As filed with the Securities and Exchange Commission on December 14, 1999
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
(exact name of registrant as specified in its charter)
Pennsylvania 22-2476703
(state or other jurisdiction of (I.R.S employer
incorporation or organization) identification number)
One Franklin Plaza
Burlington, New Jersey 08016
(address of principal executive offices)
-------------------
Franklin Electronic Publishers, Incorporated 1999
Accrued Vacation Stock Purchase Program
Stock Option Agreement for H. Andrew Cross, dated April 16, 1998
(5 year option agreement)
Stock Option Agreement for H. Andrew Cross, dated April 16, 1998
(10 year option agreement)
Stock Option Agreement for Peter Dinicola, dated August 3, 1998
Stock Option Agreement for Arnold D. Levitt, dated July 28, 1999
Stock Option Agreement for Robert Fallow, dated January 25, 1999
Stock Option Agreement for Peter N. Yianilos, dated August 16, 1999
(full title of the plan or agreement)
-------------------
Gregory J. Winsky, Esq. Copy to:
Executive Vice President Edward H. Cohen, Esq.
Franklin Electronic Publishers, Incorporated Rosenman & Colin LLP
One Franklin Plaza 575 Madison Avenue
Burlington, New Jersey 08016 New York, New York 10022
(609) 386-2500 (212) 940-8580
(name, address and telephone number of agent
for service)
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CALCULATION OF REGISTRATION FEE
================================================================================
Proposed
maximum Proposed maximum
Title of offering aggregate Amount of
securities to Amount to be price offering registration
be registered registered per share(1) price(1) fee
Common Stock, no
par value 378,750 $5.03125 $1,905,586 $504.00
- --------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee;
computed, pursuant to Rule 457(c), upon the basis of the average of the high and
low prices of the Common Stock on the New York Stock Exchange on December 10,
1999.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Franklin Electronic Publishers, Incorporated (the "Company") is subject to
the informational requirements of the Securities Exchange Act of 1934 (the
"Exchange Act") and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission (the "Commission"). The
following documents, or portions thereof, filed by the Company with the
Commission pursuant to the Exchange Act (File No. 1-14130) are incorporated by
reference in this Registration Statement:
a. The Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1999 (File No. 0-14841);
b. The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999 (File No. 0-14841); and
c. The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999 (File No. 0-14841).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment hereto indicating that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
of this Registration Statement from the respective dates of filings of such
documents.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 9-04(a) of the Company's By-laws provides that a director of the
Company shall not be personally liable for monetary damages for any action taken
or any failure to take any action, unless (i) the director has breached or
failed to perform the duties of his office as set forth in Section 512 of the
Pennsylvania Business Corporation Law (the "Pennsylvania BCL") (relating to
standard of care and justifiable reliance, as described below) and (ii) the
breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness. Section 9-04(a) does not apply to the responsibility or liability
of a director pursuant to any criminal statute or to the liability of a director
for the payment of taxes pursuant to local, state or federal law. The Section
does not limit the liability of directors for violations of the federal
securities laws in their capacities as directors and officers of the Company.
Section 512 of the Pennsylvania BCL sets forth the standard of care for
directors. As fiduciaries with respect to the corporation they serve, directors
are obligated to perform their duties in good faith, in a manner they reasonably
believe to be in the best interests of the corporation, and with such care,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. Section 512 also entitles a
director to rely in good faith on information, opinions, reports or statements,
including financial statements and other financial data, prepared or presented
by officers or employees of the corporation, attorneys, public accountants,
other experts or committees of the board upon which the director does not serve,
provided that the director reasonably believes that such persons or committees
are competent with respect to the matter in question and the director has no
actual knowledge that would cause such reliance to be unwarranted. Directors
may, in considering the best interests of the corporation, consider the effects
of any action upon the corporation's employees, suppliers and customers, and
upon the communities in which the corporation has offices or other
establishments, as well as all
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other pertinent factors. While Section 9-04(a) of the By-laws provides directors
with protection from awards of monetary damages for breaches of their duties,
including grossly negligent business decisions, it does not eliminate their duty
and standard of care. Accordingly, equitable remedies for such breaches,
including injunctions, are available.
Sections 1741 and 1742 of the Pennsylvania BCL permit Pennsylvania
corporations to grant indemnification rights to their directors, officers and
other persons. The following provisions of Section 9-04 of the By-laws are based
upon the indemnification provisions of these Pennsylvania statutes.
Section 9-04(b) provides that each director or officer of the Company who
was or is a party to, or is threatened to be made a party to, or is otherwise
involved in, any threatened, pending or completed action, suit or proceeding,
including, without limitation, an action by or in the right of the Company (a
shareholder's derivative action), by reason of being or having been a director
or officer of the Company in any other capacity, including as a director,
officer, employee, agent, partner or fiduciary for another entity), shall be
indemnified by the Company to the fullest extent permitted by Pennsylvania law,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement incurred by such person in connection therewith. The Company shall
not, however, indemnify any person for actions determined by a court to have
constituted willful misconduct or recklessness.
Section 9-04(c) obligates the Company to advance to directors or officers
the expenses incurred by them in defending any of the proceedings specified
above in advance of the final disposition of such proceedings, provided that, so
long as Pennsylvania law continues so to require, such payment shall only be
made upon delivery to the Company by the indemnified party of an undertaking to
repay all amounts so advanced if it shall ultimately be determined by a court
that the person receiving such payments is not entitled to be indemnified.
Section 9-04(d) provides that the rights to indemnification and to the
advancement of expenses conferred in the By-laws shall be contractual rights and
shall not be exclusive of any other right that any person may have or acquire
under the Company's Articles of Incorporation or By-laws or any statute,
agreement or otherwise.
Section 9-04(f) provides that the Company may procure and maintain
insurance, or create a fund, to secure or insure its indemnification obligations
whether arising under the By-laws or otherwise. The Company has not obtained
such insurance.
ITEM 8. EXHIBITS
Exhibit No. Description
- ----------- -----------
3(a) Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.01 to the Company's Registration Statement
on Form S-1, File No. 3-6612 (the "Company's 1986 S-1 Registration
Statement))
3(b) Articles of Amendment to the Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.02 to the
Company's Annual Report on Form 10-K for the year ended March 31,
1990 (the "Company's 1990 10-K"))
3(c) By-laws of the Company (incorporated by reference to Exhibit 3.02
to the Company's 1986 S-1 Registration Statement)
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3(d) Amendment to By-laws of the Company (incorporated by reference to
Exhibit A to the Company's Proxy Statement relating to the 1987
Annual Meeting of Shareholders)
3(e) Amendment to By-laws of the Company (incorporated by reference to
Exhibit 3.05 to the Company's 1990 10-K)
*4(a) Franklin Electronic Publishers, Incorporated 1999 Accrued Vacation
Stock Purchase Program
*4(b) Stock Option Agreement between the Company and H. Andrew Cross,
dated April 16, 1998 (5 year option agreement)
*4(c) Stock Option Agreement between the Company and H. Andrew Cross,
dated April 16, 1998 (10 year option agreement)
*4(d) Stock Option Agreement between the Company and Peter Dinicola,
dated August 3, 1998
*4(e) Stock Option Agreement between the Company and Arnold D. Levitt,
dated July 28, 1999
*4(f) Stock Option Agreement between the Company and Robert Fallow,
dated January 25, 1999
*4(g) Stock Option Agreement between the Company and Peter N. Yianilos,
dated August 16, 1999
*5 Opinion of Gregory J. Winsky, Esq.
*23(a) Consent of Radin, Glass & Co., LLP
*23(b) Consent of Gregory J. Winsky, Esq. (included in Exhibit 5 above)
- ----------
*Filed herewith
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<PAGE>
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes (a) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement to include any material information with respect to
the plan of distribution of the securities being registered hereby not
previously disclosed in this Registration Statement or any material change to
such information in this Registration Statement; (b) that, for the purpose of
determining any liability under the Securities Act of 1933 (the "Act"), each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(c) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
5
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Burlington, State of New Jersey, on this 14 day of
December, 1999.
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
By: /s/ Barry J. Lipsky
----------------------------------------
Barry J. Lipsky
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Edward H. Cohen December 14, 1999
- --------------------------------
Edward H. Cohen, Director
/s/ Bernard Goldstein December 14, 1999
- --------------------------------
Bernard Goldstein, Director
/s/ Barry J. Lipsky December 14, 1999
- --------------------------------
Barry J. Lipsky, Director
/s/ Leonard M. Lodish December 14, 1999
- --------------------------------
Leonard M. Lodish, Director
/s/ James Meister December 14, 1999
- --------------------------------
James Meister, Director
________________________________ December __, 1999
Howard L. Morgan, Director
/s/ Jerry R. Schubel December 14, 1999
- --------------------------------
Jerry R. Schubel, Director
________________________________ December __, 1999
James H. Simons, Director
________________________________ December __, 1999
William H. Turner, Director
6
<PAGE>
/s/ Arnold D. Levitt December 14, 1999
- --------------------------------
Arnold D. Levitt, (Senior
Vice President, Chief
Financial Officer and
Treasurer)
7
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3(a) Certificate of Incorporation of the Company (Incorporated by
reference to Exhibit 3.01 to the Company's Registration Statement
on Form S-1, File No. 3-6612 (the "Company's 1986 S-1 Registration
Statement))
3(b) Articles of Amendment to the Certificate of Incorporation of the
Company (Incorporated by reference to Exhibit 3.02 to the
Company's report on Form 10-K for the year ended March 31, 1990
(the "Company's 1990 10-K"))
3(c) By-laws of the Company (Incorporated by reference to Exhibit 3.02
to the Company's 1986 S-1 Registration Statement)
3(d) Amendment to By-laws of the Company (Incorporated by reference to
Exhibit A to the Company's Proxy Statement relating to the 1987
Annual Meeting of Shareholders)
3(e) Amendment to By-laws of the Company (Incorporated by reference to
Exhibit 3.05 to the Company's 1990 10-K)
*4(a) Franklin Electronic Publishers, Incorporated 1999 Accrued Vacation
Stock Purchase Program
*4(b) Stock Option Agreement between the Company and H. Andrew Cross,
dated April 16, 1998 (5 year option agreement)
*4(c) Stock Option Agreement between the Company and H. Andrew Cross,
dated April 16, 1998 (10 year option agreement)
*4(d) Stock Option Agreement between the Company and Peter Dinicola,
dated August 3, 1998
*4(e) Stock Option Agreement between the Company and Arnold D. Levitt,
dated July 28, 1999
*4(f) Stock Option Agreement between the Company and Robert Fallow,
dated January 25, 1999
*4(g) Stock Option Agreement between the Company and Peter N. Yianilos,
dated August 16, 1999
*5 Opinion of Gregory J. Winsky, Esq.
*23(a) Consent of Radin, Glass & Co., LLP
*23(b) Consent of Gregory J. Winsky, Esq. (included in Exhibit 5 above)
- ----------
*Filed herewith
8
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
1999 ACCRUED VACATION STOCK PURCHASE PROGRAM
1. Purpose. The purpose of the Program is to encourage employees of
Franklin Electronic Publishers, Incorporated ("Franklin") to acquire shares of
Franklin's common stock, no par value ("Common Stock"), by utilizing the cash
value (the "Cash Value") of all or a portion of their accrued but unused
vacation time as of December 31, 1998 which is still unused as of December 15,
1999 ("Accrued Vacation").
2. Stock Subject to Program. 125,000 of the authorized but unissued
shares of the Common Stock are hereby reserved for issuance under the Program.
If the number of shares of Common Stock reserved for issuance under the Program
is insufficient for purposes of the Program, shares of Common Stock will be
allocated pro rata, based on the Cash Value that each employee elects to receive
in shares of Common Stock as compared to the aggregate Cash Value that employees
elect to receive in shares of Common Stock.
3. Administration. The Board shall have authority to interpret the
Program and to prescribe, amend and rescind rules and regulations relating to
it. Any determination by the Board in carrying out, administering or construing
the Program shall be final and binding.
4. Participation and Implementation of Program. (a) Each employee
with Accrued Vacation shall, on or prior to December 22, 1999, complete an
authorization on the form provided by Franklin. The election form shall state
the portion of the Cash Value that such employee desires to allocate towards the
purchase of Common Stock (the "Exchange Amount") and the portion of the Cash
Value that such employee desires to receive in cash.
1
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(b) During January 2000, Franklin shall deliver to each employee who
has elected to receive shares of Common Stock, such number of shares of Common
Stock as shall equal the quotient of (x) the Adjusted Exchange Amount divided by
(y) the Fair Market Value. The "Adjusted Exchange Amount" shall mean (x) the
product of (i) 1.2 and (ii) the Exchange Amount minus (y) amounts withheld by
Franklin in compliance with federal, state, and local tax withholding laws. The
"Fair Market Value" shall mean the average of the closing prices of the Common
Stock as reported on the principal national securities exchange on which the
Common Stock is listed for trading for the 20 trading day period commencing on
November 10, 1999. Any fractional share resulting from the application of the
foregoing calculation shall be rounded to the next higher whole number.
(c) Each employee whose Cash Value exceeds the Exchange Amount, if
any, shall be entitled to receive the excess of the Cash Value over the Exchange
Amount, if any, (the "Distribution Amount") as follows: (i) if the Distribution
Amount is equal to or less than $5,000, Franklin shall pay the Distribution
Amount less amounts withheld by Franklin in compliance with federal, state, and
local tax withholding laws to such employee on or after January 1, 2000 but
prior to January 5, 2000 and (ii) if the Distribution Amount exceeds $5,000,
Franklin shall pay the Distribution Amount less amounts withheld by Franklin in
compliance with federal, state, and local tax withholding laws to such employee
in four equal quarterly installments on or after January 1, 2000 but prior to
January 7, 2000, and on or about April 1, 2000, July 1, 2000 and October 1,
2000; provided, however, that if the employee ceases to be employed by Franklin
prior to October 1, 2000, any unpaid Distribution Amount shall be paid to the
employee within 30 days following such employee's cessation of employment.
2
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5. Holding Period. Shares of Common Stock issued hereunder may not
be sold, assigned, transferred or otherwise disposed of, and may not be pledged
or hypothecated, until July 5, 2000.
6. Expenses of Administration. All costs and expenses incurred in
the operation and administration of the Program shall be borne by Franklin.
7. No Employment Right. The existence of the Program shall not
require Franklin or any subsidiary to continue to employ any employee.
8. Governing Law. The Program shall be governed by the laws of the
State of New York.
3
STOCK OPTION AGREEMENT
AGREEMENT, dated as of April 16, 1998, between FRANKLIN ELECTRONIC
PUBLISHERS, INC. (the "Company"), a Pennsylvania corporation, and H. ANDREW
CROSS ("Optionee").
WHEREAS, in accordance with Section 8 of the employment letter (the
"Employment Letter) dated March 25, 1998, between the Company and Optionee, the
Company has agreed to grant to Optionee an option to purchase shares of common
stock, no par value (the "Common Stock"), of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Subject to the terms and conditions set forth in this Agreement,
the Company grants to Optionee an option (the "Option") to purchase from the
Company all or any part of an aggregate of 35,000 shares (the "Optioned Shares")
of Common Stock.
2. The purchase price per share shall be $3.50 (the "Option Price").
3. Optionee may, with the prior approval of the Board of Directors
of the Company (the "Board"), transfer for no consideration the Option to or for
the benefit of the Optionee's Immediate Family, a trust for the exclusive
benefit of Optionee and/or Optionee's Immediate Family or to a partnership or
limited liability company for Optionee and/or one or more members of the
Optionee's Immediate Family, subject to such limits as the Board may establish,
and the transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The term "Immediate Family"
shall mean the Optionee's spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren and any of their respective
spouses.
4. The Option, subject to the condition that it shall not be
exercised after April 16, 2003, shall vest and become exercisable in 12 equal
installments on a monthly basis commencing on April 16, 1998. In the event that
at any time prior to April 16, 1999, (a) Optionee's employment with the Company
is terminated by the Company "without cause, " (b) Optionee terminates his
employment with the Company for "good reason" or (c) there is a "change of
control" of the Company, the Option shall immediately vest and become fully
exercisable. For purposes of this Agreement, (i) "cause" shall mean a willful
act of dishonesty, fraud or gross negligence (after notice and a reasonable
opportunity to cure), (ii) "good reason" shall be employee-initiated separation
due to reduction in responsibilities, change in reporting relationship, a
reduction in the bonus or other compensation or benefits payable to Optionee
under the Employment Agreement (or a material adverse change in the terms or
conditions on which such bonus or other compensation or benefits are payable),
the Company's failure to pay Optionee any amounts otherwise vested and due under
the Employment Agreement or under any plan or policy of the Company (after
notice and a reasonable opportunity to cure), the Company's failure to elect
Optionee to the Board, any material breach by the Company of the
<PAGE>
terms of the Employment Letter that remains uncured after notice to the Company
and after a reasonable opportunity to cure, or relocation of job more than 50
miles driving distance from the current location and (iii) "change of control"
shall have the meaning set forth in Exhibit A annexed hereto. Subject to the
foregoing, any exercise of the Option may be either in whole at any time or in
part at any time and from time to time.
5. Optionee shall not be deemed to be the holder of any of the
Optioned Shares unless and until a certificate for such Shares shall have been
issued. Nothing contained in this Agreement shall be deemed to confer upon
Optionee the right to vote or to consent, or to receive notice as a shareholder,
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any other rights whatsoever as a shareholder of
the Company. No dividends or rights shall be payable or accrued in respect of
the Option or the Optioned Shares until, and only to the extent, that this
Option shall have been exercised.
6. Upon payment of the purchase price therefor, the Optioned Shares
issued upon exercise of the Option shall be fully paid and nonassessable except
as otherwise provided in the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania.
A. 7. (a) In order to exercise the Option, Optionee shall deliver to the
Company written notice of intent to exercise the Option, in form and substance
satisfactory to the Company, specifying the number of Optioned Shares with
respect to which the Option is being exercised, and accompanied by payment to
the Company of the Option Price for the Shares so specified. Payment shall be
made by certified check, payable to the order of the Company; provided, however,
that all or any portion of such payment may be made in kind by the delivery of
shares of the Common Stock which have been owned by Optionee for a minimum
period of six months having a fair market value on the date of delivery equal to
the portion of the Option Price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, as amended, the Board may
implement procedures to allow a broker chosen by Optionee to make payment of all
or any portion of the option price payable upon the exercise of the Option and
to receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.
(b) Certificates representing the Optioned Shares issued upon
exercise of the Option shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. Such securities may not be sold or
transferred except pursuant to a registration statement under such Act,
which is effective and current with respect to such securities, or upon
receipt by the Company of an opinion of counsel reasonably satisfactory to
the Company that such sale or transfer is exempt from the registration
requirements of such Act."
8. The Company shall, at all times until the expiration of the
Option, reserve for issuance and delivery upon exercise thereof, the number of
Optioned Shares that the Company would be required to issue and deliver upon
such exercise.
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9. In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the Optioned Shares shall be adjusted
by adding to such Shares the number of shares which would be distributable
thereon if such Shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company is the surviving corporation, then there shall be
substituted for the Optioned Shares the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall be so
changed, or for which each such Share shall be exchanged. In the event that
there shall be any change, other than as specified in this paragraph 9, in the
number or kind of outstanding shares of Common Stock, or of any stock or other
securities into which the Common Stock shall have been changed, or for which it
shall have been exchanged, then, if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares subject to the Option, such adjustment shall be made by the Board
and shall be effective and binding for all purposes of the Option. In the case
of any such substitution or adjustment as provided for in this paragraph 9, the
Option Price for each Optioned Share shall be the Option Price for all shares of
stock or other securities which shall have been substituted for such Optioned
Share or to which such Optioned Share shall have been adjusted in accordance
with the provisions of this paragraph 9. No adjustment or substitution provided
for in this paragraph 9 shall require the Company to sell a fractional share. In
the event of the dissolution or liquidation of the Company, or a merger in which
the Company is not the surviving corporation, the Option shall terminate.
10. The existence of the Option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
11. By acceptance hereof, Optionee represents and warrants that the
Option is being acquired by Optionee solely for his own account and not with a
view to, or for sale in connection with, the distribution thereof. The Optioned
Shares to be purchased upon exercise of the Option shall be registered by the
Company under the Securities Act of 1933 on a Registration Statement on Form S-8
as promptly as reasonably practicable following the date of this Agreement.
Optionee shall not attempt to dispose of any or all of the Optioned Shares
unless and until they have been validly registered under said Act or the Company
has determined, based on an opinion of counsel reasonably satisfactory to the
Company, that the intended disposition is exempt from the registration
requirements of said Act.
12. In the event Optionee's employment or service with the Company
terminates by reason of death, retirement on or subsequent to his or her 65th
birthday or permanent disability, the Option shall become immediately
exercisable in full. In the event Optionee leaves the employ or service of the
Company for any reason, whether voluntarily or otherwise, other than by reason
of death, the Option shall, to the extent it is exercisable on the
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date of such termination of employment or service, terminate upon the earlier to
occur of (a) the expiration of two years after such termination of employment or
service or (b) April 16, 2003, provided, however, that in the event in which
Optionee dies subsequent to leaving the employ or service of the Company, the
Option shall terminate upon the earlier to occur of (i) the expiration of six
months after the date of such death, or (ii) April 16, 2003 . In the event
Optionee's employment or service with the Company terminates by reason of death,
the Option shall terminate upon the earlier to occur of (i) the expiration of
six months after the date of such death or permanent disability or (ii) April
16, 2003.
13. As a condition of the granting of the Option, Optionee agrees
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board, in its sole
discretion, and that any interpretations by the Board of the terms of this
Agreement shall be final, binding and conclusive.
14. All notices provided for in the Option shall be in writing and
shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at Franklin Electronic Publishers,
Inc., 1 Franklin Plaza, Burlington, New Jersey 08016, or at such other address
of which the Company shall have given notice to Optionee in the manner herein
provided; and if intended for Optionee, shall be addressed to him at the address
set forth in handwriting below, or at such other address of which Optionee shall
have given notice to the Company in the manner herein provided.
15. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed wholly within said State without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the date first above written.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/
-------------------------------------
Title:
AGREED TO:
/s/ H. Andrew Cross
- ---------------------------
H. Andrew Cross
4
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EXHIBIT A
"Change of control" means (i) the accumulation by a party (other than
Bermuda Trust Co. Ltd. as trustee for the Lord Jim Trust), or parties acting as
a group, of more than twenty percent (20%) or more of the shares of the common
stock of the Company; (ii) a merger or consolidation of the Company in which the
Company does not survive as an independent public company; (iii) a sale of all
or substantially all of the assets of the Company; (iv) a merger or
consolidation of the Company in which the Company survives as an independent
public company if the shareholders of the Company immediately prior to such
merger or consolidation own less than 50% of either the then-outstanding shares
of stock of such surviving company or the combined voting power of the
then-outstanding securities of such surviving company; (v) if during any period
of 24 consecutive months the individuals who, at the beginning of such period,
constitute the Board of Directors (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning of such 24
month period shall be deemed to have satisfied such 24 month requirement (and be
an Incumbent Director) if such director was elected by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually (because they were directors at
the beginning of such 24 month period) or by prior operation of this clause (v);
or (vi) the approval by Franklin's shareholders or Board of Directors of a
liquidation or dissolution of the Company.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of April 16, 1998, between FRANKLIN ELECTRONIC
PUBLISHERS, INC. (the "Company"), a Pennsylvania corporation, and H. ANDREW
CROSS ("Optionee").
WHEREAS, in accordance with Section 9 of the employment letter (the
"Employment Letter) dated March 25, 1998, between the Company and Optionee, the
Company has agreed to grant to Optionee an option to purchase shares of common
stock, no par value (the "Common Stock"), of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Subject to the terms and conditions set forth in this Agreement,
the Company grants to Optionee an option (the "Option") to purchase from the
Company all or any part of an aggregate of 275,000 shares (the "Optioned
Shares") of Common Stock.
2. The purchase price per share shall be $12.25 (the "Option
Price").
3. Optionee may, with the prior approval of the Board of Directors
of the Company (the "Board"), transfer for no consideration the Option to or for
the benefit of the Optionee's Immediate Family, a trust for the exclusive
benefit of Optionee and/or Optionee's Immediate Family or to a partnership or
limited liability company for Optionee and/or one or more members of the
Optionee's Immediate Family, subject to such limits as the Board may establish,
and the transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The term "Immediate Family"
shall mean the Optionee's spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren and any of their respective
spouses.
4. Subject to the condition that the Option shall not be exercised
after April 16, 2008, Optionee may (a) during the period commencing on the first
anniversary of the date of this Agreement and ending on the day preceding the
second anniversary of such date, exercise the Option with respect to one-fourth
of the Optioned Shares, (b) during the period commencing on such second
anniversary and ending on the day preceding the third anniversary of the date of
this Agreement, exercise the Option with respect to one-half of the Optioned
Shares, (c) during the period commencing on such third anniversary and ending on
the day preceding the fourth anniversary and ending on the day preceding the
fourth anniversary of the date of this Agreement, exercise the Option with
respect to three-fourths of the Optioned Shares and (d) during the period
beginning on such fourth anniversary, exercise the Option with respect to all of
the Optioned Shares. In the event of a "change of control" of the Company, the
Option shall immediately vest and become fully exercisable. For purposes of this
Agreement, "change of control" shall have the meaning set forth in Exhibit A
annexed hereto. Subject to the foregoing, any exercise of the Option may be
either in whole at any time or in part at any time and from time to time.
<PAGE>
5. Optionee shall not be deemed to be the holder of any of the
Optioned Shares unless and until a certificate for such Shares shall have been
issued. Nothing contained in this Agreement shall be deemed to confer upon
Optionee the right to vote or to consent, or to receive notice as a shareholder,
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any other rights whatsoever as a shareholder of
the Company. No dividends or rights shall be payable or accrued in respect of
the Option or the Optioned Shares until, and only to the extent, that this
Option shall have been exercised.
6. Upon payment of the purchase price therefor, the Optioned Shares
issued upon exercise of the Option shall be fully paid and nonassessable except
as otherwise provided in the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania.
A. 7. (a) In order to exercise the Option, Optionee shall deliver to the
Company written notice of intent to exercise the Option, in form and substance
satisfactory to the Company, specifying the number of Optioned Shares with
respect to which the Option is being exercised, and accompanied by payment to
the Company of the Option Price for the Shares so specified. Payment shall be
made by certified check, payable to the order of the Company; provided, however,
that all or any portion of such payment may be made in kind by the delivery of
shares of the Common Stock which have been owned by Optionee for a minimum
period of six months having a fair market value on the date of delivery equal to
the portion of the Option Price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, as amended, the Board may
implement procedures to allow a broker chosen by Optionee to make payment of all
or any portion of the option price payable upon the exercise of the Option and
to receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.
(b) Certificates representing the Optioned Shares issued upon
exercise of the Option shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. Such securities may not be sold or
transferred except pursuant to a registration statement under such Act,
which is effective and current with respect to such securities, or upon
receipt by the Company of an opinion of counsel reasonably satisfactory to
the Company that such sale or transfer is exempt from the registration
requirements of such Act."
8. The Company shall, at all times until the expiration of the
Option, reserve for issuance and delivery upon exercise thereof, the number of
Optioned Shares that the Company would be required to issue and deliver upon
such exercise.
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<PAGE>
9. In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the Optioned Shares shall be adjusted
by adding to such Shares the number of shares which would be distributable
thereon if such Shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company is the surviving corporation, then there shall be
substituted for the Optioned Shares the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall be so
changed, or for which each such Share shall be exchanged. In the event that
there shall be any change, other than as specified in this paragraph 9, in the
number or kind of outstanding shares of Common Stock, or of any stock or other
securities into which the Common Stock shall have been changed, or for which it
shall have been exchanged, then, if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares subject to the Option, such adjustment shall be made by the Board
and shall be effective and binding for all purposes of the Option. In the case
of any such substitution or adjustment as provided for in this paragraph 9, the
Option Price for each Optioned Share shall be the Option Price for all shares of
stock or other securities which shall have been substituted for such Optioned
Share or to which such Optioned Share shall have been adjusted in accordance
with the provisions of this paragraph 9. No adjustment or substitution provided
for in this paragraph 9 shall require the Company to sell a fractional share. In
the event of the dissolution or liquidation of the Company, or a merger in which
the Company is not the surviving corporation, the Option shall terminate.
10. The existence of the Option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
11. By acceptance hereof, Optionee represents and warrants that the
Option is being acquired by Optionee solely for his own account and not with a
view to, or for sale in connection with, the distribution thereof. The Optioned
Shares to be purchased upon exercise of the Option shall be registered by the
Company under the Securities Act of 1933 on a Registration Statement on Form S-8
as promptly as reasonably practicable following the date of this Agreement.
Optionee shall not attempt to dispose of any or all of the Optioned Shares
unless and until they have been validly registered under said Act or the Company
has determined, based on an opinion of counsel reasonably satisfactory to the
Company, that the intended disposition is exempt from the registration
requirements of said Act.
12. In the event Optionee's employment or service with the Company
terminates by reason of death, retirement on or subsequent to his or her 65th
birthday or permanent disability, the Option shall become immediately
exercisable in full. In the event Optionee leaves the employ or service of the
Company for any reason, whether voluntarily or otherwise, other than by reason
of death, the Option shall, to the extent it is exercisable on the
3
<PAGE>
date of such termination of employment or service, terminate upon the earlier to
occur of (a) the expiration of two years after such termination of employment or
service or (b) April 16, 2008; provided, however, that in the case in which
Optionee dies subsequent to leaving the employ or service of the Company, the
Option shall terminate upon the earlier to occur of (i) the expiration of six
months after the date of such death, or (ii) April 16, 2008 . In the event
Optionee's employment or service with the Company terminates by reason of death,
the Option shall become immediately exercisable in full and shall terminate upon
the earlier to occur of (i) the expiration of six months after the date of such
death or (ii) April 16, 2008.
13. As a condition of the granting of the Option, Optionee agrees
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board, in its sole
discretion, and that any interpretations by the Board of the terms of this
Agreement shall be final, binding and conclusive.
14. All notices provided for in the Option shall be in writing and
shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at Franklin Electronic Publishers,
Inc., 1 Franklin Plaza, Burlington, New Jersey 08016, or at such other address
of which the Company shall have given notice to Optionee in the manner herein
provided; and if intended for Optionee, shall be addressed to him at the address
set forth in handwriting below, or at such other address of which Optionee shall
have given notice to the Company in the manner herein provided.
15. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed wholly within said State without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the date first above written.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/
-----------------------------------------
Title:
AGREED TO:
/s/ H. Andrew Cross
- ----------------------------
H. Andrew Cross
4
<PAGE>
EXHIBIT A
"Change of control" means (i) the accumulation by a party (other than
Bermuda Trust Co. Ltd. as trustee for the Lord Jim Trust), or parties acting as
a group, of more than twenty percent (20%) or more of the shares of the common
stock of the Company; (ii) a merger or consolidation of the Company in which the
Company does not survive as an independent public company; (iii) a sale of all
or substantially all of the assets of the Company; (iv) a merger or
consolidation of the Company in which the Company survives as an independent
public company if the shareholders of the Company immediately prior to such
merger or consolidation own less than 50% of either the then-outstanding shares
of stock of such surviving company or the combined voting power of the
then-outstanding securities of such surviving company; (v) if during any period
of 24 consecutive months the individuals who, at the beginning of such period,
constitute the Board of Directors (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning of such 24
month period shall be deemed to have satisfied such 24 month requirement (and be
an Incumbent Director) if such director was elected by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually (because they were directors at
the beginning of such 24 month period) or by prior operation of this clause (v);
or (vi) the approval by Franklin's shareholders or Board of Directors of a
liquidation or dissolution of the Company.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of August 3, 1998, between FRANKLIN ELECTRONIC
PUBLISHERS, INC. (the "Company"), a Pennsylvania corporation, and PETER F.
DINICOLA ("Optionee").
WHEREAS, in accordance with Section 9 of the employment letter (the
"Employment Letter) dated June 5, 1998, between the Company and Optionee, the
Company has agreed to grant to Optionee an option to purchase shares of common
stock, no par value (the "Common Stock"), of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Subject to the terms and conditions set forth in this Agreement,
the Company grants to Optionee an option (the "Option") to purchase from the
Company all or any part of an aggregate of 35,000 shares (the "Optioned Shares")
of Common Stock.
2. The purchase price per share shall be $8.4375 (the "Option
Price").
3. Optionee may, with the prior approval of the Board of Directors
of the Company (the "Board"), transfer for no consideration the Option to or for
the benefit of the Optionee's Immediate Family, a trust for the exclusive
benefit of Optionee and/or Optionee's Immediate Family or to a partnership or
limited liability company for Optionee and/or one or more members of the
Optionee's Immediate Family, subject to such limits as the Board may establish,
and the transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The term "Immediate Family"
shall mean the Optionee's spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren and any of their respective
spouses.
4. Subject to the condition that the Option shall not be exercised
after August 3, 2008, Optionee may (a) during the period commencing on the first
anniversary of the date of this Agreement and ending on the day preceding the
second anniversary of such date, exercise the Option with respect to one-third
of the Optioned Shares, (b) during the period commencing on such second
anniversary and ending on the day preceding the third anniversary of the date of
this Agreement, exercise the Option with respect to two-thirds of the Optioned
Shares, (c) during the period commencing on such third anniversary, exercise the
Option with respect to all of the Optioned Shares. In the event of a "change of
control" of the Company, the Option shall immediately vest and become fully
exercisable. For purposes of this Agreement, "change of control" shall have the
meaning set forth in Exhibit A annexed hereto. Subject to the foregoing, any
exercise of the Option may be either in whole at any time or in part at any time
and from time to time.
<PAGE>
5. Optionee shall not be deemed to be the holder of any of the
Optioned Shares unless and until a certificate for such Shares shall have been
issued. Nothing contained in this Agreement shall be deemed to confer upon
Optionee the right to vote or to consent, or to receive notice as a shareholder,
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any other rights whatsoever as a shareholder of
the Company. No dividends or rights shall be payable or accrued in respect of
the Option or the Optioned Shares until, and only to the extent, that this
Option shall have been exercised.
6. Upon payment of the purchase price therefor, the Optioned Shares
issued upon exercise of the Option shall be fully paid and nonassessable except
as otherwise provided in the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania.
A. 7. (a) In order to exercise the Option, Optionee shall deliver to the
Company written notice of intent to exercise the Option, in form and substance
satisfactory to the Company, specifying the number of Optioned Shares with
respect to which the Option is being exercised, and accompanied by payment to
the Company of the Option Price for the Shares so specified. Payment shall be
made by certified check, payable to the order of the Company; provided, however,
that all or any portion of such payment may be made in kind by the delivery of
shares of the Common Stock which have been owned by Optionee for a minimum
period of six months having a fair market value on the date of delivery equal to
the portion of the Option Price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, as amended, the Board may
implement procedures to allow a broker chosen by Optionee to make payment of all
or any portion of the option price payable upon the exercise of the Option and
to receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.
(b) Certificates representing the Optioned Shares issued upon
exercise of the Option shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. Such securities may not be sold or
transferred except pursuant to a registration statement under such Act,
which is effective and current with respect to such securities, or upon
receipt by the Company of an opinion of counsel reasonably satisfactory to
the Company that such sale or transfer is exempt from the registration
requirements of such Act."
8. The Company shall, at all times until the expiration of the
Option, reserve for issuance and delivery upon exercise thereof, the number of
Optioned Shares that the Company would be required to issue and deliver upon
such exercise.
2
<PAGE>
9. In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the Optioned Shares shall be adjusted
by adding to such Shares the number of shares which would be distributable
thereon if such Shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company is the surviving corporation, then there shall be
substituted for the Optioned Shares the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall be so
changed, or for which each such Share shall be exchanged. In the event that
there shall be any change, other than as specified in this paragraph 9, in the
number or kind of outstanding shares of Common Stock, or of any stock or other
securities into which the Common Stock shall have been changed, or for which it
shall have been exchanged, then, if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares subject to the Option, such adjustment shall be made by the Board
and shall be effective and binding for all purposes of the Option. In the case
of any such substitution or adjustment as provided for in this paragraph 9, the
Option Price for each Optioned Share shall be the Option Price for all shares of
stock or other securities which shall have been substituted for such Optioned
Share or to which such Optioned Share shall have been adjusted in accordance
with the provisions of this paragraph 9. No adjustment or substitution provided
for in this paragraph 9 shall require the Company to sell a fractional share. In
the event of the dissolution or liquidation of the Company, or a merger in which
the Company is not the surviving corporation, the Option shall terminate.
10. The existence of the Option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
11. By acceptance hereof, Optionee represents and warrants that the
Option is being acquired by Optionee solely for his own account and not with a
view to, or for sale in connection with, the distribution thereof. The Optioned
Shares to be purchased upon exercise of the Option shall be registered by the
Company under the Securities Act of 1933 on a Registration Statement on Form S-8
as promptly as reasonably practicable following the date of this Agreement.
Optionee shall not attempt to dispose of any or all of the Optioned Shares
unless and until they have been validly registered under said Act or the Company
has determined, based on an opinion of counsel reasonably satisfactory to the
Company, that the intended disposition is exempt from the registration
requirements of said Act.
12. In the event Optionee's employment or service with the Company
terminates by reason of death, retirement on or subsequent to his or her 65th
birthday or permanent disability, the Option shall become immediately
exercisable in full. In the event Optionee leaves the employ or service of the
Company for any reason, whether voluntarily or otherwise, other than by reason
of death, the Option shall, to the extent it is exercisable on the
3
<PAGE>
date of such termination of employment or service, terminate upon the earlier to
occur of (a) the expiration of two years after such termination of employment or
service or (b) August 3, 2008; provided, however, that in the case in which
Optionee dies subsequent to leaving the employ or service of the Company, the
Option shall terminate upon the earlier to occur of (i) the expiration of six
months after the date of such death, or (ii) August 3, 2008 . In the event
Optionee's employment or service with the Company terminates by reason of death,
the Option shall become immediately exercisable in full and shall terminate upon
the earlier to occur of (i) the expiration of six months after the date of such
death or (ii) August 3, 2008.
13. As a condition of the granting of the Option, Optionee agrees
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board, in its sole
discretion, and that any interpretations by the Board of the terms of this
Agreement shall be final, binding and conclusive.
14. All notices provided for in the Option shall be in writing and
shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at Franklin Electronic Publishers,
Inc., 1 Franklin Plaza, Burlington, New Jersey 08016, or at such other address
of which the Company shall have given notice to Optionee in the manner herein
provided; and if intended for Optionee, shall be addressed to him at the address
set forth in handwriting below, or at such other address of which Optionee shall
have given notice to the Company in the manner herein provided.
15. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed wholly within said State without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the date first above written.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/
-----------------------------------------
Title:
AGREED TO:
/s/ Peter F. DiNicola
- ----------------------------
Peter F. DiNicola
4
<PAGE>
EXHIBIT A
"Change of control" means (i) the accumulation by a party (other than
Bermuda Trust Co. Ltd. as trustee for the Lord Jim Trust), or parties acting as
a group, of more than twenty percent (20%) or more of the shares of the common
stock of the Company; (ii) a merger or consolidation of the Company in which the
Company does not survive as an independent public company; (iii) a sale of all
or substantially all of the assets of the Company; (iv) a merger or
consolidation of the Company in which the Company survives as an independent
public company if the shareholders of the Company immediately prior to such
merger or consolidation own less than 50% of either the then-outstanding shares
of stock of such surviving company or the combined voting power of the
then-outstanding securities of such surviving company; (v) if during any period
of 24 consecutive months the individuals who, at the beginning of such period,
constitute the Board of Directors (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning of such 24
month period shall be deemed to have satisfied such 24 month requirement (and be
an Incumbent Director) if such director was elected by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually (because they were directors at
the beginning of such 24 month period) or by prior operation of this clause (v);
or (vi) the approval by Franklin's shareholders or Board of Directors of a
liquidation or dissolution of the Company.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of July 28, 1999, between FRANKLIN ELECTRONIC
PUBLISHERS, INC. (the "Company"), a Pennsylvania corporation, and ARNOLD D.
LEVITT ("Optionee").
WHEREAS, the Company has agreed to grant to Optionee an option to
purchase shares of common stock, no par value (the "Common Stock"), of the
Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Subject to the terms and conditions set forth in this Agreement,
the Company grants to Optionee an option (the "Option") to purchase from the
Company all or any part of an aggregate of 50,000 shares (the "Optioned Shares")
of Common Stock.
2. The purchase price per share shall be $4.00 (the "Option Price").
3. Optionee may, with the prior approval of the Board of Directors
of the Company (the "Board"), transfer for no consideration the Option to or for
the benefit of the Optionee's Immediate Family, a trust for the exclusive
benefit of Optionee and/or Optionee's Immediate Family or to a partnership or
limited liability company for Optionee and/or one or more members of the
Optionee's Immediate Family, subject to such limits as the Board may establish,
and the transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The term "Immediate Family"
shall mean the Optionee's spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren and any of their respective
spouses.
4. Subject to the condition that the Option shall not be exercised
after July 28, 2009, Optionee may (a) during the period commencing on the first
anniversary of the date of this Agreement and ending on the day preceding the
second anniversary of such date, exercise the Option with respect to one-fourth
of the Optioned Shares, (b) during the period commencing on such second
anniversary and ending on the day preceding the third anniversary of the date of
this Agreement, exercise the Option with respect to one and one-half of the
Optioned Shares, (c) during the period commencing on such third anniversary,
exercise the Option with respect to three fourths of the Optioned Shares, and
(d) during the period commencing on such fourth anniversary, exercise the Option
with respect to all of the Optioned Shares.
5. Optionee shall not be deemed to be the holder of any of the
Optioned Shares unless and until a certificate for such Shares shall have been
issued. Nothing contained in this Agreement shall be deemed to confer upon
Optionee the right to vote or to consent, or to receive notice as a shareholder,
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any other rights whatsoever as a shareholder of
the Company. No dividends or rights shall be payable or accrued in respect of
the Option or the Optioned Shares until, and only to the extent, that this
Option shall have been exercised.
<PAGE>
6. Upon payment of the purchase price therefor, the Optioned Shares
issued upon exercise of the Option shall be fully paid and nonassessable except
as otherwise provided in the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania
7. (a) In order to exercise the Option, Optionee shall deliver to
the Company written notice of intent to exercise the Option, in form and
substance satisfactory to the Company, specifying the number of Optioned Shares
with respect to which the Option is being exercised, and accompanied by payment
to the Company of the Option Price for the Shares so specified. Payment shall be
made by certified check, payable to the order of the Company; provided, however,
that all or any portion of such payment may be made in kind by the delivery of
shares of the Common Stock which have been owned by Optionee for a minimum
period of six months having a fair market value on the date of delivery equal to
the portion of the Option Price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, as amended, the Board may
implement procedures to allow a broker chosen by Optionee to make payment of all
or any portion of the option price payable upon the exercise of the Option and
to receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.
(b) Certificates representing the Optioned Shares issued upon
exercise of the Option shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. Such securities may not be sold or
transferred except pursuant to a registration statement under such Act,
which is effective and current with respect to such securities, or upon
receipt by the Company of an opinion of counsel reasonably satisfactory to
the Company that such sale or transfer is exempt from the registration
requirements of such Act."
8. The Company shall, at all times until the expiration of the
Option, reserve for issuance and delivery upon exercise thereof, the number of
Optioned Shares that the Company would be required to issue and deliver upon
such exercise.
9. In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the Optioned Shares shall be adjusted
by adding to such Shares the number of shares which would be distributable
thereon if such Shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company is the surviving corporation, then there shall be
substituted for the Optioned Shares the number and
2
<PAGE>
kind of shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed, or for which each such Share shall be
exchanged. In the event that there shall be any change, other than as specified
in this paragraph 9, in the number or kind of outstanding shares of Common
Stock, or of any stock or other securities into which the Common Stock shall
have been changed, or for which it shall have been exchanged, then, if the Board
shall, in its sole discretion, determine that such change equitably requires an
adjustment in the number or kind of shares subject to the Option, such
adjustment shall be made by the Board and shall be effective and binding for all
purposes of the Option. In the case of any such substitution or adjustment as
provided for in this paragraph 9, the Option Price for each Optioned Share shall
be the Option Price for all shares of stock or other securities which shall have
been substituted for such Optioned Share or to which such Optioned Share shall
have been adjusted in accordance with the provisions of this paragraph 9. No
adjustment or substitution provided for in this paragraph 9 shall require the
Company to sell a fractional share. In the event of the dissolution or
liquidation of the Company, or a merger in which the Company is not the
surviving corporation, the Option shall terminate.
10. The existence of the Option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
11. By acceptance hereof, Optionee represents and warrants that the
Option is being acquired by Optionee solely for his own account and not with a
view to, or for sale in connection with, the distribution thereof. The Optioned
Shares to be purchased upon exercise of the Option shall be registered by the
Company under the Securities Act of 1933 on a Registration Statement on Form S-8
as promptly as reasonably practicable following the date of this Agreement.
Optionee shall not attempt to dispose of any or all of the Optioned Shares
unless and until they have been validly registered under said Act or the Company
has determined, based on an opinion of counsel reasonably satisfactory to the
Company, that the intended disposition is exempt from the registration
requirements of said Act.
12. In the event Optionee's employment or service with the Company
terminates by reason of death, retirement on or subsequent to his or her 65th
birthday or permanent disability, the Option shall become immediately
exercisable in full. In the event Optionee leaves the employ or service of the
Company for any reason, whether voluntarily or otherwise, other than by reason
of death, the Option shall, to the extent it is exercisable on the date of such
termination of employment or service, terminate upon the earlier to occur of (a)
the
3
<PAGE>
expiration of two years after such termination of employment or service or (b)
July 28, 2009; provided, however, that in the case in which Optionee dies
subsequent to leaving the employ or service of the Company, the Option shall
terminate upon the earlier to occur of (i) the expiration of six months after
the date of such death, or (ii) July 28, 2009. In the event Optionee's
employment or service with the Company terminates by reason of death, the Option
shall become immediately exercisable in full and shall terminate upon the
earlier to occur of (i) the expiration of six months after the date of such
death or (ii) July 28, 2009.
13. As a condition of the granting of the Option, Optionee agrees
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board, in its sole
discretion, and that any interpretations by the Board of the terms of this
Agreement shall be final, binding and conclusive.
14. All notices provided for in the Option shall be in writing and
shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at Franklin Electronic Publishers,
Inc., 1 Franklin Plaza, Burlington, New Jersey 08016, or at such other address
of which the Company shall have given notice to Optionee in the manner herein
provided; and if intended for Optionee, shall be addressed to him at the address
set forth in handwriting below, or at such other address of which Optionee shall
have given notice to the Company in the manner herein provided.
15. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed wholly within said State without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the date first above written.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/
-----------------------------------------
Title: Executive Vice President
AGREED TO:
/s/ Arnold D. Levitt
- ---------------------------
Arnold D. Levitt
4
STOCK OPTION AGREEMENT
AGREEMENT, dated as of January 25, 1999, between FRANKLIN ELECTRONIC
PUBLISHERS, INC. (the "Company"), a Pennsylvania corporation, and ROBERT FALLOW
("Optionee").
WHEREAS, in accordance with your employment letter (the "Employment
Letter) dated December 21, 1998, between the Company and Optionee, the Company
has agreed to grant to Optionee an option to purchase shares of common stock, no
par value (the "Common Stock"), of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Subject to the terms and conditions set forth in this Agreement,
the Company grants to Optionee an option (the "Option") to purchase from the
Company all or any part of an aggregate of 15,000 shares (the "Optioned Shares")
of Common Stock.
2. The purchase price per share shall be $10.125 (the "Option
Price").
3. Optionee may, with the prior approval of the Board of Directors
of the Company (the "Board"), transfer for no consideration the Option to or for
the benefit of the Optionee's Immediate Family, a trust for the exclusive
benefit of Optionee and/or Optionee's Immediate Family or to a partnership or
limited liability company for Optionee and/or one or more members of the
Optionee's Immediate Family, subject to such limits as the Board may establish,
and the transferee shall remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The term "Immediate Family"
shall mean the Optionee's spouse, parents, children, stepchildren, adoptive
relationships, sisters, brothers and grandchildren and any of their respective
spouses.
4. Subject to the condition that the Option shall not be exercised
after January 25, 2009, Optionee may (a) during the period commencing on the
first anniversary of the date of this Agreement and ending on the day preceding
the second anniversary of such date, exercise the Option with respect to
one-fourth of the Optioned Shares, (b) during the period commencing on such
second anniversary and ending on the day preceding the third anniversary of the
date of this Agreement, exercise the Option with respect to one and one-half of
the Optioned Shares, (c) during the period commencing on such third anniversary,
exercise the Option with respect to three fourths of the Optioned Shares, and
(d) during the period commencing on such fourth anniversary, exercise the Option
with respect to all of the Optioned Shares. In the event of a "change of
control" of the Company, the Option shall immediately vest and become fully
exercisable. For purposes of this Agreement, "change of control" shall have the
meaning set forth in Exhibit A annexed hereto. Subject to the foregoing, any
exercise of the Option may be either in whole at any time or in part at any time
and from time to time.
<PAGE>
5. Optionee shall not be deemed to be the holder of any of the
Optioned Shares unless and until a certificate for such Shares shall have been
issued. Nothing contained in this Agreement shall be deemed to confer upon
Optionee the right to vote or to consent, or to receive notice as a shareholder,
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any other rights whatsoever as a shareholder of
the Company. No dividends or rights shall be payable or accrued in respect of
the Option or the Optioned Shares until, and only to the extent, that this
Option shall have been exercised.
6. Upon payment of the purchase price therefor, the Optioned Shares
issued upon exercise of the Option shall be fully paid and nonassessable except
as otherwise provided in the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania.
7. (a) In order to exercise the Option, Optionee shall deliver to
the Company written notice of intent to exercise the Option, in form and
substance satisfactory to the Company, specifying the number of Optioned Shares
with respect to which the Option is being exercised, and accompanied by payment
to the Company of the Option Price for the Shares so specified. Payment shall be
made by certified check, payable to the order of the Company; provided, however,
that all or any portion of such payment may be made in kind by the delivery of
shares of the Common Stock which have been owned by Optionee for a minimum
period of six months having a fair market value on the date of delivery equal to
the portion of the Option Price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, as amended, the Board may
implement procedures to allow a broker chosen by Optionee to make payment of all
or any portion of the option price payable upon the exercise of the Option and
to receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.
(b) Certificates representing the Optioned Shares issued upon
exercise of the Option shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. Such securities may not be sold or
transferred except pursuant to a registration statement under such Act,
which is effective and current with respect to such securities, or upon
receipt by the Company of an opinion of counsel reasonably satisfactory to
the Company that such sale or transfer is exempt from the registration
requirements of such Act."
8. The Company shall, at all times until the expiration of the
Option, reserve for issuance and delivery upon exercise thereof, the number of
Optioned Shares that the Company would be required to issue and deliver upon
such exercise.
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<PAGE>
9. In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the Optioned Shares shall be adjusted
by adding to such Shares the number of shares which would be distributable
thereon if such Shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company is the surviving corporation, then there shall be
substituted for the Optioned Shares the number and kind of shares of stock or
other securities into which each outstanding share of Common Stock shall be so
changed, or for which each such Share shall be exchanged. In the event that
there shall be any change, other than as specified in this paragraph 9, in the
number or kind of outstanding shares of Common Stock, or of any stock or other
securities into which the Common Stock shall have been changed, or for which it
shall have been exchanged, then, if the Board shall, in its sole discretion,
determine that such change equitably requires an adjustment in the number or
kind of shares subject to the Option, such adjustment shall be made by the Board
and shall be effective and binding for all purposes of the Option. In the case
of any such substitution or adjustment as provided for in this paragraph 9, the
Option Price for each Optioned Share shall be the Option Price for all shares of
stock or other securities which shall have been substituted for such Optioned
Share or to which such Optioned Share shall have been adjusted in accordance
with the provisions of this paragraph 9. No adjustment or substitution provided
for in this paragraph 9 shall require the Company to sell a fractional share. In
the event of the dissolution or liquidation of the Company, or a merger in which
the Company is not the surviving corporation, the Option shall terminate.
10. The existence of the Option shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
11. By acceptance hereof, Optionee represents and warrants that the
Option is being acquired by Optionee solely for his own account and not with a
view to, or for sale in connection with, the distribution thereof. The Optioned
Shares to be purchased upon exercise of the Option shall be registered by the
Company under the Securities Act of 1933 on a Registration Statement on Form S-8
as promptly as reasonably practicable following the date of this Agreement.
Optionee shall not attempt to dispose of any or all of the Optioned Shares
unless and until they have been validly registered under said Act or the Company
has determined, based on an opinion of counsel reasonably satisfactory to the
Company, that the intended disposition is exempt from the registration
requirements of said Act.
12. In the event Optionee's employment or service with the Company
terminates by reason of death, retirement on or subsequent to his or her 65th
birthday or permanent disability, the Option shall become immediately
exercisable in full. In the event Optionee leaves the employ or service of the
Company for any reason, whether voluntarily or otherwise, other than by reason
of death, the Option shall, to the extent it is exercisable on the
3
<PAGE>
date of such termination of employment or service, terminate upon the earlier to
occur of (a) the expiration of two years after such termination of employment or
service or (b) January 25, 2009; provided, however, that in the case in which
Optionee dies subsequent to leaving the employ or service of the Company, the
Option shall terminate upon the earlier to occur of (i) the expiration of six
months after the date of such death, or (ii) January 25, 2009. In the event
Optionee's employment or service with the Company terminates by reason of death,
the Option shall become immediately exercisable in full and shall terminate upon
the earlier to occur of (i) the expiration of six months after the date of such
death or (ii) January 25, 2009.
13. As a condition of the granting of the Option, Optionee agrees
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board, in its sole
discretion, and that any interpretations by the Board of the terms of this
Agreement shall be final, binding and conclusive.
14. All notices provided for in the Option shall be in writing and
shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at Franklin Electronic Publishers,
Inc., 1 Franklin Plaza, Burlington, New Jersey 08016, or at such other address
of which the Company shall have given notice to Optionee in the manner herein
provided; and if intended for Optionee, shall be addressed to him at the address
set forth in handwriting below, or at such other address of which Optionee shall
have given notice to the Company in the manner herein provided.
15. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed wholly within said State without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the date first above written.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/
-----------------------------------------
Title: Executive Vice President
AGREED TO:
/s/ Robert Fallow
- --------------------------
Robert Fallow
4
<PAGE>
EXHIBIT A
"Change of control" means (i) the accumulation by a party (other than
Bermuda Trust Co. Ltd. as trustee for the Lord Jim Trust), or parties acting as
a group, of more than twenty percent (20%) or more of the shares of the common
stock of the Company; (ii) a merger or consolidation of the Company in which the
Company does not survive as an independent public company; (iii) a sale of all
or substantially all of the assets of the Company; (iv) a merger or
consolidation of the Company in which the Company survives as an independent
public company if the shareholders of the Company immediately prior to such
merger or consolidation own less than 50% of either the then-outstanding shares
of stock of such surviving company or the combined voting power of the
then-outstanding securities of such surviving company; (v) if during any period
of 24 consecutive months the individuals who, at the beginning of such period,
constitute the Board of Directors (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof; provided,
however, that a director who was not a director at the beginning of such 24
month period shall be deemed to have satisfied such 24 month requirement (and be
an Incumbent Director) if such director was elected by, or on the recommendation
of or with the approval of, at least two-thirds of the directors who then
qualified as Incumbent Directors either actually (because they were directors at
the beginning of such 24 month period) or by prior operation of this clause (v);
or (vi) the approval by Franklin's shareholders or Board of Directors of a
liquidation or dissolution of the Company.
STOCK OPTION AGREEMENT
AGREEMENT, dated as of August 16, 1999, between FRANKLIN ELECTRONIC
PUBLISHERS, INC. (the "Company"), a Pennsylvania corporation, and PETER N.
YIANILOS ("Optionee").
WHEREAS, in accordance with Section 2a of the consulting letter
agreement (the "Consulting Letter") dated August 16, 1999, between the Company
and Optionee, the Company has agreed to grant to Optionee an option to purchase
shares of common stock, no par value (the "Common Stock"), of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Subject to the terms and conditions set forth in this Agreement,
the Company grants to Optionee an option (the "Option") to purchase from the
Company all or any part of an aggregate of 50,000 shares (the "Optioned Shares")
of Common Stock.
2. The purchase price per share shall be $4.00 (the "Option Price").
3. Subject to the condition that the Option shall not be exercised
after the date three (3) years from the last date of vesting hereof, Optionee
may (a) during the period commencing on February 16, 2000 exercise the Option
with respect to one-half of the Optioned Shares, and (b) during the period
commencing on August 16, 2000, exercise the Option with respect to all of the
Optioned Shares; provided, however, that such vesting shall be conditioned on
Optionee's then continuing performance of consulting services for the Company in
accordance with the provisions of the Consulting Letter on such dates.
4. Optionee shall not be deemed to be the holder of any of the
Optioned Shares unless and until a certificate for such Shares shall have been
issued. Nothing contained in this Agreement shall be deemed to confer upon
Optionee the right to vote or to consent, or to receive notice as a shareholder,
in respect of meetings of shareholders for the election of directors of the
Company or any other matters or any other rights whatsoever as a shareholder of
the Company. No dividends or rights shall be payable or accrued in respect of
the Option or the Optioned Shares until, and only to the extent, that this
Option shall have been exercised.
5. Upon payment of the purchase price therefor, the Optioned Shares
issued upon exercise of the Option shall be fully paid and nonassessable except
as otherwise provided in the Business Corporation Law of 1988 of the
Commonwealth of Pennsylvania.
<PAGE>
6. (a) In order to exercise the Option, Optionee shall deliver to
the Company written notice of intent to exercise the Option, in form and
substance satisfactory to the Company, specifying the number of Optioned Shares
with respect to which the Option is being exercised, and accompanied by payment
to the Company of the Option Price for the Shares so specified. Payment shall be
made by certified check, payable to the order of the Company; provided, however,
that all or any portion of such payment may be made in kind by the delivery of
shares of the Common Stock which have been owned by Optionee for a minimum
period of six months having a fair market value on the date of delivery equal to
the portion of the Option Price so paid; provided, further, however, that,
subject to the requirements of Regulation T (as in effect from time to time)
promulgated under the Securities Exchange Act of 1934, as amended, the Board may
implement procedures to allow a broker chosen by Optionee to make payment of all
or any portion of the option price payable upon the exercise of the Option and
to receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.
(b) Certificates representing the Optioned Shares issued upon
exercise of the Option shall bear the following legend:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933. Such securities may not be sold or
transferred except pursuant to a registration statement under such Act,
which is effective and current with respect to such securities, or upon
receipt by the Company of an opinion of counsel reasonably satisfactory to
the Company that such sale or transfer is exempt from the registration
requirements of such Act."
7. The Company shall, at all times until the expiration of the
Option, reserve for issuance and delivery upon exercise thereof, the number of
Optioned Shares that the Company would be required to issue and deliver upon
such exercise.
8. In the event that a dividend shall be declared upon the Common
Stock payable in shares of Common Stock, the Optioned Shares shall be adjusted
by adding to such Shares the number of shares which would be distributable
thereon if such Shares had been outstanding on the date fixed for determining
the stockholders entitled to receive such stock dividend. In the event that the
outstanding shares of Common Stock shall be changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation, whether through reorganization, recapitalization,
stock split-up, combination of shares, sale of assets, merger or consolidation,
whether or not the Company is the surviving corporation, then there shall be
substituted for the Optioned Shares the number and
2
<PAGE>
kind of shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed, or for which each such Share shall be
exchanged. In the event that there shall be any change, other than as specified
in this paragraph 9, in the number or kind of outstanding shares of Common
Stock, or of any stock or other securities into which the Common Stock shall
have been changed, or for which it shall have been exchanged, then, if the Board
shall, in its sole discretion, determine that such change equitably requires an
adjustment in the number or kind of shares subject to the Option, such
adjustment shall be made by the Board and shall be effective and binding for all
purposes of the Option. In the case of any such substitution or adjustment as
provided for in this paragraph 9, the Option Price for each Optioned Share shall
be the Option Price for all shares of stock or other securities which shall have
been substituted for such Optioned Share or to which such Optioned Share shall
have been adjusted in accordance with the provisions of this paragraph 9. No
adjustment or substitution provided for in this paragraph 9 shall require the
Company to sell a fractional share. In the event of the dissolution or
liquidation of the Company, or a merger in which the Company is not the
surviving corporation, the Option shall terminate.
9. The existence of the Option shall not affect in any way the right
or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
10. By acceptance hereof, Optionee represents and warrants that the
Option is being acquired by Optionee solely for his own account and not with a
view to, or for sale in connection with, the distribution thereof. The Optioned
Shares to be purchased upon exercise of the Option shall be registered by the
Company under the Securities Act of 1933 on a Registration Statement on Form S-8
as promptly as reasonably practicable following the date of this Agreement.
Optionee shall not attempt to dispose of any or all of the Optioned Shares
unless and until they have been validly registered under said Act or the Company
has determined, based on an opinion of counsel reasonably satisfactory to the
Company, that the intended disposition is exempt from the registration
requirements of said Act.
11. As a condition of the granting of the Option, Optionee agrees
that any dispute or disagreement which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Board, in its sole
discretion, and that any interpretations by the Board of the terms of this
Agreement shall be final, binding and conclusive.
3
<PAGE>
12. All notices provided for in the Option shall be in writing and
shall be given when personally delivered or sent by registered or certified
mail, return receipt requested; if intended for the Company, shall be addressed
to it, attention of its General Counsel, at Franklin Electronic Publishers,
Inc., 1 Franklin Plaza, Burlington, New Jersey 08016, or at such other address
of which the Company shall have given notice to Optionee in the manner herein
provided; and if intended for Optionee, shall be addressed to him at the address
set forth in handwriting below, or at such other address of which Optionee shall
have given notice to the Company in the manner herein provided.
13. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New Jersey applicable to contracts made and to be
performed wholly within said State without giving effect to the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Company and Optionee have duly executed this
Agreement as of the date first above written.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/
-------------------------------------
Title: Executive Vice President
AGREED TO:
/s/ Peter N. Yianilos
- ---------------------------
Peter N. Yianilos
4
Exhibit 5
December 14, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
Re: Franklin Electronic Publishers, Incorporated
Gentlemen:
I am General Counsel to Franklin Electronic Publishers, Incorporated (the
"Company") and a member in good standing of the bar of the Supreme Court of the
Commonwealth of Pennsylvania. I refer to the Registration Statement on Form S-8
to be filed by the Company with the Securities and Exchange Commission with
respect to the registration under the Securities Act of 1933 of shares (the
"Shares") of the Company's common stock, no par value (the "Common Stock"), for
issuance under the Company's 1999 Accrued Vacation Stock Purchase Program (the
"Program"), and under each of the Stock Option Agreement between the Company and
H. Andrew Cross, dated April 16, 1998 (5 year option agreement), the Stock
Option Agreement between the Company and H. Andrew Cross, dated April 16, 1998
(10 year option agreement), the Stock Option Agreement between the Company and
Peter Dinicola, dated August 3, 1998, the Stock Option Agreement between the
Company and Arnold D. Levitt, dated July 28, 1999, the Stock Option Agreement
between the Company and Robert Fallow, dated January 25, 1999 and the Stock
Option Agreement between the Company and Peter N. Yianilos, dated August 16,
1999 (collectively, the "Option Agreements").
I have examined such documents, legal opinions and precedents, corporate and
other records of the Company and certificates of public officials and officers
of the Company as I have deemed necessary or appropriate to provide a basis for
the opinions set forth below.
Based upon and subject to the foregoing, it is my opinion that the Shares have
been duly authorized and, upon issuance in accordance with the terms of the
Program or any of the Option Agreements, and upon payment of the exercise price
therefor, the Shares will be validly issued, fully paid and non-assessable.
I consent to the use of this opinion as Exhibit 5 to said Registration
Statement.
Very truly yours,
/s/ Gregory J. Winsky
---------------------
Gregory J. Winsky, Esq.
Senior Vice President
General Counsel
9
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-8 registration statement of our report dated June 10,
1999 included in the Franklin Electronic Publishers, Inc. Form 10-K for the year
ended March 30, 1999 and to all references to our Firm included in this Form S-8
registration statement.
RADIN, GLASS & CO., LLP
December 10, 1999
10
