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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998*
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________TO __________
COMMISSION FILE NUMBER 0-11402
TELXON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 74-1666060
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
3330 WEST MARKET STREET, AKRON, OHIO 44333
(Address of principal executive offices) (Zip Code)
(330) 664-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ]. No [ ].
At December 31, 1998, there were 16,126,382 outstanding shares of the
Registrant's $.01 par value Common Stock.
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* Insofar as the Registrant is filing a Form 12b-25 with respect to the
unavailability of the Registrant's financial statements for the period covered
by this Quarterly Report on Form 10-Q as of the due date therefor, this filing
omits all disclosures responsive to Item 1 of Part I and, except for the portion
relating to Year 2000 issues (which portion is included herein), the disclosures
responsive to Item 2 of Part II as well as the associated Financial Data
Schedule.
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TELXON CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA (i)
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Page No.
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PART I. FINANCIAL INFORMATION:
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Item 1: Consolidated Financial Statements [omitted (ii)]
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 3 (ii)
PART II. OTHER INFORMATION:
Item 1: Legal Proceedings 6
Item 6: Exhibits and Reports on Form 8-K 7-17
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(i) All Items of Form 10-Q other than those listed in this index have been
omitted as inapplicable.
(ii) Insofar as the Registrant is filing a Form 12b-25 with respect to the
unavailability of the Registrant's financial statements for the period covered
by this Quarterly Report on Form 10-Q as of the due date therefor, this filing
omits all disclosures responsive to Item 1 of Part I and, except for the portion
relating to Year 2000 issues (which portion is included herein), the
disclosures responsive to Item 2 of Part II.
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PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
READINESS FOR THE YEAR 2000
THE INFORMATION SET FORTH UNDER THIS CAPTION IS HEREBY DESIGNATED TO BE A "YEAR
2000 READINESS DISCLOSURE" UNDER THE YEAR 2000 INFORMATION READINESS DISCLOSURE
ACT (THE "YEAR 2000 ACT"), PUBLIC LAW 105-271, AND THE STATEMENTS BELOW AND THE
REGISTRANT, AS THE MAKER THEREOF, SHALL BE ENTITLED TO THE PROTECTIONS PROVIDED
BY THE YEAR 2000 ACT.
THE FOLLOWING DISCUSSION, INSOFAR AS IT CONSISTS OF STATEMENTS REGARDING CERTAIN
TRENDS OR OF OTHER FORWARD-LOOKING INFORMATION CONCERNING THE COMPANY'S
READINESS FOR THE YEAR 2000, IS ALSO INTENDED TO QUALIFY FOR THE PROTECTIONS
AFFORDED "FORWARD-LOOKING STATEMENTS" UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995, PUBLIC LAW 104-67. THE FORWARD-LOOKING STATEMENTS MADE
HEREIN AND ELSEWHERE IN THIS FORM 10-Q ARE INHERENTLY SUBJECT TO RISKS AND
UNCERTAINTIES, WHICH COULD CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS. CERTAIN OF THE RISKS AND OTHER
IMPORTANT FACTORS WHICH MAY AFFECT THE COMPANY'S READINESS FOR THE YEAR 2000 ARE
DESCRIBED IN THE DISCUSSION BELOW. THAT DISCUSSION OF THOSE RISKS AND OTHER
FACTORS SHOULD BE READ IN CONJUNCTION WITH THE MORE COMPLETE DISCUSSION OF THOSE
AND OTHER RISKS AND IMPORTANT FACTORS AFFECTING THE BUSINESS, OPERATING RESULTS
AND CONDITION OF THE COMPANY UNDER "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - FACTORS THAT MAY AFFECT
FUTURE RESULTS", AND OTHER CAUTIONARY STATEMENTS APPEARING UNDER "ITEM 1.
BUSINESS" AND ELSEWHERE, IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS AMENDED
BY AMENDMENTS NO. 1 AND NO. 2 ON FORM 10-K/A, FOR THE FISCAL YEAR ENDED MARCH
31, 1998.
As the end of the twentieth century nears, there is worldwide concern regarding
the use by many existing computer programs of only the last two digits rather
than four to identify the year in a date field. If not corrected, many computer
applications may fail to treat year dates intended to represent years in the
twenty-first century as such but instead treat them as still in the twentieth
century, potentially resulting in system failure or miscalculations disruptive
of business operations, including, among other things, an inability to initiate,
receive, process, invoice or otherwise complete normal business activities.
These Year 2000 issues affect virtually all companies and organizations.
Year 2000 issues affect both the Company's offerings of computer products and
related services to its customers as well as its own operations. The Year 2000
readiness of the Company's operations in turn involves not only its corporate
information systems but also computer-based systems used directly in the conduct
of its business ("Business Function Systems"), such as hardware and software
engineering design tools, manufacturing equipment and customer service and
maintenance tracking systems. In addition, the Company could also be affected by
the Year 2000 readiness of its customers and of its suppliers of raw materials,
components, peripherals, finished products and software and its providers of
facilities, equipment and services. The costs of the Company's Year 2000
readiness efforts are being funded from the Company's operating cash flows.
With respect to its products, the Company has identified those that are or will
be made Year 2000 ready. Those already- or to-be-made-Year 2000 ready products
represent the existing products which management believes will continue to be a
significant part of the Company's ongoing product line. Customers may continue
to order the Company's other existing products, but with no assurance from the
Company as to their Year 2000 readiness or the
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feasibility or availability of an upgrade path to readiness. All new products
are being designed to be Year 2000 ready.
The Company has completed the software/firmware upgrades for its products which
were identified to be made Year 2000 ready, subject to completion of debugging
activities. Subject to negotiated contractual commitments, the Company will make
the upgrades available free of charge for products purchased after December 31,
1997 which were ordered with the latest software version as of the order date;
an upgrade fee will be charged customers who requested an older software version
when they ordered the equipment. Customers will be responsible for installing
the upgrades, or they may retain the Company to do so for a fee. The costs to
date of upgrading the Company's products to Year 2000 readiness have not been,
and the Company does not expect that the remaining cost of doing so will be,
material to the Company's financial position or results of operations.
The Company has purchased and is working with outside contractors to develop and
install new corporate-wide information systems. Though the new systems were
identified as a strategic business initiative independent of Year 2000
considerations, they are also being designed to make the Company's Information
Systems Year 2000 ready. To date, the Company has installed the following phases
of the new system: key financial reporting; accounting; and services help desk
and contract billing. While the new information systems will be dynamic ones
permitting ongoing improvements as business needs are identified, the basic
operational systems remaining to be installed are the engineering product data
management, order entry, manufacturing and accounts receivable systems. These
complex systems, comprising a substantial portion of the overall new systems
installation, are expected to be substantially completed during the first
quarter of fiscal 2000.
The total capital expenditure for the new systems installation, including the
addition of interfaces for "bolt-on" enhancements, is presently estimated to be
approximately $28.0 million, together with accelerated expenditures for the
replacement of computer hardware which are anticipated to be approximately $2.4
million. As of December 31, 1998, the Company had spent approximately $22.6
million in capital expenditures and $.5 million on computer hardware
replacement. Those time and cost targets are management's current best estimates
based on presently available information and numerous assumptions. Given the
uncertainties and complexities inherent in any new system installation, there
can be no assurance that the project will be completed within the expected time
and cost parameters.
In addition to the above capitalized expenditures, the Company has incurred
approximately $2.9 million of non-capitalizable expenses as of December 31,
1998 related to the new systems installation. These non-capitalizable expenses
exclude the one-time, after-tax charge of $1.2 million recorded during fiscal
1998 as a change in accounting principle in accordance with the Financial
Accounting Standards Board's Emerging Issues Task Force consensus ruling
"Accounting for Costs Incurred in Connection with a Consulting Contract of an
Internal Project That Combines Business Process Reengineering and Information
Technology Transformation". The Company estimates that it may incur an
additional $1.4 million in non-capitalizable expenses in connection with the
completion of the initial installation of the new systems.
The Company has engaged an outside consultant to evaluate the Year 2000
readiness of its engineering, manufacturing and customer maintenance and service
Business Function Systems. The consultant's findings and recommendations were
received by the Company February 8, 1999 and are being reviewed and will be
acted upon by the Company team overseeing the study, which includes senior
management from each of the affected functional areas. To the extent any Year
2000 issues are identified, remediation options will include re-writing the
affected software or replacing the affected hardware or software with hardware
or software that is Year 2000 ready. The Company believes that, in general,
replacement, Year 2000 ready hardware and software for its Business Function
Systems are readily available, making that the most likely means of addressing
any remediation needs identified by the consultant. The estimated cost of the
study is immaterial but until the results of the consultant's study are received
and evaluated by the Company, the timetable and cost (though not expected to be
material) for any remediation that may ultimately be required with respect to
the Company's Business Function Systems cannot be estimated.
To the extent that the re-writing of affected software is selected as the means
for remediating any Year 2000 issues, whether in preparing upgrades to Company
products, making Business Function Systems Year 2000 ready or otherwise, given
the technical nature of the task of isolating and correcting non-compliant
programming and the limited internal resources available, and the increasing
demand for available external resources, to perform the work,
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there can be no assurances as to if, when and at what cost any such software
work can be completed.
The Company's own Year 2000 readiness is also affected by the Year 2000
readiness of its customers as well as of its suppliers of raw materials,
components, peripherals, finished products and software and its providers of
facilities, equipment and services and any failure on their part to achieve
readiness in their own operations or with respect to the items they supply or
otherwise provide to the Company. Insofar as no single customer has accounted
for more than ten percent of the Company's revenues in recent fiscal years, the
Company does not anticipate that its operating results will be materially
adversely affected by the failure of any particular customer to itself be Year
2000 ready. The volume of Year 2000 inquiries which the Company has received
from its customers regarding the Year 2000 readiness of the Company products
they use further suggests that the Company's customers are addressing their Year
2000 issues. The Company has made Year 2000 readiness inquiries of the current
suppliers to its engineering, manufacturing and service functions and is
in the initial stages of assessing the responses which are being received. The
Company has also made readiness inquires of its providers of facilities and
related equipment and services (elevators, HVAC, utilities, etc.) and while
still in the process of receiving and assessing the providers' responses, has
not to date identified any significant Year 2000 issues.
There are several possible scenarios which, alone or in aggregate effect, could,
depending on the particular circumstances, materially adversely affect Company's
business and/or its financial results or conditions. These scenarios could
affect the Year 2000 readiness of the Company's own product or service
offerings, disrupt its business operations or negatively impact its operating
results. The Company could be adversely affected by the failure of one or more
of its suppliers of raw materials, components, peripherals, finished products or
software or its providers of facilities, equipment and services to achieve Year
2000 readiness in their own operations or with respect to the items they supply
or otherwise provide to the Company. If such an event were to, or circumstances
indicate that one is likely to, occur, the Company would seek alternative
sources of supply (the Company periodically reviews its sourcing options as part
of its general operating procedures independent of Year 2000 concerns) or seek
to develop or obtain a software upgrade to make the affected item Year 2000
ready. As with all businesses such as the Company engaged in some facet of the
computer industry, there is a risk that the Company's customers may, in advance
of or after the change in the millennium, experience Year 2000 failures or other
difficulties in their use of computer systems comprised of or incorporating
products or services furnished by the Company and may commence legal action or
other compensation for their resulting losses; such legal actions, even if not
ultimately determined adversely to the Company, would likely involve significant
defense costs to the Company, particularly where the combination of products
and/or services of several different vendors in addition to the Company in the
subject customer system presents complex issues for isolating the cause of the
Year 2000 problem and determining the vendor responsible for that problem.
Disruptions in the economy generally, domestically and/or in foreign countries,
resulting from Year 2000 issues could also materially affect the Company. At
this time, the Company does not believe that the likelihood of any of the above
scenarios occurring can be reliably predicted, or that the nature or extent of
their possible adverse effects on the Company, can be reasonably estimated.
Though the Company currently does not have formal contingency plans in place to
address any particular possible Year 2000 scenario, the Company intends to
develop appropriate contingency plans if and when any significant risks relating
to its Year 2000 readiness can be more definitely identified.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On September 21, 1993, a derivative Complaint was filed in the Court of Chancery
of the State of Delaware, in and for Newcastle County, by an alleged stockholder
of the Company derivatively on behalf of Telxon. The named defendants are the
Company; Robert F. Meyerson, former Chairman of the Board, Chief Executive
Officer and director; Dan R. Wipff, then President, Chief Operating Officer and
Chief Financial Officer and director; Robert A. Goodman, Corporate Secretary and
outside director; Norton W. Rose, outside director; and Dr. Raj Reddy, outside
director. The Complaint alleges breach of fiduciary duty to the Company and
waste of the Company's assets in connection with certain transactions entered
into by Telxon and compensation amounts paid by the Company. The Complaint seeks
an accounting, injunction, rescission, attorney's fees and costs. While the
Company is nominally a defendant in this derivative action, no monetary relief
is sought by the plaintiff from the Company. On November 12, 1993, Telxon and
the individual director defendants filed a Motion to Dismiss. The plaintiff
filed his brief in opposition to the Motion on May 2, 1994, and the defendants
filed a final responsive brief. The Motion was argued before the Court on March
29, 1995, and on July 18, 1995, the Court issued its ruling. The Court dismissed
all of the claims relating to the plaintiff's allegations of corporate waste;
however, the claims relating to breach of fiduciary duty survived the Motion to
Dismiss.
On October 31, 1996, plaintiff's counsel filed a Motion to Intervene in the
derivative action on behalf of a new plaintiff stockholder. As part of the
Motion to Intervene, the intervening plaintiff asked that the Court designate as
operative for the action the intervening plaintiff's proposed Complaint, which
alleges that a series of transactions in which the Company acquired technology
from a corporation affiliated with Mr. Meyerson was wrongful in that Telxon
already owned the technology by means of a pre-existing consulting agreement
with another affiliate of Mr. Meyerson; the intervenor's complaint also names
Raymond D. Meyo, President, Chief Executive Officer and director at the time of
the first acquisition transaction, as a new defendant. The defendants opposed
the Motion of grounds that the new claim alleged in the proposed Complaint and
the addition of Mr. Meyo were time-barred by the statute of limitations and the
intervening plaintiff did not satisfy the standards for intervention. After
taking legal briefs, the Court ruled on June 13, 1997, to permit the
intervention. On March 18, 1998, defendant Meyo filed a Motion for Judgement on
the Pleadings (as to himself), in response to which Plaintiff filed its Answer
and Brief in Opposition. The Motion was argued before the Court on November 4,
1998, and was granted from the bench, dismissing Meyo as a defendant in the
case. The post-intervention claims are the subject of ongoing discovery, and no
deadline for the completion of the discovery has yet been set by the Court.
The defendants believe that the post-intervention claims lack merit, and they
intend to continue vigorously defending this action. While the ultimate outcome
of this action cannot presently be determined, the Company does not anticipate
that this matter will have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows and
accordingly has not made provisions for any loss or related insurance recovery
in its financial statements.
On February 17, 1998, a complaint was filed against the Company in the District
Court of Harris County, Texas, by Southwest Business Properties, the landlord of
the Company's former Wynnwood Lane facility in Houston, Texas. The complaint
alleges counts for breach of contract and temporary and permanent injunctive
relief, all related to alleged environmental contamination at the Wynnwood
property, and seeks specific performance, unspecified monetary damages for all
injuries suffered by plaintiff, payment
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of pre-judgement interest, attorneys' fees and costs and other unspecified
relief. In its Answer, Telxon denied plaintiff's allegations. No hearing has
been had on, or is currently scheduled for, plaintiff's claim for temporary
injunctive relief. The trial previously scheduled for March 8, 1999 has been
reset to commence on a day during the Court's two week docket beginning October
25, 1999, with the specific trial date to be set by the Court at that time. If
the Company were ultimately to become responsible for the alleged
contamination, the associated loss could have a material adverse effect on
results of operations for one or more quarters in which the associated
charge(s) would be taken. Telxon believes that these claims lack merit, and it
intends to vigorously defend this action.
On May 8, 1998, two class action suits were filed in the Court of Chancery of
the State of Delaware, in and for the County of New Castle, by certain alleged
stockholders of Telxon on behalf of themselves and purported classes consisting
of Telxon stockholders, other than defendants and their affiliates, relating to
an alleged offer by Symbol Technologies, Inc. ("Symbol") to acquire the Company.
The named defendants are Telxon and its current Board of Directors, namely,
Frank E. Brick, Robert A. Goodman, Dr. Raj Reddy, John H. Cribb, Richard J.
Bogomolny, and Norton W. Rose.
The plaintiffs allege that on April 21, 1998, Symbol made an offer to purchase
Telxon for $38.00 per share in cash and that on May 8, 1998, Telxon rejected
Symbol's proposal. Plaintiffs further allege that Telxon has certain
anti-takeover devices in place purportedly designed to thwart hostile bids for
the Company. Plaintiffs charge the Director defendants with breach of fiduciary
duty and claim that they are entrenching themselves in office. The plaintiffs
seek certification of the purported class, unspecified compensatory damages,
equitable and/or injunctive relief requiring the defendants to act in specified
manners consistent with the defendant Directors' fiduciary duties, and payment
of attorney's fees and costs. The parties have stipulated that the plaintiffs
will file an Amended Complaint and that the defendants will answer only the
Amended Complaint.
On June 2, 1998, the Court ordered consolidation of the above-captioned cases.
This action is in its early stages, with no scheduling order having been issued
by the Court; discovery has not yet commenced. The defendants believe that these
claims lack merit and intend to vigorously defend the consolidated action.
In December 1998 and January and February 1999, a total of 26 class actions were
filed in the United States District Court, Northern District of Ohio, by certain
alleged stockholders of the Company on behalf of themselves and purported
classes consisting of Telxon stockholders, other than the defendants and their
affiliates, who purchased stock during the period May 8, 1998 and January 27,
1999 or various portions thereof. The named defendants are the Company,
President and Chief Executive Officer Frank E. Brick, and Senior Vice President
and Chief Financial Officer Kenneth W. Haver. On February 9, 1999, the
plaintiffs filed a Motion to Consolidate all of the actions. The complaints
allege claims for "fraud on the market" arising from alleged misrepresentations
and omissions with respect to the Company's financial performance and prospects
and an alleged GAAP violation by improperly recognizing revenues. Each complaint
seeks certification of its purported class, unspecified compensatory damages,
interest, attorneys' fees and costs. The defendants believe that these claims
lack merit and they intend to vigorously defend these actions. Defendants
anticipate filing a Motion to Dismiss.
By letter dated December 18, 1998, the Staff of the Division of Enforcement of
the Securities and Exchange Commission advised the Company that it was
conducting a preliminary, informal inquiry into trading of the securities of the
Company at or about the time of the Company's December 11, 1998 press release
announcing that the Company would be restating the revenues for its second
fiscal quarter ended September 30, 1998. In cooperation with the informal
inquiry, the Company has voluntarily provided certain responsive information to
the Staff. On January 20, 1999, the Commission issued a formal Order Directing
Private Investigation And Designating Officers To Take Testimony with respect to
the referenced trading and specified accounting matters, pursuant to which a
subpoena duces tecum was served on the Company on February 11, 1999 requiring
the production of specified documents. The Company intends to continue
cooperating fully with the Staff.
In the event that any of the foregoing litigation ultimately results in a money
judgment against the Company or is otherwise determined adversely to the Company
by a court of competent jurisdiction, such adverse determination may adversely
affect the Company's conduct of its business and the results and condition
thereof.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K:
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.
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3.2 Amended and Restated By-Laws of Registrant, as
amended, incorporated herein by reference to
Exhibit No. 2(b) to Registrant's Registration
Statement on Form 8-A with respect to its Common
Stock filed pursuant to Section 12(g) of the
Securities Exchange Act, as amended by Amendment
No. 1 thereto filed under cover of a Form 8 and
Amendment No. 2 thereto filed on Form 8-A/A.
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.
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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.
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, effective July 1,
1993, incorporated herein by
reference to Exhibit 10.1.1 to
Registrant's Form 10-K for the year
ended March 31, 1994.
10.1.1.a Amendment, dated
January 1, 1994, to
the Plan included as
Exhibit 10.1.1 above,
incorporated herein
by reference to
Exhibit 10.1.1.a to
Registrant's Form
10-K for the year
ended March 31, 1994.
10.1.1.b Amendment, dated
April 1, 1994, to the
Plan included as
Exhibit 10.1.1 above,
incorporated herein
by reference to
Exhibit 10.1.1.b to
Registrant's Form
10-K for the year
ended March 31, 1994.
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10.1.1.c Amendment, dated
January 1, 1994, to
the Plan included as
Exhibit 10.1.1 above,
incorporated herein
by reference to
Exhibit 10.1.1.c to
Registrant's Form
10-Q for the quarter
ended December 31,
1994.
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,
incorporated herein by reference to
Exhibit 10.1.6 to Registrant's Form
10-K for the year ended March 31,
1994.
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, filed
herewith.
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.,
a subsidiary of
Registrant,
incorporated herein
by reference to
Exhibit 10.1.7.a to
Registrant's Form
10-K for the year
ended March 31, 1998.
10.1.8 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.
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10.1.9 Employment Agreement between
Registrant and Frank E. Brick,
incorporated herein by reference to
Exhibit 10.1.9 to Registrant's Form
10-K for the year ended March 31,
1998.
10.1.9.a 1997 Section 162(m)
Performance-Based
Compensation Plan of
Registrant with respect
to its President and
Chief Executive Officer
adopted by the
Performance-Based
Compensation Committee
of Registrant's Board
of Directors and
approved by
Registrant's
Stockholders at the
Annual Meeting thereof,
held September 10,
1997, incorporated
herein by reference to
Exhibit 10.1.9.a to
Registrant's Form 10-K
for the year ended
March 31, 1998.
10.1.10 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.
10.1.11 Amended and Restated Employment
Agreement between Registrant and
Kenneth W. Haver, effective as of
April 1, 1997, incorporated herein by
reference to Exhibit 10.1.11 to
Registrant's Form 10-K for the year
ended March 31, 1998.
10.1.12 Amended and Restated Employment
Agreement between Registrant and
David W. Porter, effective as of
April 1, 1997, incorporated herein by
reference to Exhibit 10.1.13 to
Registrant's Form 10-K for the year
ended March 31, 1998.
10.1.13 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.
10.1.14 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.
10.1.14.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.
11
<PAGE> 12
10.1.15 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.
10.2 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,
incorporated herein by reference
to Exhibit 10.2.1 to Registrant's
Form 10-K for the year ended
March 31, 1994.
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.
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.
12
<PAGE> 13
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.
10.2.4 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 Security Agreement,
dated as of August 6,
1996, by and among
Registrant and The
Bank of New York, as
Agent, incorporated
herein by reference
to Exhibit 10.3.2.b
to Registrant's Form
8-K dated August 16,
1996.
10.3.1.c 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.
13
<PAGE> 14
10.3.1.d 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.e Waiver and Agreement,
dated as of December
29, 1998, with
respect to the
Agreement included as
Exhibit 10.3.1 above,
filed herewith.
10.3.1.f Waiver Extension and
Agreement, dated as
of February 12, 1999,
with respect to the
Agreement included as
Exhibit 10.3.1 above,
filed herewith.
10.3.2 Business Purpose Revolving Promissory
Note (Swing Line) made by Registrant
in favor of Bank One, Akron, N.A.,
dated August 6, 1996, incorporated
herein by reference to Exhibit 10.3.8
to Registrant's Form 8-K dated August
16, 1996.
10.3.2.a Bank One Security
Agreement, dated as
of August 6, 1996, by
and among Registrant
and Bank One, Akron
N.A., incorporated
herein by reference
to Exhibit 10.3.8.a
to Registrant's Form
8-K dated August 16,
1996.
10.3.3 Business Purpose Revolving Promissory
Note (Swing Line) made by Registrant
in favor of Bank One, NA (fka Bank
One, Akron, N.A.), dated August 5,
1997 (extending the credit facility
evidenced by the Note included as
Exhibit 10.3.2 above), incorporated
herein by reference to Exhibit 10.3.8
to Registrant's Form 10-Q for the
quarter ended June 30, 1997.
10.3.4 Business Purpose Revolving Promissory
Note (Swing Line) made by Registrant
in favor of Bank One, NA (fka Bank
One, Akron, N.A.), dated August 4,
1998 (extending the credit facility
evidenced by the Note included as
Exhibit 10.3.3 above), filed with the
Original Filing.
10.3.4.a Consent, dated as of
December 29, 1998,
with respect to the
Note included as
Exhibit 10.3.4 above,
filed herewith.
10.3.4.b Further Consent,
dated as of February
12, 1999, with
respect to the Note
included as Exhibit
10.3.4 above, filed
herewith.
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.
14
<PAGE> 15
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.
10.6 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.
10.7 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.
10.7.1 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.
10.8 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.
10.9 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 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.
15
<PAGE> 16
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, filed herewith.
27. Financial Data Schedule as of December 31, 1998 (insofar as
the Registrant is filing a Form 12b-25 with respect to the
unavailability of the Registrant's financial statements for
the period covered by this Quarterly Report on Form 10-Q as
of the due date therefor, this Exhibit has been omitted).
(b) Reports on Form 8-K
During the second quarter of fiscal 1999 to which this Form 10-Q
relates, the Registrant filed the following Current Reports on Form 8-K: (i)
Current Report dated October 20, 1998, attaching the Registrant's press release
of that date which announced its financial results for the second quarter of
fiscal 1999, and the six month period, ended September 30, 1998 (the press
release, as incorporated in the Form 8-K, includes consolidated
16
<PAGE> 17
balance sheets for the Registrant for September 30, 1998 (unaudited), and March
31, 1998, and condensed consolidated statements of operations for the quarterly
and six- month periods (unaudited) ended September 30, 1998 and 1997); and (ii)
Current Report dated December 11, 1998, attaching the Registrant's press release
of that date (the December Release"), which announced that it would restate
the previously released financial results for its second quarter, ended
September 30, 1998, of its 1999 fiscal year to reflect a change in the timing of
recognizing revenues financed under a new floor-plan arrangement to a segment
of its value-added distributor channel and that its revenues and earnings for
fiscal 1999 are anticipated to be negatively affected as a result of unexpected
delays in the general availability of certain models of its pen-based product
line and lower than expected demand from U.S. customers.
Subsequent to the end of the third quarter of fiscal 1999, the Company
filed a Current Report on Form 8-K dated January 27, 1999, attaching the
Registrant's press release of that date 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 the
December Release, 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 the Company'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.
17
<PAGE> 18
TELXON CORPORATION
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 16, 1999
TELXON CORPORATION
(Registrant)
/s/ KENNETH W. HAVER
Kenneth W. Haver, Senior
Vice President and Chief
Financial Officer
18
<PAGE> 19
TELXON CORPORATION
-----
EXHIBITS
TO
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1998
<PAGE> 20
INDEX TO EXHIBITS
WHERE
FILED
- -----
* 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 Amended and Restated By-Laws of Registrant, as
amended, incorporated herein by reference to
Exhibit No. 2(b) to Registrant's Registration
Statement on Form 8-A with respect to its Common
Stock filed pursuant to Section 12(g) of the
Securities Exchange Act, as amended by Amendment
No. 1 thereto filed under cover of a Form 8 and
Amendment No. 2 thereto filed on Form 8-A/A.
* 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.
i
<PAGE> 21
* 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.
* 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, effective July 1, 1993,
incorporated herein by reference to
Exhibit 10.1.1 to Registrant's Form 10-K
for the year ended March 31, 1994.
* 10.1.1.a Amendment, dated
January 1, 1994, to
the Plan included as
Exhibit 10.1.1
above, incorporated
herein by reference
to Exhibit 10.1.1.a
to Registrant's Form
10-K for the year
ended March 31,
1994.
ii
<PAGE> 22
* 10.1.1.b Amendment, dated
April 1, 1994, to
the Plan included as
Exhibit 10.1.1
above, incorporated
herein by reference
to Exhibit 10.1.1.b
to Registrant's Form
10-K for the year
ended March 31,
1994.
* 10.1.1.c Amendment, dated
January 1, 1994, to
the Plan included as
Exhibit 10.1.1
above, incorporated
herein by reference
to Exhibit 10.1.1.c
to Registrant's Form
10-Q for the quarter
ended December 31,
1994.
* 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,
incorporated herein by reference to
Exhibit 10.1.6 to Registrant's Form
10-K for the year ended March 31,
1994.
* 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, filed
herewith.
* 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.
iii
<PAGE> 23
* 10.1.7.a Amended and Restated
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.a to
Registrant's Form
10-K for the year
ended March 31,
1998.
* 10.1.8 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.
* 10.1.9 Employment Agreement between
Registrant and Frank E. Brick,
incorporated herein by reference to
Exhibit 10.1.9 to Registrant's Form
10-K for the year ended March 31,
1998.
* 10.1.9.a 1997 Section 162(m)
Performance-Based
Compensation Plan of
Registrant with
respect to its
President and Chief
Executive Officer
adopted by the
Performance-Based
Compensation
Committee of
Registrant's Board
of Directors and
approved by
Registrant's
Stockholders at the
Annual Meeting
thereof, held
September 10, 1997,
incorporated herein
by reference to
Exhibit 10.1.9.a to
Registrant's Form
10-K for the year
ended March 31,
1998.
* 10.1.10 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.
* 10.1.11 Amended and Restated Employment
Agreement between Registrant and
Kenneth W. Haver, effective as of
April 1, 1997, incorporated herein
by reference to Exhibit 10.1.11 to
Registrant's Form 10-K for the year
ended March 31, 1998.
* 10.1.12 Amended and Restated Employment
Agreement between Registrant and
David W. Porter, effective as of
April 1, 1997, incorporated herein
by reference to Exhibit 10.1.13 to
Registrant's Form 10-K for the year
ended March 31, 1998.
* 10.1.13 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.
iv
<PAGE> 24
* 10.1.14 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.
* 10.1.14.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.
* 10.1.15 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.
* 10.2 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, incorporated herein by
reference to Exhibit 10.2.1 to
Registrant's Form 10-K for the
year ended March 31, 1994.
* 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.
* 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.
v
<PAGE> 25
* 10.2.3.d Fifth Addendum,
dated as of June
24, 1997, to the
Lease included as
Exhibit 10.2.2
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.
* 10.2.4 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 Security Agreement,
dated as of August
6, 1996, by and
among Registrant and
The Bank of New
York, as Agent,
incorporated herein
by reference to
Exhibit 10.3.2.b to
Registrant's Form
8-K dated August 16,
1996.
vi
<PAGE> 26
* 10.3.1.c 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.d Amendment No. 3,
dated as of December
12, 1997, to the
Agreement included
as Exhibit 10.3.1
above, incorporated
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.e Waiver and
Agreement, dated as
of December 29,
1998, with respect
to the Agreement
included as Exhibit
10.3.1 above, filed
herewith.
** 10.3.1.f Waiver Extension and
Agreement, dated as
of February 12,
1999, with respect
to the Agreement
included as Exhibit
10.3.1 above, filed
herewith.
* 10.3.2 Business Purpose Revolving
Promissory Note (Swing Line) made by
Registrant in favor of Bank One,
Akron, N.A., dated August 6, 1996,
incorporated herein by reference to
Exhibit 10.3.8 to Registrant's Form
8-K dated August 16, 1996.
* 10.3.2.a Bank One Security
Agreement, dated as
of August 6, 1996,
by and among
Registrant and Bank
One, Akron N.A.,
incorporated herein
by reference to
Exhibit 10.3.8.a to
Registrant's Form
8-K dated August 16,
1996.
* 10.3.3 Business Purpose Revolving
Promissory Note (Swing Line) made
by Registrant in favor of Bank One,
NA (fka Bank One, Akron, N.A.),
dated August 5, 1997 (extending the
credit facility evidenced by the
Note included as Exhibit 10.3.2
above), incorporated herein by
reference to Exhibit 10.3.8 to
Registrant's Form 10-Q for the
quarter ended June 30, 1997.
* 10.3.4 Business Purpose Revolving
Promissory Note (Swing Line) made
by Registrant in favor of Bank One,
NA (fka Bank One, Akron, N.A.),
dated August 5, 1997 (extending the
credit facility evidenced by the
Note included as Exhibit 10.3.3
above), filed with the Original
Filing.
** 10.3.4.a Consent, dated as of
December 29, 1998,
with respect to the
Note included as
Exhibit 10.3.4
above, filed
herewith.
vii
<PAGE> 27
** 10.3.4.b Further Consent,
dated as of February
12, 1999, with
respect to the Note
included as Exhibit
10.3.4 above, filed
herewith.
* 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.
* 10.6 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.
* 10.7 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.
* 10.7.1 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.
* 10.8 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.
* 10.9 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 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.
viii
<PAGE> 28
* 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.
ix
<PAGE> 29
** 10.15 DFS Vendor Agreement between
Registrant and Deutsche Financial
Services Corporation, dated as of
September 30, 1998, filed herewith.
*** 27. Financial Data Schedule as of
December 31, 1998 (insofar as the
Registrant is filing a Form 12b-25
with respect to the unavailability
of the Registrant's financial
statements for the period covered
by this Quarterly Report on Form
10-Q as of the due date therefor,
this Exhibit has been omitted).
- ---------------------------------------------
* Previously filed
** Filed herewith
*** Insofar as the Registrant is filing a Form 12b-25 with respect to the
unavailability of the Registrant's financial statements for the period covered
by this Quarterly Report on Form 10-Q as of the due date therefor, this Exhibit
has been omitted.
x
<PAGE> 1
Exhibit 10.1.5
TELXON CORPORATION
1992 RESTRICTED STOCK PLAN
(AS AMENDED THROUGH AND
EFFECTIVE AS OF JULY 18, 1994)
1. PURPOSE OF THE PLAN
The purpose of this Plan is to enable the Company to attract, retain and
reward key employees of the Company and its Subsidiaries and Affiliates and
strengthen the mutuality of interest between such key employees and the
Company's stockholders by offering such key employees Awards of Restricted
Stock.
2. DEFINITIONS
In addition to other capitalized terms defined elsewhere in this Plan, the
following terms shall have the respective meanings set forth below:
2.01 "Act" means the Securities Exchange Act of 1934, as amended from
time to time.
2.02 "Affiliate" means any entity in which the Company has a
substantial direct or indirect equity interest, as determined by the
Committee in its sole discretion.
2.03 "Award" means an award of Restricted Stock pursuant to Section 6
of the Plan.
2.04 "Restricted Stock Award Agreement" means the written agreement
evidencing an Award by and between the Company and the Awardee as required
by Sections 6.01 and 9.
2.05 "Awardee" means an Employee to whom an Award is made.
2.06 "Board" means the Board of Directors of the Company.
2.07 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.08 "Commission" means the United States Securities and Exchange
Commission.
2.09 "Committee" means the Committee appointed by the Board in
accordance with Section 4, if a Committee is appointed. If no Committee has
been appointed, any reference to the Committee shall be deemed a reference
to the Board.
2.10 "Common Stock" means the Common Stock, par value $.01 per share,
of the Company or such other class of equity securities or other securities
as may be applicable under Section 7.
2.11 "Company" means Telxon Corporation, a Delaware corporation or any
successor to substantially all of its business.
2.12 "Employee" means any person, including officers and directors who
are also employees, employed by the Company or any Subsidiary or Affiliate.
The payment of director's fees by the Company shall not be sufficient to
constitute a person an "Employee" of the Company. The Committee is
empowered to determine whether any person qualifies as an "Employee" for
purposes of the Plan.
2.13 "Plan" means this TELXON CORPORATION 1992 RESTRICTED STOCK PLAN.
2.14 "Restricted Period" means a period set by the Committee
commencing with the date of an Award during which such Award is subject to
forfeiture.
2.15 "Restricted Stock" means Common Stock awarded by the Committee
under Section 6.
2.16 "Rule 16b-3" means Rule 16b-3 promulgated by the Commission under
the Act or any successor regulation exempting certain transactions
involving stock-based compensa-
1
<PAGE> 2
tion arrangements from the liability provisions of Section 16 of the Act,
as adopted and amended from time to time and as interpreted by formal or
informal opinions of, and releases published or other interpretive advice
provided by, the Staff of the Commission.
2.17 "Section 16 Person" means an Employee who at the time an Award is
made is subject to Section 16 of the Act, as interpreted by the rules and
regulations promulgated by the Commission thereunder, as adopted and
amended from time to time, and by formal or informal opinions of, and
releases published or other interpretive advice provided by, the Staff of
the Commission.
2.18 "Securities Law Requirements" means the Act and the rules and
regulations promulgated by the Commission thereunder, as adopted and
amended from time to time, including but not limited to Rule 16b-3, and as
interpreted by formal or informal opinions of, and releases published or
other interpretive advice provided by, the Staff of the Commission; other
applicable Federal, State and foreign securities laws and regulations
promulgated thereunder, as adopted and amended from time to time; and the
requirements of any stock exchange, automated inter-dealer quotation system
or other recognized securities market on which the Common Stock is listed
or traded or in which the Common Stock is included, as adopted and amended
from time to time and as interpreted by formal or informal opinions of, and
other interpretive advice, provided by the representatives of such stock
exchange, quotation system or other securities market.
2.19 "Shares" means shares of Common Stock.
2.20 "Subsidiary" means any business association (including a
corporation, partnership or a joint venture, other than the Company) in an
unbroken chain of such associations beginning with the Company if each of
the associations other than the last association in the unbroken chain owns
equity interests (including stock or partnership or joint venture
interests) possessing fifty percent (50%) or more of the total combined
voting power of all classes of equity interests in one of the other
associations in such chain.
2.21 "Successor" means the estate of an Awardee or a person who
succeeds by will or the laws of descent and distribution to an Awardee's
right to an Award.
3. STOCK SUBJECT TO THE PLAN
Subject to adjustment as provided in Section 7, the total number of Shares
available for Awards under the Plan shall be 250,000 Shares. In the event and
to the extent that the Shares which are the subject of any Award granted under
the Plan are forfeited back to or are otherwise reacquired by the Company under
the terms of the Plan or the applicable Restricted Stock Plan Award Agreement,
such Shares shall again be available for the granting of further Awards under
the Plan, except that such forfeited or reacquired Shares shall not become
available for such granting of further Awards under the Plan to any Section 16
Person without the approval thereof by the stockholders of the Company if and
to the extent that Rule 16b-3 or any other Securities Law Requirement requires
that such stockholder approval be obtained on grounds that the Awardee whose
Shares are forfeited or otherwise reacquired is deemed to have received any
benefits of ownership from such Shares (such as dividends paid thereupon) or
otherwise requires that stockholder approval be obtained.
4. ADMINISTRATION OF THE PLAN
4.01 Procedure. The Plan shall be administered by the Board or the
Board may, in its discretion, appoint a Committee to administer the Plan
subject to such terms and conditions as the Board may prescribe; provided
that neither the Board nor any such Committee shall make any decision
concerning the Plan with respect to any Section 16 Person unless the Board
or such Committee making such decision is constituted so that such decision
complies with the then applicable requirements of Rule 16b-3. Once
appointed, the Committee shall continue to serve until otherwise directed
by the Board. From time to time the Board may increase the size of the
Committee and may appoint additional members thereof, remove members (with
or without cause), fill vacancies however caused and remove all members of
the Committee and thereafter directly administer the Plan. As to the
selection of and grants of Awards to Awardees who are not Section 16
Persons, the Committee may delegate any or all of its responsibilities to
members of the Company's management.
4.02 Powers of the Committee. To the extent not inconsistent with this
Plan, the Committee shall have the authority, in its sole discretion:
(a) To determine the eligibility of Employees to be granted Awards;
2
<PAGE> 3
(b) To determine whether and to what extent Awards are to be
granted to eligible Employees;
(c) To determine the number of Shares of Restricted Stock to be
covered by each Award granted under the Plan;
(d) To determine the terms and conditions of any Awards (including,
but not limited to, the Share price, if any, and any restriction or
limitation, or any vesting acceleration or waiver of forfeiture or other
restrictions regarding any Award, including, without limitation, the
duration of the Restricted Period relating to any Award, and/or the
Shares relating thereto based in each case on such factors as the
Committee shall determine in its sole discretion);
(e) To determine whether, to what extent and under what
circumstances grants of Awards are to be made and operate on a tandem
basis with respect to other awards made outside of the Plan, or on a
cumulative, additive basis;
(f) To amend, subject to the provisions of Section 14, any Award.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall from time to
time deem advisable; to interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating thereto); and
otherwise supervise the administration of the Plan.
4.03 Effect of Board and Committee Decisions. All decisions,
determinations and actions of the Board and the Committee in connection
with the construction, interpretation, administration, application,
operation and implementation of the Plan shall be final, conclusive and
binding on the Company, its stockholders and Subsidiaries, all Employees
and Awardees and the respective legal representatives, heirs, successors
and assigns of all of the foregoing and all other persons claiming under or
through any of them.
4.04 Exculpation and Indemnification. No member of the Board or the
Committee, and no Employee or other agent acting on behalf of the Board or
the Committee, shall be personally liable for any decision, determination
or action made or taken, or failed to be made or taken, with respect to
this Plan or any Award granted hereunder, and the Company shall fully
protect each such person in respect of any such decision, determination or
action and shall indemnify each such person against any and all claims,
losses, damages, expenses and liabilities arising from or in connection
with any such decision, determination or action.
5. ELIGIBILITY
Awards may be granted to any Employee who, in the sole judgment of the
Committee, has contributed or may contribute to the success and growth of the
Company, a Subsidiary or an Affiliate.
6. RESTRICTED STOCK RULES AND CONDITIONS
The grant of Restricted Stock shall be upon the following rules and
conditions:
6.01 Restricted Stock Grants. Awards of Restricted Stock shall be
evidenced by Restricted Stock Agreements in accordance with the provisions
of Section 9. Such Agreements shall conform to the requirements of the Plan
and may contain such other provisions as the Committee shall deem
advisable.
6.02 Issuance of Restricted Stock. Upon determination of the number of
Shares of Restricted Stock to be granted to an Awardee, the Committee shall
direct that a certificate representing the number of Shares of Common Stock
be issued to the Awardee with the Awardee as the registered owner. The
certificate representing such Shares shall either be legended as to sale,
transfer, assignment, pledge or other encumbrance during the Restricted
3
<PAGE> 4
Period or, at the election of the Committee, deposited by the Awardee,
together with a stock power endorsed in blank, with the Company.
6.03 Dividends and Voting Rights. Except as otherwise determined by
the Committee and provided in the Restricted Stock Award Agreement for
an Award, during the Restricted Period the Awardee shall have full right to
vote the Shares of Restricted Stock but shall not have the right to
receive any dividends of record thereof as of any date occurring within
the Restricted Period.
6.04 Delivery. The Restricted Stock Agreement shall specify the
duration of the Restricted Period and the performance and/or employment
conditions under which the Restricted Stock may be forfeited to the
Company. At the end of the Restricted Period, the restrictions imposed
hereunder shall lapse with respect to the number of Shares of Restricted
Stock, as determined by the Committee, and the legend shall be removed with
the Shares delivered, as the case may be, with respect to such number. The
Committee may in its sole discretion modify or accelerate the vesting of
Shares of Restricted Stock.
6.05 Dispositions During Restricted Period. Unless otherwise
determined by the Committee at the time of the Award, during the Restricted
Period applicable to any Restricted Stock, none of such Restricted Stock
may be sold, assigned, exchanged, transferred, pledged, hypothecated or
otherwise disposed of or encumbered.
7. ADJUSTMENTS
7.01 General Adjustments. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation or any other change in the corporate structure of the
Company affecting the Common Stock, the Board shall make appropriate
adjustment in the number and kind of Shares authorized by the Plan and any
adjustments to outstanding Awards, as it determines appropriate in the
circumstances, in its sole discretion, provided that the number of Shares
subject to any Award shall always be a whole number.
7.02 Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, all outstanding Awards will
terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board. The Board may, in the exercise of
its sole discretion in such instances, treat such event as a "change in
control" of the Company and adjust all outstanding Awards in accordance
with the provisions of Section 7.03.
7.03 Special Adjustments upon Change in Control.
(a) In the event of a "Change in Control" of the Company (as
defined in Paragraph (b) of this Section 7.03), unless otherwise
determined by the Board in its sole discretion prior to the occurrence
of such Change in Control, any Awards outstanding as of the date of such
Change in Control that are not yet fully vested on such date shall
become fully vested and all restrictions with respect thereto shall
lapse.
(b) Definition of "Change in Control." For purposes of this Section
7, a "Change in Control" means the happening of any of the following:
(i) When any "person," as such term is used in Sections 13(d)
and 14(d) of the Act (other than the Company, a Subsidiary or a
Company or Subsidiary employee benefit plan, including any trustee of
such a plan acting as trustee) becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated by the Commission under the Act, as
adopted and amended from time to time and as interpreted by formal or
informal opinions of, and releases published or other interpretive
advice provided by, the Staff of the Commission), directly or indi-
4
<PAGE> 5
rectly, of securities of the Company representing fifty percent (50%)
or more of the combined voting power of the Company's then
outstanding securities; or
(ii) The consummation of a transaction requiring stockholder
approval and involving the sale of all or substantially all of the
assets of the Company or the merger or consolidation of the Company
with or into another corporation.
8. TIMING OF GRANTING OF AWARDS
The date of grant of an Award shall, for all purposes, be the date on which
the Committee makes the determination granting such Award. Notice of such
determination shall be given to each Employee to whom an Award is granted within
a reasonable time after the date of such grant.
9. RESTRICTED STOCK AWARD AGREEMENTS
As a condition to the effectiveness of each grant of an Award under this
Plan, the Awardee shall enter into a written Restricted Stock Award Agreement in
such form as may be prescribed by the Committee from time to time. Subject to
the provisions of Section 15.01, each such Restricted Stock Award Agreement
shall contain such provisions as are required to conform to the terms of the
Plan and may contain such additional provisions not inconsistent with the terms
of the Plan as the Committee may from time to time authorize. Each Restricted
Stock Award Agreement evidencing the grant of an Award to a Section 16 Person
shall also provide for such minimum holding period from the date of the grant of
the Award to the disposition of any Shares acquired pursuant to the Award as may
be required by Rule 16b-3.
10. CONDITIONS UPON ISSUANCE OF SHARES
Shares shall not be issued with respect to an Award unless the issuance and
delivery of such Shares pursuant thereto shall comply with all applicable
Securities Law Requirements and all other applicable provisions of law,
including, without limitation, any applicable state "blue sky" laws and foreign
(national and provincial) securities laws and the rules and regulations
promulgated under any of such laws, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the issuance of Shares pursuant to an Award, the Company
may require the Awardee to whom such Shares are to be issued to make such
representations and warranties to the Company as may be required, in the opinion
of counsel for the Company, by any of the aforementioned Securities Law
Requirements and other laws, which may include, without limitation,
representations and warranties that the Shares are being acquired only for
investment and without any present intention to sell or distribute such Shares.
The Company shall not have any liability to any Awardee in respect of any
delay in the issuance of Shares hereunder until the Company is able to obtain
authority from any governmental authority (domestic or foreign) or
self-regulatory organization having jurisdiction thereover, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance of such
Shares, or any failure to issue such Shares as to which such requisite authority
the Company is unable to obtain.
11. FORFEITURE OF AWARDS AND REALIZED BENEFITS
Loss of Awards. If an Awardee holding an outstanding Award, without the
written consent of the Company as authorized by the Committee, engages in any of
the following conduct (any such conduct being referred to as "Prohibited
Conduct") at any time during the period beginning on the date the Awardee first
entered the employ of the Company or a Subsidiary or Affiliate and continuing
for so long as any portion of such Award remains subject to restrictions
outstanding (the "Grant Period"):
5
<PAGE> 6
(a) rendering services for any organization or engaging directly or
indirectly in any business which, in the sole judgment of the Committee, is
or becomes competitive with the Company or a Subsidiary or Affiliate, or
where such rendering of services or engaging in business, in the sole
judgment of the Committee, is or becomes otherwise prejudicial to or in
conflict with the interests of the Company or a Subsidiary or Affiliate;
provided that the ownership of a not more than ten percent (10%) equity
interest in any organization or business whose equity is listed on a
recognized securities exchange or traded over-the-counter shall not
constitute Prohibited Conduct within the meaning of this Section 11(a);
(b) disclosing to anyone outside the Company or any Subsidiary or
Affiliate, or use in other than the business of the Company or any
Subsidiary or Affiliate, any confidential or proprietary information
relating to the business of the Company or any Subsidiary or Affiliate,
acquired by the Awardee either during or after employment with the Company
or a Subsidiary or Affiliate;
(c) except as may otherwise be permitted by any agreement otherwise
made by the Company or a Subsidiary or Affiliate with the Awardee, failing
to disclose fully and promptly in writing and assign to the Company or to
the Subsidiary or Affiliate by which the Awardee is or was employed all
right, title and interest in any discovery, invention, process, method,
improvement or idea, whether or not patentable or subject to copyright
protection and whether or not reduced to tangible form or reduced to
practice, made or conceived by such person during employment by the Company
or such Subsidiary or Affiliate, relating in any manner to the actual or
contemplated business, research or development work of the Company or such
Subsidiary or Affiliate or to do anything reasonably necessary to enable
the Company or such Subsidiary or Affiliate to secure a patent, copyright
or similar protection in the United States of America and/or in foreign
countries as the Company or such Subsidiary or Affiliate may elect; or
(d) inducing or attempting to induce any customer or supplier of the
Company or a Subsidiary or Affiliate to breach any contract with the
Company or a Subsidiary or Affiliate or otherwise terminate its
relationship with the Company or a Subsidiary or Affiliate;
then the Committee shall have the right, upon determining that the Awardee has
engaged in any Prohibited Conduct at any time during the Grant Period (in making
such determination, the Committee may, but shall not be required to, give the
Awardee an opportunity to be heard and to present evidence on his behalf), to
declare the Award forfeited and cancelled.
12. RESERVATION OF SHARES
The Company, during the term of this Plan, shall at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
13. EFFECTIVENESS OF PLAN
This Plan was adopted by the Board on, and shall be effective as of, June
25, 1992; provided, however, that any Awards granted hereunder shall not be
exercisable unless and until, and this Plan and all such Awards shall
automatically terminate if, the Plan is not approved, within one (1) year of the
date of adoption of the Plan, by the holders of the outstanding Shares of the
Company present and voting, in person or by proxy, at a duly held meeting of the
Company's stockholders or any adjournment thereof and by such percentage of such
quorum of such stockholders as may be required by applicable Securities Law
Requirements. Once so approved by the stockholders of the Company, the Plan
shall continue in full force and effect until (i) terminated by resolution of
the Board or (ii) no Shares remain available for the granting of additional
Awards. The termination of the Plan shall not affect Awards already granted,
which Awards shall remain in full force and effect in accordance with their
respective terms as if this Plan had not been terminated.
6
<PAGE> 7
14. AMENDMENT OF PLAN AND OUTSTANDING AWARDS
The Board may, in its sole discretion, amend the Plan from time to time,
provided that any amendment which Rule 16b-3 or any other Securities Law
Requirement requires be approved by the stockholders of the Company shall be
made only with the approval of such stockholders. Amendments to the Plan shall
apply prospectively to all Awards then outstanding under the Plan, except in the
case of any amendment which is adverse to an Awardee, in which case the
amendment shall apply with respect to the outstanding Awards held by the
adversely affected Awardee only upon the consent of such Awardee to such
amendment. In exercising its authority under Section 4.02(f) to amend
outstanding Awards, the Committee likewise may make an amendment which adversely
affects the Awardee only upon the consent of such Awardee to such amendment.
Notwithstanding the provisions of this Section 14, the consent of the Awardee
shall not be required with respect to an amendment to the Plan or to any
outstanding Award which is made in order to comply with Securities Law
Requirements.
15. GENERAL PROVISIONS
15.01 Grants to Foreign Employees. Notwithstanding any other provision of
this Plan to the contrary but subject to applicable Securities Law Requirements
and tax laws, to the extent deemed necessary or appropriate by the Committee in
its sole discretion in order to further the purposes of the Plan with respect to
Employees who are foreign nationals and/or employed outside the United States of
America, an Award granted to any such Employee may be on terms and conditions
different from those specified in this Plan in recognition of the differences in
the laws, tax policies and customs applicable to such an Employee, without the
necessity of the Plan being amended to provide for such different terms and
conditions.
15.02 Nature of Benefits. Benefits realized by an Awardee under this Plan
or any Award granted hereunder shall not be deemed a part of such Awardee's
regular, recurring compensation for purposes of the termination, indemnity or
severance pay law of any country and shall not be included in, nor have any
effect on, the determination of benefits under any other employee benefit plan
or similar arrangement provided to such Awardee by the Company or a Subsidiary
unless expressly so provided by such other plan or arrangement, or except where
the Committee expressly determines in its sole discretion that an Award or
portion thereof should be so included in order accurately to reflect competitive
compensation practices or to recognize that an Award has been granted in lieu of
a portion of competitive annual cash compensation.
15.03 Determination of Deadlines. If any day on or before which action
under this Plan or any Award granted hereunder must be taken falls on a
Saturday, Sunday or Company recognized holiday, such action may be taken on the
next succeeding day which is not a Saturday, Sunday or Company-recognized
holiday; provided, however, that the provisions of this Section 15.03 shall not
apply to, and shall not extend the time for exercise of, any Award which is
terminated for Prohibited Conduct pursuant to Section 11.
15.04 Governing Law. To the extent that federal laws (such as the Act or
the Code) or the Delaware General Corporation Law do not otherwise control, this
Plan and all determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of Ohio and construed accordingly.
15.05 Gender and Number. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural and vice
versa.
15.06 Captions. The captions contained in this Plan are for convenience of
reference only and do not affect the meaning of any term or provision hereof.
15.07 The existence of this Plan shall not create in any Employee any right
to be granted an Award hereunder, and neither the existence of this Plan nor the
granting of any Awards to any Employee hereunder shall confer upon such Employee
any right with respect to continuation of
7
<PAGE> 8
the employment of such Employee by the Company or any Subsidiary or shall in any
way interfere with or limit the right which such Employee, the Company or any
Subsidiary may otherwise have to terminate such employment at any time with or
without cause. Upon the termination of any Employee's employment with the
Company or any Subsidiary, neither the Company nor any Subsidiary shall have any
liability or obligation to such Employee under this Plan or any Awards granted
to such Employee hereunder except to issue the appropriate number of Shares to
such Employee upon the exercise of any Award granted to such Employee under this
Plan prior to such termination of employment, provided that such exercise is
duly and timely made in accordance with the provisions of this Plan and such
Award.
8
<PAGE> 1
Exhibit 10.3.1.e
WAIVER AND AGREEMENT
--------------------
WAIVER AND AGREEMENT (this "Waiver"), dated as of December
29, 1998, to the Credit Agreement, dated as of March 8, 1996, by and among
Telxon Corporation (the "Borrower"), the Lenders party thereto, and The Bank of
New York, as Issuer, Swing Line Lender and Agent (as amended, the "AGREEMENT").
RECITALS
--------
I. Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Agreement.
II. The Borrower has requested that the Agent and the Lenders agree to waive
compliance by the Borrower with certain provisions of the Agreement upon the
terms and conditions contained herein.
Accordingly, in consideration of the Recitals and the
covenants and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Borrower, the Agent and the Required Lenders hereby agree as follows:
1. WAIVERS. Subject to satisfaction of the conditions to
effectiveness set forth in Section 3 below, the Required Lenders hereby
waive compliance by the Borrower with the provisions of Section 7.13 of
the Agreement for the period (the "Waiver Period") from the Effective
Date (as defined in Section 3 hereof) until the earlier of (x) February
15, 1999 and (y) the date of the delivery by the Borrower of the
financial statements required by Section 7.7(b) of the Agreement for
the Borrower's fiscal quarter ending December 31, 1998, together with
the associated compliance certificate required by Section 7.7(d) of the
Agreement. In addition, during the Waiver Period the Required Lenders
hereby waive any Defaults or Events of Default currently existing under
Sections 7.7 and 7.13 of the Agreement in respect of the fiscal quarter
of the Borrower ending September 30, 1998 and any other Defaults or
Events of Default arising solely by reason of the restatement of the
Borrower's financial statements for such quarter. Unless otherwise
agreed to by the Required Lenders in writing, upon the expiration of
the Waiver Period, the waivers provided for herein
<PAGE> 2
shall be of no further force or effect and the Lenders may exercise any
and all rights and remedies available to any of them under the
Agreement, the other Loan Documents or applicable law.
2. AGREEMENTS BY THE BORROWER. Anything in the Agreement to
the contrary notwithstanding, in consideration of the waivers set forth
above, the Borrower hereby agree as follows during the Waiver Period:
(i) The aggregate Revolving Credit Exposure shall not
at any time exceed the lesser of (x) $60,000,000 and (y) the
sum of (I) 85% of an amount equal to Eligible Accounts
Receivable MINUS $8,000,000 and (II) 25% of the Eligible
Inventory.
(ii) All Loans made during the Waiver Period shall be
made only as ABR Advances and each outstanding Eurodollar
Advance shall convert to an ABR Advance on the last day of the
Interest Period in respect thereof. The Applicable Margin in
respect of all ABR Advances shall be increased to 2.00% and
the rate at which the Commitment Fee is payable pursuant to
Section 3.11 of the Agreement shall be increased to 0.625% per
annum.
(iii) The Borrower consents to the occurrences of the
Perfection Date and to the filing of the Notice Documents at
any time on or after the Effective Date.
(iv) The Borrower agrees that it will not make any
payments in respect of the outstanding principal amount of the
Bank One Credit Line and will not agree to any amendment or
modification thereof other than extensions of the maturity
thereof and the consent contemplated by Section 3(v) hereof.
(v) The Borrower agrees that it will not make or
permit any of its Subsidiaries to make any Re-
2
<PAGE> 3
stricted Payments other than those permitted by clause (a) of
Section 8.6 of the Agreement.
(vi) The Borrower agrees, without limiting any
restrictions thereon currently contained in the Agreement,
that it will not make any Dispositions, Investments or
Acquisitions outside the ordinary course of its business
except as described on Schedule 1 hereto.
(vii) The Borrower agrees to furnish to the Agent and
each Lender (x) no later than Tuesday of each week a report
setting forth in reasonable detail the Borrower's sources and
uses of cash for the preceding calendar week and a forecast of
the Borrower's sources and uses of cash for the week during
which such report is furnished and (y) no later than fifteen
Business Days after the end of each month an accounts
receivable aging report, the balance of such accounts
receivable owing from each of the top twenty customers of the
Borrower and an inventory report, in each case in such form as
may be reasonably acceptable to the Required Lenders.
The Borrower agrees that any violation of its agreements set
forth above shall constitute a Default under the Agreement. Unless
otherwise agreed to in writing by the Borrower, the foregoing
agreements of the Borrower shall be of no further force or effect upon
the expiration of the Waiver Period.
3. EFFECTIVE DATE. Paragraph 1 and 2 of this Waiver shall not
be effective until such date (the "Effective Date") as each of the
following conditions shall have been satisfied:
(i) The Agent or the Borrower shall have received
counterparts of this Amendment executed by the Required
Lenders and the current Guarantors.
(ii) The Borrower shall have paid the reasonable fees
and disbursements of Special Counsel which
3
<PAGE> 4
shall have accrued up to, and properly invoiced to the
Borrower no later than, the Effective Date.
(iii) On and as of the Effective Date after giving
effect to this Waiver, there shall exist no Default or Event
of Default, and all of the representations and warranties of
the Loan Parties contained in the Loan Documents shall be true
and correct with the same effect as though such
representations and warranties had been made on the Effective
Date.
(iv) The Borrower shall have reduced the Aggregate
Revolving Commitment Amount to $75,000,000 pursuant to Section
2.7 of the Agreement.
(v) Bank One shall have consented to the waivers and
agreements contemplated hereby with respect to the Bank One
Credit Line.
(vi) The Borrower shall have paid to each Lender that
has executed a counterpart of this Waiver on or prior to the
Effective Date a consent fee equal to 0.40% of such Lender's
Revolving Commitment Amount (after giving effect to the
reduction referred to in clause (iv) above).
4. AFFIRMATION. On each of the date hereof and the Effective
Date, the Borrower hereby (a) reaffirms and admits the validity and
enforceability of the Loan Documents and all of its obligations
thereunder, (b) agrees and admits that it has no defenses to or offsets
against any such obligations, and (c) represents and warrants that
after giving effect hereto, no Default or Event of Default has occurred
and is continuing, and that each of the representations and warranties
made by it in the Agreement is true and correct with the same effect as
though such representation and warranty had been made on such date.
5. WAIVERS LIMITED. In all other respects, the Loan Documents
shall remain in full force and effect, and no waiver or amend-
4
<PAGE> 5
ment in respect of any term or condition of any Loan Document contained
herein shall be deemed to be a waiver or amendment in respect of any
other term or condition contained in any Loan Document.
6. COUNTERPARTS. This Waiver may be executed in any number of
counterparts all of which, taken together shall constitute one waiver.
In making proof of this waiver, it shall only be necessary to produce
the counterpart executed and delivered by the party to be charged.
7. GOVERNING LAW. THIS WAIVER IS BEING EXECUTED AND DELIVERED
IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL
BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
5
<PAGE> 6
AS EVIDENCE of the agreement by the parties hereto to the
terms and conditions herein contained, each such party has caused this Waiver to
be executed on its behalf.
TELXON CORPORATION
By: /s/ Kenneth W. Haver
------------------------------------------
Name: Kenneth W. Haver
----------------------------------------
Title: SR. V. P. & Chief Financial Officer
--------------------------------------
THE BANK OF NEW YORK, as Agent
By: /s/ Robert J. Joyce
-------------------------------------------
Name: Robert J. Joyce
------------------------------------------
Title: VP
------------------------------------------
Each of the following Lenders consents to the execution and delivery of this
Waiver by the Agent, hereby directs the Agent to so execute and deliver this
Waiver and agrees to all of the terms and conditions hereof:
THE BANK OF NEW YORK
in its capacity as a Lender, as the
Issuer and as the Swing Line Lender
By: /s/ Robert J. Joyce
---------------------------------
Name: Robert J. Joyce
-------------------------------
Title: VP
-------------------------------
BANK ONE, NA fka
BANK ONE, AKRON, N.A.
By: /s/ Susan D. Steiger
---------------------------------
Name: Susan D. Steiger
-------------------------------
Title: Vice President
-------------------------------
COMERICA BANK
By: /s/ Jeffrey J. Judge
--------------------------------
Name: Jeffrey J. Judge
-------------------------------
Title: Vice President
-------------------------------
6
<PAGE> 7
THE HUNTINGTON NATIONAL BANK
By: /s/ Christine C. Gencer
-----------------------------
Name: Christine C. Gencer
--------------------------
Title: Vice President
-------------------------
PNC BANK, N.A.
By: /s/ Bryon A. Pike
-----------------------------
Name: Bryon A. Pike
--------------------------
Title: Vice President
-------------------------
SOCIETE GENERALE
By: /s/ Joseph A. Philbin
-----------------------------
Name:
--------------------------
Title:
-------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Jack L. Quitmeyer
-----------------------------
Name: Jack L. Quitmeyer
--------------------------
Title: Vice President
-------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Walter R. Wolff
-----------------------------
Name: Walter R. Wolff
--------------------------
Title: Joint General Manager
-------------------------
Each of the Guarantors acknowledges the execution and delivery of this Waiver by
the Agent and by signing below, indicates its reaffirmation of the Guarantor
Obligations (as such term is defined in the Subsidiary Guaranty):
7
<PAGE> 8
PTC AIRCO, INC.
By: /S/ Kenneth W. Haver
-------------------------------------------
Name: Kenneth W. Haver
-----------------------------------------
Title: Sr. V. P. & Chief Financial Officer
---------------------------------------
META HOLDING CORPORATION
By: /S/ Kenneth W. Haver
-------------------------------------------
Name: Kenneth W. Haver
-----------------------------------------
Title: Sr. V. P. & Chief Financial Officer
---------------------------------------
TELETRANSACTION, INC.
By: /S/ Kenneth W. Haver
-------------------------------------------
Name: Kenneth W. Haver
-----------------------------------------
Title: Sr. V. P. & Chief Financial Officer
---------------------------------------
8
<PAGE> 1
Exhibit 10.3.1.f
WAIVER EXTENSION AND AGREEMENT
------------------------------
WAIVER EXTENSION AND AGREEMENT (this "Waiver"), dated as of
February 12, 1999, to the Credit Agreement, dated as of March 8, 1996, by and
among Telxon Corporation (the "Borrower"), the Lenders party thereto, and The
Bank of New York, as Issuer, Swing Line Lender and Agent (as amended, the
"Agreement").
RECITALS
--------
I. Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Agreement.
II. The Borrower, the Agent and the Lenders have heretofore entered into a
Waiver and Agreement, dated as of December 29, 1998 (the "Original Waiver"),
with respect to certain matters relating to the compliance by the Borrower with
certain provisions of the Agreement.
III. The Borrower has requested that the Agent and the Lenders agree to a
further waiver of compliance by the Borrower with certain provisions of the
Agreement, including an extension of the waiver granted in the Original Waiver,
upon the terms and conditions contained herein.
Accordingly, in consideration of the Recitals and the
covenants and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Borrower, the Agent and the Required Lenders hereby agree as follows:
1. WAIVERS. Subject to satisfaction of the conditions to
effectiveness set forth in Section 3 below:
(i) The Required Lenders hereby agree that the Waiver
Period (as defined in Section 1 of the Original Waiver) shall
not expire as of the time provided in the Original Waiver but
shall be extended and remain in effect for the period (the
"Extended Waiver Period") from the Effective Date (as defined
in Section 3 hereof) until March 26, 1999.
(ii) The Required Lenders hereby waive, for and
during the Extended Waiver Period, compliance by the Borrower
with the provisions of Sections 7.11 (Leverage Ratio), 7.12
(Tangible Net Worth), 7.13 (Fixed Charge Coverage Ratio) and
7.15 (Current Ratio) of the Agreement and any Defaults or
Events of
<PAGE> 2
Default under any of said Sections 7.11, 7.12, 7.13 and 7.15
currently existing in respect of the fiscal quarters of the
Borrower ended September 30, 1998 and December 31, 1998 and
any other Defaults or Events of Default hereafter arising
solely by reason of (a) the restatement of the Borrower's
financial statements for any period prior to the September 30,
1998 quarter (any Defaults or Events of Defaults relating to
the restatement of the Borrower's financial statements for the
September 30, 1998 quarter, including the effects thereof on
the Borrower's financial statements for the December 31, 1998
quarter, being waived as provided in the Original Waiver, as
extended by this Waiver), (b) the Borrower's financial results
for the December 31, 1998 quarter as reflected in the
Borrower's financial statements for that period, and/or (c)
any ratios or other computations or certifications required to
be made, maintained or provided under the Agreement or any
other Loan Document (as used in this Waiver, such term shall
include, in addition to the documents specified in the
definition thereof in the Agreement, the Original Waiver)
based upon or in respect of any of the financial statements
referenced in the immediately foregoing clauses (a) and (b).
(iii) The Required Lenders hereby waive, for and
during the Extended Waiver Period, compliance by the Borrower
with the due dates established in Sections 7.7(c) and 7.7(d)
for the delivery of quarterly financial statements and the
associated Compliance Certificate (provided that the Borrower
shall, and the Borrower hereby agrees to, deliver the same
within five (5) days after its filing of a Quarterly Report on
Form 10-Q including such quarterly financial statements) and
any Defaults or Events of Default under Section 7.7 currently
existing in respect of the fiscal quarters of the Borrower
ended September 30, 1998 and December 31, 1998 and any other
Defaults or Events of Default hereafter arising solely by
reason of any financial statements and/or certifications or
other similar documents based thereon or relating thereto
required to be provided by the Borrower under the Agreement or
any other Loan Document in respect of the fiscal quarter ended
December 31, 1998 or any prior period.
2
<PAGE> 3
Unless otherwise agreed to by the Required Lenders in writing, upon the
expiration of the Extended Waiver Period, the waivers provided for
herein shall be of no further force or effect, and unless as of that
time the Borrower is then in compliance with all of the provisions of
the Agreement compliance with which is waived in the Original Waiver
and in this Waiver, an Event of Default shall exist, and the Lenders
may exercise any and all rights and remedies available to any of them
under the Agreement, the other Loan Documents or applicable law.
2. AGREEMENTS BY THE BORROWER. Anything in the Agreement to
the contrary notwithstanding, in consideration of the waivers set forth
above, the Borrower hereby agrees as follows during the Extended Waiver
Period:
(i) The obligations of the Borrower under Section 2
of the Original Waiver, except as the same may be modified by
the terms of this Waiver, shall not be limited to the Waiver
Period but shall, as so modified, continue to be performed and
observed by the Borrower for and during the Extended Waiver
Period.
(ii) Unless otherwise agreed to by the Required
Lenders in writing, the Borrower agrees that the maximum
permitted Aggregate Revolving Credit Exposure shall continue
to be determined in accordance with the formula for
determining the same set forth in Section 2(i) of the Original
Waiver, except that the Sixty Million Dollar ($60,000,000)
amount stated in Section 2(i) of the Original Waiver shall
hereby be reduced to Fifty-Five Million Dollars ($55,000,000)
(such sum being the principal amount of indebtedness presently
outstanding under the Agreement), and that it will not request
any new Loans or the issuance of any new Letters of Credit
under the Agreement.
The Borrower agrees that any violation of its agreements set
forth above shall constitute a Default under the Agreement. Unless
otherwise agreed to in writing by the Borrower, the foregoing
agreements of the Borrower shall be of no further force or effect upon
the expiration of the Extended Waiver Period.
3
<PAGE> 4
3. EFFECTIVE DATE. Paragraph 1 and 2 of this Waiver shall not
be effective until such date (the "Effective Date") as each of the
following conditions shall have been satisfied:
(i) The Agent or the Borrower shall have received
counterparts of this Amendment executed by the Required
Lenders and the current Guarantors.
(ii) The Borrower shall have paid the reasonable fees
and disbursements of Special Counsel which shall have accrued
up to, and properly invoiced to the Borrower no later than,
the Effective Date.
(iii) On and as of the Effective Date after giving
effect to this Waiver, there shall exist no Default or Event
of Default, and all of the representations and warranties of
the Loan Parties contained in the Loan Documents (in the case
of the affirmation of representations and warranties in
Section 4(c) of the Original Waiver, after giving effect to
this Waiver in addition to the Original Waiver as there
recited) shall be true and correct with the same effect as
though such representations and warranties had been made on
the Effective Date.
(iv) Bank One shall have consented to the waivers and
agreements contemplated hereby with respect to the Bank One
Credit Line.
(v) The Borrower shall have paid to each Lender that
has executed a counterpart of this Waiver on or prior to the
Effective Date a consent fee equal to 0.25% of such Lender's
Revolving Commitment Amount (after giving effect to the
reduction in the Aggregate Revolving Commitment Amount
referred to in Section 3(iv) of the Original Waiver).
4. AFFIRMATION. On each of the date hereof and the Effective
Date, the Borrower hereby (a) reaffirms and admits the validity and
(subject to the terms of the Original Waiver and this Waiver)
enforceability of the Loan Documents and all of its obligations
thereunder, (b) agrees and admits that it has no defenses to or offsets
against any such obligations, and (c) represents and warrants that
after giving effect hereto and to the Original Waiver (as modified
hereby), no Default or Event of Default has occurred and is continuing,
and
4
<PAGE> 5
that each of the representations and warranties made by it in the
Agreement is true and correct with the same effect as though such
representation and warranty had been made on such date.
5. WAIVERS LIMITED. In all other respects, the Loan Documents
shall remain in full force and effect, and no waiver or amendment in
respect of any term or condition of any Loan Document contained herein
shall be deemed to be a waiver or amendment in respect of any other
term or condition contained in any Loan Document.
6. COUNTERPARTS. This Waiver may be executed in any number of
counterparts all of which, taken together shall constitute one waiver.
In making proof of this waiver, it shall only be necessary to produce
the counterpart executed and delivered by the party to be charged.
7. GOVERNING LAW. THIS WAIVER IS BEING EXECUTED AND DELIVERED
IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF NEW YORK AND SHALL
BE CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY,
THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
AS EVIDENCE of the agreement by the parties hereto to the
terms and conditions herein contained, each such party has caused this Waiver to
be executed on its behalf.
TELXON CORPORATION
By: /s/ Kenneth W. Haver
---------------------------------------
Kenneth W. Haver,
Sr. V. P. & Chief Financial Officer
THE BANK OF NEW YORK, as Agent
By: /s/ Robert J. Joyce
--------------------------------------
Name: Robert J. Joyce
-----------------------------------
Title: VP
-----------------------------------
5
<PAGE> 6
Each of the following Lenders consents to
the execution and delivery of this Waiver by
the Agent, hereby directs the Agent to so
execute and deliver this Waiver and agrees
to all of the terms and conditions hereof:
THE BANK OF NEW YORK
in its capacity as a Lender, as the
Issuer and as the Swing Line Lender
By: /s/ Robert J. Joyce
----------------------------------
Name: Robert J. Joyce
--------------------------------
Title: VP
-------------------------------
BANK ONE, NA
By: /s/ Susan D. Steiger
----------------------------------
Name: Susan D. Steiger
--------------------------------
Title: Vice President
-------------------------------
COMERICA BANK
By: /s/ Jeffrey J. Judge
----------------------------------
Name: Jeffrey J. Judge
--------------------------------
Title: Vice President
-------------------------------
THE HUNTINGTON NATIONAL BANK
By: /s/ Timothy M. Ward
----------------------------------
Name: Timothy M. Ward
--------------------------------
Title: Vice President
-------------------------------
6
<PAGE> 7
PNC BANK, N.A.
By: /s/ Bryon A. Pike
----------------------------------
Name: Bryon A. Pike
--------------------------------
Title: Vice President
-------------------------------
SOCIETE GENERALE
By: /s/ Joseph A. Philbin
----------------------------------
Name: Joseph A. Philbin
--------------------------------
Title: Director
-------------------------------
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Jack L. Quitmeyer
----------------------------------
Name: Jack L. Quitmeyer
--------------------------------
Title: Vice President
-------------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Walter R. Wolff
----------------------------------
Name: Walter R. Wolff
--------------------------------
Title: Joint General Manager
-------------------------------
7
<PAGE> 8
Each of the Guarantors acknowledges the execution and delivery of this Waiver by
the Agent and by signing below, indicates its reaffirmation of the Guarantor
Obligations (as such term is defined in the Subsidiary Guaranty):
PTC AIRCO, INC.
By: /s/ Kenneth W. Haver
-------------------------------------------
Kenneth W. Haver,
Sr. V. P. & Chief Financial Officer
META HOLDING CORPORATION
By: /s/ Kenneth W. Haver
-------------------------------------------
Kenneth W. Haver,
Sr. V. P. & Chief Financial Officer
TELETRANSACTION, INC.
By: /s/ Kenneth W. Haver
-------------------------------------------
Kenneth W. Haver,
Sr. V. P. & Chief Financial Officer
8
<PAGE> 1
Exhibit 10.3.4.a
CONSENT
-------
CONSENT (this "CONSENT"), dated as of December 29, 1998, given
under the Business Purpose Revolving Promissory Note (Swing Line), dated August
4, 1998 (the "NOTE"), by Telxon Corporation (the "BORROWER") in favor of Bank
One, NA (f/k/a Bank One, Akron, NA; hereafter, the "BANK").
RECITALS
--------
I. Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Note.
II. The Borrower has requested that the Bank consent to the waiver and
agreement, dated as of the date hereof, under the Credit Agreement, dated as of
March 8, 1996, by and among the Borrower, the lenders party thereto, and The
Bank of New York, as issuer, swing line lender and agent (the "CREDIT
AGREEMENT"); such waiver and agreement substantially in the form attached hereto
as Exhibit A (the "AMENDMENT").
III. Certain defaults have occurred under the Credit Agreement and the Note,
which defaults have been waived in the manner, and for the period, provided in
the Amendment and hereunder.
Accordingly, in consideration of the Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Bank does hereby agree as follows:
1. CONSENT. The Bank does hereby consent to the execution and
delivery by the Borrower of the Amendment. This Consent will be
effective for the period from the effective date of the Amendment until
the earlier of (i) February 15, 1999 and (ii) the date of the delivery
by the Borrower of the financial statements required by Section 7.7(b)
of the Credit Agreement for the Borrower's fiscal quarter ending
December 31, 1998, together with the associated compliance certificate
required by Section 7.7(d) of the Credit Agreement.
2. AFFIRMATION; ACKNOWLEDGMENTS. The Borrower hereby (i)
reaffirms and admits the validity and enforceability of the Note and
<PAGE> 2
all of its obligations thereunder as of the date hereof, (ii)
acknowledges that the Bank is in compliance with all of its
obligations under the Note as of the date hereof and (iii) acknowledges
that no further draws can be made by the Borrower under the Note
without the consent of the Bank.
3. CONSENT LIMITED. In all other respects, the Note shall
remain in full force and effect.
4. COUNTERPARTS. This Consent may be executed in any number of
counterparts all of which, taken together shall constitute one Consent.
In making proof of this Consent, it shall only be necessary to produce
the counterpart executed and delivered by the party to be charged.
5. GOVERNING LAW. THIS CONSENT IS BEING EXECUTED AND DELIVERED
IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF OHIO AND SHALL BE
CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF OHIO, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
IN WITNESS WHEREOF, each of the undersigned have caused this
Consent to be executed on its behalf as of the date first above written.
BANK ONE, NA
By: /s/ Susan D. Steiger
--------------------------------
Name: Susan D. Steiger
-----------------------------
Title: Vice President
-----------------------------
TELXON CORPORATION
By: /s/ Kenneth W. Haver
--------------------------------
Name: Kenneth W. Haver
------------------------------
Title: Senior Vice President & CFO
-----------------------------
2
<PAGE> 1
Exhibit 10.3.4.b
FURTHER CONSENT
---------------
FURTHER CONSENT (this "Consent"), dated as of February 12,
1999, given under the Business Purpose Revolving Promissory Note (Swing Line),
dated August 4, 1998 (the "Note"), by Telxon Corporation (the "Borrower") in
favor of Bank One, NA (the "Bank").
RECITALS
--------
I. Capitalized terms used herein which are not otherwise defined herein shall
have the respective meanings ascribed thereto in the Note.
II. The Borrower and the Bank are parties to a Consent, dated as of December 29,
1998 (the "Original Consent") pursuant to which the Bank has consent to the
Waiver and Agreement, dated as of even date with the Original Consent (the
"Amendment"), under the Credit Agreement, dated as of March 8, 1996, by and
among the Borrower, the lenders party thereto, and The Bank of New York, as
issuer, swing line lender and agent (as amended from time to time, the "Credit
Agreement").
III. The Borrower has requested that the parties to the Credit Agreement grant a
further waiver to the Borrower under the Credit Agreement, including an
extension of the waiver granted under the Amendment, such further waiver being
substantially in the form of the Waiver Extension and Agreement attached as
Exhibit A hereto (the "Further Amendment"), and accordingly, has requested that
the Bank consent to the Further Amendment.
IV. Certain defaults have occurred or may occur under the Credit Agreement and
the Note, which defaults are being waived in the manner, and for the period,
provided in the Further Amendment and hereunder.
Accordingly, in consideration of the Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the Bank does hereby agree as follows:
1. CONSENT. The Bank does hereby consent to the execution and
delivery by the Borrower of the Further Amendment, provided that this
Consent shall not become effective unless and until the Borrower shall
have provided the Bank with written certification that the Borrower's
Eligible Accounts Receivable and Eligible Inventory (as such terms are
defined in the Credit Agreement) as of January 31, 1999 are sufficient
under the formula set forth in Section 2(i) of the Amendment, as being
modified by the Further Amendment, to support the Borrower's currently
outstanding borrowings under the Credit Agreement. Subject to the
Bank's receipt of the foregoing certification, this Consent will be
effective until March 26, 1999. The Bank further agrees that the
effectiveness of the Original Consent shall not expire as of the time
provided therein but shall be extended and remain in effect for and
until the end of the period specified in the immediately preceding
sentence.
<PAGE> 2
2. AFFIRMATION; ACKNOWLEDGMENTS. The Borrower hereby (i)
reaffirms and admits the validity and (subject to the terms of the
Credit Agreement as referenced in and made a part of the terms of the
Note, as such Credit Agreement terms are waived or modified by the
Amendment and the Further Amendment) enforceability of the Note and all
of its obligations thereunder as of the date hereof, (ii) acknowledges
that the Bank is in compliance with all of its obligations under the
Note as of the date hereof and (iii) acknowledges that no further draws
can be made by the Borrower under the Note without the consent of the
Bank.
3. CONSENT LIMITED. In all other respects, the Note shall
remain in full force and effect.
4. COUNTERPARTS. This Consent may be executed in any number of
counterparts all of which, taken together shall constitute one Consent.
In making proof of this Consent, it shall only be necessary to produce
the counterpart executed and delivered by the party to be charged.
5. GOVERNING LAW. THIS CONSENT IS BEING EXECUTED AND DELIVERED
IN, AND IS INTENDED TO BE PERFORMED IN, THE STATE OF OHIO AND SHALL BE
CONSTRUED AND ENFORCEABLE IN ACCORDANCE WITH, AND BE GOVERNED BY, THE
INTERNAL LAWS OF THE STATE OF OHIO, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS.
IN WITNESS WHEREOF, each of the undersigned have caused this
Consent to be executed on its behalf as of the date first above written.
BANK ONE, NA
By: /s/ Susan D. Steiger
-----------------------------------
Name: Susan D. Steiger
-----------------------------------
Title: Vice President
-----------------------------------
TELXON CORPORATION
By: /s/ Kenneth W. Haver
-----------------------------------
Kenneth W. Haver,
Senior Vice President and
Chief Financial Officer
2
<PAGE> 1
Exhibit 10.15
DFS VENDOR AGREEMENT
THIS DFS VENDOR AGREEMENT ("Agreement") is made as of September 30,
1998 between DEUTSCHE FINANCIAL SERVICES CORPORATION ("DFS"), having a principal
place of business at 655 Maryville Centre Drive, St. Louis, Missouri 63141, and
TELXON CORPORATION ("Vendor"), having a principal place of business located at
3330 West Market Street, Akron, OH 44334-0582.
Vendor sells various products ("Merchandise") to DFS, which, in turn,
pursuant to a Consignment Agreement between DFS and MRK Technologies, Ltd.
("MRK") dated as of the date hereof, are then consigned to MRK (as such
agreement is modified or amended from time to time, the "Consignment
Agreement"). (A copy of the consignment Agreement is attached hereto as Exhibit
A and incorporated herein by this reference thereto. Capitalized terms used but
not defined herein shall have the meanings given them in the Consignment
Agreement.) To induce DFS to purchase the Merchandise on behalf of MRK under the
terms of the Consignment Agreement, and in consideration thereof, Vendor and DFS
agree as follows:
1. Purchase of Merchandise by DFS; Waivers.
a. Purchase. On or about the date hereof, Vendor shall issue a "pro
forma invoice" to DFS for DFS' purchase of the Merchandise in an amount
not to exceed the Consignment Limit. DFS shall remit payment to Vendor
in the amount of such pro forma invoice Price, via wire transfer,
within one (1) business day of DFS' receipt thereof. However, within
ten (10) days of the date of such pro forma invoice, Vendor must
deliver to DFS a bona fide invoice for such Merchandise, and if such
invoice indicates an actual purchase price which differs with that of
the pro forma invoice, then DFS or Vendor, as applicable shall remit to
the other party such differing amount to conform to the actual purchase
price.
b. Waivers. Vendor understands that upon issuance of the invoice to
DFS, DFS shall have complete ownership of the Merchandise.
Nevertheless, the parties recognize that for a period of time after
issuance of such invoices but prior to shipment to MRK, the Merchandise
may be located at premises owned or under the control of Vendor. Vendor
fully recognizes DFS' interest in the Merchandise and that it is
superior to any other claimed interest in the Merchandise, including
but not limited to any interest of any creditors of Vendor. Vendor
shall not claim any rights of ownership in any of the Merchandise
and/or the proceeds thereof and shall not encumber, lease, transfer or
otherwise dispose of any of the Merchandise, except as permitted
hereunder or instructed in writing by DFS. Vendor waives and releases
any claim right, lien, right of set-off, or any other claim or lien of
any nature whatsoever that Vendor may have or hereafter acquire against
the Merchandise and/or the proceeds thereof, and hereby agrees not to
distrain or levy upon any of the Merchandise. Vendor will keep the
Merchandise segregated from all other merchandise located at any such
premises, and keep them readily identifiable as being the property of
DFS. Vendor will maintain records sufficient to enable DFS to identify
the Merchandise with specificity.
2. MRK Shipments. Whenever MRK requests the shipment of Merchandise
from Vendor which DFS has purchased hereunder for consignment to MRK pursuant to
the Consignment Agreement, Vendor shall request DFS' acceptance thereof, such
acceptance to be indicated by DFS' issuance of an approval number. Vendor hereby
agrees and confirms as follows: (a) that the Merchandise will be delivered to
MRK within ten (10) days following DFS' acceptance; (b) that DFS will receive
Vendor's invoice for such merchandise within ten (10) days from the date of
delivery of the Merchandise to MRK; and (c) that DFS' approval number shall be
on the invoice; subject, however, in all events to DFS' right to revoke its
acceptance prior to the shipment of the Merchandise to MRK.
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<PAGE> 2
3. Vendor's Warranties. By delivery of any invoice, Vendor warrants the
following:
a. That Vendor transfers to DFS all right, title and interest in
and to the Merchandise so described, contingent upon DFS'
prior approval for Vendor to ship such Merchandise to MRK;
b. That Vendor's title to the Merchandise is free and clear of
all liens and encumbrances when sold to DFS and transferred to
MRK;
c. That the Merchandise is in a salable condition suitable for
ordinary sale, free from any known defects; provided, however,
if any Merchandise reflects a defect, Vendor shall repair such
Merchandise at its sole expense;
d. That the Merchandise is the subject of, and substantially
conforms to, a bona fide order by MRK placed with and accepted
by Vendor, and that MRK has requested the Merchandise be
purchased by DFS for MRK pursuant to the terms of the
Consignment Agreement; and
e. That the Merchandise subject to the transaction has been
shipped to MRK not more than ten (10) days prior to the
Invoice Date (with the exception of O.E.M. sourced
Merchandise).
If Vendor breaches any of the above-described warranties, Vendor will
immediately: (i) pay to DFS an amount equal to the total unpaid balance (being
principal and finance and other charges) owed to DFS on all Merchandise related
to the breach; and (ii) reimburse DFS for all costs and expenses (including, but
not limited to, reasonable attorneys' fees) incurred by DFS as a result of the
breach.
4. Payments to DFS. Vendor acknowledges that it is in its best business
interest to have DFS obtain the Merchandise from Vendor hereunder and consign it
to MRK under the Consignment Agreement in order to supply such merchandise to
MRK's CUSTOMERS. In consideration thereof, Vendor agrees as follows:
a. Purchase Charge. Vendor shall pay DFS a purchase charge, calculated
and payable monthly in arrears, in an amount equal to the "Prime Rate"
minus fifteen one-hundredths of one percent (0.15%) per annum on the
average daily outstanding balance of all Invoice Prices (herein, the
"Purchase Charge"). The Purchase Charge will: (i) be computed based on
a 360 day year; and (ii) accrue from the date that DFS makes an advance
hereunder until DFS received the full and final payment of the Invoice
Price. For purposes of this Agreement "Prime Rate" means the "prime
rate" as published in The Wall Street Journal. The Prime Rate will
change and take effect for purposes of this Agreement on the day of any
change in the prime rate published in The Wall Street Journal.
b. Advance Fee. Vendor agrees to pay to DFS an advance fee equal to
one-tenth of one percent (0.10%) of the amount of each Invoice Price
advanced by DFS.
c. Monthly Administration Fee. Vendor shall pay to DFS an
administration fee, payable on the 31st day after each Invoice Date,
and every thirty (30) days thereafter until the applicable Invoice
Price has been satisfied in full, in an amount equal to one-tenth of
one percent (0.10%) of the total outstanding balance of all unpaid
Invoice Prices.
d. Principal Repayment; Purchase Maturity Charge. (i) Principal
Repayment. As Vendor is aware under the Consignment Agreement, MRK is
required to immediately pay DFS the Invoice Price owed to DFS for each
item of Merchandise after MRK sells the Merchandise and collects the
purchase price from the purchaser of such merchandise. However, if MRK
does not collect such amount from the purchaser within ninety (90) days
after the Invoice Date for such merchandise (the "Consignment Period"),
or for any other reason the Invoice Price is not satisfied in full to
DFS on or before the expiration of the Consignment Period, Vendor will
immediately pay DFS the Invoice
2
<PAGE> 3
Price. (ii) Purchase Maturity Charge. Additionally, to the extent the
applicable Invoice Price remains unpaid to DFS for any reason,
one-hundred (100) or more days from the applicable Invoice Date, Vendor
shall pay to DFS a weekly fee, calculated and payable in arrears, in an
amount equal to the Prime Rate plus two and one-half of one percent
(2.5%) per annum of the average daily outstanding balance of such
Invoice Prices which remain unpaid beyond such period. Such change will
be computed based on a 360 day year.
e. Payment Terms Generally. DFS may deduct from amounts owed to Vendor
for any purchases hereunder or any other amounts owed to Vendor, the
amount of any fees, charges or other amounts payable by Vendor to DFS.
To the extent that there exists no indebtedness from DFS to Vendor
against which to set off the amount of such fees, charges or other
amounts, Vendor hereby agrees to pay in full to DFS any such amounts,
or portion thereof. DFS will send Vendor a monthly billing statement
identifying all fees and other charges due from Vendor. The amounts
specified on each billing statement will be: (i) due and payable in
full immediately on receipt, and (ii) an account stated, unless DFS
receives Vendor's written objection thereto within 15 days after it is
mailed to Vendor. DFS may adjust the billing statement at any time to
conform to applicable law and this Agreement. Vendor will make all
payments to DFS at 1630 Des Peres Road, Suite 280, St. Louis, Missouri
63131, Attention: Regional Vice President, unless Vendor is otherwise
notified in writing by DFS. Any checks or other instrument delivered by
DFS under this Agreement will constitute conditional payment until the
funds represented by such instruments are actually received by DFS.
Vendor hereby waives any right it may now or in the future have to
set-off its obligation to make any payment to DFS under this Agreement
or any of the other documents pursuant to which the transactions
contemplated hereby and consummated, against any obligation of DFS to
Vendor, whether under this Agreement, such other documents or any other
agreement between DFS and Vendor.
f. Maximum Interest. Regardless of any provision contained herein, in
the Consignment Agreement or in any other document executed or
delivered in connection herewith or therewith, DFS shall never be
deemed to have contracted for, charged or be entitled to receive,
collect or apply as interest hereunder or under the Consignment
Agreement (whether termed interest herein or deemed to be interest by
judicial determination or operation of law), any amount in excess of
the maximum amount allowed by applicable law, and, if DFS ever
receives, collects or applies as interest any such excess, such amount
which would be excessive interest will be applied first to the
reduction of the unpaid principal balances of advances hereunder, and,
second, any remaining excess will be paid to Vendor. In determining
whether or not the interest paid or payable under any specific
contingency exceeds the highest lawful rate, Vendor and DFS shall, to
the maximum extent permitted under applicable law: (i) characterize any
non-principal payment (other than payments which are expressly
designated as interest payments hereunder) as an expense or fee rather
than as interest; (ii) exclude voluntary pre-payments and the effect
hereof, and (iii) spread the total amount of interest throughout the
entire term hereof so that the interest rate is uniform throughout such
term.
5. Repurchase of Merchandise. Whenever DFS deems it necessary in its
sole discretion to repossess or if DFS otherwise comes into possession, actual
or constructive, of any Merchandise in which it has a security interest or other
lien, Vendor will purchase such Merchandise from DFS at the time of DFS'
repossession or other acquisition of possession. Additionally, Vendor will also
repurchase from DFS, if requested in writing by DFS, any of the Merchandise for
which MRK has not been able to facilitate the sale thereof within ninety (90)
days from the date hereof. Such repurchases by Vendor shall be completed in
accordance with the following terms and conditions:
a. Vendor will purchase such Merchandise, regardless of its condition,
at the point where DFS repossesses it or where it otherwise comes into
DFS' possession;
b. The purchase price Vendor will pay to DFS for such Merchandise will
be due
3
<PAGE> 4
and payable immediately in full, and will be an amount equal to (i)
Vendor's original per unit Invoice Price for such Merchandise,
including all unpaid freight, service and other charges related
thereto, and (ii) all costs and expenses (including, but not limited
to, reasonable attorneys' fees) paid or incurred by DFS in connection
with the repossession of such Merchandise; and
c. Vendor shall not assert or obtain any interest in or to any
Merchandise acquired by Vendor until the purchase price therefor is
paid in full.
6. Indemnifications. In addition to all other obligations of Vendor set
forth in this Agreement, Vendor will be liable for, indemnify and hold DFS
harmless for one hundred percent (100%) of any loss DFS suffers from DFS'
purchase of Merchandise from Vendor and subsequent consignment of said
Merchandise, which loss shall include, but not be limited to, all claims losses,
liability, suits or damages sustained (including reasonable attorneys' fees)
arising out of DFS' performance of the terms of or set forth in and/or
contemplated by this Agreement, the Consignment Agreement and/or any other
agreement, whether resulting from the following or otherwise: (i) damage to
property, or injury to or death or persons, occasioned by or in connection with,
the acts or omissions of Vendor, MRK, or either of their respective agents,
employees or subcontractors, or occasioned by the consigned Merchandise, the use
or presence thereof, or by any other act or omission actually or allegedly
giving rise to liability on the part of DFS, (ii) product liability claims
relating to the Merchandise or any enhancements thereto (whether due to
manufacturing or installation defects, failure to warn of potential hazards,
design defects, claims or defenses asserted by any buyer of the Merchandise or
otherwise), (iii) claims based upon any express or implied warranty, including,
but not limited to, any implied warranty of merchantability or fitness for a
particular purpose, (iv) issues regarding the value, quality, condition,
operation, or description of the consigned Merchandise (whether or not
discoverable), and any other claim that such goods are defective or otherwise
fail to perform to the provisions of the underlying contact, (v) any
unauthorized release or delivery of the Merchandise to any party other than as
provided herein, (vi) any theft or conversion of the Merchandise, (vii) any
mysterious disappearance of the Merchandise, (viii) any damage or casualty loss,
or other shortage of the Merchandise, (ix) any patent, trade secret, copyright
infringement or other claim with respect to third party proprietary rights, or
any other intellectual property claims (whether for patent, copyright or
trademark infringement or unauthorized use or sale or otherwise), (x) consumer
protection or deceptive trade practice claims, or (xi) antitrust claims.
7. Extension of Time; Waivers. DFS may extend the time of MRK in
payment default to fulfill its obligations to DFS with respect to the
Merchandise without altering Vendor's obligations hereunder provided DFS has
given Vendor notice of such payment default in respect of the Merchandise within
five (5) business days thereof. Notwithstanding the foregoing, DFS may extend
the time of MRK in default to fulfill any other of its obligations to DFS, or
any kind or nature including a nonpayment related default in respect of the
Merchandise, without notice to Vendor and without altering Vendor's obligations
hereunder Vendor waives any rights it may have to notice of nonpayment,
nonperformance, dishonor, the amount of indebtedness of MRK outstanding at any
time, any legal proceeding against MRK, and any other demands and notices except
as required by law, and any rights it may have to require DFS to proceed against
MRK or the Merchandise or to pursue any other remedy in DFS' power. Vendor's
liability to DFS is direct and unconditional and will not be affected by any
change in the terms of payment or performance of any agreement between DFS and
MRK including but not limited to the Consignment Agreement, or the release,
settlement or compromise of or with any party liable for the payment or
performance thereof, the release or non-perfection of any security interest
granted DFS in any agreement between DFS and MRK, any change in MRK's financial
condition, or the interruption of business relations between DFS and MRK.
8. Expenses; Release of Information. Vendor will pay all DFS' expenses
(including, but not limited to, court costs, arbitration fees and reasonable
attorneys' fees) in the event DFS is required to enforce its rights against
Vendor. Upon each request by DFS and provided MRK has consented to the release
of the described information, which consent may be evidenced by a security or
other agreement between DFS and MRK in which authorized disclosure of such
information, Vendor will release to DFS any credit, financial or
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<PAGE> 5
information on MRK, whether or not such information is public or non-public. In
the event MRK has not consented to the release of the information described
above, upon each request by DFS, Vendor will release to DFS any credit, publicly
available financial or other public information on MRK upon each request by DFS.
Vendor will immediately notify DFS if Vendor reasonably believes that MRK has
violated the terms of any franchise, permission, license or right to sell or
deal in the Merchandise.
9. Invoices. Invoices submitted to DFS by Vendor for inventory sold to
DFS hereunder in connection with the Consignment Agreement should indicate that
the Merchandise is "Sold to DFS" and "Shipped to MRK."
10. Successors and Assigns; Obligations. This Agreement will be binding
upon and inure to the benefit of DFS' successors and assigns. Vendor cannot
assign this Agreement without DFS' prior written consent. DFS may perform or
cause to be performed any or all of its obligations hereunder by any of its
subsidiaries and/or affiliated companies. Vendor's obligations under this
Agreement inure to the benefit of any of DFS' subsidiaries and/or affiliated
companies.
11. Events of Default. The occurrence of any of the following events
shall be deemed an "Event of Default" under this Agreement: (a) Vendor's failure
to pay when due any amount owed DFS hereunder or under any other agreement
between DFS and Vendor; (b) Vendor's failure to perform or observe any covenant,
term or provision hereunder or under any other agreement between DFS and Vendor;
(c) the occurrence of any default under the Consignment Agreement; (d) Vendor
shall cease existence as a corporation, partnership, limited liability company
or trust, as applicable; (e) Vendor ceases or suspends business; (f) Vendor
makes a general assignment for the benefit of creditors; (g) Vendor becomes
insolvent or voluntarily or involuntarily becomes subject to the Federal
Bankruptcy Code, any state insolvency law or any similar law; (h) any receiver
is appointed for any assets of Vendor; (i) Vendor sells, transfers or assigns
all or substantially all of its assets; (j) Vendor merges its business with
another business in a transaction in which Vendor is not the surviving entity;
or (k) there is any material adverse change in Vendor's financial condition.
12. Remedies Upon Default. Upon the occurrence of any Event of Default,
DFS shall have the right, at DFS' option, to immediately exercise one or more of
the following remedies: (a) refuse to extend any further financing to MRK or
Vendor, pursuant to the Consignment Agreement or otherwise; (b) terminate this
Agreement and the Consignment Agreement; or (c) exercise any other rights it may
have under the laws of the state governing this Agreement.
13. Termination. Either party may terminate this Agreement by notice to
the other in writing, the termination to be effective thirty (30) days after
receipt (which receipt is presumed to be five (5) business days after the same
is sent) of notice by the other party provided, however, that DFS may terminate
this Agreement immediately if an Event of Default has occurred. In any event, no
termination of this Agreement will affect any of Vendor's (or its assignees,
whether permitted or unpermitted) liability with respect to any financial
transactions entered into by DFS with MRK prior to the effective date of
termination, including, without limitation, transactions that will not be
completed until after the effective date of termination.
14. Miscellaneous. Vendor will notify DFS of any changes in its name or
business structure. Vendor waives notice of DFS' acceptance of this Agreement.
This Agreement is not intended, nor shall it be deemed to, directly or
indirectly, benefit any person or entity, including MRK, who is not a party
hereto. If at any time any one or more of the provisions of this Agreement
becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby. DFS' failure to exercise any
rights granted hereunder shall not operate as a waiver of those rights. The
rights of DFS under this Agreement are cumulative, may be exercised as often as
it considers appropriate, and are in addition to its rights under the general
law.
15. No Oral Agreements. There are no oral or unwritten agreements
between DFS and Vendor regarding the subject matter hereof, Vendor and DFS
acknowledge and agree that
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<PAGE> 6
all agreements and understandings between them are set forth in this Agreement
and any terms letters executed in connection herewith (as the same may be
revised from time to time without necessitating an amendment of this Agreement)
or in any other writing between the parties relating hereto.
16. BINDING ARBITRATION
16.1 Arbitrable Claims. Except as otherwise specified below, all
actions, disputes, claims and controversies under common law,
statutory law or in equity of any type or nature whatsoever
(including, without limitation, all torts, whether regarding
negligence, breach of fiduciary duty, restraint of trade,
fraud, conversion, duress, interference, wrongful replevin,
wrongful sequestration, fraud in the inducement, usury or any
other tort, all contract actions, whether regarding express or
implied terms, such as implied covenants of good faith, fair
dealing, and the commercial reasonableness of any Collateral
disposition, or any other contract claim, all claims of
deceptive trade practices or lender liability, and all claims
questioning the reasonableness or lawfulness of any act),
whether arising before or after the date of this Agreement,
and whether directly or indirectly relating to: (a) this
Agreement or any other agreements relating hereto, and/or any
amendments and addenda hereto or thereto, or the breach,
invalidity or termination hereof or thereof; (b) any previous
or subsequent agreement between DFS and Vendor; (c) any act
committed by DFS or by any parent company, subsidiary or
affiliated company of DFS (the "DFS Companies"), or by any
employee, agent, officer of director of a DFS Company whether
or not arising within the scope and course of employment or
other contractual representation of the DFS Companies provided
that such act arises under a relationship, transaction or
dealing between DFS and Vendor; and/or (d) any other
relationship, transaction or dealing between DFS and Vendor
(collectively the "Disputes"), will be subject to and resolved
by binding arbitration.
16.2 Administrative Body. All arbitration hereunder will be
conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association ("AAA"). If the AAA is
dissolved, disbanded or becomes subject to any state or
federal bankruptcy or insolvency proceeding, the parties will
remain subject to binding arbitration which will be conducted
by a mutually agreeable arbitral forum. The parties agree that
all arbitrator(s) selected will be attorneys with at least
five (5) years secured transactions experience. The
arbitrator(s) will decide if any inconsistency exists between
the rules of any applicable arbitral forum and the arbitration
provisions contained herein. If such inconsistency exists, the
arbitration provisions contained herein will control and
supersede such rules. The site of all arbitration proceedings
will be in the Division of the Federal Judicial District in
which AAA maintains a regional office that is closest to
Vendor.
16.3 Discovery. Discovery permitted in any arbitration proceeding
commenced hereunder is limited as follows. No later than
thirty (30) days after the filing of a claim for arbitration,
the parties will exchange detailed statements setting forth
the facts supporting the claim(s) and all defenses to be
raised during the arbitration, and a list of all exhibits and
witnesses. No later than twenty-one (21) days prior to the
arbitration hearing, the parties will exchange a final list of
all exhibits and all witnesses, including any designation of
any expert witness(es) together with a summary of their
testimony; a copy of all documents and a detailed description
of any property to be introduced at the hearing. Under no
circumstances will the use of interrogatories, request for
admission, requests for the production of documents or the
taking of deposition be permitted. However, in the event of
the designation of any expert witness(es), the following will
occur: (a) all information and documents relied upon by the
expert witness(es) will be delivered to the opposing party,
(b) the opposing party will be permitted to depose the expert
witness(es), (c) the opposing party will be permitted to
designate rebuttal expert witness(es), and (d) the arbitration
hearing will be continued to the earliest possible date that
enables the foregoing limited discovery to be accomplished.
16.4 Exemplary or Punitive Damages. The Arbitrator(s) will not
have the authority to award exemplary or punitive damages.
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16.5 Confidentiality of Awards. All arbitration proceedings,
including testimony or evidence at hearings, will be kept
confidential, although any award or order rendered by the
arbitrator(s) pursuant to the terms of this Agreement may be
entered as a judgment or order in any state or federal court
and may be confirmed within the federal judicial district
which includes the residence of the party against whom such
award or order was entered. This agreement concerns
transactions involving commerce among the several states. The
Federal Arbitration Act, Title 9 U.S.C. Sections 1 et seq., as
amended ("FAA") will govern all arbitration(s) and
confirmation proceedings hereunder.
16.6 Prejudgment and Provisional Remedies. Nothing herein will be
construed to prevent DFS' or Vendor's use of bankruptcy,
receivership, injunction, repossession, replevin, claim and
delivery, sequestration, seizure, attachment, foreclosure,
dation and/or any other prejudgment or provisional action or
remedy relating to any Collateral for any current or future
debt owed by either party to the other. Any such action or
remedy will not waive DFS' or Vendor's right to compel
arbitration of any Dispute.
16.7 Attorneys' Fees. If either Vendor or DFS brings any other
action for judicial relief with respect to any Dispute (other
than those set forth in Section 16.6), the party bringing such
action will be liable for and immediately pay all of the other
party's costs and expenses (including attorneys' fees)
incurred to stay or dismiss such action and remove or refer
such Dispute to arbitration. If either Vendor or DFS brings or
appeals an action to vacate or modify an arbitration award and
such party does not prevail, such party will pay all costs and
expenses, including attorneys' fees, incurred by the other
party in defending such action. Additionally, if Vendor sues
DFS or institutes any arbitration claim or counterclaim
against DFS in which DFS is the prevailing party, Vendor will
pay all costs and expense (including attorneys' fees) incurred
by DFS in the course of defending such action or proceeding.
16.8 Limitations. Any arbitration proceeding must be instituted:
(a) with respect to any Dispute for the collection of any debt
owed by either party to the other, within two (2) years after
the date the last payment was received by the instituting
party, and (b) with respect to any other Dispute, within two
(2) years after the date the incident giving rise thereto
occurred, whether or not any damage was sustained or capable
of ascertainment or either party knew of such incident.
Failure to institute an arbitration proceeding within such
period will constitute an absolute bar and waiver to the
institution of any proceeding, whether arbitration or a court
proceeding, with respect to such Dispute.
16.9 Survival After Termination. The agreement to arbitrate will
survive the termination of this Agreement.
17. INVALIDITY/UNENFORCEABILITY OF BINDING ARBITRATION. IF THIS
AGREEMENT IS FOUND TO BE NOT SUBJECT TO ARBITRATION, ANY LEGAL PROCEEDING WITH
RESPECT TO ANY DISPUTE WILL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE WITHOUT A JURY. VENDOR AND DFS WAIVE ANY RIGHT TO A JURY TRIAL IN ANY SUCH
PROCEEDING.
18. Governing Law. Vendor acknowledges and agrees that this and all
other agreements between Vendor and DFS have been substantially negotiated, and
will be substantially performed, in the state of Ohio. Accordingly, Vendor
agrees that all Disputes will be governed by, and construed in accordance with,
the laws of such state, except to the extend inconsistent with the provisions of
the FAA which shall control and govern all arbitration proceedings hereunder.
THIS AGREEMENT CONTAINS BINDING ARBITRATION, JURY WAIVER AND PUNITIVE DAMAGE
WAIVER PROVISIONS.
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ATTEST: TELXON CORPORATION
/s/ GLENN S. HANSEN By: /s/ KENNETH W. HAVER
- ----------------------------------- -----------------------------------
(Assistant) Secretary Name: Kenneth W. Haver
Title: Senior Vice President - CFO
Glenn S. Hansen
Vice President Legal Administration
& Corporate Counsel
DEUTSCHE FINANCIAL SERVICES CORPORATION
By: /s/ DENNIS VANLEEUWEN
-----------------------------------
Dennis VanLeeuwen - Vice President
Director of Operations - Technology
Division
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