<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K/A
(AMENDMENT NO. 1)
<TABLE>
<S> <C> <C>
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM
TO
</TABLE>
COMMISSION FILE NUMBER 0-11402
TELXON CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 74-1666060
------------------------------------ ----------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
<TABLE>
<S> <C>
3330 WEST MARKET STREET, AKRON, OHIO 44333
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(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (330) 664-1000
<TABLE>
<CAPTION>
SECURITIES REGISTERED PURSUANT NAME OF EACH EXCHANGE
TO SECTION 12(B) OF THE ACT: ON WHICH REGISTERED:
------------------------------ ---------------------
<S> <C>
None None
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $.01 Par Value
---------------------------------
(TITLE OF CLASS)
7 1/2% Convertible Subordinated Debentures Due 2012
---------------------------------------------------------
(TITLE OF CLASS)
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 [ ]. No [X].*
* Other than its Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1998 and this Annual Report on Form 10-K, the
registrant 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 (during which period the registrant has been subject to
such filing requirements).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ].
The aggregate market value of registrant's Common Stock held by non-affiliates
as of June 30, 1999, based on the last reported sales price of the Common Stock
as reported on the Nasdaq National Market for such date, was $127,737,637.
At June 30, 1999, there were 16,155,606 outstanding shares of the registrant's
Common Stock.
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<PAGE> 2
This Amendment No. 1 on Form 10-K/A supplements the registrant's Form 10-K
as originally filed on August 10, 1999 (the "Original Filing") by the
registrant, Telxon Corporation ("Telxon" or the "Company"), with respect to its
fiscal year ended March 31, 1999 ("Fiscal 1999") to add the information required
by Part III and in Part IV to add exhibits 10.1.20 and 10.1.21 and correct one
of the cross references to the notes to the consolidated financial statements in
footnote (1) to the listing of and index to exhibits.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTOR AND EXECUTIVE OFFICER BIOGRAPHICAL INFORMATION
For certain information relating to the Company's executive officers, see
Item X included in Part I of the Form 10-K as originally filed, which
information is incorporated in this Item 10 by this reference.
Included among the executive officers about whom information is included in
Part I, Item X is John W. Paxton, Sr., who also serves as a director of the
Company; the information there set fort about them in incorporated in this Item
10 by this reference. The remaining directors of the Company and corresponding
information about them are as follows:
Richard J. Bogomolny, age 64, retired as Chairman of the Board and
Chief Executive Officer of First National Supermarkets, Inc., in January
1992, positions which he held since June 1975. From May 1992 through May
1998, Mr. Bogomolny was a member of the Supervisory Board (board of
directors) of Royal Ahold n.v., the Netherlands' largest food retailer with
operations also in the United States (Stop-N-Shop Cos. New England, Finast,
BI-LO, Giant, Tops and Edwards), South America, Portugal, Spain, China,
Thailand and the Czech Republic. For ten years prior to his retirement he
was a board member of the Food Marketing Institute, the industry's
international trade association. Mr. Bogomolny has been a director of the
Company since August 1995, his current term expires at the 2001 Annual
Meeting of stockholders.
John H. Cribb, age 66, retired from active employment with the Company
as Chairman, Telxon International in December 1996, as which he had served
since January 1995. From January 1993 to January 1995 he served the Company
as President, International, and from January 1990 to January 1993, as
Senior Vice President, International Operations. Mr. Cribb was a Vice
President of the Company and Managing Director of Telxon Limited, the
Company's United Kingdom subsidiary, from 1982 to 1990. He has been a
director and Vice Chairman of the Board of the Company since January 1995,
his current term expires at the 2001 Annual Meeting of stockholders.
Robert A. Goodman, age 64, has been the Company's General Counsel
since 1979 and Secretary since 1983. He has been senior partner of Goodman
Weiss Miller LLP, a Cleveland, Ohio law firm, since 1986. Mr. Goodman has
been a director of the Company since October 1991. His current term expires
at the 2000 Annual Meeting of stockholders.
Jonathan R. Macey, age 43, is the J. DuPratt White Professor of Law
and the Director of the John M. Olin Program in Law and Economics at
Cornell Law School, specializing in corporation law, comparative corporate
governance, banking and corporate finance. From late 1993 through mid-1994,
Professor Macey was a Research Fellow in Turin, Italy. Prior to that, he
was a visiting law professor at the Stockholm School of Economics. From
1990 to 1991, Professor Macey was a Professor of Law at the University of
Chicago, and from 1987 to 1990 he was a Professor of Law at Cornell
University. Mr. Macey has been a director of the Company since November
1998, and his current term expires at the 1999 Annual Meeting of
stockholders.
Raj Reddy, age 62, has been Dean of the School of Computer Science,
and Herbert A. Simon University Professor, at Carnegie Mellon University
since July 1992. Since 1984 he had held the rank of University Professor
and for eleven years prior to that time held the rank of Professor of
Computer Science. He has been the Director of The Robotics Institute at
Carnegie Mellon since 1980. He also serves as a consultant in the area of
computer science, robotics and related disciplines. Dr. Reddy has been a
director of
95
<PAGE> 3
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONTINUED)
the Company since April 1987 and served as Chairman of the Board of
Directors from February 1997 to March 1999. His current term expires at the
2000 Annual Meeting of stockholders.
Norton W. Rose, age 70, has been President and principal/owner of
Norton W. Rose & Co., Cleveland, Ohio (consulting firm) since August 1990
and has headed the Beachwood, Ohio office of Kenzer Corporation (executive
search firm) since July 1997. He was Executive Vice President of Creative
Art Activities, Inc. (craft kit manufacturer) from January 1994 to June
1997 and Chairman of the Board of Premier Travel (formerly Prescott Travel)
from July 1991 until it was acquired by Travel One in January 1997. Mr.
Rose has been a director of the Company since October 1990, and his current
term expires at the 1999 Annual Meeting of stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
officers and directors with respect to Fiscal 1999 were complied with, except
that each of directors John H. Cribb and Robert A. Goodman were late in filing a
transaction report for a market purchase of Company stock option by his wife, as
to which each disclaims beneficial ownership. The Company does not believe it
had any greater than ten percent beneficial owners at any time during Fiscal
1999 based on its records and because it has not received copies of, and is not
otherwise aware of, any filings by any such beneficial owner with the SEC under
Section 13 or 16(a) of the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows all annual, long-term and other compensation for
services rendered to the Company in all capacities paid or awarded during each
of its three most recently completed fiscal years to each person who served as
the Company's chief executive officer during any portion of Fiscal 1999, to the
Company's two other executive officers serving at fiscal year end and to the two
former executive officers of the Company who, but for the fact that they were
not serving as such at fiscal year end, would have been included among the four
Company executive officers other than the chief executive officer who received
the highest combined salary and bonus compensation during Fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ----------------------
OTHER RESTRICTED ALL
ANNUAL STOCK STOCK OTHER
NAME AND COMPEN- AWARDS OPTIONS COMPEN-
PRINCIPAL POSITION(1) YEAR SALARY BONUS SATION ($) (SHARES) SATION(2)
--------------------- ---- ------- ------- ------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Paxton, Sr........................ 1999 27,692(3) 0 0 0 700,000!(4) 0
Chairman of the Board and
Chief Executive Officer
Dan R. Wipff.............................. 1999 275,000 0 0 0 20,000* 5,000
President and Chief Executive 1998 275,000 100,000 0 0 0 4,125
Officer, Telxon Products 1997 275,000 70,000 0 0 10,000! 5,375
Division, and during March 1999,
Telxon interim president and
chief executive officer
</TABLE>
96
<PAGE> 4
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ----------------------
OTHER RESTRICTED ALL
ANNUAL STOCK STOCK OTHER
NAME AND COMPEN- AWARDS OPTIONS COMPEN-
PRINCIPAL POSITION(1) YEAR SALARY BONUS SATION ($) (SHARES) SATION(2)
--------------------- ---- ------- ------- ------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank E. Brick............................ 1999 750,006 1,800(5) 0 0 70,000* 1,513,160(6)
President from June 1996 to March 1999 1998 750,006 250,000 17,272(7) 0 0 7,187(8)
and Chief Executive Officer from 1997(9) 421,154 500,000 0 0 500,000! 8,288
February 1997 to March 1999
James G. Cleveland........................ 1999 333,655 0 0 0 40,000* 5,000
Executive Vice President, Americas 1998 275,000 200,000 0 0 0 3,173
1997 250,000 150,000 0 0 80,000! 6,615
Gerald J. Gabriel......................... 1999 200,000 0 5,781(7) 0(10) 7,500* 5,000
Senior Vice President,
Financial Operations, and from
March 1999 to May 1999,
interim chief financial officer
David D. Loadman.......................... 1999 225,000 0 3,327(7) 0(11) 0 235,431(12)
Senior Vice President, 1998 225,000 125,000 30,865(7) 0 0 3,470
Global Product and 1997 200,000 175,000 0 0 75,000! 5,688
Systems Development, and 60,000*
Chief Technical Officer from
September 1996 to January 1999
Kenneth W. Haver.......................... 1999 200,000 0 0 0(13) 50,000* 210,431(14)
Senior Vice President, Finance 1998 200,000 150,000 0 0 25,000! 2,308
and Administration, and 1997 200,000 250,000 0 0 50,000! 7,192
Chief Financial Officer from
March 1995 to March 1999
</TABLE>
- ---------------
! Option for the purchase of the indicated number of shares of Telxon Common
Stock granted to the named executive officer pursuant to the Telxon
Corporation 1990 Stock Option Plan for employees (the "Employee Option
Plan"), except that 400,000 of the stock options to Mr. Paxton were granted
outside the Employee Option Plan as part of an inducement essential to his
entering into an employment agreement to join the Company as its new
President, Chairman of the Board and Chief Executive Officer.
* Option for the purchase of the indicated number of shares of common stock of
Aironet Wireless Communications, Inc. ("Aironet", a majority-owned
subsidiary of the Company until the initial public offering of Aironet
common stock on July 30, 1999, which reduced the Company's interest in
Aironet to 39%) at an exercise price of, in the case of the fiscal 1996
grant, $1.86 per share, and in the case of the fiscal 1999 grants, $3.50 per
share, under the Aironet 1996 Stock Option Plan for employees, directors and
advisors (as amended through March 31, 1998, the "Aironet Option Plan"),
granted by Aironet to each of the named executive officers as an advisor to
Aironet. See the table of Option Grants in Fiscal 1999 below for further
information regarding each option granted during Fiscal 1999.
(1) Except as otherwise indicated by limiting dates, each of the named
executive officers presently holds the position(s) indicated.
(2) Except as otherwise footnoted, the amounts shown are matching contributions
made by the Company under its Retirement and Uniform Matching Profit
Sharing (401(k)) Plan ("401(k) Matching Contribution").
(3) The amount shown is the portion of his annual salary which accrued during
the portion of Fiscal 1999 after he joined the Company on March 22, 1999.
(4) In addition to these stock options granted to Mr. Paxton as further
described in the table of Option Grants in Fiscal 1999 below, the Company
agreed to sell to Mr. Paxton, as part of an inducement essential to his
entering into an employment agreement to join the Company, and Mr. Paxton
agreed to purchase, 300,000 shares of Company Common Stock at a price of
$8.719 per share (equal to the closing sale price for the Common Stock as
reported on The Nasdaq National Market tier of the Nasdaq Stock Market (the
"Nasdaq NNM") for the last trading day prior to his entering into the
Company's employ); under the terms of his employment agreement, Mr. Paxton
must complete the stock purchase by March 22, 2000.
97
<PAGE> 5
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
(5) Bonus under the Company's patent award program for its employees generally.
(6) In addition to a $5,000 401(k) Matching Contribution, includes accruals for
severance benefits of $1,500,013 in respect of salary continuation and
$8,147 in respect of medical insurance.
(7) The amount shown was paid in reimbursement of expenses incurred in
connection with the executive officer's consideration of and/or ultimate
relocation.
(8) In addition to a $2,596 401(k) Matching Contribution, includes $4,591
representing the premiums that would have had to be paid in order to
provide Mr. Brick with a term life equivalent of the death benefit payable
to his estate under the "split-dollar" universal insurance arrangement
maintained during his employ under the terms of his employment agreement.
(9) Mr. Brick became the Company's Chief Executive Officer on February 26,
1997, having been the Company's President and Chief Operating Officer since
June 1996 and served the Company in other executive capacities prior
thereto. The amounts shown in the Summary Compensation Table reflect all
compensation paid to Mr. Brick in all capacities in respect of the fiscal
year ended March 31, 1997.
(10) At March 31, 1999, the final 1,000 of the 5,000 Shares awarded to Mr.
Gabriel in July 1994 under the Company's 1992 Restricted Stock Plan (as
amended, the "Restricted Stock Plan") remained unvested (but have since
vested) and 1,600 of the 2,000 shares awarded to him in October 1997 under
the Restricted Stock Plan also remained unvested, which unvested Shares had
a value, based on the closing sale price per Share as reported on the
Nasdaq NNM for March 31, 1999, of $24,539.
(11) At March 31, 1999, the final 1,000 of the 5,000 Shares awarded to Mr.
Loadman in July 1994 under the Restricted Stock Plan remained unvested
(which have since been forfeited in connection with the termination of his
employment), which unvested Shares had a value, based on the closing sale
price per Share as reported on the Nasdaq NNM for March 31, 1999, of
$9,438.
(12) In addition to a $5,000 401(k) Matching Contribution, includes accruals for
severance benefits of $225,000 in respect of salary continuation and $5,431
in respect of medical insurance.
(13) At March 31, 1999, the final 1,000 of the 5,000 Shares awarded to Mr. Haver
in July 1994 under the Restricted Stock Plan remained unvested (but have
since been forfeited by reason of the termination of his employment), which
unvested Shares had a value, based on the closing sale price per Share as
reported on the Nasdaq NNM for March 31, 1999, of $9,438.
(14) In addition to a $5,000 401(k) Matching Contribution, includes accruals for
severance benefits of $200,000 in respect to salary continuation and $5,431
in respect of medical insurance.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
The Company has finalized the definitive employment agreement for Mr.
Paxton to serve as Chairman of the Board of Directors and Chief Executive
Officer of the Company through March 31, 2002 at a base salary of $800,000 per
year. In addition, Mr. Paxton's employment agreement provides for annual bonus
compensation of up to $600,000 per year if he meets or exceeds the annual goals
to be agreed upon between him and the Company's Board of Directors, components
of which shall include operating earnings, backlog, revenue, inventory, quality
control and cash flow. The employment agreement also provides for his purchase
of 300,000 shares of the Company's common stock ("Shares" or "Common Stock") by
March 22, 2000 and stock options for an aggregate of 700,000 Shares listed in
the Summary Compensation Table above and the table of Option Grants in Fiscal
1999 below and further described in the footnotes thereto, each of such stock
purchase and option rights being at the $8.719 closing price for the Common
Stock on the last trading day prior to the commencement of his employment. These
stock purchase and option rights were an essential inducement to Mr. Paxton's
agreement to enter the Company's employ. The employment agreement also obligates
the Company to pay his transitional living expenses (housing, ground and air
transportation), "grossed-up" for taxes, through March 31, 2000.
98
<PAGE> 6
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
If Mr. Paxton's employment is terminated by the Company for other than
"cause" (defined in his employment agreement as behavior of Employee which is
adverse to the Company's interests, including dishonesty, grossly negligent
misconduct, willful misconduct, disloyalty, acts of bad faith, neglect of duty
or material breach of the employment agreement or of any other Company agreement
with him or Company policy applicable to its employees generally), his
employment agreement obligates the Company to pay a severance benefit to him at
a rate equal to his base salary for the greater of 24 months or the remaining
term of the agreement, as well as his basic medical insurance premiums for 18
months. A resignation by Mr. Paxton following the Company's assignment of him to
serve in any capacity other than his current offices or to perform tasks
inconsistent with such positions will be deemed a termination by the Company
without "cause" entitling him to the foregoing severance and insurance. Mr.
Paxton is also entitled to the severance benefit if his employment agreement
expires without renewal or extension. If any of the foregoing employment
terminations occurs after a "change in control" of the Company of a nature which
the Company would be required to report in its filings with the SEC (including,
without limitation, (a) the acquisition by any person, entity or group of
beneficial ownership of 15% or more of the combined voting power of the
Company's securities in the election of directors, (b) liquidation of all or
substantially all of the Company's assets or a merger, consolidation or
reorganization in which neither the Company nor any entity in which the
Company's stockholders own at least 50% of the voting power is the surviving
entity, and (c) the current directors of the Company, or persons approved by
them to succeed them (such current and successor directors constituting
"Continuing Directors"), ceasing to constitute at least a majority of the
Board), the severance benefit payable to Mr. Paxton is increased to an amount
equal to 2.99 times his base salary and, to the extent that such payment and/or
any other payments which he has the right to receive from the Company would
constitute, alone or in the aggregate, an "excess parachute payment" under
Section 280G of the Internal Revenue Code, payment by the Company of any excise
tax imposed on such payments and any taxes due as the result of the Company's
payment of such excise tax and other taxes, as well as the acceleration of the
vesting of all then outstanding stock option grants and the ability to exercise
all of his stock options for their full original terms. In the event of a Change
in Control, Mr. Paxton has the right to elect to terminate his employment within
30 days of such event without regard to his reason therefor or within two years
of the Change in Control if he has "Good Reason" (defined to include a reduction
in his salary or benefits from pre-change in control levels or a requirement
that he relocate from, or be based anywhere other than, the metropolitan area
where his office is located prior to the change in control) to resign; upon any
such election, Mr. Paxton is entitled to receive the increased severance and
insurance benefits. If his employment is terminated by the Company within two
years after a Change in Control, Mr. Paxton is entitled, until replacement
benefits may be provided by a successor employer, to up to two years of
continued employee welfare benefits.
Mr. Wipff has an employment agreement with the Company for a term ending
March 31, 2000, at a base salary of $275,000 per year. His employment agreement
further provides for bonus compensation for each fiscal year during the term as
determined by the Board of Directors in its discretion based upon the
recommendation of the Chief Executive Officer or such other supervising officer
as the Chief Executive Officer shall designate (the "Supervising Officer"). Mr.
Wipff or his estate is entitled under the employment agreement to the same
disability and death benefits as are extended by the Company to its executive
employees generally, and he is also entitled to severance benefits of twelve
months base salary and, until replacement benefits may be provided by a
successor employer, up to twelve months of continued employee welfare benefits
in the event that his employment is terminated by the Company for other than
"cause".
Mr. Cleveland has an employment agreement with the Company for a term
ending March 31, 2000, at a base salary of $275,000 per year. His employment
agreement further provides for bonus compensation for each fiscal year during
the term as determined by the Board of Directors in its discretion based upon
the recommendation of the Supervising Officer. Mr. Cleveland or his estate is
entitled under the employment agreement to the same disability and death
benefits as are extended by the Company to its executive employees generally,
and he is also entitled to severance benefits of twelve months base salary and,
until replacement benefits may be provided by a successor employer, up to twelve
months of continued employee welfare benefits in the event that his employment
is terminated by the Company for other than "cause".
99
<PAGE> 7
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
Mr. Gabriel has an employment agreement with the Company for a term ending
March 31, 2000, at a base salary of $200,000 per year. His employment agreement
further provides for bonus compensation for each fiscal year during the term as
determined by the Board of Directors in its discretion based upon the
recommendation of the Supervising Officer. Mr. Gabriel or his estate is entitled
under the employment agreement to the same disability and death benefits as are
extended by the Company to its executive employees generally, and he is also
entitled to severance benefits of twelve months base salary and, until
replacement benefits may be provided by a successor employer, up to twelve
months of continued employee welfare benefits in the event that his employment
is terminated by the Company for other than "cause".
In February 1998, the Company entered into letter agreements with each of
its then executive officers (other than Mr. Brick, with respect to whom the
subject matter was already addressed in his employment agreement) and other key
Company officers, including Messrs. Wipff, Cleveland, Gabriel, Loadman and
Haver, providing for certain severance benefits in the event such officer's
employment with the Company is terminated under certain circumstances within two
years after a "change in control" of the Company. If the officer's employment is
terminated by the Company or its successor other than for "cause", disability or
at retirement age or by the officer for "good reason", the officer is entitled
to a lump sum payment equal to two times his annual salary as in effect prior to
the change in control, continued benefits under all insured and self-insured
welfare benefit plans in effect prior to the employment termination date for a
period of two years or until such earlier date as the officer receives
equivalent benefits from a new employer or reaches retirement age (in which case
the terms of any retirement plan shall apply), and to the extent that such
payment and/or any other payments which he has the right to receive from the
Company would constitute, alone or in the aggregate, an "excess parachute
payment" under Section 280G of the Internal Revenue Code, payment by the Company
of any excise tax imposed on such payments and any taxes due as the result of
the Company's payment of such excise tax and other taxes. "Good reason" will
exist for an officer to terminate his own employment without losing his
entitlement to such benefits if, without the officer's prior written consent,
his job status, positions or responsibilities are reduced or otherwise
inconsistent with those prior to the change in control, his salary or benefits
are reduced from pre-change in control levels or he is required to relocate
from, or be based anywhere other than, the metropolitan area where his office is
located prior to the change in control. The events constituting a "change in
control" following which the letter agreement's severance provisions apply are
events of a nature which the Company would be required to report in its filings
with the SEC, including, without limitation, (a) the acquisition by any person,
entity or group of beneficial ownership of 15% or more of the combined voting
power of the Company's securities in the election of directors, (b) liquidation
of all or substantially all of the Company's assets or a merger, consolidation
or reorganization in which neither the Company nor any entity in which the
Company's stockholders own at least 50% of the voting power is the surviving
entity, and (c) the current directors of the Company, or persons approved by
them to succeed them, ceasing to constitute at least a majority of the Board;
provided that any of the foregoing events shall not constitute a "change in
control" if the officer or a group of which he is a part acquires, directly or
indirectly, 15% or more of the combined voting power of the Company's
securities.
Each of the Employee Option Plan, Aironet Option Plan and Restricted Stock
Plan under which one or more of the Company's executive officers have received a
grant or award provide for the cancellation or forfeiture of then unvested stock
options or restricted stock, and a limited, 30-day post-termination period for
exercising his then vested stock options (generally extended to three months in
the case of retirement, six months in the case of death and one year in the case
of disability), in the event the recipient ceases to be employed by or an
advisor to the granting or awarding entity, subject to the acceleration of
vesting and/or the extension of the post-termination exercise period by the
administering authority in its discretion. In the event of a "change in control"
of the issuing entity, each of the Plans provides that, except as otherwise
determined at the time by the board of directors of the issuing entity, all
grants and awards then outstanding thereunder shall become fully vested, and the
Employee Option Plan and the Aironet Option Plan further provide that, except as
otherwise determined at the time by the applicable board of directors, a cash
payment shall be made to the holders of outstanding options equal to the amount
by which (i) the highest price paid or offered in any transaction related to the
"change in control", or at which the underlying stock has traded on any
securities market, within the preceding 60 days, as determined by the board,
exceeds (ii) the exercise price. The Employee Option Plan and the Restricted
Stock Plan
100
<PAGE> 8
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
define "change in control" to mean (1) the acquisition by any person, entity or
group of beneficial ownership of 50% or more of the combined voting power of the
issuing entity's then outstanding securities, or (2) the consummation of a
transaction requiring stockholder approval and involving the sale of all or
substantially all of the assets, or a merger or consolidation, of the issuing
entity; "change in control" is defined under the Aironet Option Plan, as in
effect prior to the March 30, 1998 amendment thereof, and by which pre-amendment
terms such options continue to be governed, to also occur upon any person,
entity or group acquiring 15% or more of the combined voting power of Telxon's
then outstanding securities.
Under the terms of his employment agreement with the Company, in the event,
as has occurred, that Mr. Brick's employment is terminated by the Company for
other than "cause" (as defined in his employment agreement), the Company is
obligated to pay a severance benefit to him at a rate equal to his base salary
for the greater of 24 months or the remaining term of the agreement, as well as
his basic medical insurance premiums for 18 months. as well as the acceleration
of the vesting of all then outstanding stock option grants and restricted stock
awards and the ability to exercise all of his stock options for their full
original terms. Similarly, upon the termination of their employment by the
Company for other than "cause", Messrs. Loadman and Haver are entitled under
their employment agreements to twelve months base salary and, until replacement
benefits may be provided by a successor employer, up to twelve months of
continued employee welfare benefits in the event that his employment is
terminated by the Company for other than "cause". Notwithstanding the generally
applicable limitations on the post-employment termination exercise of stock
options discussed in the preceding paragraph, pursuant to the terms of Mr.
Brick's employment agreement, all of his options to purchase Telxon Common Stock
became fully vested upon the termination of his employment for other than
"cause" and will remain exercisable for their full original terms.
EMPLOYEE STOCK OPTIONS
The following tables provide information with respect to options granted
to, and exercises by, the persons indicated during Fiscal 1999 and the value of
unexercised options held by such persons at the end of Fiscal 1999.
OPTION GRANTS IN FISCAL 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------
PERCENT OF
TOTAL
OPTIONS
GRANTED
TO
EMPLOYEES GRANT
OPTIONS IN EXERCISE DATE
GRANTED FISCAL PRICE EXPIRATION PRESENT
NAME (SHARES) 1999(1) (PER SHARE)(2) DATE VALUE
---- ---------- ---------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
John W. Paxton, Sr........... 300,000!(3) 40% $8.719 03/22/07 $1,322,730(4)
400,000!(5) 54% $8.719 03/22/07 $1,628,000(6)
Dan R. Wipff................. 20,000*(7) 4% $3.500 03/30/08 $ 37,788(8)
Frank E. Brick............... 70,000*(7) 14% $3.500 03/30/08 $ 132,258(8)
James G. Cleveland........... 40,000*(7) 8% $3.500 03/30/08 $ 75,576(8)
Gerald J. Gabriel............ 7,500*(7) 2% $3.500 03/30/08 $ 14,171(8)
David D. Loadman............. -- -- -- -- --
Kenneth W. Haver............. 50,000*(7) 10% $3.500 03/30/08 $ 94,470(8)
</TABLE>
- ---------------
! Option for the purchase of the indicated number of shares of Telxon Common
Stock.
* Option for the purchase of the indicated number of shares of Aironet common
stock of at an exercise price of $3.50 per share, under the Aironet Option
Plan, granted by Aironet to each of the named executive officers as an
advisor to Aironet.
101
<PAGE> 9
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
(1) The options for the purchase of Aironet stock shown in the table were
granted as part of a pool of options Plan to purchase an aggregate of
300,000 shares of Aironet common stock approved by the Aironet Board of
Directors under the Aironet Option Plan on March 30, 1998 to, and to be
allocated among, Telxon employees serving as advisors to Aironet, as
designated by Telxon's Chief Executive Officer. In April 1998, the pool was
fully allocated, based on a review of the designated recipients and the
allocation among them by the Compensation Committee of Telxon's Board of
Directors. Though the allocation of the option pool among the Telxon
employees was not finalized until Fiscal 1999, the percentage stated in the
table represents that which the respective grant bears to the total number
of options granted through the pool to Telxon officers and employees and to
all other Aironet employees, directors and advisors under the Aironet Option
Plan during Fiscal 1998, when the size of the pool was fixed.
(2) In the case of options for the purchase of Telxon Common Stock, the exercise
price shown is equal to the closing sale price for the Common Stock as
reported on the Nasdaq NNM for the last trading day prior to the grant date.
In the case of options for the purchase of Aironet stock, the exercise price
shown is equal to the negotiated arm's-length price per share paid by third
party investors purchasing a minority position in Aironet common stock in a
private placement contemporaneous with the grant of the options.
(3) Granted pursuant to the Employee Option Plan on March 22, 1999. Becomes
exercisable as to one-third of the underlying shares on a cumulative basis
on each of the first three anniversaries of the grant date.
(4) Present value of the option as of the date of grant, calculated using the
Black-Scholes option valuation model under the following assumptions: (a)
based upon the Company's review of historical data concerning the exercise
by employees of options for Shares granted under the Company's stock option
plans and survey data concerning the experience of other companies, an
executive may typically be expected to hold an option with a stated term of
eight years for five years prior to exercise; (b) a stock price volatility
of 51.57% (based on the changes in the market price for Shares over the five
fiscal year period ended March 31, 1999, the length of which period
corresponds to the expected holding period assumed in (a) above); (c) a
risk-free interest rate of 5.29% (based on the published yield as of the
grant date of Treasury securities at "constant maturity" as interpolated by
the U.S. Treasury for a five-year maturity, corresponding to the assumed
holding period); and (d) a continuation of the $0.01 per Share annual
dividend historically paid by the Company, representing a dividend yield of
0.069%.
(5) Granted outside the Employee Option Plan on March 22, 1997 as part of an
inducement essential to Mr. Paxton's entering into an employment agreement
to join the Company as its new President, Chairman of the Board and Chief
Executive Officer. As originally granted, became exercisable upon the
attainment of a trading price for the Common Stock of, as to 200,000 of the
Shares, $14 per Share; as to the next 100,000 of the Shares, $22 per Share;
and as to the remaining 100,000 Shares, $27 per Share. In connection with
the finalization of the definitive terms of Mr. Paxton's employment
agreement, the option terms were amended to provide for vesting on the sixth
anniversary of the grant date, subject to the acceleration thereof upon the
attainment of an "Average Trading Price" for the Common Stock (the average
of the closing price per Share as reported on the Nasdaq NNM (or such other
securities exchange, market or trading system which is then the principal
place or manner for trading in the Common Stock) for any period of ten (10)
consecutive days of trading on such securities market) equal to the
respective price performance targets set forth above.
(6) Present value of the option as of the date of its grant, calculated using a
path dependent valuation model under the following assumptions: (a) a stock
price volatility of 53.13%; (b) a risk-free interest rate of 5.25%; and (c)
a continuation of the $0.01 per Share annual dividend historically paid by
the Company, representing a dividend yield of 0.069%. The expected term for
the options is determined by the path dependent model.
(7) As originally granted, each option vested as to one-third of the underlying
shares on a cumulative basis on each of March 30, 1999, 2000 and 2001,
becoming exercisable upon, but only after, (i) an underwritten registered
public offering by Aironet of its common stock at a price of at least $8 per
share netting proceeds of at least $8 million to Aironet ("IPO") or (ii) a
"change in control" of Aironet (for the definition of such an event for
purposes of the Aironet Option Plan and a description of certain other
effects of such an event, see the discussion under "Employment Agreements
and Termination of Employment Arrangements" above),
102
<PAGE> 10
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
and expire March 30, 2008, subject to earlier termination in the event the
grantee ceases to serve as an advisor to Aironet. By action of the Aironet
Board of Directors in March 1999, the Aironet Option Plan was amended to
make all vested options granted thereunder exercisable on the earlier of the
occurrence of the IPO or "change in control" events discussed above or March
31, 2001, and the vesting of the pool options was accelerated in full. As a
result of Aironet's July 30, 1999 initial public offering, the pool options
are now fully exercisable.
(8) Although at the time of the granting and allocation of the pool grants
described in footnote (1) above there had not been a trading market for
Aironet common stock, there was then only a limited history of exercises
under the Aironet Option Plan and exercisability of the options described in
this footnote (8) was subject to the preconditions described in the footnote
(7) above, present values of these options as of the date of grant can be
calculated using the Black-Scholes option valuation model under the
following assumptions utilized by Aironet in its Fiscal 1998 preparation of
the disclosures in its separate audited financial statements under Financial
Accounting Standards No. 123: (a) though reflective of the terms of the
minority investment made by third party investors in the March 1998 private
placement of Aironet common stock made contemporaneously with those option
grants and not necessarily representative of the per share price that would
exist if at that time there had been a regular trading market for such
stock, the $3.50 per share private placement price is assumed as the value
of the underlying Aironet common stock; (b) given the limited history of
exercises under the Aironet Option Plan, the same five year period adopted
by Telxon as discussed in footnote (4) above is used as the period for which
executives may be expected to hold these options prior to exercise; (c)
stock price volatility of 56%; (d) an interest rate of 5.54% (based on the
published yield as of the grant date of Treasury Strips maturing as of the
end of the holding period assumed in (b) above in this footnote (8)); and
(e) no dividends are paid by Aironet during that assumed holding period.
AGGREGATED OPTION EXERCISES IN FISCAL 1999
AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
EXERCISES DURING
FISCAL 1999 FISCAL YEAR-END
-------------------- ------------------------------------------------------------
SHARES NUMBER OF VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS(1)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Paxton, Sr..... -- -- -- 700,000! -- $215,700
Dan R. Wipff........... -- -- 17,916! 3,334! -- --
-- -- -- 20,000*(2) -- $150,000
Frank E. Brick......... -- -- 550,000! -- -- --
-- -- -- 70,000*(2) -- $525,000
James G. Cleveland..... -- -- 120,000! 40,000! -- --
-- -- -- 40,000*(2) -- $300,000
Gerald J. Gabriel...... -- -- 38,415! 12,001! -- --
-- -- -- 7,500*(2) -- $ 56,250
David D. Loadman....... -- -- 101,689! -- $ 1,170 --
-- -- 60,000* -- $548,400 --
Kenneth W. Haver....... -- -- 116,666! 33,334! -- --
-- -- -- 50,000*(2) -- $375,500
</TABLE>
103
<PAGE> 11
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
- ---------------
! Options for the purchase of the indicated number of shares of Telxon Common
Stock granted to the named executive officer pursuant to the Employee Option
Plan except as otherwise explained in footnote (5) to the table of Fiscal
1999 Option Grants above with respect to 300,000 of the option shares
granted to Mr. Paxton.
* Option for the purchase of the indicated number of shares of Aironet common
stock of the granted to the named executive officer as an advisor to Aironet
pursuant to the Aironet Option Plan.
(1) Aggregate fair market value, based, in the case of options for the purchase
of Telxon Common Stock, on the amount by which the closing sale price for
Telxon Common Stock as reported on the Nasdaq NNM for March 31, 1999
exceeded the exercise price of all unexercised "in-the-money" (fair market
value per share in excess of exercise price) Telxon stock options then held,
and in the case of options for the purchase of Aironet Common Stock, on the
amount by which an assumed value equal to the $11 offering price per share
in the July 30, 1999 initial public offering of Aironet Common Stock (though
that offering occurred four months after the end of Fiscal 1999, there is no
more reliable basis readily available for valuing Aironet Common Stock as of
fiscal year end) exceeded the exercise price of all unexercised
"in-the-money" Aironet stock options then held.
(2) See footnote (7) to the table of Option Grants in Fiscal 1999 for a
discussion of the preconditions to the exercisability of these options.
COMPENSATION OF DIRECTORS
CASH COMPENSATION
The Company's non-employee directors each receive an annual fee of $25,000
per year. The non-employee directors also receive $2,500 plus travel expenses
for each day of attendance at directors' meetings ($1,250 for a telephonic
meeting), and $2,500 for each Audit Committee or Compensation Committee meeting
attended (either as a member thereof or at the request of the Committee), unless
the committee and the full Board meet on the same day, in which event
compensation in the amount of $1,250 is paid for attendance at such committee
meeting.
In July 1996, the Audit Committee of the Board of Directors engaged Mr.
Rose to act as the Committee's delegate to advise Company management by
analyzing, assessing and recommending improvements to the Company's operating
systems and processes and assisting in the recruitment, training and integration
of personnel, the services under which engagement were completed in Fiscal 1998.
In recognition of the other commitments which Mr. Rose had to resign or forego
in order to undertake it, the engagement also provided for him to receive a
severance benefit of $150,000 payable from January through December 1998,
$112,500 of which was paid during Fiscal 1999. In connection with the
engagement, Mr. Rose also received coverage for himself and his wife under the
Company's self-insured medical, dental and vision plans, with Mr. Rose paying
the customary employee contributions for participation in those plans.
Mr. Paxton, by reason of also being an employee of the Company, does not
receive any compensation from the Company for his services as a director (see
"COMPENSATION OF EXECUTIVE OFFICERS" above for the compensation payable to him
in his capacity as an executive officer of the Company).
STOCK OPTIONS
Directors who are not employees of the Company or a subsidiary are eligible
to receive options to purchase Shares under the Company's 1990 Stock Option Plan
for Non-Employee Directors (as amended the "Director Option Plan"). However, all
shares of Company Common Stock authorized for issuance under the Director Option
Plan have been fully utilized for the granting of options thereunder. The
Director Option Plan provides for each non-employee director to be automatically
granted an option to purchase 25,000 Shares upon first being elected to the
Board (an "Initial Grant") and to be automatically granted annually thereafter a
10,000 Share option (each a "Continuing Grant") on each anniversary of his last
election to the Board during his continued
104
<PAGE> 12
ITEM 11. EXECUTIVE COMPENSATION (CONTINUED)
service on the Board. An Initial Grant becomes exercisable in equal thirds on
each of the first three anniversaries of the grant date, whereas each Continuing
Grant becomes exercisable in full on the third anniversary of its grant date.
The Director Option Plan also permits the Board to make discretionary option
grants under the Director Option Plan to any one or more of the Company's
non-employee directors from time to time in addition to the foregoing automatic
grants. Each option granted under the Director Option Plan has a seven-year term
, which may be extended up to ten (10) years, and an option price per Share
equal to the closing sales price of the Common Stock as reported on the Nasdaq
for the trading day immediately preceding the date of grant. The options
terminate three months following the optionee no longer being a director of the
Company, six months following death and one year following disability. Options
granted under the Director Option Plan are subject to the same "change in
control" provisions as apply under the Employee Option Plan described under
"EXECUTIVE COMPENSATION -- Employment Agreements and Termination of Employment
Arrangements" above.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based on the copies of the Schedule 13Gs received by the Company since the
beginning of Fiscal 1999, the Company is not aware of any person who currently
is the beneficial owner of more than five percent of its shares.
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the outstanding Shares, as of June 30, 1999, by all
directors of the Company, by the executive officers of the Company named in the
Summary Compensation Table, and by the directors, the named executive officers
and all other current executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
NAME AND ADDRESS(1) --------------------------
OF BENEFICIAL OWNER NUMBER PERCENTAGE(2)
------------------- --------- -------------
<S> <C> <C>
Richard J. Bogomolny........................................ 87,313(3) *
Frank E. Brick.............................................. 624,000(4) 3.7%
James G. Cleveland.......................................... 131,930(5) *
John H. Cribb............................................... 44,113(6) *
Gerald J. Gabriel........................................... 49,880(7) *
Robert A. Goodman........................................... 107,190(8) *
Kenneth W. Haver............................................ , 2,997(9) *
David D. Loadman............................................ 106,689(10) *
Jonathan R. Macey........................................... 500 *
John W. Paxton, Sr.......................................... 300,000(11) 1.8%
Raj Reddy................................................... 100,914(12) *
Norton W. Rose.............................................. 92,814(13) *
Dan R. Wipff................................................ 83,285(14) *
All directors and executive officers as a group (17
persons).................................................. 1,754,691(15) 10.0%
</TABLE>
- ---------------
* less than 1 percent
(1) The address for the named individuals is 3330 West Market Street, Akron,
Ohio 44333.
105
<PAGE> 13
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT (CONTINUED)
(2) Computed based upon the 16,155,606 Shares outstanding as of June 30, 1999,
as adjusted with respect to the Shares which may be acquired within 60 days
(measured from June 30, 1999) by exercise of options by the person(s) whose
percentage ownership is being computed.
(3) Includes 37,313 Shares which he may acquire within 60 days by exercise of
options.
(4) Includes 550,000 Shares which he may acquire within 60 days by exercise of
options.
(5) Includes 130,000 Shares which he may acquire within 60 days by exercise of
options.
(6) Includes 7,800 Shares owned by Mr. Cribb's wife, as to which Shares Mr.
Cribb disclaims beneficial ownership, and 27,313 Shares which he may
acquire within 60 days by exercise of options.
(7) Includes 40,415 Shares which he may acquire within 60 days by exercise of
options. Also includes 2,600 Shares awarded to Mr. Gabriel under the
Restricted Stock Plan, 1,000 shares of which have vested since June 30,
1999 and 400 Shares of which will vest during the remaining portion of the
current fiscal year ending March 31, 2000 and in each of the fiscal years
ending March 31, 2001 through 2003.
(8) Includes 10,900 Shares owned by Mr. Goodman's wife, as to which Shares Mr.
Goodman disclaims beneficial ownership, and 97,313 Shares which he may
acquire within 60 days by exercise of options.
(9) Includes 997 Shares (rounded) allocated to Mr. Haver's account under the
Company's 401(k) plan.
(10) Includes 101,689 Shares which he may acquire within 60 days by exercise of
options.
(11) Consists of Shares which Mr. Paxton has agreed to purchase under his
employment agreement, but has not yet completed and has until March 22,
2000 to do so.
(12) Includes 78,314 Shares which he may acquire within 60 days by exercise of
options.
(13) Includes 82,314 Shares which he may acquire within 60 days by exercise of
options.
(14) Includes 17,916 Shares which he may acquire within 60 days by exercise of
options.
(15) Includes the 300,000 shares to be purchased by Mr. Paxton as described in
footnote (11), 1,174,253 Shares which may be acquired within 60 days by
exercise of options and 2,600 Shares awarded under the Restricted Stock
Plan, 1,000 of which Shares have vested since June 30, 1999, and provided
the awardee is then employed by the Company, 400 Shares will vest during
the remaining portion of the current fiscal year ending March 31, 2000 and
in each of the fiscal years ending March 31, 2001 through 2003.
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
As part of its five-year plan, Telxon 2000, announced in August 1995, the
Company established a program providing key Telxon employees with a long-term
incentive opportunity to purchase stock in its technology subsidiaries, thereby
encouraging them to support the development of the subsidiaries and their
businesses with the same effort and dedication as in their service to Telxon so
as to more closely align their objectives with the long-term goals of the
Company as a whole. Such investments are subject to certain risks and
restrictions and are based on outside opinions of the issuing subsidiary's
market value. During the fiscal year ended March 31, 1996 ("Fiscal 1996"), the
Company sold shares of common stock in its Metanetics Corporation subsidiary
("Metanetics") under the program at a price per share equal to that paid in a
contemporaneous sale negotiated at arm's length with a third party investor.
Certain of those program purchases, including 20,000 Metanetics shares purchased
by Frank E. Brick, the Company's former President and Chief Executive Officer
and a former director, were made with loans approved by the Telxon Board of
Directors, bearing interest at eight percent per annum and secured by the stock
purchased with the loan proceeds. The largest amount of indebtedness ($16,618 in
original principal amount plus accrued interest) outstanding under this loan
during Fiscal 1999 was $20,610. In May, the full $20,766, then outstanding
balance was applied as a partial offset against the $80,000 repurchase price
which the Company agreed to pay Mr. Brick in connection with the Company's
exercise of its right under Metanetics' stockholders' agreement, in the event of
the termination of an employee stockholder's employment, to repurchase his
40,000 Metanetics shares, representing an approximately 0.8% interest in
Metanetics, of which the Company held approximately 60.3% at the time of the
repurchase.
106
<PAGE> 14
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS (CONTINUED)
In December 1993, and January 1994, Mr. Brick received loans of $75,985 and
$58,000, respectively, from the Company, for his use in payment of withholding
and estimated tax obligations incurred with respect to the 25,000 Share portion
of the 50,000 Shares awarded to him in October 1993 under the Restricted Stock
Plan with respect to which he had elected under the applicable regulations under
the Internal Revenue Code to be taxed as of the time of the award. The loans are
secured by the restricted stock and originally bore interest at two percent in
excess of the prime rate, adjusted quarterly. In January 1997, Mr. Brick
borrowed an additional $30,932 from the Company for his use in the payment of
his tax obligations with respect to 5,000 additional Shares of his restricted
stock award which vested during Fiscal 1997 but were not included in his earlier
tax election. While Mr. Brick repaid the tax loans in full in July 1997, they
were subsequently readvanced to him, and in December 1997 he borrowed an
additional $52,082 for his use in the payment of his tax obligations with
respect to 10,000 additional Shares of his restricted stock award which vested
during Fiscal 1998 but were not included in his earlier tax election. The
largest aggregate amount of indebtedness (principal and accrued interest)
outstanding during Fiscal 1999 under these tax loans was $340,329. The
indebtedness is being retired through deductions against the severance
compensation payable to Mr. Brick on a level amortization schedule over the
severance payment period.
In November 1997, Dan R. Wipff, the President and Chief Executive Officer
of the Company's Telxon Products manufacturing division, received a $120,000
personal loan from the Company. The loan is due November 30, 2000, bears
interest at a rate of one percent in excess of the prime rate and remains
outstanding in full. The largest aggregate amount of indebtedness (principal and
accrued interest) outstanding during Fiscal 1999 under the loan was $135,179 and
with additional interest increased at June 30, 1999 to $137,833.
In connection with the consolidation and relocation of the Company's
engineering and research and development functions from Akron, Ohio to the
Company's new World Technology Center in The Woodlands, Texas (north of
Houston), the Company made interest free bridge loans aggregating $140,000 in
principal amount to David L. Loadman, the Company's former Senior Vice
President, Global Product and Systems Development, and Chief Technical Officer,
in July 1997 to assist him in the relocation of his family. Payments and credits
for unreimbursed relocation costs have reduced the outstanding balance of these
loans to $71,291. The Company also made loans to Mr. Loadman loans of $8,019,
$4,192, $5,706 and $5,927 in December 1995, 1996, 1997 and 1998, respectively,
with respect to the three 1,000 Share installments of his restricted stock award
which vested during Fiscal 1996, 1997 and 1998. These borrowings, bearing
interest at a rate of one percent in excess of the prime rate annum, remain
outstanding in full. The largest aggregate amount of indebtedness (principal and
accrued interest) outstanding during Fiscal 1999 under these tax loans was
$27,283 and with additional interest increased at June 30, 1999 to $27,810. Mr.
Loadman will repay the foregoing indebtedness as part of his severance
arrangements.
During Fiscal 1999, the Company paid to the law firm of Goodman Weiss
Miller LLP, of which Robert A. Goodman, a director and Secretary of the Company,
is senior partner, $1,647,167 for legal services and $133,019 in reimbursement
of expenses. It is anticipated that payments will continue to be made to said
firm in the future for additional services. In addition, in January 1998, the
Company entered into a letter agreement engaging the law firm to represent the
Company in any potential change in control transaction involving the Company.
The firm would provide the full range of services reasonably associated with
such a transaction which it is in a position to provide, with Mr. Goodman and
his partner, Steven J. Miller, to be primarily responsible for and involved in
the engagement. In recognition of the magnitude of the time commitment that
would be involved in such an event and the intensity and duration of such an
engagement, and the significance of the firm's role and the importance of its
expertise and its contribution to the results obtained, the agreement
contemplates that the fees payable to the firm in respect of such services would
include a value added component of approximately $1.5 million in addition to
customary hourly time charges. This letter agreement becomes inoperative,
however, in the event that the consulting agreement described in the next
paragraph becomes effective prior to the commencement of a change in control
transaction to which this letter agreement would otherwise apply.
107
<PAGE> 15
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS (CONTINUED)
In January 1998, the Company, in order to assure itself of the continued
availability to it of Mr. Goodman's legal services, entered into a letter
agreement with Mr. Goodman in which he has agreed to provide advice to the
Company on a non-exclusive basis regarding legal matters relating to the
Company's business after he ceases full-time practice with his law firm. The
consulting engagement will not take effect until the earliest of the date Mr.
Goodman withdraws from his current law firm, becomes "of counsel" thereto, or
the date on which Mr. Goodman's firm ceases to be the Company's primary outside
counsel and will expire on the tenth anniversary of the commencement date,
unless sooner terminated in accordance with the consulting agreement. Consulting
fees of $150,000 per annum (the "Consulting Payments") will be paid by the
Company over the term of the agreement, along with reimbursement of reasonable
expenses incurred by Mr. Goodman. Earlier termination may occur (1) by Mr.
Goodman for "Good Reason", defined as a material breach of the agreement by the
Company which is not cured within ten (10) business days of receipt by the
Company of written notice, (2) by the Company for "Cause", defined as a material
breach of the agreement by Mr. Goodman which is not cured within ten (10)
business days of receipt by Mr. Goodman of written notice, (3) by death or
disability of Mr. Goodman or (4) by a "Change in Control" of the Company. For
purposes of the consulting agreement, the occurrence of any of the following
shall constitute a "Change in Control": (i) the acquisition, directly or
indirectly, of at least 30% of the outstanding common stock of, or voting power
in, the Company calculated on a fully diluted basis; (ii) a merger or
consolidation of the Company with any company other than one in which the
Company then owns at least a majority of the outstanding common stock or voting
power; (iii) a sale (whether in one or a series of transactions) of all or
substantially all of the assets of the Company; (iv) any recapitalization,
restructuring or liquidation of the Company; or (v) events during any period of
two consecutive years as a result of which individuals who at the beginning of
any such period constitute the directors of the Company cease for any reason to
constitute at least a majority thereof, provided, however, that for purposes of
this clause (v), each director who is first appointed or elected by the Board or
whose nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date of the consulting agreement or
whose appointment, election or nomination was previously so approved or
recommended will be deemed to have been a Director of the Company at the
beginning of such period. In the event of a termination by Mr. Goodman for Good
Reason or termination because of death, disability or the occurrence of a Change
in Control, Mr. Goodman is entitled to a lump sum cash payment of the unpaid
balance of the Consulting Payments, payable within 10 days of such termination.
If the Company terminates the consulting agreement for Cause, Mr. Goodman is
entitled to no further compensation under the consulting agreement. The
consulting agreement will also be of no effect if the consulting period has not
commenced prior to the commencement of a change in control transaction to which
the letter agreement described in the preceding paragraph applies.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this Report:
(1) Consolidated Financial Statements: Reference is made to the Index
on page 42 of this Annual Report on Form 10-K.
(2) Financial Statement Schedule: Reference is made to the Index on
page 42 of this Annual Report on Form 10-K. All other schedules are omitted
because they are not applicable or the required information is shown in the
financial statements of the notes thereto.
108
<PAGE> 16
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
(3) Exhibits required by Item 601 of Regulation S-K:
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3.1 Restated Certificate of Incorporation of Registrant,
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 and Amendment No. 2
thereto filed on Form 8-A/A.
3.2 Second Amended and Restated By-Laws of Registrant, filed
with the Original Filing.
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 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 and Amendment No. 2
thereto filed on Form 8-A/A.
4.2 Text of form of Certificate for 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 Registrant's Form 10-Q for the
quarter ended June 30, 1995.
4.3 Rights Agreement between Registrant and KeyBank National
Association, as Rights Agent, dated as of August 25, 1987,
as amended and restated as of July 31, 1996, incorporated
herein by reference to Exhibit 4 to Registrant's Form 8-K
dated August 5, 1996.
4.3.1 Form of Rights Certificate (included as Exhibit A
to the Rights Agreement included as Exhibit 4.3 above).
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 above,
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.
4.3.2 Letter agreement among Registrant, KeyBank
National Association and Harris Trust and Savings Bank,
dated June 11, 1997, with respect to the appointment of Harris
Trust and Savings Bank as successor Rights Agent under the
Rights Agreement included as Exhibit 4.3 above, incorporated
herein by reference to Exhibit 4.3.2 to Registrant's Form 10-K
for the year ended March 31, 1997.
4.4 Indenture by and between 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 Registrant's 7 1/2% Convertible Subordinated Debentures
Due 2012 (set forth in the Indenture included as Exhibit 4.4
above).
4.5 Indenture by and between Registrant and Bank One Trust
Company, N.A., as Trustee, dated as of December 1, 1995,
regarding Registrant's 5 3/4% Convertible Subordinated Notes
due 2003, incorporated herein by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form S-3,
Registration No. 333-1189, filed February 23, 1996.
4.5.1 Form of Registrant's 5 3/4% Convertible Subordinated Notes due
2003 issued under the Indenture included as Exhibit 4.5 above,
incorporated herein by reference to Exhibit 4.2 to Registrant's
Registration Statement on Form S-3, Registration No. 333-1189,
filed February 23, 1996.
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109
<PAGE> 17
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
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4.5.2 Registration Rights Agreement by and among
Registrant and Hambrecht & Quist LLC and Prudential
Securities Incorporated, as the Initial Purchasers of
Registrant's 5 3/4% Convertible Subordinated Notes due 2003,
with respect to the registration of said Notes under
applicable securities laws, incorporated herein by reference
to Exhibit 4.3 to Registrant's Registration Statement on Form
S-3, Registration No. 333-1189, filed February 23, 1996.
10.1 Compensation and Benefits Plans of Registrant.
10.1.1 Amended and Restated Retirement and Uniform
Matching Profit-Sharing Plan of Registrant, as amended,
filed with the Original Filing.
10.1.2 1990 Stock Option Plan for employees of Registrant,
as amended, incorporated herein by reference to Exhibit
10.1.2 to Registrant's Form 10-Q for the quarter
ended September 30, 1997.
10.1.3 1990 Stock Option Plan for Non-Employee Directors
of Registrant, as amended, incorporated herein by reference
to Exhibit 10.1.3 to Registrant's Form 10-Q for the
quarter ended September 30, 1998.
10.1.4 Non-Qualified Stock Option Agreement between
Registrant and Raj Reddy, dated as of October 17, 1988,
filed with the Original Filing.
10.1.4.a Description of amendments extending the term of the
Agreement included as Exhibit 10.1.4 above,
incorporated herein by reference to Exhibit 10.1.4.a
to Registrant's Form 10-Q for the quarter ended
September 30, 1998.
10.1.5 1992 Restricted Stock Plan of Registrant, as
amended, incorporated herein by reference to Exhibit 10.1.5
to Registrant's Form 10-Q for the quarter ended
December 31, 1998.
10.1.6 1995 Employee Stock Purchase Plan of Registrant, as
amended, incorporated herein by reference to Exhibit 10.1.7
to Registrant's Form 10-Q for the quarter ended
September 30, 1995.
10.1.7 1996 Stock Option Plan for employees, directors and
advisors of Aironet Wireless Communications, Inc., a
subsidiary of Registrant, incorporated herein by
reference to Exhibit 10.1.7 to Registrant's Form
10-K for the year ended March 31, 1997.
10.1.7.a Amended and Restated 1996 Stock Option Plan for
employees, directors and advisors of Aironet Wireless
Communications, Inc., incorporated herein by reference
to Exhibit 10.1.7.a to Registrant's Form 10-K for the
year ended March 31, 1998.
10.1.7.b First Amendment to Amended and Restated 1996 Stock
Option Plan for employees, directors and advisors of
Aironet Wireless Communications, Inc., filed with the
Original Filing.
10.1.8 1999 Stock Option Plan for Non-Employee Directors
of Aironet Wireless Communications, Inc., filed with the
Original Filing.
10.1.9 Non-Competition Agreement by and between Registrant
and Robert F. Meyerson, effective February 27, 1997,
incorporated herein by reference to Exhibit 10.1.8
to Registrant's Form 10-K for the year ended March
31, 1997.
10.1.10 Form of Employment Agreement between Registrant and
John W. Paxton, Sr., filed with the Original Filing.
10.1.11 Employment Agreement between Registrant and Kenneth
A. Cassady, effective as of June 7, 1999, filed with the
Original Filing.
10.1.12 Employment Agreement between Registrant and Woody
M. McGee, effective as of June 1, 1999, filed with the
Original Filing.
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110
<PAGE> 18
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
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10.1.13 Amended and Restated Employment Agreement between
Registrant and James G. Cleveland, effective as of April 1,
1997, incorporated herein by reference to Exhibit
10.1.10 to Registrant's Form 10-K for the year
ended March 31, 1998.
10.1.14 Amended and Restated Employment Agreement between
Registrant and Danny R. Wipff, effective as of April 1,
1997, incorporated herein by reference to Exhibit
10.1.14 to Registrant's Form 10-K for the year
ended March 31, 1998.
10.1.15 Description of Key Employee Retention Program,
incorporated herein by reference to Exhibit 10.1.15 to
Registrant's Form 10-K for the year ended March 31,
1998.
10.1.15.a Form of letter agreement made with key employees
selected under the retention program described in
Exhibit 10.1.15 above, incorporated herein by
reference to Exhibit 10.1.15.a to Registrant's Form
10-K for the year ended March 31, 1998.
10.1.16 Employment Agreement, effective as of April 1,
1997, between Registrant and Frank E. Brick, a former
executive officer, incorporated herein by reference
to Exhibit 10.1.9 to Registrant's Form 10-K for the
year ended March 31, 1998.
10.1.17 Amended and Restated Employment Agreement,
effective as of April 1, 1997, between Registrant and
Kenneth W. Haver, a former executive officer,
incorporated herein by reference to Exhibit 10.1.11
to Registrant's Form 10-K for the year ended March
31, 1998.
10.1.18 Amended and Restated Employment Agreement,
effective as of April 1, 1997, between Registrant and David
W. Porter, a former executive officer, incorporated
herein by reference to Exhibit 10.1.13 to
Registrant's Form 10-K for the year ended March 31,
1998.
10.1.19 Letter agreement of Registrant with Robert A.
Goodman, dated as of December 29, 1997 and executed and
delivered January 20, 1998, for continued
consulting services following certain changes in
his law practice, incorporated herein by reference
to Exhibit 10.1.17 to Registrant's Form 10-K for
the year ended March 31, 1998.
10.1.20 Amended and Restated Employment Agreement between
Registrant and Gerald J. Gabriel, effective as of April 1,
1997, filed herewith.
10.1.21 Amended and Restated Employment Agreement between
Registrant and David D. Loadman, a former executive officer,
incorporated herein by reference to Exhibit 10.1.12
to Registrant's Form 10-K for the year ended March
31, 1998.
10.2 Material Leases of Registrant.
10.2.1 Lease between Registrant and 3330 W. Market
Properties, dated as of December 30, 1986, for premises at
3330 West Market Street, Akron, Ohio, filed with the
Original Filing.
10.2.2 Lease Agreement between The Woodlands Commercial
Properties Company, L.P. and Registrant, made and entered
into as of January 16, 1998, including Rider No. 1
thereto, for premises at 8302 New Trails Drive, The
Woodlands, Texas, incorporated herein by reference
to Exhibit 10.2.2 to Registrant's Form 10-K for the
year ended March 31, 1998.
10.2.3 Standard Office Lease (Modified Net Lease) between
Registrant and John D. Dellagnese III, dated as of July 19,
1995, for premises at 3875 Embassy Parkway, Bath,
Ohio, including an Addendum thereto, incorporated
herein by reference to Exhibit 10.2.4 to
Registrant's Form 10-K for the year ended March 31,
1996.
10.2.3.a Second Addendum, dated as of October 5, 1995, to the
Lease included as Exhibit 10.2.3 above, incorporated
herein by reference to Exhibit 10.2.4.a to
Registrant's Form 10-K for the year ended March 31,
1996.
10.2.3.b Third Addendum, dated as of March 1, 1996, to the Lease
included as Exhibit 10.2.3 above, incorporated herein
by reference to Exhibit 10.2.4.b to Registrant's Form
10-K for the year ended March 31, 1996.
</TABLE>
111
<PAGE> 19
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(CONTINUED)
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10.2.3.c Fourth Addendum, dated as of April 16, 1996, to the
Lease included as Exhibit 10.2.3 above, incorporated
herein by reference to Exhibit 10.2.2.c to
Registrant's Form 10-Q for the quarter ended June 30,
1997.
10.2.3.d Fifth Addendum, dated as of June 24, 1997, to the
Lease included as Exhibit 10.2.3 above, incorporated
herein by reference to Exhibit 10.2.2.d to
Registrant's Form 10-Q for the quarter ended June 30,
1997.
10.2.3.e Sixth Addendum, dated as of March, 1998, to the Lease
included as Exhibit 10.2.3 above, incorporated herein
by reference to Exhibit 10.2.3.e to Registrant's Form
10-Q for the quarter ended September 30, 1998.
10.2.3.f Seventh Addendum, dated as of July 20, 1998, to the
Lease included as Exhibit 10.2.3 above, incorporated
herein by reference to Exhibit 10.2.3.f to
Registrant's Form 10-Q for the quarter ended September
30, 1998.
10.2.3.g Eighth Addendum, dated as of September 8, 1998, to the
Lease included as Exhibit 10.2.3 above, incorporated
herein by reference to Exhibit 10.2.3.g to
Registrant's Form 10-Q for the quarter ended September
30, 1998.
10.2.3.h Sublease Agreement, dated as of September 1, 1998,
between Registrant and Aironet Wireless
Communications, Inc. for the premises subject to the
Lease included as Exhibit 10.2.3 above, as amended
through the Eighth Addendum thereto included as
Exhibit 10.2.3.g above, filed with the Original
Filing.
10.2.3.i Renewal, dated June 16, 1999, with respect to the
Sublease Agreement included as Exhibit 10.2.3.h above,
filed with the Original Filing.
10.2.4 Lease Contract between Desarrollos\Inmobiliarios
Paso del Norte, S.A. de C.V. and Productos y Servicios de
Telxon, S.A. de C.V., a subsidiary of Registrant,
for premises in Ciudad Juarez, Chihuahua, Mexico,
made and entered into as of April 10, 1997,
incorporated herein by reference to Exhibit 10.2.4
to Registrant's Form 10-K for the year ended March
31, 1998.
10.3 Credit Agreements of Registrant.
10.3.1 Credit Agreement by and among Registrant, the
lenders party thereto from time to time and The Bank of New
York, as letter of credit issuer, swing line lender and agent
for the lenders, dated as of March 8, 1996, incorporated
herein by reference to Exhibit 10.3.2 to Registrant's Form 10-K
for the year ended March 31, 1996.
10.3.1.a Amendment No. 1, dated as of August 6, 1996, to the
Agreement included as Exhibit 10.3.1 above,
incorporated herein by reference to Exhibit 10.3.2.a
to Registrant's Form 8-K dated August 16, 1996.
10.3.1.b Amendment No. 2, dated as of
December 16, 1996, to the Agreement included as Exhibit 10.3.1
above, incorporated herein by reference to Exhibit 10.3.2.c to
Registrant's Form 8-K dated December 16, 1996.
10.3.1.c Amendment No. 3, dated as of December 12, 1997, to the
Agreement included as Exhibit 10.3.1 above, included
herein by reference to Exhibit 10.3.1.d to
Registrant's Form 10-K for the year ended March 31,
1998.
10.3.1.d Waiver and Agreement, dated as of December 29, 1998,
with respect to the Agreement included as Exhibit
10.3.1 above, incorporated herein by reference to
Exhibit 10.3.1.e to Registrant's Form 10-Q for the
quarter ended December 31, 1998.
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112
<PAGE> 20
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
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10.3.1.e Waiver Extension and Agreement, dated as of February
12, 1999, with respect to the Agreement included as
Exhibit 10.3.1 above, incorporated herein by reference
to Exhibit 10.3.1.f to Registrant's Form 10-Q for the
quarter ended December 31, 1998.
10.3.1.f Second Waiver Extension Agreement and Amendment No. 4,
dated as of March 26, 1999, with respect to the
Agreement included as Exhibit 10.3.1 above,
incorporated herein by reference to Exhibit 10.3.1.a
to Registrant's Form 8-K dated April 1, 1999.
10.3.1.g Amended and Restated Security Agreement, dated as of
March 26, 1999, by and among Registrant and The Bank
of New York, as Agent for the Lenders from time to
time party to the Agreement included as Exhibit 10.3.1
above, incorporated herein by reference to Exhibit
10.3.1.b to Registrant's Form 8-K dated April 1, 1999.
10.3.1.h Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Fixture Filing and Financing
Statement, dated as of March 26, 1999, by Registrant
to First American Title Insurance Company as Trustee
for the benefit of The Bank of New York, as Agent for
the Lenders from time to time party to the Agreement
included as Exhibit 10.3.1 above, filed with the
Original Filing.
10.3.1.i Patent and Trademark Security Agreement, dated as of
March 26, 1999, by Registrant and certain of its
subsidiaries to The Bank of New York, as Agent for the
benefit of the Lenders from time to time party to the
Agreement included as Exhibit 10.3.1 above, filed with
the Original Filing.
10.3.1.j Pledge Agreement, dated as of March 26, 1999, by
Registrant to The Bank of New York, as Agent for the
benefit of the Lenders from time to time party to the
Agreement included as Exhibit 10.3.1 above, filed with
the Original Filing.
10.3.1.k Third Waiver Extension Agreement and Amendment No. 5,
dated as of June 29, 1999, with respect to the
Agreement included as Exhibit 10.3.1 above,
incorporated herein by reference to Exhibit 10.3.1.a
to Registrant's Form 8-K dated July 1, 1999.
10.3.2 Business Purpose Revolving Promissory Note (Swing
Line) made by Registrant in favor of Bank One, NA , dated
August 4, 1998 , incorporated herein by reference to
Exhibit 10.3.4 to Registrant's Form 10-Q for the
quarter ended June 30, 1998.
10.3.2.a Consent, dated as of December 29, 1998, with respect
to the Note included as Exhibit 10.3.2 above,
incorporated herein by reference to Exhibit 10.3.4.a
to Registrant's Form 10-Q for the quarter ended
December 31, 1998.
10.3.2.b Further Consent, dated as of February 12, 1999, with
respect to the Note included as Exhibit 10.3.2 above,
incorporated herein by reference to Exhibit 10.3.4.a
to Registrant's Form 10-Q for the quarter ended
December 31, 1998.
10.3.2.c Second Further Consent and Agreement, dated as of
March 26, 1999, with respect to the Note included as
Exhibit 10.3.2 above, incorporated herein by reference
to Exhibit 10.3.4.c b to Registrant's Form 8-K dated
April 1, 1999.
10.3.2.d Amended and Restated Security Agreement, dated as of
March 26, 1999, by and among Registrant and Bank One,
NA with respect to the Note included as Exhibit 10.3.2
above, filed with the Original Filing.
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113
<PAGE> 21
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
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10.3.2.e Deed of Trust, Assignment of Leases and Rents,
Security Agreement, Fixture Filing and Financing
Statement, dated as of March 26, 1999, by Registrant
to First American Title Insurance Company as Trustee
for the benefit of Bank One, NA with respect to the
Note included as Exhibit 10.3.2 above, filed with the
Original Filing.
10.3.2.f Patent and Trademark Security Agreement, dated as of
March 26, 1999, by Registrant and certain of its
subsidiaries to Bank One, NA with respect to the Note
included as Exhibit 10.3.2 above, filed with the
Original Filing.
10.3.2.g Third Further Consent and Note Modification Agreement,
dated as of June 29, 1999, with respect to the Note
included as Exhibit 10.3.2 above, incorporated herein
by reference to Exhibit 10.3.2.g b to Registrant's
Form 8-K dated July 1, 1999.
10.4 Amended and Restated Agreement between 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, 1998.
10.5 License, Rights, and Supply Agreement between Aironet
Wireless Communications, Inc., a subsidiary of Registrant,
and Registrant, dated as of March 31, 1998, incorporated
herein by reference to Exhibit 10.5 to Registrant's Form
10-K for the year ended March 31, 1998.
10.5.1 First Amendment, dated as of March 8, 1996, to the
Agreement included as Exhibit 10.5 above, filed with the
Original Filing.
10.6 Asset Purchase Agreement by and among Dynatech Corporation,
IAQ Corporation, Registrant and Itronix Corporation, then a
subsidiary of Registrant, dated as of December 28, 1996,
incorporated herein by reference to Exhibit 2 to
Registrant's Form 8-K dated December 31, 1996.
10.7 Agreement of Purchase and Sale of Assets by and among Vision
Newco, Inc., a subsidiary of 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 for the quarter ended June 30, 1995.
10.8 Stock Purchase Agreement by and among Registrant and FED
Corporation, dated as of March 31, 1998, with respect to FED
Corporation's purchase of all of the stock of Virtual
Vision, Inc. (fka Vision Newco, Inc.), incorporated herein
by reference to Exhibit 10.7 to Registrant's Form 10-K for
the year ended March 31, 1998.
10.8.1 Escrow Agreement by and among FED Corporation,
Registrant and First Union National Bank, with respect to
the transactions under the Stock Purchase Agreement
included as Exhibit 10.7 above, incorporated herein
by reference to Exhibit 10.7.1 to Registrant's Form
10-K for the year ended March 31, 1998.
10.9 Subscription Agreement by and among New Meta Licensing
Corporation, a subsidiary of Registrant, and certain
officers of Registrant as Purchasers, dated as of September
19, 1995, incorporated herein by reference to Exhibit 10.8
to Registrant's Form 10-Q for the quarter ended September
30, 1995.
10.10 Amended and Restated Shareholder Agreement by and among
Metanetics Corporation fka New Meta Licensing Corporation,
and its Shareholders, including the officers of Registrant
party to the Agreement included as Exhibit 10.8 above, dated
as of March 28, 1996, incorporated herein by reference to
Exhibit 10.9.3 to Registrant's Form 10-K for the year ended
March 31, 1996.
10.10.1 First Amendment, dated as of March 30, 1996, to the
Agreement included as Exhibit 10.9 above, incorporated
herein by reference to Exhibit 10.9.4 to
Registrant's Form 10-K for the year ended March 31,
1996.
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<PAGE> 22
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
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10.11 Stock Purchase Agreement by and among Meta Holding
Corporation, a subsidiary of Registrant, and certain
officers of Registrant as Purchasers, dated as of March 30,
1996, incorporated herein by reference to Exhibit 10.8 to
Registrant's Form 10-K for the year ended March 31, 1997.
10.12 Stock Purchase Agreement by and between Metanetics
Corporation, a subsidiary of Registrant fka New Meta
Licensing Corporation, and Accipiter II, Inc., dated as of
September 30, 1996, incorporated herein by reference to
Exhibit 10.8 to Registrant's Form 10-Q for the quarter ended
September 30, 1996.
10.13 Stock Purchase Agreement by and between Registrant and
Telantis Capital, Inc., dated as of March 31, 1997,
incorporated herein by reference to Exhibit 10.10 to
Registrant's Form 10-K for the year ended March 31, 1997.
10.14 Subscription Agreement by and among Aironet Wireless
Communications, Inc., a subsidiary of Registrant, and the
investors who executed the same, dated as of March 31, 1998,
incorporated herein by reference to Exhibit 10.14 to
Registrant's Form 10-K for the year ended March 31, 1998.
10.14.1 Form of Warrant issued pursuant to the Subscription Agreement
included as Exhibit 10.14 above, incorporated herein by
reference to Exhibit 10.14.1 to Registrant's Form 10-K for the
year ended March 31, 1998.
10.14.2 Stockholders Agreement by and among Aironet Wireless
Communications, Inc. and its Stockholders party thereto,
including Registrant and the investors party to the Subscription
Agreement included as Exhibit 10.14 above, entered into as of
March 31, 1998 in connection with the transactions under the
Subscription Agreement, incorporated herein by reference to
Exhibit 10.14.2 to Registrant's Form 10-K for the year ended
March 31, 1998.
10.14.3 Registration Rights Agreement by and among Aironet Wireless
Communications, Inc. and certain of its security holders,
including Registrant and the investors party to the Subscription
Agreement included as Exhibit 10.14 above, entered into as of
March 31, 1998 in connection with the transactions under the
Subscription Agreement, incorporated herein by reference to
Exhibit 10.14.3 to Registrant's Form 10-K for the year ended
March 31, 1998.
10.15 DFS Vendor Agreement between Registrant and Deutsche
Financial Services Corporation, dated as of September 30,
1998, incorporated herein by reference to Exhibit 10.15 to
Registrant's Form 10-Q for the quarter ended December 31,
1998.
21. Subsidiaries of Registrant, filed with the Original Filing.
23. Consent of PricewaterhouseCoopers LLP, filed with the
Original Filing.
24. Power of Attorney executed by the members of Registrant's
Board of Directors, filed with the Original Filing.
27. Financial Data Schedule as of March 31, 1999, filed with the
Original Filing.
27.1 Restated Financial Data Schedule as of March 31, 1998, filed
with the Original Filing(1).
27.2 Restated Financial Data Schedule as of March 31, 1997, filed
with the Original Filing(1).
27.3 Restated Financial Data Schedule as of March 31, 1996, filed
with the Original Filing(1).
</TABLE>
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(1) Included for convenience of reference with respect to the identified prior
period affected by the restatements of Registrant's financial statements
described in its press releases of December 11, 1998, February 23, 1999
and/or June 16, 1999, each as filed under cover of a Current Report on Form
8-K dated the respective dates of the press releases. The restated financial
results are reflected and discussed in the consolidated financial statements
included in Part II, Item 8 hereof and notes 3 and 23 thereto in lieu of
Registrant separately filing of amendments to its Form 10-K and 10-Q filings
for the affected periods as originally contemplated by the referenced press
releases.
115
<PAGE> 23
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
(b) Reports on Form 8-K
During the last quarter of the period covered by this Annual Report on Form
10-K, Registrant filed the following Current Reports on Form 8-K: (1) Current
Report dated January 27, 1999, attaching Registrant's press release of that date
(the "January Release"), which announced that its financial results for the
third quarter, ended December 31, 1998, of its 1999 fiscal year, and the
restated results for the fiscal year 1999 second quarter, ended September 30,
1998, the need for which restatement was announced in Registrant's press release
of December 11, 1998 (the "December Release") filed under cover of a Current
Report on Form 8-K of that same date, had been rescheduled to mid-February
pending the completion of a review of certain judgmental accounting matters with
its outside auditors and also updated certain of the information contained in
the December Release concerning Registrant's expectations for the fiscal 1999
third and fourth quarters and the full year, stating that revenues were expected
to be under $100 million with less than targeted gross margins in the third
quarter and below prior year levels for the full year, and that a loss was
expected for the fourth quarter and the full year; (2) Current Report dated
February 23, 1999, attaching Registrant's press release of that date (the
"February Release"), which announced Registrant's financial results for the
third quarter of fiscal 1999, and the nine month period, ended December 31,
1998, and that, having completed the review of certain judgmental accounting
matters with Registrant's outside auditors previously reported in the January
Release, Registrant will be restating its audited financial statements for
fiscal years 1996, 1997 and 1998 and its unaudited interim financial statements
for the first and second quarters of fiscal 1999 (the press release, as
incorporated in the Form 8-K, includes comparative unaudited consolidated
statements of operations for Registrant for its fiscal years ended March 31,
1996, 1997 and 1998 and first and second quarters ended June 10 and September
30, 1998 [including, as to the September 30 quarter, the effects of the
restatement item announced in the December Release] as previously reported and
as restated, as well as consolidated statements of operations for the quarterly
and nine-month periods ended December 31, 1998 and 1997 which give effect to
those restatements); and (3) Current Report dated March 1, 1999, attaching
Registrant's press release of that date (the "March Release"), which announced
Registrant's consolidated balance sheet for the third quarter of fiscal 1999
ended December 31, 1998, which was not available at the time of the February
Release due to the complexity of deriving it from the restated consolidated
statements of operations included as attachments to the February Release (the
press release, as incorporated in the Form 8-K, includes an unaudited
consolidated balance sheet for the Registrant comparing its financial position
at December 31, 1998 and, as restated to give effect to the restated
consolidated statements of operations attached to the February Release, at the
end of Registrant's prior fiscal year on March 31, 1998).
Subsequent to the end of the period covered by this Annual Report on Form
10-K, Registrant filed the following Current Reports on Form 8-K: (i) Current
Report dated April 1, 1999, attaching Registrant's press release of that date,
announcing the extension of waivers under Registrant's revolving credit facility
and separate business purpose revolving promissory note, effective through June
29, 1999, and certain related amendments to the underlying credit agreements,
including the broadening of the lenders' collateral, as well as an approximately
4% reduction in Registrant's workforce; (ii) Current Report dated May 14, 1999,
attaching the press release issued by Registrant's Aironet Wireless
Communications, Inc. subsidiary on that date regarding the filing of a
Registration Statement with the Securities and Exchange Commission for a
contemplated initial public offering of Aironet common stock; (iii) Current
Report dated June 16, 1999, attaching Registrant's press release of that date
(the "June Release"), announcing a delay in the release of its financial results
for the fourth quarter, ended March 31, 1999, of its 1999 fiscal year, that it
expects a significant loss for the quarter, including adjustments for the
"end-of-life" and discontinuation of certain products, a further restatement of
the previously released results for its second fiscal quarter ended September
30, 1998 based on a year-end review by Registrant's outside auditors of a
customer lease transaction and progress made by Registrant in the implementation
of its new strategic plan; (iv) Current Report dated July 1, 1999, attaching
Registrant's press release of that date, announcing the further extension of
waivers under Registrant's revolving credit facility and separate business
purpose revolving promissory note, effective through August 30, 1999, and
certain related amendments to the underlying credit agreements as well as a
delay in the filing of the Form 10-K for Registrant's fiscal year ended March
31, 1999 pending completion of the closing of the Registrant's fourth fiscal
quarter and the annual audit of
116
<PAGE> 24
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (CONTINUED)
its fiscal 1999 financial statements; (v) Current Report dated July 14, 1999,
which announced Registrant's financial results for the fourth quarter of fiscal
1999, and the fiscal year, ended March 31, 1999 (the press release, as
incorporated in the Form 8-K, includes unaudited condensed consolidated balance
sheets for the Registrant for March 31, 1999 and March 31, 1998 and unaudited
condensed consolidated statements of operations for Registrant for the quarterly
and twelve-month periods ended March 31, 1999 and March 31, 1998, which
financial statements give effect to the restatements previously discussed in the
Registrant's February, March and June Releases referenced above in this Item
14(b)); and (vi) Current Report dated July 19, 1999, reporting the Company's
engagement of Arthur Andersen LLP to audit the Company's consolidated financial
statements for the fiscal year ending March 31, 2000 and the dismissal of
PricewaterhouseCoopers LLP as the principal accountant to audit the Company's
consolidated financial statements effective upon the completion of the audit of
the Company's consolidated financial statements for the fiscal year ended March
31, 1999 and the issuance of their report thereon.
117
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 on Form 10-K/A to be signed on
its behalf by the undersigned, thereunto duly authorized.
TELXON CORPORATION
Date: August 11, 1999 By: /s/ WOODY M. MCGEE
------------------------------------
Woody M. McGee, Vice President
and Chief Financial Officer
118
<PAGE> 26
TELXON CORPORATION
EXHIBITS
TO
AMENDMENT NO. 1
ON
FORM 10-K/A
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
<PAGE> 27
INDEX TO EXHIBITS
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* 3.1 Restated Certificate of Incorporation of Registrant,
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 and Amendment No. 2
thereto filed on Form 8-A/A.
* 3.2 Second Amended and Restated By-Laws of Registrant, filed
with the Original Filing.
* 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 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 and Amendment No. 2
thereto filed on Form 8-A/A.
* 4.2 Text of form of Certificate for 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 Registrant's Form 10-Q for the
quarter ended June 30, 1995.
* 4.3 Rights Agreement between Registrant and KeyBank National
Association, as Rights Agent, dated as of August 25, 1987,
as amended and restated as of July 31, 1996, incorporated
herein by reference to Exhibit 4 to Registrant's Form 8-K
dated August 5, 1996.
* 4.3.1 Form of Rights Certificate (included as Exhibit A to
the Rights Agreement included as Exhibit 4.3 above).
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 above, 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.
* 4.3.2 Letter agreement among Registrant, KeyBank National
Association and Harris Trust and Savings Bank, dated June
11, 1997, with respect to the appointment of Harris
Trust and Savings Bank as successor Rights Agent
under the Rights Agreement included as Exhibit 4.3
above, incorporated herein by reference to Exhibit
4.3.2 to Registrant's Form 10-K for the year ended
March 31, 1997.
* 4.4 Indenture by and between 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 Registrant's 7 1/2% Convertible Subordinated
Debentures Due 2012 (set forth in the Indenture included
as Exhibit 4.4 above).
* 4.5 Indenture by and between Registrant and Bank One Trust
Company, N.A., as Trustee, dated as of December 1, 1995,
regarding Registrant's 5 3/4% Convertible Subordinated Notes
due 2003, incorporated herein by reference to Exhibit 4.1 to
Registrant's Registration Statement on Form S-3, 4
Registration No. 333-1189, filed February 23, 1996.
* 4.5.1 Form of Registrant's 5 3/4% Convertible Subordinated
Notes due 2003 issued under the Indenture included as
Exhibit 4.5 above, incorporated herein by reference
to Exhibit 4.2 to Registrant's Registration Statement
on Form S-3, Registration No. 333-1189, filed
February 23, 1996.
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* 4.5.2 Registration Rights Agreement by and among Registrant
and Hambrecht & Quist LLC and Prudential Securities
Incorporated, as the Initial Purchasers of
Registrant's 5 3/4% Convertible Subordinated Notes
due 2003, with respect to the registration of said
Notes under applicable securities laws, incorporated
herein by reference to Exhibit 4.3 to Registrant's
Registration Statement on Form S-3, Registration No.
333-1189, filed February 23, 1996.
10.1 Compensation and Benefits Plans of Registrant.
* 10.1.1 Amended and Restated Retirement and Uniform Matching
Profit-Sharing Plan of Registrant, as amended, filed
with the Original Filing.
* 10.1.2 1990 Stock Option Plan for employees of Registrant,
as amended, incorporated herein by reference to Exhibit
10.1.2 to Registrant's Form 10-Q for the quarter
ended September 30, 1997.
* 10.1.3 1990 Stock Option Plan for Non-Employee Directors of
Registrant, as amended, incorporated herein by reference
to Exhibit 10.1.3 to Registrant's Form 10-Q for the
quarter ended September 30, 1998.
* 10.1.4 Non-Qualified Stock Option Agreement between
Registrant and Raj Reddy, dated as of October 17, 1988,
filed with the Original Filing.
* 10.1.4.a Description of amendments extending the term of
the Agreement included as Exhibit 10.1.4 above,
incorporated herein by reference to Exhibit 10.1.4.a
to Registrant's Form 10-Q for the quarter ended
September 30, 1998.
* 10.1.5 1992 Restricted Stock Plan of Registrant, as
amended, incorporated herein by reference to Exhibit
10.1.5 to Registrant's Form 10-Q for the quarter ended
December 31, 1998.
* 10.1.6 1995 Employee Stock Purchase Plan of Registrant, as
amended, incorporated herein by reference to Exhibit
10.1.7 to Registrant's Form 10-Q for the quarter ended
September 30, 1995.
* 10.1.7 1996 Stock Option Plan for employees, directors and
advisors of Aironet Wireless Communications, Inc., a
subsidiary of Registrant, incorporated herein by
reference to Exhibit 10.1.7 to Registrant's Form
10-K for the year ended March 31, 1997.
* 10.1.7.a Amended and Restated 1996 Stock Option Plan for
employees, directors and advisors of Aironet Wireless
Communications, Inc., incorporated herein by
reference to Exhibit 10.1.7.a to Registrant's Form
10-K for the year ended March 31, 1998.
* 10.1.7.b First Amendment to Amended and Restated 1996 Stock
Option Plan for employees, directors and advisors of
Aironet Wireless Communications, Inc., filed with the
Original Filing.
* 10.1.8 1999 Stock Option Plan for Non-Employee Directors of
Aironet Wireless Communications, Inc., filed with the
Original Filing.
* 10.1.9 Non-Competition Agreement by and between Registrant
and Robert F. Meyerson, effective February 27, 1997,
incorporated herein by reference to Exhibit 10.1.8
to Registrant's Form 10-K for the year ended March
31, 1997.
* 10.1.10 Form of Employment Agreement between Registrant and
John W. Paxton, Sr., filed with the Original Filing.
* 10.1.11 Employment Agreement between Registrant and Kenneth
A. Cassady, effective as of June 7, 1999, filed with
the Original Filing.
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* 10.1.12 Employment Agreement between Registrant and Woody
M. McGee, effective as of June 1, 1999, filed with the
Original Filing.
* 10.1.13 Amended and Restated Employment Agreement between
Registrant and James G. Cleveland, effective as of
April 1, 1997, incorporated herein by reference to
Exhibit 10.1.10 to Registrant's Form 10-K for the year
ended March 31, 1998.
* 10.1.14 Amended and Restated Employment Agreement between
Registrant and Danny R. Wipff, effective as of April 1,
1997, incorporated herein by reference to Exhibit
10.1.14 to Registrant's Form 10-K for the year
ended March 31, 1998.
* 10.1.15 Description of Key Employee Retention Program,
incorporated herein by reference to Exhibit 10.1.15 to
Registrant's Form 10-K for the year ended March 31,
1998.
* 10.1.15.a Form of letter agreement made with key
employees selected under the retention
program described in Exhibit 10.1.15 above,
incorporated herein by reference to Exhibit
10.1.15.a to Registrant's Form 10-K for the
year ended March 31,1998.
* 10.1.16 Employment Agreement, effective as of April 1,
1997, between Registrant and Frank E. Brick, a former
executive officer, incorporated herein by reference
to Exhibit 10.1.9 to Registrant's Form 10-K for the
year ended March 31, 1998.
* 10.1.17 Amended and Restated Employment Agreement,
effective as of April 1, 1997, between Registrant and
Kenneth W. Haver, a former executive officer,
incorporated herein by reference to Exhibit 10.1.11
to Registrant's Form 10-K for the year ended March
31, 1998.
* 10.1.18 Amended and Restated Employment Agreement,
effective as of April 1, 1997, between Registrant and
David W. Porter, a former executive officer,
incorporated herein by reference to Exhibit 10.1.13 to
Registrant's Form 10-K for the year ended March 31,
1998.
* 10.1.19 Letter agreement of Registrant with Robert A.
Goodman, dated as of December 29, 1997 and executed and
delivered January 20, 1998, for continued
consulting services following certain changes in
his law practice, incorporated herein by reference
to Exhibit 10.1.17 to Registrant's Form 10-K for
the year ended March 31, 1998.
** 10.1.20 Amended and Restated Employment Agreement between
Registrant and Gerald J. Gabriel, effective as of
April 1, 1997, filed herewith.
* 10.1.21 Amended and Restated Employment Agreement between
Registrant and David D. Loadman, a former executive
officer, incorporated herein by reference to
Exhibit 10.1.12 to Registrant's Form 10-K for the year
ended March 31, 1998.
10.2 Material Leases of Registrant.
* 10.2.1 Lease between Registrant and 3330 W. Market
Properties, dated as of December 30, 1986, for premises
at 3330 West Market Street, Akron, Ohio, filed with the
Original Filing.
* 10.2.2 Lease Agreement between The Woodlands Commercial
Properties Company, L.P. and Registrant, made and
entered into as of January 16, 1998, including Rider
No. 1 thereto, for premises at 8302 New Trails Drive,
The Woodlands, Texas, incorporated herein by reference
to Exhibit 10.2.2 to Registrant's Form 10-K for the
year ended March 31, 1998.
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* 10.2.3 Standard Office Lease (Modified Net Lease) between
Registrant and John D. Dellagnese III, dated as of July
19, 1995, for premises at 3875 Embassy Parkway, Bath,
Ohio, including an Addendum thereto, incorporated
herein by reference to Exhibit 10.2.4 to
Registrant's Form 10-K for the year ended March 31,
1996.
* 10.2.3.a Second Addendum, dated as of October 5, 1995,
to the Lease included as Exhibit 10.2.3
above, incorporated herein by reference to
Exhibit 10.2.4.a to Registrant's Form 10-K
for the year ended March 31, 1996.
* 10.2.3.b Third Addendum, dated as of March 1,
1996, to the Lease included as Exhibit
10.2.3 above, incorporated herein by
reference to Exhibit 10.2.4.b to Registrant's
Form 10-K for the year ended March 31, 1996.
* 10.2.3.c Fourth Addendum, dated as of April 16, 1996,
to the Lease included as Exhibit 10.2.3
above, incorporated herein by reference to
Exhibit 10.2.2.c to Registrant's Form 10-Q
for the quarter ended June 30, 1997.
* 10.2.3.d Fifth Addendum, dated as of June 24, 1997, to
the Lease included as Exhibit 10.2.3 above,
incorporated herein by reference to Exhibit
10.2.2.d to Registrant's Form 10-Q for the
quarter ended June 30, 1997.
* 10.2.3.e Sixth Addendum, dated as of March, 1998, to
the Lease included as Exhibit 10.2.3 above,
incorporated herein by reference to Exhibit
10.2.3.e to Registrant's Form 10-Q for the
quarter ended September 30, 1998.
* 10.2.3.f Seventh Addendum, dated as of July 20, 1998,
to the Lease included as Exhibit 10.2.3
above, incorporated herein by reference to
Exhibit 10.2.3.f to Registrant's Form 10-Q
for the quarter ended September 30, 1998.
* 10.2.3.g Eighth Addendum, dated as of September 8,
1998, to the Lease included as Ehibit 10.2.3
above, incorporated hereinby reference to
Exhibit 10.2.3.g to Registrant's Form 10-Q
for the quarter ended September 30, 1998.
* 10.2.3.h Sublease Agreement, dated as of September 1,
1998, between Registrant and Aironet Wireless
Communications, Inc. for the premises subject
to the Lease included as Exhibit 10.2.3
above, as amended through the Eighth
Addendum thereto included as Exhibit 10.2.3.g
above, filed with the Original Filing.
* 10.2.3.i Renewal, dated June 16, 1999, with respect to
the Sublease Agreement included as Exhibit
10.2.3.h above, filed with the Original
Filing.
* 10.2.4 Lease Contract between Desarrollos\Inmobiliarios
Paso del Norte, S.A. de C.V. and Productos y Servicios
de Telxon, S.A. de C.V., a subsidiary of Registrant,
for premises in Ciudad Juarez, Chihuahua, Mexico,
made and entered into as of April 10, 1997,
incorporated herein by reference to Exhibit 10.2.4
to Registrant's Form 10-K for the year ended March
31, 1998.
10.3 Credit Agreements of Registrant.
* 10.3.1 Credit Agreement by and among Registrant, the
lenders party thereto from time to time and The Bank of
New York, as letter of credit issuer, swing line lender
and agent for the lenders, dated as of March 8, 1996,
incorporated herein by reference to Exhibit 10.3.2 to
Registrant's Form 10-K for the year ended March 31,1996.
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* 10.3.1.a Amendment No. 1, dated as of August 6, 1996,
to the Agreement included as Exhibit 10.3.1
above, incorporated herein by reference to
Exhibit 10.3.2.a to Registrant's Form 8-K
dated August 16, 1996.
* 10.3.1.b Amendment No. 2, dated as of December 16,
1996, to the Agreement included as Exhibit
10.3.1 above, incorporated herein by
reference to Exhibit 10.3.2.c to Registrant's
Form 8-K dated December 16, 1996.
* 10.3.1.c Amendment No. 3, dated as of December 12,
1997, to the Agreement included as Exhibit
10.3.1 above, included herein by reference to
Exhibit 10.3.1.d to Registrant's Form 10-K
for the year ended March 31, 1998.
* 10.3.1.d Waiver and Agreement, dated as of December
29, 1998, with respect to the Agreement
included as Exhibit 10.3.1 above incorporated
herein by reference to Exhibit 10.3.1.e to
Registrant's Form 10-Q for the quarter ended
December 31, 1998.
* 10.3.1.e Waiver Extension and Agreement, dated as of
February 12, 1999, with respect to the
Agreement included as Exhibit 10.3.1 above,
incorporated herein by reference to Exhibit
10.3.1.f to Registrant's Form 10-Q for the
quarter ended December 31, 1998.
* 10.3.1.f Second Waiver Extension Agreement and
Amendment No. 4, dated as of March 26, 1999,
with respect to the Agreement included as
Exhibit 10.3.1 above, incorporated herein by
reference to Exhibit 10.3.1.a to Registrant's
Form 8-K dated April 1, 1999.
* 10.3.1.g Amended and Restated Security Agreement,
dated as of March 26, 1999, by and among
Registrant and The Bank of New York, as
Agent for the Lenders from time to time party
to the Agreement included as Exhibit 10.3.1
above, incorporated herein by reference to
Exhibit 10.3.1.b to Registrant's Form 8-K
dated April 1, 1999.
* 10.3.1.h Deed of Trust, Assignment of Leases and
Rents, Security Agreement, Fixture Filing
and Financing Statement, dated as of March
26, 1999, by Registrant to First American
Title Insurance Company as Trustee for the
benefit of The Bank of New York, as Agent for
the Lenders from time to time party to the
Agreement included as Exhibit 10.3.1 above,
filed with the Original Filing.
* 10.3.1.i Patent and Trademark Security Agreement,
dated as of March 26, 1999, by Registrant and
certain of its subsidiaries to The Bank of
New York, as Agent for the benefit of the
Lenders from time to time party to the
Agreement included as Exhibit 10.3.1 above,
filed with the Original Filing.
* 10.3.1.j Pledge Agreement, dated as of March 26, 1999,
by Registrant to The Bank of New York, as
Agent for the benefit of the Lenders from
time to time party to the Agreement included
as Exhibit 10.3.1 above, filed with the
Original Filing
* 10.3.1.k Third Waiver Extension Agreement and
Amendment No. 5, dated as of June 29, 1999,
with respect to the Agreement included
as Exhibit 10.3.1 above, incorporated herein
by reference to Exhibit 10.3.1.a to
Registrant's Form 8-K dated July 1, 1999.
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* 10.3.2 Business Purpose Revolving Promissory Note (Swing
Line) made by Registrant in favor of Bank One, NA , dated
August 4, 1998, incorporated herein by reference to
Exhibit 10.3.4 to Registrant's Form 10-Q for the
quarter ended June 30, 1998.
* 10.3.2.a Consent, dated as of December 29, 1998, with
respect to the Note included as Exhibit
10.3.2 above, incorporated herein by
reference to Exhibit 10.3.4.a to Registrant's
Form 10-Q for the quarter ended December 31,
1998.
* 10.3.2.b Further Consent, dated as of February 12,
1999, with respect to the Note included as
Exhibit 10.3.2 above, incorporated herein by
reference to Exhibit 10.3.4.a to Registrant's
Form 10-Q for the quarter ended December 31,
1998.
* 10.3.2.c Second Further Consent and Agreement, dated
as of March 26, 1999, with respect to the
Note included as Exhibit 10.3.2 above,
incorporated herein by reference to Exhibit
10.3.4.c b to Registrant's Form 8-K dated
April 1, 1999.
* 10.3.2.d Amended and Restated Security Agreement,
dated as of March 26, 1999, by and among
Registrant and Bank One, NA with respect to
the Note included as Exhibit 10.3.2 above,
filed with the Original Filing
* 10.3.2.e Deed of Trust, Assignment of Leases and
Rents, Security Agreement, Fixture Filing and
Financing Statement, dated as of March 26,
1999, by Registrant to First American Title
Insurance Company as Trustee for the benefit
of Bank One, NA with respect to the Note
included as Exhibit 10.3.2 above, filed with
the Original Filing.
* 10.3.2.f Patent and Trademark Security Agreement,
dated as of March 26, 1999, by Registrant and
certain of its subsidiaries to Bank One, NA
with respect to the Note included as Exhibit
10.3.2 above, filed with the Original Filing.
* 10.3.2.g Third Further Consent and Note Modification
Agreement, dated as of June 29, 1999, with
respect to the Note included as Exhibit
10.3.2 above, incorporated herein by
reference to Exhibit 10.3.2.g b to
Registrant's Form 8-K dated July 1, 1999.
* 10.4 Amended and Restated Agreement between 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, 1998.
* 10.5 License, Rights, and Supply Agreement between Aironet
Wireless Communications, Inc., a subsidiary of Registrant,
and Registrant, dated as of March 31, 1998, incorporated
herein by reference to Exhibit 10.5 to Registrant's Form
10-K for the year ended March 31, 1998.
* 10.5.1 First Amendment, dated as of March 8, 1996, to the
Agreement included as Exhibit 10.5 above, filed with the
Original Filing.
* 10.6 Asset Purchase Agreement by and among Dynatech Corporation,
IAQ Corporation, Registrant and Itronix Corporation, then a
subsidiary of Registrant, dated as of December 28, 1996,
incorporated herein by reference to Exhibit 2 to
Registrant's Form 8-K dated December 31, 1996.
* 10.7 Agreement of Purchase and Sale of Assets by and among Vision
Newco, Inc., a subsidiary of 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 for the quarter ended June 30, 1995.
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* 10.8 Stock Purchase Agreement by and among Registrant and FED
Corporation, dated as of March 31, 1998, with respect to FED
Corporation's purchase of all of the stock of Virtual
Vision, Inc. (fka Vision Newco, Inc.), incorporated herein
by reference to Exhibit 10.7 to Registrant's Form 10-K for
the year ended March 31, 1998.
* 10.8.1 Escrow Agreement by and among FED Corporation,
Registrant and First Union National Bank, with respect to
the transactions under the Stock Purchase Agreement
included as Exhibit 10.7 above, incorporated herein
by reference to Exhibit 10.7.1 to Registrant's Form
10-K for the year ended March 31, 1998.
* 10.9 Subscription Agreement by and among New Meta Licensing
Corporation, a subsidiary of Registrant, and certain
officers of Registrant as Purchasers, dated as of September
19, 1995, incorporated herein by reference to Exhibit 10.8
to Registrant's Form 10-Q for the quarter ended September
30, 1995.
* 10.10 Amended and Restated Shareholder Agreement by and among
Metanetics Corporation fka New Meta Licensing Corporation,
and its Shareholders, including the officers of Registrant
party to the Agreement included as Exhibit 10.8 above, dated
as of March 28, 1996, incorporated herein by reference to
Exhibit 10.9.3 to Registrant's Form 10-K for the year ended
March 31, 1996.
* 10.10.1 First Amendment, dated as of March 30, 1996, to the
Agreement included as Exhibit 10.9 above, incorporated
herein by reference to Exhibit 10.9.4 to
Registrant's Form 10-K for the year ended March 31,
1996.
* 10.11 Stock Purchase Agreement by and among Meta Holding
Corporation, a subsidiary of Registrant, and certain
officers of Registrant as Purchasers, dated as of March 30,
1996, incorporated herein by reference to Exhibit 10.8 to
Registrant's Form 10-K for the year ended March 31, 1997.
* 10.12 Stock Purchase Agreement by and between Metanetics
Corporation, a subsidiary of Registrant fka New Meta
Licensing Corporation, and Accipiter II, Inc., dated as of
September 30, 1996, incorporated herein by reference to
Exhibit 10.8 to Registrant's Form 10-Q for the quarter ended
September 30, 1996.
* 10.13 Stock Purchase Agreement by and between Registrant and
Telantis Capital, Inc., dated as of March 31, 1997,
incorporated herein by reference to Exhibit 10.10 to
Registrant's Form 10-K for the year ended March 31, 1997.
* 10.14 Subscription Agreement by and among Aironet Wireless
Communications, Inc., a subsidiary of Registrant, and the
investors who executed the same, dated as of March 31, 1998,
incorporated herein by reference to Exhibit 10.14 to
Registrant's Form 10-K for the year ended March 31, 1998.
* 10.14.1 Form of Warrant issued pursuant to the Subscription
Agreement included as Exhibit 10.14 above, incorporated
herein by reference to Exhibit 10.14.1 to
Registrant's Form 10-K for the year ended March 31,
1998.
* 10.14.2 Stockholders Agreement by and among Aironet
Wireless Communications, Inc. and its Stockholders party
thereto, including Registrant and the investors
party to the Subscription Agreement included as
Exhibit 10.14 above, entered into as of March 31,
1998 in connection with the transactions under the
Subscription Agreement, incorporated herein by
reference to Exhibit 10.14.2 to Registrant's Form
10-K for the year ended March 31, 1998.
</TABLE>
<PAGE> 34
<TABLE>
<CAPTION>
WHERE
FILED
- -----
<S> <C> <C> <C>
* 10.14.3 Registration Rights Agreement by and among Aironet
Wireless Communications, Inc. and certain of its security
holders, including Registrant and the investors
party to the Subscription Agreement included as
Exhibit 10.14 above, entered into as of March 31,
1998 in connection with the transactions under the
Subscription Agreement, incorporated herein by
reference to Exhibit 10.14.3 to Registrant's Form
10-K for the year ended March 31, 1998.
* 10.15 DFS Vendor Agreement between Registrant and Deutsche
Financial Services Corporation, dated as of September 30,
1998, incorporated herein by reference to Exhibit 10.15 to
Registrant's Form 10-Q for the quarter ended December 31,
1998.
* 21. Subsidiaries of Registrant, filed with the Original Filing.
* 23. Consent of PricewaterhouseCoopers LLP, filed with the
Original Filing.
* 24. Power of Attorney executed by the members of Registrant's
Board of Directors, filed with the Original Filing.
* 27. Financial Data Schedule as of March 31, 1999, filed with the
Original Filing.
* 27.1 Restated Financial Data Schedule as of March 31, 1998, filed
with the Original Filing(1).
* 27.2 Restated Financial Data Schedule as of March 31, 1997, filed
with the Original Filing(1).
* 27.3 Restated Financial Data Schedule as of March 31, 1996, filed
with the Original Filing(1).
</TABLE>
- ---------------
* Previously filed
** Filed herewith
(1) Included for convenience of reference with respect to the identified prior
period affected by the restatements of Registrant's financial statements
described in its press releases of December 11, 1998, February 23, 1999
and/or June 16, 1999, each as filed under cover of a Current Report on Form
8-K dated the respective dates of the press releases. The restated financial
results are reflected and discussed in the consolidated financial statements
included in Part II, Item 8 hereof and notes 3 and 23 thereto in lieu of
Registrant separately filing of amendments to its Form 10-K and 10-Q filings
for the affected periods as originally contemplated by the referenced press
releases.
<PAGE> 1
EXHIBIT 10.1.20
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 1, 1997
(the "Effective Date") at Akron, Ohio between TELXON CORPORATION ("Employer"), a
Delaware corporation with offices at 3330 West Market Street, Akron, Ohio 44333,
and GERALD J. GABRIEL ("Key Employee") in amendment and restatement in full of
the Employment Agreement previously made by them as of the Effective Date.
WITNESSETH:
WHEREAS, Employer desires to employ Key Employee initially as Senior Vice
President, Financial Operations of Employer, and thereafter, in such capacity as
Employer's chief executive officer (the "Chief Executive Officer"), or such
other officer of Employer as the Chief Executive Officer shall direct (the Chief
Executive Officer or such other officer being Key Employee's "Supervisor"),
shall direct, and Key Employee desires to be so employed, upon the terms and
conditions herein contained.
NOW, THEREFORE, in consideration of the foregoing and in consideration of
the mutual promises and agreements contained herein, the parties hereto agree as
follows:
1. EMPLOYMENT PERIOD. Employer agrees to employ Key Employee, and Key
Employee agrees to be so employed, on the terms and conditions set
forth herein for the period beginning on the Effective Date and
ending March 31, 2000, which period shall thereafter be
automatically extended for successive additional twelve (12) month
periods, subject to the earlier termination of such employment, as
so extended, by Employer or Key Employee pursuant to paragraph 4
(the "Employment Period").
2. NATURE OF DUTIES.
a. Key Employee's duties and responsibilities shall be to serve
as Senior Vice President, Financial Operations of Employer or
in such other capacity as the Supervisor may at any time and
from time to time in its discretion direct, in conformity with
management policies, guidelines and directions issued by
Employer. Key Employee shall report directly to the
Supervisor, and shall have general charge and supervision of
those functions and such other responsibilities as the
Supervisor shall from time to time determine in his
discretion.
b. Key Employee shall work exclusively for Employer on a
full-time basis in such capacity as he is to serve pursuant to
paragraph 2(a), devoting all of his time and attention during
normal business hours to Employer's business.
c. Key Employee shall perform his duties and responsibilities
hereunder diligently, faithfully and loyally in order to cause
the proper, efficient and successful operation of Employer's
business.
3. COMPENSATION AND BENEFITS.
a. BASE SALARY AND EXPENSES. As compensation for Key Employee's
services, Employer shall pay to Key Employee during the
Employment Period a salary (the "Base Salary") at the annual
rate of $200,000 for FY `98. Any salary increases for future
fiscal years will be determined by the Board of Directors of
Employer or an appropriate committee thereof (the "Board") in
its discretion based upon the recommendation of the Chief
Executive Officer. Base salary will be payable in arrears, in
equal bi-weekly installments or at such other
<PAGE> 2
interval as the Board or applicable Employer policies shall
direct. Employer shall reimburse Key Employee for all
reasonable out-of-pocket expenses incurred by Key Employee on
Employer's behalf during the Employment Period and approved by
the Supervisor or such other officer as the Supervisor or
applicable Employer policies shall direct.
b. BONUS COMPENSATION. In addition to the Base Salary, Key
Employee shall, at the discretion of the Board, be eligible to
receive bonus compensation ("Bonus Compensation") with respect
to the Employment Period on such basis as shall be approved by
the Board. For FY `98, Key Employee shall be eligible for a
potential bonus of up to $75,000 based upon achieving goals
and achievements agreed upon by Key Employee and the
Supervisor, subject to such approval thereof as may be
required by the Chief Executive Officer and/or the Board.
Bonus compensation for subsequent fiscal years will be
determined by the Board in its discretion based upon the
recommendation of the Chief Executive Officer.
c. STOCK OPTIONS. During the Employment Period, Key Employee
shall be eligible to receive grants of stock option(s) and
other awards and benefits pursuant to such employee stock
option and other stock-based employee benefit plans as
Employer may maintain from time to time during the Employment
Period with respect to its key employees of like stature and
compensation, in such amounts as may be determined by the
Board in its discretion based upon the recommendation of the
Chief Executive Officer. In the event that, during the
Employment Period, Key Employee is re-assigned by Employer to
a position carrying duties and responsibilities of lesser
stature than his present position as recited in paragraph 2(a)
or such position in which Key Employee serves as of the time
that any such options or other rights or benefits were
previously (including any period prior to the Employment
Period during which Key Employee had duties and
responsibilities substantially similar in stature to those of
his present position) or are hereafter granted or awarded to
or otherwise received by Key Employee during the Employment
Period (other than a re-assignment occurring as the result of
or in connection with any change in control of Employer, in
which case the provisions of the governing benefit plan, or
any other written agreement between Telxon and Employee,
applicable in such a circumstance shall control), such
options, rights and benefits shall, to the extent unvested as
of the time of such re-assignment, be subject to such
reduction, cancellation and/or forfeiture as may then be
determined to be appropriate by the Board in its discretion.
d. VACATION. During the Employment Period, Key Employee shall be
entitled to vacation in accordance with Employer's policies.
e. HEALTH, DISABILITY, RETIREMENT AND DEATH BENEFITS. Employer
shall provide Key Employee with the same health, disability,
retirement and death and other fringe benefits as are
generally provided to the executive employees of Employer in
accordance with such terms, conditions and eligibility
requirements as may from time to time be established by
Employer.
4. TERMINATION.
a. This Agreement shall terminate automatically upon Key
Employee's death.
b. Employer may terminate Key Employee's employment under this
Agreement at any time, upon thirty (30) days written notice to
Key Employee, if Key Employee becomes permanently disabled.
Permanent disability shall be determined by Employer according
to the same standards applicable to the employees of Employer
generally under the disability benefits referred to in
paragraph 3(e).
-2-
<PAGE> 3
c. Employer shall have the right to terminate Key Employee's
employment under this Agreement at any time (i) immediately
for "cause" (which shall mean for any action or inaction of
Key Employee which is adverse to Employer's interests,
including, without limitation, Key Employee's dishonesty,
grossly negligent misconduct, willful misconduct, disloyalty,
act of bad faith, neglect of duty or material breach of this
Agreement or of any Employer policy applicable to its
employees generally), or (ii) without cause upon thirty (30)
days written notice to Key Employee.
d. Key Employee may voluntarily terminate his employment under
this Agreement at any time, upon thirty (30) days written
notice to Employer.
5. EFFECTS OF TERMINATION.
a. In the event of automatic termination by reason of Key
Employee's death pursuant to paragraph 4(a), or by Employer by
reason of Key Employee's permanent disability pursuant to
paragraph 4(b), all of Employer's obligations under this
Agreement shall end except for Employer's obligations to pay
Key Employee's Base Salary and Bonus Compensation, if any
(which Bonus Compensation shall, for purposes of this
paragraph 5(a) and paragraph 5(c)(i), be prorated in light of
the circumstances), in each case earned but unpaid to the date
of death or permanent disability. Key Employee shall also have
the right to receive any payments under the death or
disability benefits, as the case may be, provided to Key
Employee pursuant to paragraph 3(e), if any.
b. In the event Employer exercises its right of termination
other than for cause pursuant to paragraph 4(c)(ii), or Key
Employee exercises his right of voluntary termination pursuant
to paragraph 4(d), all of Employer's obligations under this
Agreement shall end except for its obligations to pay Key
Employee's Base Salary, if any, earned but unpaid to the date
of termination (which, for purposes of this paragraph 5(b) and
paragraph 5(c), shall be thirty (30) days after the date on
which notification is provided by Employer to Key Employee
pursuant to paragraph 4(c)(ii) or by Key Employee to Employer
pursuant to paragraph 4(d), as the case may be) and, in the
case of termination pursuant to paragraph 4(c)(ii), Employer's
obligations under paragraph 5(c).
c. In the event Employer exercises its right of termination other
than for cause pursuant to paragraph 4(c)(ii), Employer shall
also be obligated to pay or provide to Key Employee:
i. Key Employee's Bonus Compensation, if any, earned but
unpaid to the date of termination;
ii. as severance pay, for the twelve (12) month period
following the date of such termination, annualized
compensation at a rate which shall be equal to Key
Employee's Base Salary at such termination date, payable
in equal bi-weekly installments or at such other interval
as the Board or Employer's corresponding payroll policies
shall direct; and
iii.continued benefits (or if unavailable under the general
terms and provisions of the applicable plan, their
equivalent) for Key Employee and his dependents, for a
period terminating on the earliest of (A) twelve (12)
months following the date of such termination, (B) the
commencement date of equivalent benefits from a new
employer, or (C) Key Employee's normal retirement date
(after which the terms of the retirement plan which would
have been applicable to Key Employee had he retired as of
such termination date rather than having been terminated
shall govern), under all insured and self-insured employee
welfare benefit plans in which Key Employee was entitled
to participate immediately prior to such termination date,
provided that Key Employee
-3-
<PAGE> 4
shall not be required to pay any amount greater than
the regular contribution made by Key Employee for
such participation immediately prior to such
termination date.
d. In the event Employer exercises its right of termination
pursuant to paragraph 4(c)(i) for cause, or Key Employee
leaves the employ of Employer other than pursuant to notice
duly given under paragraph 4(d), all of Employer's obligations
under this Agreement shall end except for Employer's
obligations to pay Key Employee's Base Salary, if any, earned
but unpaid to the date of such termination or of the Key
Employee so leaving Employer's employ.
6. COVENANT NOT TO COMPETE.
a. RESTRICTED ACTIVITIES--DURATION. Except as otherwise
consented to or approved by Employer's Board of Directors in
writing, Key Employee agrees that, in addition to being
operative during the Employment Period, the provisions of
paragraphs 6(a)(i) through (iii), inclusive, shall be
operative for a period of twelve (12) months after the later
of (1) the date Key Employee's employment with Employer
(pursuant to this Agreement or otherwise) is terminated or
otherwise ceases, or (2) the end of all severance payments,
if any, which Employer is obligated to make to Key Employee
under paragraph 5(c) or any other subsequent written
agreement between them, regardless of the time, manner or
reason for the termination or other cessation of such
employment. During such periods, without Telxon's prior
written consent, Key Employee will not, directly or
indirectly, acting alone or as a member of a partnership or
as an owner, director, officer, employee, manager,
representative or consultant of any corporation or other
business entity:
i. Engage in any business which manufactures, sells,
distributes, services or supports products or services
of a type manufactured, sold, marketed, serviced or
supported, or in any other business in competition with
or adverse to the business that is conducted by
Employer, or which Employer is in the process of
developing and in or of which Key Employee participated
or has knowledge, at the time of the cessation of Key
Employee's employment with the Employer, in the United
States, Canada or any European, Asian, Pacific Rim or
other foreign country in which Employer then or
thereafter transacts business or is making a bona fide
attempt to do so;
ii. induce, request or attempt to influence any customer or
supplier of Employer to curtail or cancel their
business or prospective business with Employer or in
any way interfere with Employer's business
relationships; or
iii. induce, solicit or assist or facilitate the inducement
or solicitation by any third person of any employee,
officer, agent or representative of Employer to
terminate his respective relationship with Employer or
in any way interfere with the Employer's employee,
officer, agent or representative relationships.
b. TOLLING; RELIEF OF OBLIGATIONS. In the event that Key Employee
breaches any provision of this paragraph 6, such violation (i)
shall toll the running of the twelve (12) month period set
forth in paragraph 6(a) from the date of commencement of such
violation until such violation ceases, and (ii) shall relieve
Employer of any obligations to Key Employee under this
Agreement.
c. "BLUE PENCILING" OR MODIFICATION. If either the length of
time, geographic area or scope of restricted business activity
set forth in paragraph 6(a) is deemed unreasonably restrictive
or unreasonable in any other respect in any proceeding before
a court of competent jurisdiction, Key Employee and Employer
agree and consent to such court's modifying or reducing such
-4-
<PAGE> 5
restriction(s) with respect, but only with respect, to that
jurisdiction to the extent deemed reasonable under the
circumstances then presented.
7. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
a. For purposes of this Agreement, "Confidential Information" means
all information or trade secrets of any type or description
belonging to Employer which are proprietary and confidential to
Employer and which are not publicly disclosed or are only
disclosed with restrictions. Without limiting the generality of
the foregoing, Confidential Information includes: strategic and
other plans for carrying on business; cost data and other
financial information; lists of customers, employees, vendors and
business partners and alliances; manufacturing methods and
processes; product research and engineering data, drawings,
designs and schematics; computer programs, flow charts, routines,
subroutines, translators, compilers, operating systems and object
and source codes; specifications, inventions, know-how,
calculations and discoveries; any letters, papers, documents and
instruments disclosing or reflecting any of the foregoing; and
all information revealed to or acquired or created by Key
Employee during Key Employee's employment by Employer relating to
any of the foregoing or otherwise to Employer's past, current or
future business.
b. Key Employee acknowledges that the discharge of Key Employee's
duties under this Agreement will necessarily involve his access
to Confidential Information. Key Employee acknowledges that the
unauthorized use by him or disclosure by him of such Confidential
Information to third parties might cause irreparable damage to
Employer and Employer's business. Accordingly, Key Employee
agrees that at all times after the date hereof he will not,
without the prior written consent of Employer's Board of
Directors, copy, publish, disclose, divulge to or discuss with
any third party, nor use for his own benefit or that of others
any Confidential Information, except in the normal conduct of his
duties under this Agreement, it being understood and acknowledged
by Key Employee that all Confidential Information created,
compiled or obtained by Key Employee or Employer, or furnished to
Key Employee by any person while Key Employee is associated with
Employer, is and shall be and remain Employer's exclusive
property.
c. Promptly upon termination of his employment, irrespective of the
time or manner thereof or reason therefor, Key Employee agrees to
return and surrender to Employer all Confidential Information
copies thereof in any form which is in any manner in his control
or possession, as well as all other Employer property.
8. RIGHTS. Key Employee acknowledges and agrees that any procedure,
design feature, schematic, invention, improvement, development,
discovery, know-how, concept, idea or the like (whether or not
patentable, registrable under copyright or trademark laws, or
otherwise protectable under similar laws) that Key Employee (whether
individually or jointly with any other person or persons) has since
the inception of his employment with Employer conceived of, suggested,
made, invented, developed or implemented, or may hereafter conceive
of, suggest, make, invent, develop or implement, during the course of
his service to Employer which relates in any way to the business of
Employer or to the general industry of which Employer is a part, all
physical embodiments and manifestations thereof, and all patent
rights, copyrights and trademarks (and applications therefor) and
similar protections thereof (all of the foregoing referred to as "Work
Product") are and shall be the sole, exclusive and absolute property
of Employer. All Work Product shall be deemed to be works for hire for
the benefit of Employer, and to the extent that any Work Product may
not constitute a work for hire, Key Employee hereby assigns to
Employer all right, title and interest in, to and under such Work
Product, including, without limitation, the right to obtain such
patents, copyright registrations, trademark registrations or similar
protections as Employer may desire to obtain. Key Employee will
immediately disclose all Work Product to
-5-
<PAGE> 6
Employer and agrees, at anytime, upon Employer's request and
without additional compensation, to execute any documents and
otherwise to cooperate with Employer (including, without
limitation, all lawful testimony and sworn statements or other
certifications as may be appropriate) respecting the perfection
of its right, title and interest in, to and under such Work
Product and in any litigation or administrative or other
proceeding or controversy in connection therewith, all expenses
incident thereto be borne by Employer.
9. INDUCEMENT; REMEDIES INADEQUATE; AND SURVIVAL.
a. The covenants made by Key Employee in favor of Employer
under paragraphs 6, 7 and 8 and this paragraph 9 are being
executed and delivered by Key Employee in consideration of
Key Employee's employment with Employer and Employer's
obligations hereunder (including, without limitation, the
Base Salary, the Bonus Compensation and other benefits and
payments provided for herein). Key Employee further
acknowledges that such covenants were and have been
conditions of his employment since the inception of Key
Employee's employment with Employer.
b. Key Employee has carefully considered, and has had adequate
time and opportunity to consult with his own counsel or
other advisors regarding the nature and extent of the
restrictions upon him, and the rights and remedies conferred
upon Employer, under paragraphs 6, 7 and 8 and this
paragraph 9, and hereby acknowledges and agrees that such
restrictions are reasonable in time, territory and scope,
are designed to eliminate competition which otherwise would
be unfair to Employer, do not stifle the inherent skill and
experience of Key Employee, would not operate as a bar to
Key Employee's sole means of support, are fully required to
protect the legitimate interests of Employer and do not
confer a benefit upon Employer disproportionate to the
detriment to Key Employee.
c. Key Employee acknowledges that the services to be rendered
by him to Employer as contemplated by this Agreement are
special, unique and of extraordinary character. Key Employee
expressly agrees and understand that the remedy at law for
any breach by him of paragraph 6, 7 or 8 will be inadequate
and that the damages flowing from such breach are not
readily susceptible to being measured in monetary terms.
Accordingly, upon adequate proof of Key Employee's violation
of any legally enforceable provision of paragraph 6, 7 or 8,
Employer shall be entitled to immediate injunctive relief,
including, without limitation, a temporary order restraining
any threatened or further breach. In the event any equitable
proceedings are brought to enforce any provision of
paragraphs 6, 7 and 8, Key Employee agrees that he will not
raise in such proceedings any defense that Employer has an
adequate remedy at law, and Key Employee hereby waives any
such defense. Nothing in this Agreement shall be deemed to
limit Employer's remedies at law or in equity for any breach
by Key Employee of any of the provisions of paragraphs 6, 7
and 8 which may be pursued or availed of by Employer.
Without limiting the generality of the immediately preceding
sentence, any covenant on Key Employee's part contained in
paragraph 6, 7 or 8 which may not be specifically
enforceable shall nevertheless, if breached, give rise to a
cause of action for monetary damages.
d. As used in paragraphs 6, 7 and 8 and in this paragraph 9,
the term "Employer" (other than with respect to the Board of
Directors) shall include, in addition to Employer, all
subsidiaries and other affiliates of Employer, whether so
related to Employer during Key Employee's employment with
Employer or at any time thereafter.
e. Subject only to such time limitations as may be expressly
set forth therein, the covenants and agreements made by Key
Employee in paragraphs 6, 7 and 8 and this paragraph 9 shall
survive full payment by Employer to Key Employee of the
amounts to which Key Employee
-6-
<PAGE> 7
is entitled under this Agreement and the termination of this
Agreement and Key Employee's employment hereunder or
otherwise. The provisions of paragraphs 6, 7 and 8 and this
paragraph 9, and to the extent applicable thereto,
paragraphs 13 through 20, shall continue to apply to and be
binding upon Key Employee in the event and for so long as
Key Employee shall remain in the employ of Employer
following any termination under this Agreement and for such
post-employment period as may there be specified but
measured from the end of such continued employment.
10. ASSIGNMENT OF KEY EMPLOYEE'S RIGHTS. In no event shall Employer be
obligated to make any payment under this Agreement to any assignee
or creditor of Key Employee. Prior to the time provided for the
making of any payment under this Agreement, neither Key Employee
nor his legal representative shall have any right by way of
anticipation or otherwise to assign or otherwise dispose of any
interest under this Agreement.
11. RIGHT OF SET-OFF. Any payments to be made to Key Employee under
this Agreement shall be subject to offset by Employer for any
claims for damages, liabilities or expenses which it may have
against Key Employee.
12. EMPLOYER'S OBLIGATIONS UNFUNDED. Except as to any benefits that
may be required to be funded under any benefit plan of Employer
pursuant to law or under any other written agreement, the
obligations of Employer under this Agreement are not funded, and
Employer shall be not required to deposit in escrow or otherwise
set aside any moneys in advance of the due date for payment
thereof to Key Employee.
13. NOTICES. Any notice to be given hereunder by Employer to Key
Employee shall be deemed to be given if delivered to Key Employee
in person, or if mailed to Key Employee, by certified mail,
postage prepaid, return receipt requested, at his address last
shown on the records of Employer, and any notice to be given by
Key Employee to Employer shall be deemed to be given if delivered
in person or by mail, postage prepaid, return receipt requested to
the Chief Executive Officer at Employer's principal executive
office, unless Key Employee or Employer shall have duly notified
the other parties in writing of a change of address. If mailed,
notice shall be deemed to have been given when deposited in the
mail as set forth above.
14. AMENDMENTS. This Agreement shall not be modified or discharged, in
whole or in part, except by an agreement in writing signed by the
parties hereto.
15. ENTIRE AGREEMENT. This Agreement, together with any and all other
written agreement(s) made contemporaneously herewith, constitute
the entire agreement between the parties with respect to Key
Employee's employment by Employer from and after the Effective
Date. The parties are not relying on any other representation or
understanding with respect thereto, express or implied, oral or
written. This Agreement, as supplemented by such contemporaneous
agreement(s), supersedes any prior employment agreement, written
or oral, between Key Employee and Employer.
16. CAPTIONS. The captions contained in this Agreement are for
convenience of reference only and do not affect the meaning of any
terms or provisions hereof.
17. GENDER AND NUMBER. Whenever the context may permit, any pronouns
used herein shall include the corresponding masculine, feminine
and neuter forms, and the singular form of any noun or pronoun,
including any terms defined herein, shall include the plural and
vice versa.
18. BINDING EFFECT. The rights and obligations of Employer hereunder
shall inure to the benefit of, and shall be binding upon, Employer
and its respective successors and assigns, and the rights and
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<PAGE> 8
obligations of Key Employee hereunder shall inure to the benefit
of, and shall be binding upon, Key Employee and his heirs,
personal representatives and estate.
19. SEVERABLE PROVISIONS. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to
be illegal or otherwise unenforceable in any jurisdiction, in
whole or in part, the remaining provisions and any partially
enforceable provision shall be binding and enforceable to the
extent enforceable in such jurisdiction.
20. GOVERNING LAW. This Agreement shall be interpreted, construed, and
enforced in all respects in accordance with the laws of the State
of Ohio.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.
TELXON CORPORATION KEY EMPLOYEE
By: /s/ Frank E. Brick /s/ Gerald J. Gabriel
-------------------------------------- --------------------------
Frank E. Brick Gerald J. Gabriel
President & Chief Executive Officer
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