation, whether by
acceleration or otherwise, and, in the case of voting shares or interests
pledged to vote the same when Bank One deems the exercise of such power
necessary to maintain or protect such Collateral.
15. When any Obligation becomes due, whether by acceleration or
otherwise, and at any time thereafter, Bank One may, at its option, demand, sue
for, collect or make any compromise or settlement it deems desirable with
reference to the Collateral. Bank One shall not be bound to take any steps
necessary to preserve any rights in the Collateral against prior parties,
inasmuch as Obligor agrees to assume such responsibility. Bank One shall have
no duty with respect to collection or protection of the Collateral or of any
income on the Collateral as to the preservation of any rights pertaining to the
Collateral beyond safe custody.
16. Obligor will deliver to Bank One satisfactory collateral or
additional collateral, as the case may be, should Bank One so require.
17. Obligor agrees that Bank One may take possession of any
Collateral without prior judicial hearing or process, hereby expressly waives
any right to such judicial hearing process, and hereby assents to any
substitution, exchange or release of Collateral.
18. When any Obligation becomes due, by acceleration or otherwise,
Bank One shall have the right, without notice to Obligor, any party claiming
under Obligor, or any other party, such notice being hereby expressly waived,
and without regard to the adequacy of value of the Collateral or the solvency
or insolvency of Obligor, to the appointment of a receiver by a court of
competent jurisdiction chosen solely by Bank One, upon application at any time,
whether prior to or after a judgment has been obtained against Obligor, to take
possession of the assets and/or business of Obligor together with its books and
records, to maintain or to liquidate said assets and/or business, to collect
the proceeds of the Collateral and apply the net proceeds to any Obligation.
Obligor consents to jurisdiction and venue for the appointment of such receiver
by such court and agrees that any receiver so appointed may take possession of
the assets and/or business of the Obligor, together with the Collateral in any
other jurisdiction in which the Collateral may be located.
<PAGE> 6
19. Obligor authorizes Bank One to exchange Bank One deposit,
credit and borrowing information about Obligor with third parties.
20. Obligor jointly and severally hereby authorizes any attorney
at law to appear in an action on this Note at any time after the same becomes
due, whether by acceleration or otherwise, in any court of record in or of the
State of Ohio, or of elsewhere, and to waive the issuing and service of process
against any or all of said parties, enter an appearance and to confess judgment
is in favor of Bank One against any or all of said parties for the amount that
may be due, together with costs of suit, and to release all errors and waive
all rights of appeal and stay of execution from the judgment rendered. After
the judgment is entered against one or more of said parties, the powers wherein
conferred may be exercised as to one or more of the others. The death of
Obligor shall not impair the authority herein granted as to the survivor or
survivors of Obligor.
<PAGE> 7
EXHIBIT A
The interest rate options available to Borrower shall be as follows, if, as and
when offered by Bank:
MONEY MARKET RATE - meaning interest shall be calculated daily on the current
outstanding principal balance at a variable rate equal to the Money Market
rate, as determined solely by Bank, plus 175 basis points. Interest payments
under the Money Market Rate option shall be due and payable on the first day of
each month beginning October 1, 1995.
LIBOR RATE - meaning the London Interbank Offer Rate, as determined solely by
Bank, plus 175 basis points for a period of 30, 60 or 90 day term as selected
by Borrower. Interest payments under the Libor Rate option shall be due and
payable at the expiration of the 30, 60 or 90 day term.
Telxon Corporation
By: /s/ Kenneth W. Haver
---------------------
Kenneth W. Haver
<PAGE> 8
[BANK1ONE(R) logo]
September 8, 1995
Mr. Kenneth Haver
Chief Financial Officer
Telxon Corporation
3330 West Market Street
P.O. Box 5582
Akron, Ohio 44334-0582
Dear Mr. Haver:
This Letter Agreement is issued in conjunction with the Business Purpose
Revolving Promissory Note (the "Note") in the amount of $20,000,000.00 executed
on the 8[th] day of September, 1995 and the terms and conditions contained
herein are considered to be an integral part of that Note. Bank One, Akron,
N.A. (the "Bank") agrees to disburse funds to Telxon Corporation (the
"Borrower") subject to the Borrower meeting all of the Terms and Conditions
contained in the Note and all of the terms and conditions contained in this
Letter Agreement.
The Borrower is currently a party to the Amended and Restated Revolving Credit,
Term Loan and Security Agreement (the "Agreement"), dated March 31, 1995, with
the Bank of New York Commercial Corporation acting as lender and as agent. In
this Agreement, the Borrower has agreed to provide a security interest in all
Receivables, all Equipment, All General Intangibles, all Inventory, the Texas
Real Property and other property as further described in Section 1.2. With the
exception of these liens, the Borrower shall not, without prior written consent
of the Bank, create any additional liens, except Permitted Encumbrances as
further described in Section 1.2 of the Agreement.
This Agreement required the Borrower to meet a number of Affirmative and
Negative Covenants, with a failure to do so resulting in a Default as further
described in the Events of Default section of the Agreement. By executing this
Letter Agreement, the Borrower hereby agrees to meet each Affirmative and
Negative Covenant contained in the Agreement, and provides the same Default
remedies to the Bank for principal advances under the Note in the event of a
failure to properly cure a Default. In addition, in the event that the Bank of
New York Commercial Corporation declares a Default under the Agreement, the
Bank may also declare a default under the Note.
If, for any calendar month during the term of this Note, the average daily
unpaid balance of the disbursements does not equal the committed face amount of
the Note, the Borrower agrees to pay to the Bank an Unused Line fee of 1/8
percent per annum on a monthly basis on the unused
<PAGE> 9
Mr. Kenneth W. Haver
September 8, 1995
Page 2
portion of the Note. The Borrower may terminate the Note at any time prior to
the expiration date of April 30, 1996 and incur an Unused Line Fee on a pro
rate basis up to the point of termination. The Borrower may reduce the
committed face amount of the Note at any time prior to the expiration and incur
an Unused Line Fee on the lower amount of the Note.
This Letter Agreement and the Note comprise all of the terms and conditions
underlying the extension of credit by the Bank to the Borrower. By executing
this Letter Agreement below, the Borrower agrees to be bound by all terms and
conditions.
Very truly yours,
/s/ Steven B. Currier
- ---------------------
Steven B. Currier
Vice President
Acknowledged and agreed to this 8[th] day of September, 1995:
Telxon Corporation
By: /s/ Kenneth W. Haver
<PAGE> 1
EXHIBIT 10.8
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "Agreement") is made and entered
into as of this 29th day of September, 1995, by and among NEW META LICENSING
CORPORATION, a Delaware corporation ("New Meta"), and the individuals
identified in the attached EXHIBIT A hereto (individually a "Purchaser" and
collectively the "Purchasers").
WHEREAS, on September 22, 1995, the Certificate of Incorporation of
New Meta Licensing Corporation was filed by the Secretary of State for the
State of Delaware (the "Certificate");
WHEREAS, pursuant to the Certificate the authorized capital stock of
New Meta consists solely of Ten Million (10,000,000) shares of Voting Common
Stock $.01 par value (the "Voting Common"), Three Million (3,000,000) shares of
Non-Voting Common Stock $.01 par value and Three Million (3,000,000) shares of
Preferred Stock $.01 par value;
WHEREAS, the Purchasers are officers or advisors of New Meta;
WHEREAS, the Board of Directors of New Meta has determined that it
will be in the best interests of New Meta and its stockholders if New Meta
sells shares of Voting Common to the Purchasers in the amounts set forth in
EXHIBIT A in order to more closely align the interests of New Meta and the
Purchasers, and each Purchaser desires to purchase such shares of Voting Common
from New Meta;
WHEREAS, immediately prior to consummating the transactions
contemplated hereby, New Meta's parent corporation, Metanetics Corporation
("Metanetics"), shall substantially discontinue the business in which it was
heretofore engaged and New Meta shall begin conducting such business.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements hereinafter
set forth, the parties, intending to be legally and equitably bound, hereby
agree as follows:
1. SALE AND PURCHASE OF SHARES. Subject to the terms and
conditions hereof, New Meta shall sell, transfer and assign to each Purchaser,
and each Purchaser shall purchase and acquire from New Meta, the number of
shares of Voting Common indicated in EXHIBIT A (the "Purchased Shares"), for a
purchase price of 50/100 Dollars ($0.50) per share (each Purchaser's aggregate
purchase price is set forth in EXHIBIT A and is referred to as the "Purchase
Price"). The Purchase Price shall be payable by each Purchaser to New Meta at
the Closing (as hereinafter defined) through its delivery to New Meta of good
funds. Delivery of the share
<PAGE> 2
certificates evidencing the shares so purchased shall be delivered by New Meta
to the Purchasers within ten (10) days following the Closing.
2. REPRESENTATIONS AND WARRANTIES.
(a) New Meta hereby represents and warrants to each Purchaser
(with respect to and only with respect to the shares of Voting Common hereby
being sold by New Meta to him), respectively, that:
(i) Except as indicated in SCHEDULES 2(a)(ix) AND (x),
the execution, delivery and performance of this Agreement does not and
will not violate, conflict with or result in the breach of any
provision of (a) any material contract, agreement or instrument to
which it is a party or by or to which it or its assets or properties
may be bound or subject; or (b) any order, judgment, injunction,
award, decree, statute, law, rule or regulation of any jurisdiction
applicable to it. Such execution, delivery and performance will not
result in the creation of any lien or encumbrance on the Purchased
Shares.
(ii) There are no outstanding orders, judgments,
injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against it. There are no actions,
suits or claims or legal, administrative or arbitral proceedings or
investigations (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) pending or, to its
knowledge, threatened, against or involving it which could adversely
effect its ability to consummate the transactions contemplated hereby.
(iii) Upon its execution and delivery, this Agreement will be
the valid and binding obligation of New Meta, enforceable in
accordance with its terms, except (A) as limited by applicable
bankruptcy, insolvency, organization, moratorium or other laws of
general application affecting enforcement of creditor' rights; and (B)
general principles of equity that restrict the availability of
equitable remedies.
(iv) It is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, with all
requisite corporate power and lawful authority to own, lease and
operate its assets and properties and to carry on its business in the
manner presently conducted or contemplated by it.
(v) The execution, delivery and performance of this
Agreement does not and will not violate, conflict with or result in
the breach of any provision of its Certificate of Incorporation or
By-laws, as either may be amended.
(vi) No consent, action, approval, order or authorization, or
declaration of or registration or filing with, any federal, state,
local or governmental agency or authority is required to be obtained
or made by New Meta in connection with (a) the execution, delivery or
performance by New Meta of this Agreement and of the other
instruments, agreements and documents required or contemplated
hereunder; and (b) the consummation of the transactions contemplated
hereby and thereby.
<PAGE> 3
(vii) New Meta is authorized to issue Ten Million
(10,000,000) shares of Voting Common Stock $.01 par value, Three
Million (3,000,000) shares of Non-Voting Common Stock $.01 par value
and Three Million (3,000,000) shares of Preferred Stock $.01 par
value, of which Four Million (4,000,000) shares of Voting Common Stock
are issued and outstanding as of the date hereof. There are no other
class of capital stock authorized, issued or outstanding. The
Purchase Shares shall when issued be validly issued, fully paid, and
nonassessable, and all such shares have been issued in compliance with
all applicable federal and state securities laws. There are no
subscriptions, rights, options, warrants, convertible or exchangeable
securities, agreements, restrictions, or other rights of any kind
relating to the shares being sold hereunder.
(viii) Metanetics' un-audited balance sheet and income
statement as of March 31, 1995 and August 31, 1995, copies of which
have been furnished to each Purchaser, were prepared by or for
Metanetics on the same basis as required for incorporation into
Metanetics' parent corporation's, Telxon Corporation, audited
financial statements, and are materially correct in presenting the
financial position of Metanetics as at that date and the results of
Metanetics' operations for the period then ended.
(ix) There is no tangible property or intangible personal
property, including, without limitation, trademarks, service marks,
styles, trade names, copyrights, licenses, patents, logos, designs,
inventions, discoveries, processes, formulae, trade secrets,
proprietary technical information and know-how (whether confidential
or otherwise), software and other industrial property (including
applications, certificates and registrations for or of any of the
foregoing), used by New Meta in its business as presently conducted by
it which is not owned, leased or licensed by New Meta. New Meta's
property is free and clear of any lien or other encumbrance, except
for (a) liens or encumbrances specifically described in SCHEDULE
2(A)(IX); (b) liens or other encumbrances securing taxes, assessments,
governmental charges or levies, or the claims of materialmen,
carriers, landlords and like persons, all of which are not yet due and
payable or are being contested in good faith and such contest does not
involve any substantial danger of the sale, forfeiture or loss of any
assets material to the condition of New Meta; (c) minor liens or other
encumbrances of a character that do not substantially impair the
assets to which they apply; and (d) the terms of the written
agreements pursuant to which any such property, tangible or
intangible, is leased or licensed by it.
(x) EXCEPT AS DESCRIBED IN SCHEDULE 2(a)(x), as of the date
hereof, New Meta does not have, nor has it agreed to incur or does it
contemplate incurring, any indebtedness, liability, claim or loss,
liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise, including but not limited to liabilities for
taxes, and which is not fully and adequately reflected or reserved
against on its balance sheet.
(xi) New Meta is not in violation of any applicable United
States, state, local or foreign law, ordinance, regulation, order,
judgment, injunction, award, decree or other
3
<PAGE> 4
requirement of any governmental or regulatory body, court or
arbitrator, which violation could have a material adverse effect on
the condition, financial or otherwise, of New Meta.
(xii) To the extent that the business plan and other
disclosures of Metanetics which have been provided to the Purchasers
contain any projections, such projections, if any, have been prepared
by on the basis of underlying assumptions which, in good faith
judgment, based on the circumstances known at the time of preparation
thereof and as to the conditions which, in such judgment, it was then
believed most likely to prevail over the projected period, provide a
reasonable basis for such projections; provided that there is no
assurance that the projected results will actually be achieved.
(b) Each Purchaser hereby severally represents and warrants as to
himself or herself to New Meta as follows:
(i) Purchaser has all necessary power and authority under
all applicable provisions of law to execute and deliver this Agreement
and to carry out Purchaser's obligations hereunder. All actions by
Purchaser required for the lawful execution and deliver of this
Agreement have been effectively taken prior to the Closing. Upon its
execution and delivery, this Agreement will be the valid and binding
obligation of Purchaser, enforceable in accordance with its terms,
except (A) as limited by applicable bankruptcy, insolvency,
organization, moratorium or other laws of general application
affecting enforcement of creditor' rights; and (B) general principles
of equity that restrict the availability of equitable remedies.
(ii) All consents, approvals, orders, authorizations,
registrations, qualifications, designations, declarations or filings
with any governmental or banking authority on the part of Purchaser or
his spouse required in connection with the consummation of the
transactions contemplated in this Agreement have been obtained prior
to and shall be effective as of the Closing.
(iii) Purchaser understands that the Purchased Shares
purchased by him hereunder have not been registered under the
Securities Act of 1993, as amended (the "Securities Act"). Purchaser
also understands that the shares are being offered and sold pursuant
to exemptions from registration contained in the Securities Act and
applicable state securities laws based in part upon Purchaser's
representations contained in this Agreement.
(iv) Purchaser understands and agrees that he bears the
economic risk of this investment indefinitely unless and until the
shares acquired hereunder are registered pursuant to the Securities
Act, or an exemption from registration is available. Purchaser
understands that New Meta has no present intention of registering the
shares being sold hereunder or any shares of its capital stock.
Purchaser also understands that there is no assurance that any
exemption from registration under the Securities Act will be available
4
<PAGE> 5
and that, even if available, such exemption may not allow Purchaser to
transfer all or any portion of such shares.
(v) Purchaser is acquiring the Purchased Shares for
Purchaser's own account for investment only, and not with a view
toward their distribution.
(vi) Purchaser represents that by reason of his business
or financial experience, Purchaser has the capacity to protect his own
interests in connection with the transactions contemplated in this
Agreement and can bear the risk of such investment without materially
impairing his financial condition. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in this Agreement.
(vii) Purchaser has had an opportunity to discuss New
Meta's and Metanetics' business, management and financial affairs with
directors, officers and management of New Meta and Metanetics,
respectively, and has had the opportunity to review New Meta and
Metanetics' respective operations and facilities. Purchaser also has
had the opportunity to ask questions of and receive answers from New
Meta and its management regarding the transactions contemplated
hereby.
(viii) If identified in SCHEDULE 2(b)(viii), Purchaser is an
"accredited investor" as that term is defined in Regulation D under
the Securities Act. Specifically, if so identified, Purchaser meets
one or more of the following definitions of an "accredited investor":
(A) A natural person whose net worth, either
individually or jointly with such person's spouse, at the same
time of the Closing, exceeds $1,000,000;
(B) A natural person who had an individual income
in excess of $200,000 or joint income with that person's
spouse in excess of $300,000 in 1993 and 1994, and reasonably
expects to have individual income reaching the same level in
1995;
(C) A director or executive officer of New Meta;
(D) A trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring
the shares, whose purchase is directed by a sophisticated
person who has such knowledge and experience in financial and
business matters that such person is capable of evaluating the
merits and risks involved in purchasing the shares hereunder;
(E) A corporations, not formed for the specific
purpose of acquiring shares the Purchased Shares, with assets
in excess of $5,000,000.
5
<PAGE> 6
For purposes of the above definitions of "accredited investor," the
term "net worth" means the excess of total assets over total
liabilities. In calculating net worth, Purchaser may include the
estimated fair market value of the Purchaser's principal residence as
an asset. In determining individual "income," Purchaser should add to
Purchaser's individual adjusted gross income (exclusive of any spousal
income) any amounts attributable to tax exempt income received, losses
claimed as a limited partner in any limited partnership, deductions
claimed for depletion, contributions to an IRA or Keogh retirement
plan, alimony payments, and any amount by which income from long-term
capital gains has been reduced in arriving at adjusted gross income,
and should subtract any unrealized capital gain.
(ix) Purchaser's address as set forth on EXHIBIT A is the
address of Purchaser's primary residence. Purchaser's address as set
forth on EXHIBIT A is the same state in which Purchaser received an
offer of sale of the Purchased Shares and in which Purchaser is
entering into this Agreement.
3. CLOSING. The closing of the transactions contemplated
hereunder (the "Closing") shall be held at such times and places as the parties
may agree, and shall continue until all of the Purchasers have consummated such
transactions; provided that the Closing shall be consummated no later than
September 29, 1995.
4. INDEMNIFICATION. Notwithstanding anything to the contrary in
this Agreement, each of the Purchasers severally and New Meta shall indemnify
and hold harmless the other against and from any and all losses, fees, costs,
expenses, damages, obligations, liabilities and claims (including, without
limitation, any and all fees, costs and expenses whatsoever reasonably incurred
by it or its counsel in investigating, preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect
of, any threatened or asserted claim) arising directly or indirectly out of:
(a) any failure of any representation or warranty of such party to be correct
and complete when made, or (b) any failure by such party to perform and observe
fully all obligations and conditions to be performed or observed by that party
under this Agreement. Notwithstanding the foregoing or anything herein to the
contrary, no claim for indemnification may be asserted after September 29,
1996.
5. CONDITIONS TO EACH PURCHASER'S OBLIGATIONS. The obligation of
each Purchaser to purchase the Purchased Shares are subject to the
satisfaction, at or prior to the Closing, of the following conditions, any one
or more of which may be waived by such Purchaser:
(a) The representations and warranties made by New Meta
in Section 2(a) hereof shall be true and correct in all material
respects at the Closing with the same force and effect as if they had
been made as of the date of the Closing, and New Meta shall have
performed all obligations and conditions herein required to be
performed or observed by it on or prior to Closing.
6
<PAGE> 7
(b) At the time of Closing, the sale of the Purchased
Shares shall be legally permitted by all laws and regulations to which
the Purchasers and New Meta are subject.
(c) New Meta shall have obtained any and all consents,
permits, and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for such as
properly may be obtained subsequent to the Closing).
(d) Each Purchaser or his counsel has had the opportunity
to review copies of all corporate documents of New Meta as the
Purchaser reasonably may have requested.
(e) New Meta shall have delivered to Purchaser a
certificate, executed by an officer of New Meta, dated the date of
Closing, to the effect that the conditions specified in subparagraphs
(a) through (c) of this Section 5 have been satisfied.
(e) All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers, and
the Purchasers shall have received all such counterpart originals or
certified or other copies of such documents as they reasonably may
request.
6. CONDITIONS TO NEW META'S OBLIGATIONS. New Meta's obligation to
sell the Purchased Shares at Closing is subject to the satisfaction, on or
prior to Closing, of the following conditions, any one or more of which may be
waived by it:
(a) The representations and warranties made by each
Purchaser in Section 2(b) hereof shall be true and correct in all
material respects at the date of the Closing, with the same force and
effect as if they had been made on and as of said date, and each
Purchaser shall have performed all obligations and conditions herein
required to be performed or observed by him on or prior to Closing.
(b) At the time of Closing, the sale of the Purchased
Shares shall be legally permitted by all laws and regulations to which
the Purchasers and New Meta are subject.
(c) Each Purchaser shall have obtained any and all
consents, permits, and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement
(except for such as properly may be obtained subsequent to the
Closing).
(d) Each Purchaser shall have performed and complied with
all agreements and conditions herein required to be performed or
complied with by each Purchaser on or before the Closing.
(e) Each Purchaser shall have delivered to New Meta (i) a
certificate, executed by him or her, dated the date of Closing, to the
effect that the conditions specified in subparagraphs (a) through (d)
of this Section 6, and in subparagraph (d) of Section 5,
7
<PAGE> 8
have been satisfied and (ii) an Investment Letter in the form attached
hereto as EXHIBIT B, executed by him or her.
7. CONDITION SUBSEQUENT. This Agreement and the transactions
contemplated hereby are subject to ratification by the Board of Directors of
Telxon Corporation, parent corporation of Metanetics, parent corporation of New
Meta. In the event that such ratification is not granted, then New Meta may
return the Purchase Price to Purchaser and require Purchaser to return the
Purchased Shares purchased by him hereunder, and thereafter all of Purchaser's
rights and obligations hereunder and as a shareholder of New Meta shall be null
and void ab initio.
8. ENTIRE AGREEMENT. This Agreement and any other writing
specifically identified herein or specifically contemplated hereby, taken
together, contain the entire agreement among the parties hereto with respect to
New Meta's sale and each Purchaser's acquisition of shares hereunder and
supersedes all previous written or oral negotiations, commitments and writings
with respect thereto.
9. HEADINGS. The paragraph headings used herein are for
convenience of reference only and do not form a part hereof and do not in any
way modify, interpret or set forth the intentions of the parties.
10. SURVIVAL. All agreements, obligations, warranties, and
representations under this Agreement shall survive the Closing and any
investigations made by the parties until September 29, 1996.
11. GENDER AND NUMBER. When permitted by the context, each
pronoun used in this Agreement includes the same pronoun in other genders or
numbers, and each noun used in this Agreement, including each capitalized term
defined herein, includes the same noun in other numbers.
12. SUCCESSORS. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by and against the respective heirs,
personal representatives, successors, and assigns of each party to this
Agreement.
13. NO THIRD-PARTY BENEFIT. This Agreement is intended for the
exclusive benefit of the parties to this Agreement and their respective
successors and assigns, and nothing contained in this Agreement shall be
construed as creating any rights or benefits in or to any third party.
14. GOVERNING LAW. 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, without regard to conflict of
laws principals.
15. SEVERABILITY. The intention of the parties to this Agreement
is to comply fully with all laws and public policies, and this Agreement shall
be construed consistently with all
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laws and public policies to the extent possible. If any court of competent
jurisdiction determines it is impossible to construe any provision of this
Agreement consistently with any law or public policy and consequently holds
that provision to be invalid, such holding shall in no way effect the validity
of the other provisions of this Agreement, which shall remain in full force and
effect.
16. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, of the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NEW META LICENSING CORPORATION
By: /s/ David B. Swank
Its President
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EXHIBIT 10.9
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (this "Agreement"), is made and effective
as of September 29 1995 by and among NEW META LICENSING CORPORATION, a Delaware
corporation (the "Corporation"), and each of the undersigned (collectively
referred to as the "Original Shareholders" and individually as an "Original
Shareholder") (any person, partnership, association, trust, corporation,
limited liability company, or other entity acquiring any Shares (defined below)
in accordance with the terms and conditions of this Agreement or otherwise, and
any transferee that acquires any Shares from any such person or entity, and the
heirs, executors, administrators, successors and assigns of any such person or
entity, is referred to as an "Additional Shareholder" and collectively are
referred to as the "Additional Shareholders," and together with the Original
Shareholders are referred to as the "Shareholders"):
WITNESSETH:
WHEREAS, on September 22, 1995, the Certificate of Incorporation of
New Meta Licensing Corporation was filed by the Secretary of State for the
State of Delaware (the "Certificate");
WHEREAS, pursuant to the Certificate the authorized capital stock of
the Corporation consists solely of Ten Million (10,000,000) shares of Voting
Common Stock $.01 par value (the "Voting Common"), Three Million (3,000,000)
shares of Non-Voting Common Stock $.01 par value and Three Million (3,000,000)
shares of Preferred Stock $.01 par value (collectively the "Shares");
WHEREAS, the Corporation has issued an aggregate of Four Million
(4,000,000) shares of its Voting Common to its parent corporation, Metanetics
Corporation ("Metanetics"), and the undersigned. There are no shares of
Non-Voting Common Stock or Preferred Stock issued or outstanding;
WHEREAS, Metanetics has redeemed the Voting Common Stock in Metanetics
owned by Yung Fu Chang ("Chang"), Ynjiun P. Wang ("Wang"), John Chu ("Chu") in
exchange for an equal number of share of the Corporation's Voting Common owned
by Metanetics;
WHEREAS, the individual signatories hereto are executives of the
Corporation, Metanetics and/or Metanetics' parent corporation, Telxon
Corporation ("Telxon") (the "Telxon Transferees");
WHEREAS, the purchase of Shares by the Telxon Transferees remains on
the date hereof subject to ratification by Telxon's Board of Directors (the
"Executive Sale"); and
<PAGE> 2
WHEREAS, the parties hereto desire to enter into this Agreement to
govern the transfer of Shares and certain matters of corporate governance.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be legally and equitably bound, hereby agree as follows:
ARTICLE 1. GOVERNING LAW
This Agreement shall be governed under, and in accordance with the
laws of the State of Delaware, without regard to conflict of laws principles.
ARTICLE 2. MANAGEMENT
(a) GENERAL. The Corporation shall have a Board of Directors
comprised of up to five (5) directors, but no fewer than three (3) directors
(in the event the Board is deadlocked its Chairman shall cast the deciding
vote); however, subject to applicable law governing the responsibilities and
liabilities of directors, which shall in any event take precedence, the Board's
power and authority shall be restricted such that it may take no action which
conflicts with the terms hereof or which is reserved to the Shareholders
hereunder. Except as otherwise provided in this Agreement or as required by
applicable law, all matters requiring action by the Shareholders shall be
determined by a Two Thirds (2/3) majority vote based on the number of shares of
Voting Common then owned by them. The Shareholders acknowledge and agree that
the intellectual property of the Corporation has been assigned to Metanetics
which has in turn granted back an exclusive license of the intellectual
property to the Corporation. The Shareholders agree that the Directors of the
Corporation shall be the following persons until their successors are elected
in accordance with this Agreement, the Certificate and the Corporation's
By-laws:
Yung Fu Chang
Ynjiun P. Wang
LazerData designee
David B. Swank (Chairman)
Robert A. Eberle
Notwithstanding the foregoing, the LazerData designee shall be named from time
to time soley by LazerData Corporation ("Lazer"), so long as Lazer then owns at
least 5% of the issued and outstanding shares of the Corporation's capital
stock, by delivering written notice duly executed by an officer of Lazer to the
Secretary of the Corporation, for inclusion in the Corporation's minutes. In
the event the Board establishes an Executive Committee, then so long as
LazerData has the right to designate a Board member pursuant to this Article
2(a), such Board member shall have the right to sit on Such Committee.
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(b) BY-LAWS. The Corporation's By-laws shall continue in full
force and effect from and after the date hereof. To the extent that the terms
and conditions of this Agreement conflict with the Corporation's By-Laws, the
terms and conditions of this Agreement shall control.
(c) ACTION BY WRITTEN CONSENT. Any vote, approval, authorization
or other action to be taken by the Shareholders or directors of the Corporation
may be taken without a meeting, without prior notice and without a vote if a
consent or consents in writing, setting forth the action so taken, shall be
signed by Two Thirds (2/3) of the Shareholders entitled to vote on matters put
before the Shareholders, or Two Thirds (2/3) of the directors entitled to vote
on matters put before the directors, as the case may be. The original of such
consent(s) shall be entered in the record of minutes of the proceedings of the
shareholders or directors, as applicable, of the Corporation.
ARTICLE 3. TRANSFER OF SHARES
(a) PROHIBITION ON TRANSFER. No Shareholder shall sell, exchange,
give, transfer, assign, pledge, encumber, hypothecate, or otherwise dispose of
any Shares, or any legal, beneficial or other interest in any Shares, whether
now owned or hereafter acquired, whether voluntarily, involuntarily, by
operation of law, or otherwise, including by way of intestacy, will, gift,
bankruptcy, execution, or seizure and sale by legal process (such events
separately and collectively are referred to as a "Transfer"), except as
provided in this Agreement. The rights and obligations set forth in this
Article 3 are subject in their entirety to the rights and obligations set forth
in Article 4.
(b) CORPORATION RIGHT OF FIRST REFUSAL. In the event that a
Shareholder at any time desires to Transfer all or any portion of his Shares to
any third party (the "Offeror"), he must first offer to Transfer his Shares to
the Corporation. Such offer must be upon the same terms and conditions as he
proposes to Transfer such Shares to the Offeror, which terms and conditions
shall be set forth in a written notice of offer (the "Notice of Offer"). The
Notice of Offer shall state with particularity the terms upon which the
Transfer of the Shares is proposed to be made, including, without limitation,
the purchase price to be paid for the Shares, if any, the time and method of
payment, and if payment is to be made other than in cash, the rate of interest
to be paid on the non-cash portion of said purchase price (collectively the
"Offer Price and Terms"). The Corporation shall have a period of thirty (30)
days after receipt of the Notice of Offer within which to accept or reject in
writing said offer of Transfer. Should the Corporation accept such offer, it
shall forthwith acquire the tendered Shares at the Offer Price and Terms.
Failure of the Corporation to respond in writing to a Notice of Offer within
such thirty (30) day period shall be deemed a rejection of said offer.
(c) ORIGINAL SHAREHOLDER RIGHT OF FIRST REFUSAL. Should any of
the subject Shares remain un-acquired by the Corporation at the expiration of
the period specified in Article 3(b), the tendering Shareholder shall offer to
Transfer his Shares to the Original Shareholders (excluding the tendering
Shareholder if he is an Original Shareholder), if any, pro-rata to their Share
interests, respectively at the Offer Price and Terms. The Original
Shareholders shall have a period of thirty (30) days after receipt of the
Notice of Offer within which to accept or reject
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in writing said offer of Transfer. Should any Original Shareholder accept
such offer, he shall forthwith acquire the tendered Shares at the Offer Price
and Terms. Failure of any Original Shareholder to respond in writing to a
Notice of Offer within such thirty (30) day period shall be deemed a rejection
of said offer. Should any, but not all, of the subject Shares remain
un-acquired following the expiration of such thirty (30) day period, the
remaining Original Shareholders electing to acquire tendered Shares shall have
an additional Seven (7) day period to acquire the unsold Shares, pro rata to
their Share interests, respectively (as between themselves).
(d) ADDITIONAL SHAREHOLDER RIGHT OF FIRST REFUSAL. Should any of
the subject Shares remain un-acquired by the Original Shareholders at the
expiration of the periods specified in Article 3(c), or should there be no
Original Shareholders at the time the subject Shares are offered, the tendering
Shareholder shall offer to Transfer his Shares to the Additional Shareholders
(excluding the tendering Shareholder if he is an Additional Shareholder), if
any, pro rata to their Share interests, respectively. The Additional
Shareholders shall have a period of fifteen (15) days after receipt of the
Notice of Offer within which to accept or reject in writing said offer of
Transfer. Should any Additional Shareholder accept such offer, he shall
forthwith acquire the tendered Shares at the Offer Price and Terms. Failure of
any Additional Shareholder to respond in writing to a Notice of Offer within
such fifteen (15) day period shall be deemed a rejection of said offer. Should
any, but not all, of the subject Shares remain un-acquired following the
expiration of such fifteen (15) day period, the remaining Additional
Shareholders electing to acquire tendered Shares shall have an additional Seven
(7) day period to acquire the unsold Shares, pro rata to their Share interests,
respectively (as between themselves).
(e) TRANSFER AND TAG ALONG. If all of the tendered Shares are not
acquired by either the Corporation, the Original Shareholders and/or the
Additional Shareholders, within the time periods provided for in Articles 3(b),
(c) and (d), respectively, the tendering Shareholder may Transfer the remaining
un-acquired Shares to the Offeror; provided, however, that if the tendering
Shareholder holds more than five percent (5%) of the then issued and
outstanding Shares, then each of the non-tendering Original Shareholders who
hold less than five percent (5%) of the then issued and outstanding Shares may
participate with the tendering Shareholder in such Transfer, at the Offer Price
and Terms, pro rata to their respective Share interests (as between themselves
and the tendering Shareholder). Any such Original Shareholder that desires to
participate in the Transfer shall have a period of fifteen (15) days after
receipt of the Notice of Offer within which to notify the tendering Shareholder
in writing of his election to participate in the Transfer. The tender
Shareholder's Transfer must be completed within fifteen (15) days following the
last day on which the last party could have acquired the Shares under Article
3(d), and must be at the Offer Price and Terms set forth in the applicable
Notice of Offer.
(f) ALTERATION OF TERMS. Each time the Offer Price and Terms are
altered in any fashion, including, but not limited to, changes in the identity
of the proposed Offeror or the consideration to be paid for the Shares to be
Transferred, or in the event that a Transfer is not completed within the time
period provided for in Article 3(e), then the subject Shares shall be
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re-offered to the Corporation, Original Shareholders and Additional
Shareholders in accordance with Article 3(b), (c) and (d), respectively, as if
a totally new transaction were proposed.
(g) PERMITTED TRANSFER. A non-entity Original Shareholder is
permitted to Transfer his Shares during his life without first offering his
Shares to the Corporation, Original Shareholders or Additional Shareholders in
accordance with Article 3(b), (c) and (d), respectively if, but only if, the
Transfer is to a trust created by the Original Shareholder for his benefit, or
his spouse's benefit or the benefit of his lineal descendants, or to a
corporation wholly owned by the Original Shareholder or his or her spouse. In
the event of such a permitted Transfer, the transferor shall promptly furnish
written notice thereof to the Corporation and the transferee shall thereupon
succeed to and may exercise any and all rights formerly held by the selling
Original Shareholder, and shall be bound by the terms, conditions and
restrictions contained in this Agreement. Such a transferee shall be deemed to
be an Additional Shareholder. Concurrently with such permitted Transfer, the
transferee shall execute a written agreement to be bound by the terms and
provisions of this Agreement, in form and substance satisfactory to counsel for
the Corporation. A corporate Original Shareholder is permitted to Transfer its
Shares without first offering its Shares to the Corporation, Original
Shareholders or Additional Shareholders in accordance with Article 3(b), (c)
and (d), respectively, if, but only if, the Transfer is to a corporation of
which at least 80% of the issued and outstanding shares of its capital stock
are owned by the Original Shareholder, or if at least 80% of the issued and
outstanding shares of the Original Shareholder's capital stock are owned by the
Transferee, and each such transferee may similarly Transfer such Shares to
similarly controlled or controlling affiliate corporations. Each such
Transferee shall be deemed to be an Original Shareholder. Any transfer
hereunder shall not be effective until such agreement is accepted by counsel
for the Corporation and the transferee shall have executed and delivered that
agreement to the Corporation.
(h) ADDENDUM. Before the holdings of the successor in interest
of any Shareholder shall be honored by the Corporation or accepted upon its
stock register and before any right, title or interest whatsoever therein shall
vest in such successor, and before the Corporation shall issue or agree to
issue any previously unissued (or reissue or agree to reissue from treasury)
Shares of, or any securities convertible into or exercisable for, stock of the
Corporation, the Corporation shall require, as a condition to the issuance of a
stock certificate or other instrument evidencing such stock or other security,
that said successor in interest or the person to whom any such previously
unissued (or reissued) Shares or other securities are to be issued, as the case
may be, execute and deliver to the Secretary of the Corporation an Addendum to
this Agreement in substantially the following form with appropriate insertions:
ADDENDUM
Pursuant to the SHAREHOLDER AGREEMENT (the "Agreement") dated
September ___, 1995 by and among New Meta Licensing
Corporation, a Delaware corporation (the "Corporation") and
its Shareholders, the undersigned, now the holder of
__________ shares of _______ stock, with $.01 par
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value, of the Corporation evidenced by certificate(s) numbered
__________, does hereby become a party to the Agreement
entitled to the rights, and subject to the obligations, as set
forth therein with the same force and effect as though he had
executed said Agreement as an initial signatory party thereto.
The undersigned acknowledges that he has read said Agreement
and is familiar with and understands its terms.
Dated this _____ day of __________, 199__.
------------------------------
(signature of new shareholder)
Whether or not such Addendum is executed, each such successor in interest or
new holder of Shares or other security shall in any event be bound by, and
shall perform the obligations imposed by, this Agreement with the same force
and effect as if such successor in interest had signed this instrument.
ARTICLE 4. TRANSFER OF SHARES AFTER DEATH OF
A SHAREHOLDER OR TERMINATION OF EMPLOYMENT
OF AN EMPLOYEE SHAREHOLDER
(a) GENERAL. Notwithstanding anything in this Agreement to the
contrary, all Shares shall be subject to Article 4, whether such Shares are
owned by the an Original Shareholder, Additional Shareholder or any transferee
of a Shareholder, or an immediate or subsequent transferee thereof.
(b) CORPORATION'S CALL OPTION. Upon the death of any Shareholder,
the voluntary or involuntary termination of employment of a Shareholder who is
employed by the Corporation, Metanetics or Telxon or any involuntary transfer
of the Shares of any Shareholder, including transfers by reason of dissolution,
liquidation, change in control, levy or execution, in connection with a divorce
or dissolution proceeding, by judicial sale, sale by a receiver or in any
bankruptcy or insolvency proceeding (individually an "Involuntary Event" and
collectively "Involuntary Events"), the Corporation shall have an option to
purchase the Shares of such Shareholder's Shares for an amount equal to the
Applicable Value (defined below) (if the Corporation is unable for any reason
to exercise any right under this Section 4(b), then Telxon shall succeed to
such rights). The Corporation shall have a period of thirty (30) days after
receipt of notice of the Involuntary Event giving rise to its right to purchase
such Shares to exercise this option in writing. If such Involuntary Event is
the death of a Shareholder, then said thirty (30) day exercise period shall not
begin to run until an executor or administrator of the deceased Shareholder's
estate has been appointed by a court of competent jurisdiction. Should the
Corporation exercise this option, it shall forthwith acquire the subject Shares
at a price equal to the Applicable Value. This option shall automatically
expire if not exercised within such thirty (30) day period. Nothing herein is
intended to or shall be construed as an
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implied promise of employment or continued employment of any Shareholder by
either the Corporation or Telxon.
(c) TELXON'S VOTING TRUST. At any time and from time to time,
from and after the date hereof, Telxon shall have the right to require the
Telxon Transferees to place any or all of their Shares in a voting trust the
form and substance of which shall be determined by Telxon.
(d) APPLICABLE VALUE. "Applicable Value" shall be determined as
follows:
(i) If the Involuntary Event giving rise to the
Corporation's right to exercise its call option is the death of a
Shareholder, then the Applicable Value shall be Fair Market Value
(defined below);
(ii) If the Involuntary Event giving rise to the
Corporation's right to exercise its call option is the termination of
a Shareholder's employment by the Corporation, Metanetics and/or
Telxon, if applicable, for other than gross misconduct, then the
Applicable Value shall be Fair Market Value;
(iii) If the Involuntary Event giving rise to the
Corporation's right to exercise its call option is the termination of
a Shareholder's employment by the Corporation, Metanetics and/or
Telxon, if applicable, for gross misconduct or voluntary separation by
the Shareholder for any reason, then the Applicable Value shall be
Fair Market Value for the Fixed portion of the Shareholder's Shares
and the lower of Fair Market Value or cost on the Un-Fixed portion.
(A) One fifth (1/5) of the Shares owned on the
date hereof by Ynjiun P. Wang, Yung Fu Chang and John Chu,
respectively, shall "Fix" on each of the next five (5)
anniversaries of the date of this Agreement.
(B) One third (1/3) of the Shares owned on the
date hereof by the Telxon Transferees, respectively, shall
"Fix" on each of the next three (3) anniversaries of the date
of this Agreement.
(iv) If the Involuntary Event giving rise to the
Corporation's right to exercise its call option is any other
Involuntary Event, then the Applicable Value shall be Fair Market
Value.
(e) FAIR MARKET VALUE. "Fair Market Value" shall be either (i)
the per share price paid by purchasers in the most recent private placement of
Shares, the aggregate proceeds from which exceeded One Million Dollars
($1,000,000), or if no such private placement has taken place within the last
one (1) year (ii) Fair Market Value shall be determined by Hambrecht and Quist
or any other investment banking firm mutually agreed upon by the parties to the
transaction, as of the date of the Involuntary Event giving rise to the
valuation, without regard to the Corporation's loss or replacement of any
Shareholder/employee. The fees and costs incurred with such investment banking
firm shall be paid by the purchaser; provided, however
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that the seller shall pay a portion of such fees and costs in proportion to his
or her ownership of the then issued and outstanding Shares. In the event that
either seller or purchaser is dissatisfied with the valuation then a
dissatisfied party may obtain its own valuation from a qualified, nationally
recognized investment banking firm, which must be completed within sixty (60)
days after completion of the initial valuation. If no valuation obtained by a
dissatisfied party varies from the initial valuation by more than 10%, then the
two or three valuations, as the case may be, shall be averaged and that average
shall be the Fair Market Value of the Shares. The cost of a dissatisfied
party's valuation shall be paid by the dissatisfied party. If the valuation
obtained by any dissatisfied party varies from the initial valuation by more
than 10%, then the valuation issue shall be submitted to the American
Arbitration Association for its determination of value in accordance with its
commercial arbitration rules; provided that such valuation shall be based
solely on the valuations already obtained pursuant to this Section, and in no
event shall exceed the greatest such valuation nor be less than the lowest such
valuation. The cost of the arbitration shall be paid equally by seller and
purchaser.
ARTICLE 5. REGISTRATION RIGHTS
(a) DEFINITIONS. As used in this Article 5, the following terms
have the following meanings:
"Commission" means the United States Securities and Exchange
Commission.
"IPO" means an underwritten, firm commitment, public offering
by New Meta Licensing Corporation of its Voting Common Stock.
"NASD" means the National Association of Securities Dealers,
Inc.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government, or any agency or
political subdivision thereof.
"Registrable Securities" means (a) Voting Common; and (b) any
stock or other securities of the Corporation acquired by a Shareholder
in a stock split or reclassification of, or a stock dividend or other
distribution on or in substitution or exchange for, or otherwise
acquired in connection with the securities described in clause (a)
above.
"Rule 144" means Rule 144 promulgated under the Securities Act
or any successor rule thereto or Rule 144A or any other rule
promulgated under the Securities Act complementary thereto.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
(b) INCIDENTAL REGISTRATION. Each time the Corporation shall
determine to proceed with the actual preparation and filing of a registration
statement under the Securities Act in connection with the proposed offer and
sale for money of any of its securities by it or any of its
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security holders (other than a registration statement on Forms S-4, S-8 or
other limited purpose form), the Corporation will give written notice of its
determination to each Shareholder. Upon the written request of a Shareholder
given within thirty (30) days after receipt of any such notice from the
Corporation, the Corporation will cause the Shareholder's Registrable
Securities to be included in such registration statement. Nothing herein shall
prevent the Corporation from, at any time, abandoning or delaying such
registration. If any registration pursuant to this section shall be
underwritten, in whole or in part, the Corporation may require that, and any
holder of the Registrable Securities shall be entitled, upon request, to have
the Registrable Securities included in the underwriting on the same terms and
conditions as the securities otherwise being sold through the underwriters.
(c) REGISTRATION PROCEDURES. If and whenever the Corporation
attempts to effect the registration of any Registrable Securities under the
Securities Act pursuant to the provisions hereof, the Corporation will:
(i) prepare and file with the Commission a registration
statement with respect to such securities, and use its best efforts to
cause such registration statement to become and remain effective for
such period as may be reasonably necessary to effect the sale of such
securities, but not to exceed nine months;
(ii) prepare and file with the Commission such amendments
to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration
statement effective for such period as may be reasonably necessary to
effect the sale of such securities, but not to exceed nine months;
(iii) furnish to the Shareholder such registration and to
the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(iv) use its best efforts to register or qualify the
securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as the Shareholder
may require;
(v) notify the Shareholder, promptly after it shall
receive notice thereof, of the time when such registration statement
has become effective or a supplement to any prospectus forming a part
of such registration statement has been filed;
(vi) notify the Shareholder promptly of any request by the
Commission for the amending or supplementing of such registration
statement or prospectus or for additional information;
(vii) prepare and file with the Commission, promptly upon
the request of the Shareholder, any amendments or supplements to such
registration statements or prospectus which, in the opinion of counsel
for the Shareholder, is required under the
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Securities Act or the rules and regulations thereunder in connection
with the distribution of the Registrable Securities by the
Shareholder;
(viii) prepare and promptly file with the Commission and
promptly notify the Shareholder of the filing of such amendment or
supplement to such registration statement or prospectus, as may be
necessary to correct any statements or omissions if, at the time when
a prospectus relating to such securities is required to be delivered
under the Securities Act, any event shall have occurred as a result of
which any such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or fail to state
any material fact necessary to make the statements therein, in the
light of the circumstances in which they were made, not misleading;
(ix) advise the Shareholder, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any
stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best efforts to
prevent the issuance of any stop order or to obtain its withdrawal, if
such stop order should be issued;
(x) not file any amendment or supplement to such
registration statement or prospectus to which the Shareholder shall
have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or the rules and regulations
thereunder, after having been furnished with a copy thereof at least
five (5) business days prior to the filing thereof, unless in the
opinion of counsel for the Corporation the filing of such amendment or
supplement is reasonably necessary to protect the Corporation from any
liabilities under any applicable federal or state law; and
(xi) at the request of the Shareholder, furnish on the
effective date of the registration statement and, if such registration
includes an underwritten public offering, at the closing provided for
in the underwriting agreement: (a) opinions, dated such respective
dates, of the counsel representing the Corporation for the purposes of
such registration, addressed to the underwriters, if any, and to the
Shareholder, covering such matters as such underwriters and the
Shareholder may reasonably request; and (b) letters, dated such
respective dates, from the independent certified public accountants of
the Corporation, addressed to the underwriters, if any, and to the
Shareholder, covering such matters as such underwriters and the
Shareholder may reasonably request, in which letters such accountants
shall state (without limiting the generality of the foregoing) that
they are independent certified public accountants within the meaning
of the Securities Act and that in the opinion of such accountants the
financial statements and other financial data of the Corporation
included in the registration statement or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act.
(d) EXPENSES. The Corporation shall bear all fees, costs and
expenses of any registration hereunder, including but not limited to all
registration, filing and NASD fees,
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printing expenses, fees and disbursements of counsel and accountants for the
Corporation and the Shareholder and all legal fees and disbursements and other
expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified, except that underwriting discounts and commissions and transfer
taxes for the Shareholder shall be borne by the Shareholder.
(e) INDEMNIFICATION. The Corporation will defend, indemnify and
hold harmless the Shareholder and any underwriter (as defined in the Securities
Act) for the Shareholder and each person, if any, who controls the Shareholder
or such underwriter within the meaning of the Securities Act, from and against
any and all loss, damage, liability, cost and expense to which the Shareholder
or any such underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages, liabilities,
costs or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided, however, that the Corporation will not be liable in any such case to
the extent that any such loss, damage, liability, cost or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by the
Shareholder, such underwriter or such controlling person in writing
specifically for use in the preparation thereof.
(f) ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES. The Corporation
will not take any action, or permit any change within its control to occur,
with respect to the Registrable Securities, which would adversely affect the
ability of the Shareholder to include such securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration.
(g) ASSIGNMENT. The rights under this Article 5 are fully
assignable by the Shareholders, and shall inure to the benefit of the
Shareholders and their respective successors and assigns.
(h) RULE 144. From the first date that any Shareholder's
Registrable Securities are registered pursuant to the terms hereof, or such
earlier date as of which a registration statement filed by the Corporation
pursuant to the Securities Exchange Act of 1934 (as amended, the "1934 Act"),
relating to any class of the Corporation's securities shall become effective,
and until the Original Shareholders shall own less than an aggregate of two (2)
percent of any class or series of equity securities of the Corporation, the
Corporation shall comply with all of the reporting requirements of the 1934
Act, whether or not it shall be required to do so, and shall comply with all
other public information reporting requirements of the Commission which are
conditions to the availability of Rule 144 for the sale of the Voting Common
Stock. The Corporation shall cooperate with the Shareholder in supplying such
information as may be necessary for it to complete and file any information
reporting forms presently or hereafter required by the Commission as a
condition to the availability of Rule 144.
11
<PAGE> 12
ARTICLE 6. MISCELLANEOUS
(a) In the event that Telxon's Board of Directors fails to ratify
the Executive Sale, then each of the undersigned acknowledges and agrees that
the Executive Sale will be voided ab initio and the Corporation will promptly
adopt an incentive stock option plan, pursuant to which options to acquire the
same respective number of Shares that were to be acquired by the Telxon
Transferees in the Executive Sale will be issued to the Telxon Transferees at
an exercise price of $.50 per Share.
(b) The parties hereto agree that, except as may otherwise be
consented to by the Shareholders in accordance with Article 2(c), the
Corporation shall not issue or agree to issue any previously unissued (or
reissue or agree to reissue from treasury) Shares of, or any securities
convertible into or exercisable for, Shares. In the event that the Corporation
intends to or agrees to issue any previously unissued (or reissues or agrees to
reissue from treasury) Shares, or any securities convertible into Shares, to
any third party (the "Offeree"), it must first offer to sell such Shares to the
Original Shareholders, if any, pro-rata to their Share interests, respectively,
upon the same terms and conditions as it proposes to sell such Shares to the
Offeree, which terms and conditions shall be set forth in a written notice of
offer (the "Notice"). The Notice shall state with particularity the terms upon
which the sale of the Shares is proposed to be made, including, without
limitation, the purchase price to be paid for the Shares and the time and
method of payment (the "Terms"). The Original Shareholders shall have a period
of seven (7) days after receipt of the Notice within which to accept or reject
in writing said offer. Failure of any Original Shareholder to respond in
writing to a Notice within such seven (7) day period shall be deemed a
rejection of said Offer. Original Shareholders electing to acquire such Shares
shall have three (3) days from the date of accepting said offer to acquire such
Shares.
(c) In order to effectuate the terms and restrictions of this
Agreement, each certificate of stock evidencing Shares owned by the
Shareholders or issued by the Corporation shall bear the following legend:
OWNERSHIP, ENCUMBRANCE, PLEDGE, ASSIGNMENT,
TRANSFER, OR OTHER DISPOSITION OF THIS
CERTIFICATE OF STOCK, OR ANY SHARES ISSUED IN
LIEU THEREOF, ARE SUBJECT TO RESTRICTIONS
CONTAINED IN AN AMENDED AND RESTATED SHAREHOLDER
AGREEMENT DATED AND EFFECTIVE AS OF THE ___ DAY
OF SEPTEMBER, 1995, BY AND AMONG THE CORPORATION
AND ITS SHAREHOLDERS, A COPY OF WHICH IS ON FILE
IN THE OFFICE OF THE SECRETARY OF THE
CORPORATION. A COPY OF THE SHAREHOLDER
AGREEMENT AND THE CORPORATION'S BY-LAWS WILL BE
MAILED BY THE CORPORATION TO ANY SHAREHOLDER
WITHOUT CHARGE WITHIN FIVE (5) DAYS AFTER
WRITTEN REQUEST THEREFOR.
12
<PAGE> 13
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") AND APPLICABLE
STATE SECURITIES LAWS ("STATE LAWS") AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE ACT
AND STATE LAWS OR (ii) A TRANSACTION PERMITTED
BY RULE 144 OR RULE 145 UNDER THE ACT OR
EQUIVALENT STATE LAWS FOR WHICH THE ISSUER HAS
RECEIVED REASONABLY SATISFACTORY EVIDENCE OF
COMPLIANCE WITH THE PROVISIONS OF SUCH
APPLICABLE RULE OR (iii) AN OPINION OF COUNSEL
SATISFACTORY TO ISSUER THAT SUCH SHARES ARE
EXEMPT FROM THE REGISTRATION PROVISIONS OF THE
ACT AND STATE LAWS OR (iv) A NO-ACTION LETTER
FROM THE STAFF OF THE SECURITIES AND EXCHANGE
COMMISSION AND THE STATE DIVISION OF SECURITIES
THAT REGISTRATION IS NOT REQUIRED UNDER THE ACT
OR STATE LAWS."
(d) If a Shareholder or his executor, administrator, or transferee
shall be in default under any of the terms and conditions of this Agreement, or
if any Shares are held in any manner contrary to the terms and conditions of
this Agreement, the Corporation may avail itself of all remedies afforded at
law or in equity, and, in addition, no dividends shall be paid upon the Shares
with respect to which such default exists and the holder of such Shares shall
not be entitled to vote.
(e) Failure of the Corporation or remaining Shareholders to
acquire Shares as to which notice has been given hereunder or for which a right
or option to acquire has become exercisable, and the Transfer of any Shares to
any transferee or any subsequent transferee, shall not be deemed to release
said Shares from any of the restrictions herein contained. All restrictions
imposed in this Agreement shall apply to any future Transfer of Shares, whether
acquired through voluntary acts or by operation of law. Any purported Transfer
of Shares in violation of this Agreement will not affect the beneficial
ownership of such Shares, nor shall such Transfer be recognized in the books
and records of the Corporation. The Shareholder, or his successor, making the
purported Transfer will retain the right to vote, the right to receive
dividends and liquidated proceeds upon, and any other rights under, his Shares.
Neither the Corporation, nor any director or officer of the Corporation, nor
any transfer agent shall be liable for any refusal to Transfer any Shares or
issue any new certificates when it or he in good faith believes that such
Transfer or issuance would be in violation of this Agreement.
(f) The Shares shall cease to be subject to this Agreement upon
(i) the merger of the Corporation with or into any other corporation in an arms
length transaction, (ii) the
13
<PAGE> 14
consolidation of the Corporation with any other corporation in an arms length
transaction, (iii) the sale of all of the issued and outstanding Shares of the
Corporation to a single purchaser, (iv) the sale of substantially all of the
Corporation's assets (v) an IPO (as defined in Article 5).
(g) Section and Article headings are not to be considered part of
this Agreement; they are included solely for convenience and are not intended
to be full or accurate descriptions of the contents hereof.
(h) All of the terms and words used in this Agreement, regardless
of the number and gender in which they are used, shall be deemed and construed
to include any other number, singular or plural, and any other gender,
masculine, feminine or neuter, as the context of this Agreement or any Article
or clause herein may require, the same as if such words had been fully and
properly written in the number and gender.
(i) This Agreement constitutes the entire agreement between the
parties with respect to the within subject matter, and supersedes all prior
agreements or understandings with respect thereto.
(j) All clauses of this Agreement are distinct and severable. If
any clause shall be held to be unenforceable or overly broad, a court of
competent jurisdiction is hereby authorized to modify such clause so as to
render the terms, provisions and restrictions hereof enforceable to the maximum
extent permitted by law.
(k) This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which, when taken together,
shall constitute one and the same instrument.
(l) Notices required hereunder shall be deemed to have been given
when mailed, by certified mail, addressed to the Shareholders as set forth in
the Share Journal of the Corporation, or as set forth in any notice of change
of address previously given in writing by the addressee to the addressor, and
to the Corporation at its principal offices, with a copy to Robert A Goodman,
Esq., Goodman Weiss Miller Freedman, 100 Erieview Plaza, 27th Floor, Cleveland,
Ohio 44114.
(m) The terms, provisions and restrictions set forth in this
Agreement shall be binding upon the Shareholders of the Corporation and their
respective heirs, executors, administrators, personal representatives,
successors and assigns, and upon the Corporation and any successors-in-interest
to the Corporation.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first appearing above.
NEW META LICENSING CORPORATION
By: /s/ David B. Swank
President
15
<PAGE> 1
EXHIBIT 11
EXHIBIT 11* TO REPORT ON FORM 10-Q
TELXON CORPORATION AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE
(Dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
--------------------- ----------------------
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income applicable to
common shares $ 2,811 $ 1,619 $ 5,040 $ 2,892
======= ======= ======= =======
Weighted average common shares
outstanding for the period 16,248 15,796 16,066 15,677
Increase in weighted average from:
Dilutive effect of stock
options 51 0 89 0
------- ------- ------- -------
Weighted average common shares
assuming issuance of the above
securities 16,299 15,796 16,155 15,677
======= ======= ======= =======
Net income per common share:
On the weighted average
common shares outstand-
ing for the year $ .17 $ .10 $ .31 $ .18
Assuming issuance of shares
for dilutive stock
options** $ .17 $ .10 $ .31 $ .18
</TABLE>
* 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> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 18,984
<SECURITIES> 3,790
<RECEIVABLES> 104,919
<ALLOWANCES> 2,018
<INVENTORY> 99,672
<CURRENT-ASSETS> 247,453
<PP&E> 114,912
<DEPRECIATION> 66,484
<TOTAL-ASSETS> 322,400
<CURRENT-LIABILITIES> 141,281
<BONDS> 31,035
<COMMON> 159
0
0
<OTHER-SE> 147,146
<TOTAL-LIABILITY-AND-EQUITY> 322,400
<SALES> 178,135
<TOTAL-REVENUES> 210,557
<CGS> 103,474
<TOTAL-COSTS> 121,914
<OTHER-EXPENSES> 78,271
<LOSS-PROVISION> 1,139
<INTEREST-EXPENSE> 2,404
<INCOME-PRETAX> 8,323
<INCOME-TAX> 3,283
<INCOME-CONTINUING> 5,040
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,040
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
