As filed with the Securities and Exchange Commission on October 24, 1997.
Registration No. 333-
-------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
RACOM SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
-----------
Delaware 84-1182875
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
-----------
6080 Greenwood Plaza Blvd., Greenwood Village, CO 80111
(Address of principal executive offices) (Zip Code)
1993 Employee Stock Plan
(Full title of the plan)
Richard L. Horton, President
6080 Greenwood Plaza Blvd.
Greenwood Village, CO 80111
(303) 771-2077
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to public: From time to
time after the Registration Statement becomes effective.
--------------------------------
Exhibit Index Begins at Page II-6
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CALCULATION OF REGISTRATION FEE
================================================================================
Title of Amount to be Proposed Proposed Amount of
Securities Registered(1) Maximum Maximum Registration
to be Offering Aggregate Fee
Registered Price Per Offering
Security(2) Price(2)
- --------------------------------------------------------------------------------
Common Stock, 1,700,000 $ 2.81 $4,777,000 $1448.
$.01 par value Shares
================================================================================
(1) This Registration Statement, pursuant to Rule 416, covers any
additional shares of no par value Common Stock ("shares") which become issuable
under the 1993 Employee Stock Plan ("Plan") set forth herein by reason of any
stock dividend, stock split, recapitalization or any other similar transaction
without receipt of consideration which results in an increase in the number of
shares outstanding.
(2) Estimated solely for the purpose of computing the amount of the
Registration fee under Rule 457 of the Securities Act of 1933, as amended. A
total of 1,700,000 shares are issuable under the Plan at an offering price per
share based upon the closing price of the Common Stock on the NASDAQ SmallCap
Market on October 21, 1997 of $2.81 per share.
ii
<PAGE>
RACOM SYSTEMS, INC.
PART I
Cross Reference Sheet Required by Item 501
Item in Form S-8 Caption In Prospectus
---------------- ---------------------
1. General Plan Information........... Cover Page; Issuer and Participating
Employees; Description of the Plan;
Tax Consequences
2. Registrant Information and
Employee Plan Annual
Information........................ Available Information
3. Incorporation of Documents
by Reference....................... Incorporation of Documents by
Reference
4. Description of Securities.......... Description of Common Stock
5. Interests of Named Experts
and Counsel........................ Counsel
6. Indemnification of
Directors and Officers............. SEC Position Regarding Indemnification
7. Exemption from Registration
Claimed............................ Not Applicable
8. Exhibits........................... Not Applicable (See Part II, Item 8)
9. Undertakings....................... Not Applicable (See Part II, Item 9)
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to the requirements of the Note to Part I of Form S-8 and Rule
428(b)(1) of the Rules under the Securities Act of 1933, as amended, the
information required by Part I of Form S-8 is included in the Reoffer Prospectus
which follows. The Reoffer Prospectus together with the documents incorporated
by reference pursuant to Item 3 of Part II of this Registration Statement
constitute the Section 10(a) Prospectus.
iii
<PAGE>
REOFFER PROSPECTUS
The material which follows, up to but not including the page beginning Part
II of this Registration Statement, constitutes a prospectus, prepared on Form
S-3, in accordance with General Instruction C to Form S-8, to be used in
connection with resales of securities acquired under the Registrant's 1993
Employee Stock Plan by directors of the Registrant, as defined in Rule 405 under
the Securities Act of 1933, as amended.
iv
<PAGE>
1,700,000 SHARES
COMMON STOCK
RACOM SYSTEMS, INC.
---------------
1993 EMPLOYEE STOCK PLAN
---------------
This Reoffer Prospectus ("Prospectus") relates to the offering by Racom
Systems, Inc. (the "Company") and the Company's employees, officers, directors
and consultants of up to 1,700,000 shares (subject to adjustment in certain
circumstances) of the Company's $.01 par value Common Stock (the "Common Stock"
or "shares"), purchasable by such employees, officers, directors and consultants
pursuant to Common Stock options ("options") under the Company's 1993 Employee
Stock Plan (the "Plan"). As of the date hereof 1,539,280 options issued under
the Plan are outstanding.
---------------
This Prospectus will be used by non-affiliates of the Company as well as
persons who are "affiliates" (as that term is defined under the Securities Act
of 1933) to effect resales of the shares. See "Selling Stockholders." The
Company will receive no part of the proceeds of any such sales although it will
receive the exercise price of the options.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
No person is authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made hereby, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. The delivery of this
Prospectus at any time does not imply that the information herein is correct as
of the time subsequent to the date hereof.
----------------
The date of this Prospectus is October 24, 1997.
1
<PAGE>
AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, including Sections 14(a) and 14(c) relating to
proxy and information statements, and in accordance therewith files reports and
other information with the Securities and Exchange Commission ("Commission").
Reports and other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; 7 World Trade Center, New York, New York 10048; and
5670 Wilshire Boulevard, Los Angeles, California 90036. Copies of such material
can be obtained from the Public Reference Section of the Commission, 450 Fifth
Street N.W., Washington, D.C. 20549 at prescribed rates. The Company's Common
Stock is traded on the NASDAQ SmallCap Market under the symbol "RCOM." Reports,
proxy and information statements may also be inspected at the NASDAQ SmallCap
Market offices, 1735 K Street Northwest, Washington, D.C. 20006.
The Company furnishes annual reports to its shareholders which include
audited financial statements. The Company may furnish such other reports as may
be authorized, from time to time, by its Board of Directors.
INCORPORATION BY REFERENCE
--------------------------
Certain documents have been incorporated by reference into this Prospectus,
either in whole or in part. The Company will provide without charge (i) to each
person to whom a Prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference (not including exhibits to the information unless such exhibits are
specifically incorporated by reference into the information), and (ii) documents
and information required to be delivered to the Company's directors pursuant to
Rule 428(b). Requests for such information shall be addressed to the Company at
6080 Greenwood Plaza Blvd., Greenwood Village, CO 80111, (303) 771-2077.
2
<PAGE>
TABLE OF CONTENTS
-----------------
INTRODUCTION........................................................ 4
SELLING STOCKHOLDERS................................................ 5
METHOD OF SALE...................................................... 6
SEC POSITION REGARDING INDEMNIFICATION.............................. 7
DESCRIPTION OF THE PLAN............................................. 7
APPLICABLE SECURITIES LAW RESTRICTIONS.............................. 8
TAX CONSEQUENCES.................................................... 9
LEGAL MATTERS....................................................... 10
EXPERTS ........................................................... 10
3
<PAGE>
INTRODUCTION
The Company is a leading developer and marketer of contactless smart card
systems ("Smart Card(s)" or "Smart Card System(s)") used primarily in electronic
commerce. Generally the size of a credit card, Smart Cards are used in a number
of consumer applications including (i) access to restricted areas (replacing
keys and identification cards), (ii) public transportation fare collection
(replacing bus tokens, taxi cab charge cards, airline or railway tickets), (iii)
point of sale purchases (replacing cash or supplementing credit cards at
cafeterias, newsstands and related point of sale locations where speed of
purchase is important), and (iv) miscellaneous small monetary transactions
(replacing coins and cash at parking lots, in vending machines and public
telephones and the like). Smart Card technology is also used in industrial
applications such as attaching a "tag" containing the Smart Card technology to a
manufactured product in order to track the product from the assembly line
through quality control, warehousing, inventory control, distribution and
warranty.
The Company's Smart Cards are "contactless" and therefore do not require
the use of a magnetic stripe or insertion in a terminal as is required by
contacted cards ("Contacted Card(s)"). Instead, the Company's Smart Card System
involves direct wireless radio frequency communication between a ferroelectric
random access memory ("FRAM") chip in the Smart Card and a terminal. The
Company's FRAM chip does not require battery power and allows for processing the
Smart Card transaction in a fraction of a second by waving the Smart Card near
the terminal. Moreover, the Smart Card does not require insertion in the
terminal or the use of a keypad and therefore may be used by all members of the
population regardless of age or physical health and in both indoor and outdoor
locations.
For consumers and goods and services providers, the Company's Smart Cards
offer the convenience and accuracy of high speed transaction processing without
the requirement of carrying cash, checks or credit cards, thereby reducing the
threat of theft, inventory shrinkage, and payment fraud resulting from the
handling of cash or the counterfeiting of cash or credit cards. Goods and
services providers do not have to risk loss resulting from (i) accepting cash or
checks which may be subsequently stolen from them after payment by consumers or
(ii) accepting credit cards which may have been stolen prior to such payment.
Consumer loss is limited because the Smart Card is programmed to be used to
purchase only specific goods or services which is not as attractive to a thief
when compared to the broader illegal uses for stolen cash, checks or credit
cards. The Smart Card is designed to complement credit cards rather than replace
them in that Smart Card applications involve the storage and handling of
substantially more data than credit cards and can therefore be used for other
applications (rather than just purchase and sale transactions) such as
electronic purses, identification of the user and other portable data functions.
The Company sells its Smart Card System through its own direct sales force,
through a combination of joint ventures and strategic alliances and through
selective licensing and distributorship arrangements and agreements with
independent sales representatives in foreign countries. Since 1993, the Company
has designed Smart Card Systems for over 100 customers in cities throughout the
world including Singapore, Macau, Hong Kong, Tokyo, Manchester, Paris, Milan,
Los Angeles, Chicago and Denver.
4
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SELLING STOCKHOLDERS
This Prospectus covers possible sales by officers and directors of the
Company of shares they acquire through exercise of options granted under the
Plan. The names of such officers and directors who may be Selling Stockholders
from time to time are listed below, along with the number of shares of Common
Stock currently owned by them and the number of shares offered for sale hereby.
The number of shares offered for sale by such individuals may be updated in
supplements to this Prospectus, which will be filed with the Securities and
Exchange Commission in accordance with Rule 424(b) under the Securities Act of
1933, as amended.
Number of
Name and Address of Shareholdings Shares Offered
Selling Stockholder Number(1)(2) Percent(1) For Sale(2)
- ------------------- ------------ ---------- -----------
Charles A. Fear(3) 25,000 * 25,000
Level 22 Allendale Square
77 St. Georges Terrace
Perth, Western Australia 6000
Richard L. Horton(4) 500,000 3.7 500,000
6080 Greenwood Plaza Blvd.
Greenwood Village, CO 80111
Mark R. Davison(5) 25,000 * 25,000
9th Floor, Kyle House
27-31 Macquarie Place
Sydney NSW 2000
Australia
L. David Sikes(6) 25,000 * 25,000
1850 Ramtron Drive
Colorado Springs, CO 80921
George J. Stathakis(6) 25,000 * 25,000
One Bush Street, 15th Floor
San Francisco, CA 94104
Charles R. Broshous(7) 100,000 * 100,000
Michael L. Malmer(7) 250,000 * 250,000
William H. Jacobs(7) 100,000 * 100,000
Douglas J. Sheldon(7) 40,000 * 40,000
- ---------
* Less than 1%.
5
<PAGE>
(1) Includes all stock options exercisable within 60 days from the date hereof.
(2) Represents all shares issuable upon exercise of options under the Plan.
(3) Represents options to purchase 25,000 shares of Common Stock at $2.50 per
share issued under the Plan.
(4) Represents options to purchase 500,000 shares of Common Stock at $1.00 per
share issued under the Plan.
(5) Represents options to purchase 25,000 shares of Common Stock at $2.50 per
share issued under the Plan. Does not include 5,422,532 shares or 321,766
common stock purchase warrants held by Intag International Limited
("Intag"), a publicly held Australian company for which Mr. Davison serves
as a director.
(6) Represents options to purchase 25,000 shares of Common Stock at $2.50 per
share issued under the Plan. Does not include 4,800,000 shares or 251,452
common stock purchase warrants held by Ramtron International Corporation
("Ramtron") for which Mr. Sikes serves as a Chairman and Chief Executive
Officer and for which Mr. Stathakis serves as a director. See "Management -
Directors and Executive Officers."
(7) Represents options to purchase the number of shares indicated after each
individual's name issued under the Plan at $1.00 per share as to Mr. Malmer
and $2.50 per share as to Messrs. Broshous, Jacobs and Sheldon. The address
of all four individuals is in care of the Company at 6080 Greenwood Plaza
Blvd., Greenwood Village, CO 80111.
METHOD OF SALE
Sales of the shares offered by this Prospectus will be made on the NASDAQ
SmallCap Market, where the Company's Common Stock is listed for trading, in
other markets where the Company's Common Stock may be traded or in negotiated
transactions. Sales will be at prices current when the sales take place and will
generally involve payment of customary brokers' commissions. There is no present
plan of distribution.
6
<PAGE>
SEC POSITION REGARDING INDEMNIFICATION
The Company's Article of Incorporation and Bylaws provide for
indemnification of officers and directors, among other things, in instances in
which they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the Company and in which, with
respect to criminal proceedings, they had no reasonable cause to believe their
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling the Company under the provisions described above, the Company has
been informed that in the opinion of the Securities and Exchange Commission that
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.
DESCRIPTION OF THE PLAN
In May 1993, the Company's Board of Directors approved the Plan for the
benefit of employees, officers, directors and consultants of the Company. The
Company believes that the Plan provides an incentive to individuals to act as
employees, officers, directors and consultants of the Company and to maintain a
continued interest in the operations and future of the Company. The Plan
includes qualified stock options and non-qualified stock options issued under
Section 422 of the Internal Revenue Code.
The terms of the Plan provide that the Company is authorized to grant
options to purchase shares of Common Stock ("options" or "option shares") to
employees, officers, directors and consultants of the Company upon the majority
consent of the Administrative Committee of the Company's Board of Directors. Any
employee, officer, director or consultant of the Company is eligible to receive
options under the Plan. The option price to be paid by optionees for shares
under qualified stock options must not be less than the fair market value of the
options shares as reported by the NASDAQ SmallCap Market on the date of the
grant. The option price for nonqualified stock options will not be less than 85%
of such fair market value. Options must be exercised within 10 years following
the date of grant (or sooner at the discretion of the Administrative Committee),
and the optionee must exercise options during service to the Company or within
30 days of termination of such service (12 months in the event of death on
disability). The Administrative Committee may extend the termination date of an
option granted under the Plan.
A total of 1,700,000 shares of the Company's authorized but unissued Common
Stock have been reserved for issuance pursuant to the Plan of which 1,539,280
options are currently outstanding at exercise prices ranging from $1.00 to $2.78
per share. In the event of a change in control of the Company (as defined in the
Plan), all outstanding options become immediately exercisable.
Options under the Plan may not be transferred, except by will or by the
laws of intestate succession. The number of shares and price per share of the
options under the Plan will be proportionately adjusted to reflect forward and
reverse stock splits. The holder of an option under the Plan has none of the
rights of a shareholder until shares are issued.
7
<PAGE>
The Plan is administered by the Administrative Committee (consisting of not
less than two disinterested directors) which has the power to interpret the
Plan, determine which persons are to be granted options and the amount of such
options.
The provisions of the Federal Employee Retirement Income Security Act of
1974 do not apply to the Plan. Shares issuable upon exercise of options will not
be purchased in open market transactions but will be issued by the Company from
authorized shares.
Payment for shares must be made by optionees in cash from their own funds.
No payroll deductions or other installment plans have been established. No
reports will be made to optionees under the Plan except in the form of updated
information for the Prospectus.
There are no assets administered under the Plan, and, accordingly, no
investment information is furnished herewith.
Shares issuable under the Plan may be sold in the open market, without
restrictions, as free trading securities. No options may be assigned,
transferred, hypothecated or pledged by the option holder. No person may create
a lien on any securities under the Plan, except by operation of law. However,
there are no restrictions on the resale of the shares underlying the options.
The Plan will remain in effect until May 24, 2003 but may be terminated or
extended by the Company's Board of Directors. Additional information concerning
the Plan and its administrators may be obtained from the Company at the address
and telephone number indicated under "Incorporation by Reference" above.
APPLICABLE SECURITIES LAW RESTRICTIONS
If the optionee is deemed to be an "affiliate" (as that term is defined
under the Securities Act of 1933, as amended), the resale of the shares
purchased upon exercise of options covered hereby will be subject to certain
restrictions and requirements. The Company's legal counsel may be called upon to
discuss these applicable restrictions and requirements with any optionee who may
be deemed to be an affiliate, prior to exercising an option.
In addition to the requirements imposed by the Securities Act of 1933, the
antifraud provisions of the Securities Exchange Act of 1934 and the rules
thereunder (including Rule 10b-5) are applicable to any sale of shares acquired
pursuant to options.
Up to 1,700,000 shares may be issued under the Plan. The Company has
authorized 20,000,000 shares, of which 13,192,532 shares were outstanding as of
September 30, 1997. Common shares outstanding and those to be issued upon
8
<PAGE>
exercise of options are fully paid and nonassessable, and each share of stock is
entitled to one vote at all shareholders' meetings. All shares are equal to each
other with respect to lien rights, liquidation rights and dividend rights. There
are no preemptive rights to purchase additional shares by virtue of the fact
that a person is a shareholder of the Company. Shareholders do not have the
right to cumulate their votes for the election of directors.
Directors must comply with certain reporting requirements and resale
restrictions pursuant to Sections 16(a) and 16(b) of the Securities Exchange Act
of 1934 and the rules thereunder upon the receipt or disposition of any options.
TAX CONSEQUENCES
If a qualified option is exercised and if the optionee does not dispose of
the shares acquired pursuant to the exercise within two years of the date of the
granting of the option nor within one year from the transfer of the shares
pursuant to exercise of the options, then there will not be any federal income
tax consequences to the Company from either the exercise of the option or the
receipt of the proceeds with respect to the exercise of the option. In such
circumstances, the optionee would not be required to recognize any taxable
income upon the exercise of the option.
Furthermore, the sale of the shares received pursuant to the exercise of
the option would result in long-term capital gain or long-term capital loss to
the optionee based on the difference between the amount received with respect to
such sale and the amount paid upon the exercise of the option.
If an optionee exercised an option and sold the shares acquired pursuant to
such exercise either within two years from the date of the granting of the
option or within one year from the date of the transfer of such shares to him
pursuant to his exercise of the option, then in general the Company would be
entitled to a deduction for federal income tax purposes equal to lessor of: (1)
the fair market value of the stock on the date of exercise over the option price
of the stock; or (2) the amount realized on disposition over the adjusted basis
of the stock. The optionee would recognize ordinary income equal to the amount
of the Company's deduction. The Company's deduction would be allowed, and the
optionee's income would be taxable, in the year the optionee disposed of the
shares. However, if the disposition occurs within two years of the date of the
grant or within one year from the date of transfer of the shares and the
disposition is a sale or exchange with respect to which a loss, if sustained,
would be recognized (generally any disposition other than to a related party),
then the optionee's income and the Company's deduction would not exceed the
excess (if any) of the amount realized on such sale or exchange over the
adjusted basis of such shares. The Company expects that optionees will be
required to exercise their options within five years from the date of grant
although optionees may hold the shares issuable upon exercise of the options
indefinitely.
For options exercised after 1987, an individual generally must include in
alternative minimum taxable income the amount by which the option price paid is
exceeded by the fair market value at the time the individual's rights to the
shares are freely transferable or are not subject to a substantial risk of
forfeiture. However, if the stock is disposed of within two years of the date of
the granting of the option or within one year of the date of transfer of the
shares and the disposition occurs in the same year as the option exercise then
the alternative minimum taxable income shall be the lesser of (1) the fair
market value of the stock on the date of exercise over the option price of the
stock; or (2) the amount realized on disposition over the adjusted basis of the
stock. The alternative minimum tax is payable only if the alternative minimum
tax exceeds the regular income tax liability.
9
<PAGE>
The provision of Section 401(a) of the Code, relating to "qualified"
pension, profit sharing and stock bonus plans, do not apply to the options or
underlying shares covered hereby.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed on
for the Company by Gary A. Agron, 5445 DTC Parkway, Suite 520, Englewood,
Colorado 80111.
EXPERTS
The financial statements of the Company incorporated by reference in the
Company's Annual Report on Forms 10KSB for the years ended December 31, 1996 and
1995, were audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference. Reference is made to said report which includes an explanatory
paragraph that discusses substantial doubt about the Company's ability to
continue as a going concern.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference in this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission:
(a) The Registrant's Annual Report on Form 10KSB for the year
ended December 31, 1996, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934 (the "Exchange Act");
(b) The Registrant's Quarterly Report on Form 10-QSB for the
quarters ended March 31, 1997, and June 30, 1997, filed pursuant to
Section 13(a) of the Exchange Act; and
(c) The description of the Registrant's Common Stock contained in
the Registrant's Registration Statement on Form SB-2 under the
Securities Act of 1933, as amended (Registration No. 333-18351),
including any amendments or reports filed for the purpose of updating
such description.
(d) All other reports and subsequent reports filed pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended.
All reports and definitive proxy or information statements filed by the
Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold at the time
of such amendment will be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
II-1
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Article VI of the Registrant's Restated Certificate of Incorporation
provides as follows:
"Limitation of Liability
------------------------
A Director of the Corporation shall not be personally liable to the
Corporation or its shareholders for monetary damages for breach of fiduciary
duty as a Director except for liability, (i) for any breach of the Director's
duty of loyalty to the Corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the Director derived any improper
personal benefit.
Notwithstanding any other provisions herein, personal liability of a
director shall be eliminated to the greatest extent possible as is now, or in
the future, provided for by law."
Article Eight of the Company's Restated Bylaws provides, inter alia, as
follows:
"Liability: Indemnification
---------------------------
Section 8.01 Exculpation. No director or officer of the Corporation shall be
liable for the acts, defaults or omissions of any other director or officer, or
for any loss sustained by the Corporation, unless the same has resulted from his
own willful misconduct, willful neglect or gross negligence.
Section 8.02 Indemnification for Action, Etc. Other Than by or in the Right of
the Corporation. The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe the conduct which was taken was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that such person did not act in good faith and in a manner which such person
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, that such
person had reasonable cause to believe that the conduct which was taken was
unlawful.
II-2
<PAGE>
Section 8.03 Indemnification for Actions, Etc. by or in the Right of the
Corporation. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that such person is or was a director, officer, employee
or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper."
Insofar as indemnification for liabilities arising under the 1933 Act, as
amended, may be permitted to officers, directors or persons controlling the
Company, the Company has been advised that, in the opinion of the Securities and
Exchange Commission, Washington, D.C. 20549, such indemnification is against
public policy as expressed in such Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
officer, director or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such officer, director or
controlling person in connection with the securities being registered, the
Company 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 such Act and will be governed by the final adjudication of such
issue.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The following is a list of Exhibits filed as part of the Registration
Statement:
4. 1993 Employee Stock Plan (As amended and Restated Effective October
14, 1997).
4.1 Form of 1993 Employee Stock Agreement under the 1993 Employee Stock
Plan
II-3
<PAGE>
5.02 Opinion of Gary A. Agron
24.05 Consent of Arthur Andersen LLP, independent certified public
accountants
Item 9. Undertakings
The Registrant hereby undertakes (1) to file, during any period in which
offers or sales are being made, a post-effective amendment to this Registration
Statement; to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (2) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
Registration Statement; (3) that, for the purpose of determining any liability
under the Securities Act of 1933, each 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 (4) 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 Plan.
The Registrant hereby undertakes to deliver or cause to be delivered with
the prospectus to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange 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 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 against the
Registrant 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 juris-diction 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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
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 Greenwood Village, State of Colorado, on this 15th
day of October, 1997.
RACOM SYSTEMS, INC.
By: /s/ Richard Horton
---------------------------------------------
Richard Horton
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Charles A. Fear Chairman of the Board of October 15, 1997
- -------------------------- Directors
Charles A. Fear
/s/ Richard L. Horton President, Chief Executive October 15, 1997
- -------------------------- Officer, Chief Financial
Richard L. Horton Officer (Principal Accounting
Officer) and Director
/s/ Mark R. Davison Director October 15, 1997
- --------------------------
Mark R. Davison
/s/ L. David Sikes Director October 15, 1997
- --------------------------
L. David Sikes
/s/ George J. Stathakis Director October 15, 1997
- --------------------------
George J. Stathakis
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Page No.
4. 1993 Employee Stock Plan
4.1 Form of 1993 Employee Stock Agreement
under the 1993 Employee Stock Plan
5.02 Opinion of Gary A. Agron
23.05 Consent of Arthur Andersen LLP, independent
certified public accountants
II-6
RACOM SYSTEMS, INC.
1993 EMPLOYEE STOCK PLAN
(AS AMENDED AND RESTATED EFFECTIVE OCTOBER 14, 1997)
SECTION 1: PURPOSE
The general purpose of the Racom Systems, Inc. 1993 Employee Stock Plan
(the "Plan") is to further the growth and development of Racom Systems, Inc.
(the "Company") by affording an opportunity for stock ownership through the
grant of stock options and restricted stock to selected employees, directors and
consultants of the Company and its subsidiaries who are responsible for the
conduct and management of its business or who are involved in endeavors
significant to its success.
SECTION 2: DEFINITIONS
Unless otherwise indicated, the following words when used herein shall have
the following meanings:
(a) "Affiliate" shall mean, with respect to any person or entity, a person
or entity that directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, such person or
entity.
(b) "Board of Directors" shall mean the Board of Directors of the Company.
(c) "Change in Control" shall be deemed to have occurred (1) at such time
as a third person, including a "group" as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, becomes the beneficial owner of shares of the
Company having 50% or more of the total number of votes that may be cast for the
election of Directors of the Company, or (2) on the date on which the
stockholders of the Company approve (i) any agreement for a merger or
consolidation in which the Company will not survive as an independent
corporation or (ii) any sale, exchange or other disposition of all or
substantially all of the Company's assets, or (3) on the effective date of any
sale, exchange or other disposition of greater than 50% in fair market value of
the Company's assets. The Committee's reasonable determination as to whether
such an event has occurred shall be final and conclusive.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(e) "Common Stock" shall mean the Company's common stock (par value $.01
per share) and any share or shares of the Company's capital stock hereafter
issued or issuable in substitution for such shares.
<PAGE>
(f) "Director" shall mean a member of the Board of Directors.
(g) "Grantee" shall mean any employee (including an employee who is also a
Director) who is awarded shares of Common Stock pursuant to a Restricted Stock
Award.
(h) "Incentive Stock Option" shall mean any option granted to an eligible
employee (including an employee who is also a Director) under the Plan, which
the Company intends at the time the option is granted to be an Incentive Stock
Option within the meaning of Section 422 of the Code.
(i) "Limited SAR" shall mean a stock appreciation right subject to the
terms of Section 12.2.
(j) "Non-Employee Director" shall mean a Director who is not an officer of
the Company or any Affiliate of the Company and who otherwise meets the
requirements set forth in Rule 16b-3(b)(3) as promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
(k) "Nonqualified Stock Option" shall mean any option granted to an
eligible employee, Director or consultant under the Plan which is not an
Incentive Stock Option.
(l) "Option" shall mean and refer collectively to Incentive Stock Options
and Nonqualified Stock Options.
(m)"Option Agreement" means the agreement specified in Section 7.2.
(n) "Optionee" shall mean any employee, Director or consultant who is
granted an Option under the Plan. "Optionee" shall also mean the personal
representative of an Optionee and any other person who acquires the right to
exercise an Option by bequest or inheritance.
(o) "Parent" shall mean a parent corporation of the Company as defined in
Section 424(e) of the Code.
(p) "Related Option" shall mean an Incentive Stock Option or a Nonqualified
Stock Option which has been granted in conjunction with a Limited SAR.
(q) "Restricted Stock" shall mean shares of Common Stock awarded to an
eligible employee (including an employee who is also a Director) which are
subject to the restrictions set forth in Section 10 of the Plan and the
Restricted Stock Agreement. "Restricted Stock" shall also include any shares of
the Company's capital stock issued as the result of a dividend on or split of
Restricted Stock. Upon termination of the restrictions, such Common Stock or
other capital stock shall no longer be Restricted Stock.
2
<PAGE>
(r) "Restricted Stock Agreement" means the agreement specified in Section
10.2.
(s) "Restricted Stock Award" means the grant of Restricted Stock under this
Plan.
(t) "Restriction Period" shall be the period set forth in the Restricted
Stock Agreement which is the period beginning on the date of grant of the
Restricted Stock Award and ending on the vesting of the Restricted Stock.
(u) "Subsidiary" shall mean a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
SECTION 3: EFFECTIVE DATE
The effective date of the Plan is May 25, 1993.
SECTION 4: ADMINISTRATION
4.1. Administrative Committee. The Plan shall be administered either by (i)
the entire Board of Directors or (ii) a committee of the Board of Directors
appointed by and serving at the pleasure of the Board of Directors composed
solely of two or more Non-Employee Directors. The Board of Directors or such
committee, as the case may be, is referred to hereinafter as the "Committee".
The Board of Directors may from time to time remove members from or add members
to the Committee, and vacancies on the Committee, howsoever caused, shall be
filled by the Board of Directors.
4.2. Committee Meetings and Actions. The Committee shall hold meetings at
such times and places as it may determine. A majority of the members of the
Committee shall constitute a quorum, and the acts of the majority of the members
present at a meeting or a consent in writing signed by all members of the
Committee shall be the acts of the Committee and shall be final, binding and
conclusive upon all persons, including the Company, its Subsidiaries, its
shareholders, and all persons having any interest in Options or Restricted Stock
Awards which may be or have been granted pursuant to the Plan.
4.3. Powers of Committee. Subject to the restrictions of Section 7.8, the
Committee shall have the full and exclusive right to grant and determine terms
and conditions of all Options and Restricted Stock Awards granted under the Plan
and to prescribe, amend and rescind rules and regulations for administration of
3
<PAGE>
the Plan. In granting Options and Restricted Stock Awards, the Committee shall
take into consideration the contribution the Optionee or Grantee has made or may
make to the success of the Company or its Subsidiaries and such other factors as
the Committee shall determine.
4.4. Interpretation of Plan. The determination of the Committee as to any
disputed question arising under the Plan, including questions of construction
and interpretation, shall be final, binding and conclusive upon all persons,
including the Company, its Subsidiaries, its shareholders, and all persons
having any interest in Options or Restricted Stock Awards which may be or have
been granted pursuant to the Plan.
4.5. Indemnification. Each person who is or shall have been a member of the
Committee or of the Board of Directors shall be indemnified and held harmless by
the Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred in connection with or resulting from any
claim, action, suit or proceeding to which such person may be a party or in
which such person may be involved by reason of any action taken or failure to
act under the Plan and against and from any and all amounts paid in settlement
thereof, with the Company's approval, or paid in satisfaction of a judgment in
any such action, suit or proceeding against him, provided such person shall give
the Company an opportunity, at its own expense, to handle and defend the same
before undertaking to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive of, and is in addition
to, any other rights of indemnification to which any person may be entitled
under the Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
SECTION 5: STOCK SUBJECT TO THE PLAN
5.1. Number. The aggregate number of shares of Common Stock which may be
issued under Options and Restricted Stock Awards granted pursuant to the Plan
shall not exceed 1,700,000 shares. Shares which may be issued under Options and
Restricted Stock Awards may consist, in whole or in part, of authorized but
unissued stock or treasury stock of the Company not reserved for any other
purpose.
5.2. Unused Stock. If any outstanding Option under the Plan expires or for
any other reason ceases to be exercisable, in whole or in part, other than upon
exercise of the Option or a Limited SAR, the shares which were subject to such
Option and as to which the Option had not been exercised shall continue to be
available under the Plan. Any Restricted Stock which is forfeited to the Company
pursuant to restrictions contained in this Plan shall not be counted in
determining the number of shares of Common Stock available to be awarded under
the Plan.
5.3. Adjustment for Change in Outstanding Shares. If there is any change,
increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend, recapitalization, merger, consolidation, stock split,
4
<PAGE>
combination or exchange of stock, or other similar circumstances, then in each
such event, the Committee shall make an appropriate adjustment in (i) the
aggregate number of shares of stock available under the Plan and (ii) the number
of shares of stock subject to each outstanding Option and Restricted Stock Award
and the option price of each outstanding Option in order to prevent the dilution
or enlargement of any Optionee or Grantee's rights. In making such adjustments,
fractional shares shall be rounded to the nearest whole share. The Committee's
determinations in making adjustments shall be final and conclusive.
5.4. Reorganization or Sale of Assets. If the Company is merged or
consolidated with another corporation and the Company is not the surviving
corporation, or if all or substantially all of the assets of the Company are
acquired by another entity, or if the Company is liquidated or reorganized (each
of such events being referred to hereinafter as a "Reorganization Event"), the
Committee shall, as to outstanding Options, either (1) make appropriate
provision for the protection of any such outstanding Options by the substitution
on an equitable basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation, which will be issuable in
respect of the Common Stock, provided that no additional benefits shall be
conferred upon Optionees as a result of such substitution, and provided further
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof, or (2) upon written notice to all Optionees, which notice shall
be given not less than 20 days prior to the effective date of the Reorganization
Event, provide that all unexercised Options and Limited SARs must be exercised
within a specified number of days (which shall not be less than ten) of the date
of such notice or such Options will terminate. In response to a notice provided
pursuant to clause (2) of the preceding sentence, an Optionee may make an
irrevocable election to exercise the Optionee's Option contingent upon and
effective as of the effective date of the Reorganization Event. In the
alternative, if the Reorganization Event would also result in a Change in
Control, the Optionee may make an irrevocable election to exercise the
Optionee's Limited Stock Appreciation Right contingent upon and effective as of
the effective date of the Reorganization Event. The Committee may, in its sole
discretion, accelerate the exercise dates of outstanding Options in connection
with any Reorganization Event which does not also result in a Change in Control.
SECTION 6: ELIGIBILITY
All full- or part-time salaried employees of the Company and its
Subsidiaries who are responsible for the conduct and management of its business
or who are involved in endeavors significant to its success shall be eligible to
receive Incentive Stock Options, Nonqualified Stock Options and Restricted Stock
5
<PAGE>
Awards under the Plan. Directors and consultants shall be eligible to receive
Nonqualified Stock Options, but not Incentive Stock Options or Restricted Stock
Awards, under the Plan.
SECTION 7: GRANT OF OPTIONS
7.1. Grant of Options. The Committee may from time to time in its
discretion, after consultation with the President of the Company, determine
which of the eligible employees, Directors and consultants of the Company or its
Subsidiaries should receive Options, the type of Options to be granted (whether
Incentive Stock Options or Nonqualified Stock Options), the number of shares
subject to such Options, whether the Optionee shall also receive Limited SARs,
and the dates on which such Options are to be granted. No employee may be
granted Incentive Stock Options to the extent that the aggregate fair market
value (determined as of the time each Option is granted) of the Common Stock
with respect to which any such Options are exercisable for the first time during
a calendar year (under all incentive stock option plans of the Company and its
Parent and Subsidiaries) would exceed $100,000.
7.2. Option Agreement. Each Option granted under the Plan shall be
evidenced by a written Option Agreement setting forth the terms upon which the
Option is granted. Each Option Agreement shall designate the type of Options
being granted (whether Incentive Stock Options or Nonqualified Stock Options),
whether the Optionee shall also receive Limited SARs, and shall state the number
of shares of Common Stock, as designated by the Committee, to which that Option
pertains. More than one Option, and both Options and Restricted Stock Awards,
may be granted to an eligible person.
7.3. Option Price. The option price per share of Common Stock under each
Option shall be determined by the Committee and stated in the Option Agreement.
The option price for Incentive Stock Options granted under the Plan shall not be
less than 100% of the fair market value (determined as of the day the Option is
granted) of the shares subject to the Option. The option price for Nonqualified
Stock Options granted under the Plan shall not be less than 85% of the fair
market value (determined as of the day the Option is granted) of the shares
subject to the Option.
7.4. Determination of Fair Market Value. If the Common Stock is listed upon
an established stock exchange or exchanges, then the fair market value per share
shall be deemed to be the average of the quoted closing prices of the Common
Stock on such stock exchange or exchanges on the day for which the determination
is made, or if no sale of the Common Stock shall have been made on any stock
exchange on that day, on the next preceding day on which there was such a sale.
If the Common Stock is not listed upon an established stock exchange but is
traded in the NASDAQ National Market System, the fair market value per share
shall be deemed to be the closing price of the Common Stock in the National
Market System on the day for which the determination is made, or if there shall
6
<PAGE>
have been no trading of the Common Stock on that day, on the next preceding day
on which there was such trading. If the Common Stock is not listed upon an
established stock exchange and is not traded in the National Market System, the
fair market value per share shall be deemed to be the mean between the dealer
"bid" and "ask" closing prices of the Common Stock on the NASDAQ System on the
day the Option is granted or, if there shall have been no trading of the Common
Stock on that day, on the next preceding day on which there was such trading. If
none of these conditions apply, the fair market value per share shall be deemed
to be an amount as determined in good faith by the Committee by applying any
reasonable valuation method.
7.5. Duration of Options. Each Option shall be of a duration as specified
in the Option Agreement; provided, however, that the term of each Option shall
be no more than ten years from the date on which the Option is granted and shall
be subject to early termination as provided herein.
7.6. Additional Limitations on Grant. No Incentive Stock Option shall be
granted to an employee who, at the time the Incentive Stock Option is granted,
owns stock (as determined in accordance with Section 424(d) of the Code)
representing more than 10% of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary, unless the option price of
such Incentive Stock Option is at least 110% of the fair market value
(determined as of the day the Incentive Stock Option is granted) of the stock
subject to the Incentive Stock Option and the Incentive Stock Option by its
terms is not exercisable more than five years from the date it is granted.
7.7. Other Terms and Conditions. The Option Agreement may contain such
other provisions, which shall not be inconsistent with the Plan, as the
Committee shall deem appropriate, including, without limitation, provisions that
relate the Optionee's ability to exercise an Option to the passage of time or
the achievement of specific goals established by the Committee or the occurrence
of certain events specified by the Committee. The Option Agreement may also
provide that any shares of Common Stock acquired upon exercise of a Nonqualified
Stock Option shall become, upon such acquisition, Restricted Stock subject to
the terms of a Restricted Stock Agreement which shall be set forth as an
attachment to the Stock Option Agreement.
SECTION 8: EXERCISE OF OPTIONS
8.1. Manner of Exercise. Subject to the limitations and conditions of the
Plan or the Option Agreement, an Option shall be exercisable, in whole or in
part, from time to time, by giving written notice of exercise to the Secretary
of the Company, which notice shall specify the number of shares of Common Stock
to be purchased and shall be accompanied by (1) payment in full to the Company
of the purchase price of the shares to be purchased, plus (2) payment in cash or
by certified or bank cashier's check of such amount as the Company shall
determine to be sufficient to satisfy any liability it may have for any
withholding of federal, state or local income or other taxes incurred by reason
7
<PAGE>
of the exercise of the Option, and (3) a representation meeting the requirements
of Section 14.1 if requested by the Company, and (4) a Stock Restriction
Agreement meeting the requirements of Section 14.2 if requested by the Company.
8.2. Payment of Purchase Price. Payment for shares shall be in the form of
either (1) cash, (2) a certified or bank cashier's check to the order of the
Company, or (3) shares of the Common Stock, properly endorsed to the Company, in
an amount the fair market value of which on the date of receipt by the Company
(as determined in accordance with Section 7.4) equals or exceeds the aggregate
option price of the shares with respect to which the Option is being exercised,
or (4) in any combination thereof; provided, however, that no payment may be
made in shares of Common Stock unless payment in such form has been approved in
advance by the Committee. Upon the exercise of any Option, the Company, in its
sole discretion, may make financing available to the Optionee for the payment of
the purchase price on such terms and conditions as the Committee shall specify.
SECTION 9: RESTRICTIONS ON TRANSFER OF OPTIONS
Options and Limited SARs granted pursuant to the Plan are not transferable
by the Optionee other than by Will or the laws of descent and distribution and
shall be exercisable during the Optionee's lifetime only by the Optionee. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option or Limited SAR contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon the Option or Limited SAR, the Option and
Limited SAR shall immediately become null and void.
SECTION 10: GRANT OF RESTRICTED STOCK AWARDS
10.1. Grant of Restricted Stock Awards. The Committee may from time to time
in its discretion, after consultation with the President of the Company,
determine which of the eligible employees of the Company or its Subsidiaries
(including employees who are also Directors) should receive Restricted Stock
Awards, the number of shares subject to such Restricted Stock Awards, and the
dates on which such Restricted Stock Awards are to be granted.
10.2. Restricted Stock Agreement. Each Restricted Stock Award granted under
the Plan shall be evidenced by a written Restricted Stock Agreement setting
forth the terms upon which the Restricted Stock Award is granted. Each
Restricted Stock Agreement shall state the number of shares of Common Stock, as
designated by the Committee, to which that Restricted Stock Award pertains and
the price, if any, to be paid by the Grantee for the Restricted Stock. More than
one Restricted Stock Award, and both Options and Restricted Stock Awards, may be
granted to an eligible person.
10.3. Issuance of Restricted Stock. The right to receive Restricted Stock
shall be conditioned upon the delivery by the Grantee of (1) payment in full, in
cash or by certified or bank cashier's check, to the Company of the purchase
price, if any, of the Restricted Stock, (2) a representation meeting the
requirements of Section 14.2 if requested by the Company, and (3) a Stock
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Restriction Agreement meeting the requirements of Section 14.3 if requested by
the Company. The stock certificate or certificates representing the Restricted
Stock shall be registered in the name of the Grantee to whom such Restricted
Stock shall have been awarded. Such certificates shall remain in the custody of
the Company and the Grantee shall deposit with the Company stock powers or other
instruments of assignment, each endorsed in blank, so as to permit retransfer to
the Company of all or a portion of the Restricted Stock that shall be forfeited
or otherwise not become vested in accordance with the Plan and the applicable
Restricted Stock Agreement.
10.4. Completion of Restriction Period. With respect to each Restricted
Stock Award, upon the satisfaction of any applicable restrictions, terms and
conditions set forth in this Plan or in the Restricted Stock Agreement, all or
part of the Restricted Stock shall become vested as set forth in the Restricted
Stock Agreement. The Company shall issue a certificate for shares of Common
Stock of the Company as such Restricted Stock becomes vested; provided, however,
that prior to such issuance Grantee shall pay, in cash or by certified or bank
cashier's check, such amount as the Company shall determine to be sufficient to
satisfy any liability it may have for any withholding of federal, state or local
income or other taxes incurred by reason of the vesting of the Restricted Stock.
If the Grantee fails to satisfy any applicable restrictions, terms and
conditions set forth in this Plan or in the Restricted Stock Agreement for any
reason, any Restricted Stock held by such Grantee and affected by such
conditions shall be forfeited to the Company in return for such consideration as
shall be specified in the Restricted Stock Agreement. The Company and its
officers are authorized to reflect such forfeiture of Restricted Stock on the
Company's stock ledger.
SECTION 11: RESTRICTIONS ON TRANSFER OF RESTRICTED STOCK
11.1. Restrictions. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes. The Grantee shall
have the right to vote such Restricted Stock, to receive and retain all regular
cash dividends and such other distributions, as the Board of Directors may, in
its discretion, designate, pay or distribute on such Restricted Stock, and to
exercise all other rights, powers and privileges of a holder of Common Stock
with respect to such Restricted Stock, except as set forth in this Section 11.
The Grantee shall not be entitled to delivery of the stock certificate or
certificates representing such Restricted Stock until the Restriction Period
shall have expired and unless all other vesting requirements with respect
thereto shall have been fulfilled or waived. The Company shall retain custody of
the stock certificate or certificates representing the Restricted Stock during
the Restriction Period.
11.2. Prohibition on Transfer. Restricted Stock granted pursuant to the
Plan is not transferrable by the Grantee until all restrictions on such
Restricted Stock shall have lapsed. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of the Restricted Stock, contrary to the
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<PAGE>
provisions hereof, and levy of any attachment or similar process upon the
Restricted Stock, shall be null and void. Furthermore, the Company shall not
recognize or give effect to such transfer on its books and records or recognize
the person or persons to whom such purported transfer has been made as the legal
or beneficial owner of the Restricted Stock.
11.3. Legend. Certificates representing shares of Restricted Stock shall
bear the following legend, in addition to such other legends as counsel to the
Company may deem appropriate:
NOTICE OF RESTRICTIONS ON TRANSFER
THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE PROVISIONS
OF THE COMPANY'S 1993 EMPLOYEE STOCK PLAN AND A
RESTRICTED STOCK AGREEMENT, WHEREBY THE TRANSFER
IN ANY MANNER OF SUCH SHARES OF STOCK OR ANY
INTEREST THEREIN IS RESTRICTED AND THE SHARES OF
STOCK ARE SUBJECT TO FORFEITURE. A COPY OF SAID
PLAN AND SAID AGREEMENT IS ON FILE AT THE
REGISTERED OFFICE OF THE COMPANY WHERE IT MAY BE
INSPECTED.
To the extent that restrictions on the Restricted Stock have lapsed,
certificates bearing the legend provided for herein may be submitted to the
Company, and the Company shall reissue such certificates free of such legend.
SECTION 12: CHANGE IN CONTROL
12.1. Acceleration of Vesting. Notwithstanding any vesting requirements
contained in any Option Agreement, all outstanding Options shall become
immediately exercisable in full upon the occurrence of a Change in Control.
Notwithstanding any vesting requirements contained in any Stock Restriction
Agreement, all outstanding Restricted Stock shall become immediately fully
vested upon the occurrence of a Change in Control.
12.2. Limited Stock Appreciation Rights. The Committee may, but shall not
be obligated to, grant Limited SARs pursuant to the provisions of this Section
12.2 to an Optionee with respect to all or any portion of the shares of Common
Stock subject to the Related Option. The SAR may be granted either concurrently
with the grant of the Related Option or at any time thereafter prior to the
complete exercise, termination, expiration or cancellation of the Related
Option. Each SAR shall be exercisable to the extent the Related Option is then
exercisable and may be subject to such additional limitations on exercisability
as the Option Agreement may provide. In no event shall an SAR be exercisable
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<PAGE>
after the termination or exercise of the Related Option. Upon the exercise of
SARs, the Related Option shall be considered to have been exercised to the
extent of the number of shares of Common Stock with respect to which SARs are
exercised, both for purposes of acquiring shares of Common Stock upon exercise
of an Option and for purposes of determining the number of shares of Common
Stock which may be issued pursuant to the Plan. Limited SARs may be exercised
only during the period beginning on the effective date of a Change of Control
and ending on the 90th day after such date. Limited SARs shall be exercised in
the same manner as set forth in Section 8.1; provided, however, that no payment
shall be made with respect to the purchase price of the shares to be purchased.
Except as set forth in Section 5.4, the effective date of exercise of a Limited
SAR shall be the date on which the Company shall have received notice from the
Optionee of the exercise thereof. Upon the exercise of Limited SARs, the
Optionee shall receive in cash an amount equal to the fair market value (as
determined in accordance with Section 7.4) on the date of exercise of such
Limited SAR of the shares of Common Stock with respect to which such Limited SAR
shall have been exercised over the aggregate exercise price of the Related
Option.
SECTION 13: EFFECT OF TERMINATION OF EMPLOYMENT
13.1. Effect upon Options. An Optionee's ability to exercise an Option
following the termination of the Optionee's employment shall be determined in
accordance with the following provisions.
13.1.1. Termination of Employment Other Than Upon Death or Disability.
Upon termination of an Optionee's employment with the Company or a
Subsidiary other than upon death or disability (within the meaning of
Section 22(e)(3) of the Code), an Optionee may, at any time within 30 days
after the date of termination but not later than the date of expiration of
the Option, exercise the Option to the extent the Optionee was entitled to
do so on the date of termination. Any Options not exercisable as of the
date of termination and any Options or portions of Options of terminated
Optionees not exercised as provided herein shall terminate.
13.1.2. Termination By Death of Optionee. If an Optionee shall die
while in the employ of the Company or a Subsidiary or within a period of 30
days after the termination of employment with the Company or a Subsidiary,
the personal representatives of the Optionee s estate or the person or
persons who shall have acquired the Option from the Optionee by bequest or
inheritance may exercise the Option at any time within the year after the
date of death but not later than the expiration date of the Option, to the
extent the Optionee was entitled to do so on the date of death. Any Options
not exercisable as of the date of death and any Options or portions of
Options of deceased Optionees not exercised as provided herein shall
terminate.
11
<PAGE>
13.1.3. Termination By Disability of Optionee. Upon termination of an
Optionee's employment with the Company or a Subsidiary by reason of the
Optionee's disability (within the meaning of Section 22(e)(3) of the Code),
the Optionee may exercise the Option at any time within one year after the
date of termination but not later than the expiration date of the Option,
to the extent the Optionee was entitled to do so on the date of
termination. Any Options not exercisable as of the date of termination and
any Options or portions of Options of disabled Optionees not exercised as
provided herein shall terminate.
13.1.4. Extension of Option Termination Date. The Committee, in its
sole discretion, may extend the termination date of an Option granted under
the Plan without regard to the preceding provisions of this Section 13.1.
In such event, the termination date shall be a date selected by the
Committee in its sole discretion, but not later than the latest expiration
date of the Option permitted pursuant to Section 7.5. Such extension may be
made in the Option Agreement as originally executed or by amendment to the
Option Agreement, either prior to or following termination of an Optionee's
employment. The Committee shall have no power to extend the termination
date of an Incentive Stock Option beyond the periods provided in Sections
13.1.1, 13.1.2 and 13.1.3 prior to the termination of the Optionee's
employment or without the approval of the Optionee, which may be granted or
withheld in the Optionee's sole discretion.
13.2. Effect upon Restricted Stock. In the event that a Grantee terminates
employment with the Company for any reason, including the death or disability of
the Grantee, any Restricted Stock held by such Grantee as of the date of such
termination of employment shall be forfeited to the Company as set forth in
Section 10.4.
13.3. Termination of Directors and Consultants. For purposes of this
Section 13, a termination of employment shall be deemed to include the
termination of a Director's service as a member of the Board of Directors
(unless the Director is also an employee) and the termination of a consulting
arrangement in the case of consultants.
SECTION 14: ISSUANCE OF SHARES
14.1. Transfer of Shares to Optionee. As soon as practicable after (i) an
Optionee has given the Company written notice of exercise of an Option and has
otherwise met the requirements of Section 8.1, or (ii) a Grantee has satisfied
any applicable restrictions, terms and conditions set forth in this Plan or in
the Restricted Stock Agreement with respect to a Restricted Stock Award as set
forth in Section 10.4, the Company shall issue or transfer to such Optionee or
Grantee the number of shares of Common Stock as to which the Option has been
exercised or the Restricted Stock Award has been satisfied and shall deliver to
the Optionee or Grantee a certificate or certificates therefor, registered in
the Optionee's or Grantee's name. In no event shall the Company be required to
12
<PAGE>
transfer fractional shares, and in lieu thereof, the Company may pay an amount
in cash equal to the fair market value (as determined in accordance with Section
7.4) of such fractional shares on the date of exercise. If the issuance or
transfer of shares by the Company would for any reason, in the opinion of
counsel for the Company, violate any applicable federal or state laws or
regulations, the Company may delay issuance or transfer of such shares until
compliance with such laws can reasonably be obtained. In no event shall the
Company be obligated to effect or obtain any listing, registration,
qualification, consent or approval under any applicable federal or state laws or
regulations or any contract or agreement to which the Company is a party with
respect to the issuance of any such shares.
14.2. Investment Representation. Upon demand by the Company, the Optionee
or Grantee shall deliver to the Company a representation in writing that the
acquisition of shares under this Plan is being made for investment only and not
for resale or with a view to distribution, and containing such other
representations and provisions with respect thereto as the Company may require.
Upon such demand, delivery of such representation promptly and prior to the
transfer or delivery of any such shares and, in the case of an Option, prior to
the expiration of the option period, shall be a condition precedent to the right
to acquire such shares.
14.3. Stock Restriction Agreement. Upon demand by the Company, the Optionee
or Grantee shall execute and deliver to the Company a Stock Restriction
Agreement in such form as the Company may provide at the time of exercise of the
Option or grant of the Restricted Stock Award. Such Agreement may include,
without limitation, restrictions upon the Optionee's or Grantee's right to
transfer shares, including the creation of an irrevocable right of first refusal
in the Company and its designees, and provisions requiring the Optionee or
Grantee to transfer the shares to the Company or the Company's designees upon a
termination of employment. Upon such demand, execution of the Stock Restriction
Agreement prior to the transfer or delivery of any shares and, in the case of an
Option, prior to the expiration of the option period, shall be a condition
precedent to the right to purchase such shares, unless such condition is
expressly waived in writing by the Company.
SECTION 15: AMENDMENTS
The Board of Directors may at any time and from time to time alter, amend,
suspend or terminate the Plan or any part thereof as it may deem proper, except
that no such action shall diminish or impair the rights under an Option or
Restricted Stock Award previously granted. Unless the shareholders of the
Company shall have given their approval, the total number of shares which may be
issued under the Plan shall not be increased, except as provided in Section 5.3,
and no amendment shall be made which reduces the price at which the Common Stock
may be offered upon the exercise of Options under the Plan below the minimum
required by Section 7.3, except as provided in Section 5.3, or which materially
13
<PAGE>
modifies the requirements as to eligibility for participation in the Plan.
Subject to the terms and conditions of the Plan, the Board of Directors may
modify, extend or renew outstanding Options or Restricted Stock Awards granted
under the Plan, or accept the surrender of outstanding Options or Restricted
Stock Awards to the extent not theretofore exercised and authorize the granting
of new Options or Restricted Stock Awards in substitution therefor, except that
no such action shall diminish or impair the rights under an Option or Restricted
Stock Awards previously granted without the consent of the Optionee or the
Grantee.
SECTION 16: TERM OF PLAN
This Plan shall terminate on May 24, 2003; provided, however, that the
Board of Directors may at any time prior thereto suspend or terminate the Plan.
SECTION 17: OPTIONEE'S RIGHTS AS STOCKHOLDER
An Optionee shall have no rights as a stockholder of the Company with
respect to any shares of Common Stock covered by an Option until the date of the
issuance of the stock certificate for such shares.
SECTION 18: NO SPECIAL EMPLOYMENT RIGHTS
Nothing contained in this Plan or in any Option or Restricted Stock Award
granted under the Plan shall confer upon any Optionee or Grantee any right with
respect to the continuation of such person's employment by the Company or any
Subsidiary or interfere in any way with the right of the Company or any
Subsidiary, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of such person from the rate in existence at the time of the
grant of the Option or the Restricted Stock Award.
SECTION 19: GOVERNING LAW
This Plan, and all Options and Restricted Stock Awards granted under this
Plan, shall be construed and shall take effect in accordance with the laws of
the State of Colorado, without regard to the conflicts of laws rules of such
State.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
(Without Limited Stock Appreciation Rights)
OPTIONEE:
---------------------------------
DATE OF GRANT:
------------------------------------
AGREEMENT between Racom Systems, Inc. (the "Company"), and the above named
Optionee ("Optionee"), an employee of the Company or a Subsidiary thereof.
The Company and Optionee agree as follows:
1. Grant of Option.
- -------------------
Optionee is hereby granted an Incentive Stock Option, within the meaning of
Section 422 of the Code (the "Option"), to purchase Common Stock of the Company
pursuant to the Racom Systems, Inc. 1993 Employee Stock Plan (the "Plan"). The
Option and this Agreement are subject to and shall be construed in accordance
with the terms and conditions of the Plan, as now or hereinafter in effect. Any
terms which are used in this Agreement without being defined and which are
defined in the Plan shall have the meaning specified in the Plan.
2. Date of Grant.
- -----------------
The date of the grant of the Option is the date first set forth above, the
date of the action by the Committee which administers the Plan (the "Committee")
in granting the same.
3. Number and Price of Shares.
- ------------------------------
The number of shares as to which the Option is granted is the number set
forth in Schedule 3A to this Agreement. The purchase price per share is the
amount set forth in Schedule 3B to this Agreement.
4. Expiration Date.
- -------------------
Unless sooner terminated as provided in Section 5.4 or Section 13 of the
Plan, the Option shall expire and terminate on the date set forth in Schedule 4
to this Agreement, and in no event shall the Option be exercisable after that
date.
5. Manner of Exercise.
- ----------------------
Except as provided in this Agreement, the Option shall be exercisable, in
whole or in part, from time to time, in the manner provided in Section 8 of the
Plan.
<PAGE>
6. Time of Exercise.
- --------------------
The Option granted hereby shall become vested in and exercisable by
Optionee in the installments, on the dates and subject to the conditions set
forth in Schedule 6; provided, however, that Optionee must have been
continuously employed by the Company or a Subsidiary thereof from the date of
grant of the Option until the date specified on Schedule 6 or until the
conditions specified on Schedule 6 have been satisfied.
7. Stock Restriction Agreement.
- -------------------------------
Upon exercise of the Option, the Optionee shall execute and deliver to the
Company a Stock Restriction Agreement in substantially the form attached to this
Agreement as Exhibit A. Execution and delivery of the Stock Restriction
Agreement prior to the transfer or delivery of any shares and prior to the
expiration of the option period shall be a condition precedent to the right to
purchase such shares.
8. Nontransferability of Option.
- --------------------------------
The Option is not transferable by Optionee other than by Will or the laws
of descent and distribution, and the Option shall be exercisable during
Optionee's lifetime only by Optionee. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of the Option contrary to the
provisions hereof, or upon the levy of any attachment or similar process upon
the Option, the Option shall immediately become null and void.
9. Withholding for Taxes.
- -------------------------
Optionee shall reimburse the Company, in cash or by certified or bank
cashier's check, for any federal, state or local taxes required by law to be
withheld with respect to the exercise of the Option or any disqualifying
disposition of the Common Stock acquired upon exercise of the Option. The
Company shall have the right to deduct from any salary or other payments to be
made to Optionee any federal, state or local taxes required by law to be so
withheld. The Company's obligation to deliver a certificate representing the
Common Stock acquired upon exercise of the Option is subject to the payment by
Optionee of any applicable federal, state and local withholding tax.
10. Legends.
- ------------
Certificates representing Common Stock acquired upon exercise of this
Option may contain such legends and transfer restrictions as the Company shall
deem reasonably necessary or desirable, including, without limitation, legends
restricting transfer of the Common Stock until there has been compliance with
2
<PAGE>
federal and state securities laws and until Optionee or any other holder of the
Common Stock has paid the Company such amounts as may be necessary in order to
satisfy any withholding tax liability of the Company resulting from a
disqualifying disposition described in Section 422(a) of the Code.
11. Employee Benefits.
- ----------------------
Optionee agrees that the grant and vesting of the Option and receipt of
shares of Common Stock upon exercise of the Option constitute special incentive
compensation that will not be taken into account as "salary" or "compensation"
or "bonus" in determining the amount of any payment under any pension,
retirement, profit sharing or other remuneration plan of the Company.
12. Amendment.
- --------------
Subject to the terms and conditions of the Plan, the Committee may modify,
extend or renew the Option, or accept the surrender of the Option to the extent
not theretofore exercised and authorize the granting of new Options in
substitution therefor, except that no such action shall diminish or impair the
rights under the Option without the consent of the Optionee.
13. Interpretation.
- -------------------
The interpretations and constructions of any provision of and
determinations on any question arising under the Plan or this Agreement shall be
made by the Committee, and all such interpretations, constructions and
determinations shall be final and conclusive as to all parties.
14. Receipt of Plan.
- --------------------
By entering into this Agreement, Optionee acknowledges (i) that he or she
has received and read a copy of the Plan and (ii) that this Agreement is subject
to and shall be construed in accordance with the terms and conditions of the
Plan, as now or hereinafter in effect.
15. Governing Law.
- ------------------
This Agreement shall be construed and shall take effect in accordance with
the laws of the State of Colorado, without regard to the conflicts of laws rules
of such State.
16. Miscellaneous.
- ------------------
This Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. If any
3
<PAGE>
provision of this Agreement, or the application thereof, shall for any reason
and to any extent be invalid or unenforceable, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
All notices or other communications which are required to be given or may be
given to either party pursuant to the terms of this Agreement shall be in
writing and shall be delivered personally or by registered or certified mail,
postage prepaid, to the address of the parties as set forth following the
signature of such party. Notice shall be deemed given on the date of delivery in
the case of personal delivery or on the delivery or refusal date as specified on
the return receipt in the case of registered or certified mail. Either party may
change its address for such communications by giving notice thereof to the other
party in conformity with this Section 16.
IN WITNESS WHEREOF, the Company by a duly authorized officer of the Company
and Optionee have executed this Agreement on ____________________, effective as
of the date of grant.
RACOM SYSTEMS, INC.
By:
--------------------------------
Title:
-----------------------------
Address:
---------------------------
-----------------------------------
-----------------------------------
OPTIONEE
-----------------------------------
Address:
---------------------------
-----------------------------------
-----------------------------------
4
<PAGE>
SCHEDULES
to
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
(Without Limited Stock Appreciation Rights)
Schedule
- --------
3A Number of Shares of Stock:
--------------------------------------------------
3B Purchase Price per Share:
---------------------------------------------------
4 Expiration Date:
------------------------------------------------------------
6 Vesting Schedule:
Cumulative Number of Options
Date Which Have Become Exercisable
---- -----------------------------
-------- ---------
-------- ---------
-------- ---------
-------- ---------
-------- ---------
Additional Conditions to Vesting: Notwithstanding the foregoing, no portion
of the Option shall be vested and exercisable until the following conditions
have been satisfied:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE>
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
(With Limited Stock Appreciation Rights)
OPTIONEE:
---------------------------------
DATE OF GRANT:
-----------------------------
AGREEMENT between Racom Systems, Inc. (the "Company"), and the above named
Optionee ("Optionee"), an employee of the Company or a Subsidiary thereof.
The Company and Optionee agree as follows:
1. Grant of Option and Limited SARs.
--------------------------------
Optionee is hereby granted (i) an Incentive Stock Option, within the
meaning of Section 422 of the Code, to purchase Common Stock of the Company (the
"Option") and (ii) Limited SARs with respect to all of the shares of Common
Stock covered by the Option (the "Limited SAR"). Such grant is made pursuant to
the Racom Systems, Inc. 1993 Employee Stock Plan (the "Plan"). The Option, the
Limited SAR and this Agreement are subject to and shall be construed in
accordance with the terms and conditions of the Plan, as now or hereinafter in
effect. Any terms which are used in this Agreement without being defined and
which are defined in the Plan shall have the meaning specified in the Plan.
2. Date of Grant.
--------------
The date of the grant of the Option and the Limited SAR is the date first
set forth above, the date of the action by the Committee which administers the
Plan (the "Committee") in granting the same.
3. Number and Price of Shares.
---------------------------
The number of shares as to which the Option and the Limited SAR is granted
is the number set forth in Schedule 3A to this Agreement. The purchase price per
share is the amount set forth in Schedule 3B to this Agreement.
4. Expiration Date.
----------------
Unless sooner terminated as provided in Section 5.4 or Section 13 of the
Plan, the Option and the Limited SAR shall expire and terminate on the date set
forth in Schedule 4 to this Agreement, and in no event shall the Option or the
Limited SAR be exercisable after that date.
<PAGE>
5. Manner of Exercise.
-------------------
Except as provided in this Agreement, the Option and the Limited SAR shall
be exercisable, in whole or in part, from time to time, in the manner provided
in Sections 8 and 12.2 of the Plan.
6. Time of Exercise.
-----------------
The Option and the Limited SAR granted hereby shall become vested in and
exercisable by Optionee in the installments, on the dates and subject to the
conditions set forth in Schedule 6; provided, however, that Optionee must have
been continuously employed by the Company or a Subsidiary thereof from the date
of grant of the Option and the Limited SAR until the date specified on Schedule
6 or until the conditions specified on Schedule 6 have been satisfied.
7. Stock Restriction Agreement.
----------------------------
Upon exercise of the Option, the Optionee shall execute and deliver to the
Company a Stock Restriction Agreement in substantially the form attached to this
Agreement as Exhibit A. Execution and delivery of the Stock Restriction
Agreement prior to the transfer or delivery of any shares and prior to the
expiration of the option period shall be a condition precedent to the right to
purchase such shares.
8. Nontransferability of Option and Limited SAR.
---------------------------------------------
The Option and the Limited SAR is not transferable by Optionee other than
by Will or the laws of descent and distribution, and the Option and the Limited
SAR shall be exercisable during Optionee's lifetime only by Optionee. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option or the Limited SAR contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon the Option or the Limited SAR, the Option
and the Limited SAR shall immediately become null and void.
9. Withholding for Taxes.
----------------------
Optionee shall reimburse the Company, in cash or by certified or bank
cashier's check, for any federal, state or local taxes required by law to be
withheld with respect to the exercise of the Option or the Limited SAR or any
disqualifying disposition of the Common Stock acquired upon exercise of the
Option. The Company shall have the right to deduct from any salary or other
payments to be made to Optionee any federal, state or local taxes required by
law to be so withheld. The Company's obligation to deliver a certificate
representing the Common Stock acquired upon exercise of the Option is subject to
the payment by Optionee of any applicable federal, state and local withholding
tax.
2
<PAGE>
10. Legends.
--------
Certificates representing Common Stock acquired upon exercise of this
Option may contain such legends and transfer restrictions as the Company shall
deem reasonably necessary or desirable, including, without limitation, legends
restricting transfer of the Common Stock until there has been compliance with
federal and state securities laws and until Optionee or any other holder of the
Common Stock has paid the Company such amounts as may be necessary in order to
satisfy any withholding tax liability of the Company resulting from a
disqualifying disposition described in Section 422(a) of the Code.
11. Employee Benefits.
------------------
Optionee agrees that the grant and vesting of the Option and the Limited
SAR, the receipt of shares of Common Stock upon exercise of the Option and the
receipt of cash upon exercise of the Limited SAR constitute special incentive
compensation that will not be taken into account as "salary" or "compensation"
or "bonus" in determining the amount of any payment under any pension,
retirement, profit sharing or other remuneration plan of the Company.
12. Amendment.
----------
Subject to the terms and conditions of the Plan, the Committee may modify,
extend or renew the Option and the Limited SAR, or accept the surrender of the
Option and the Limited SAR to the extent not theretofore exercised and authorize
the granting of new Options and Limited SARs in substitution therefor, except
that no such action shall diminish or impair the rights under the Option or the
Limited SAR without the consent of the Optionee.
13. Interpretation.
---------------
The interpretations and constructions of any provision of and
determinations on any question arising under the Plan or this Agreement shall be
made by the Committee, and all such interpretations, constructions and
determinations shall be final and conclusive as to all parties.
14. Receipt of Plan.
---------------
By entering into this Agreement, Optionee acknowledges (i) that he or she
has received and read a copy of the Plan and (ii) that this Agreement is subject
to and shall be construed in accordance with the terms and conditions of the
Plan, as now or hereinafter in effect.
3
<PAGE>
15. Governing Law.
--------------
This Agreement shall be construed and shall take effect in accordance with
the laws of the State of Colorado, without regard to the conflicts of laws rules
of such State.
16. Miscellaneous.
--------------
This Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. If any
provision of this Agreement, or the application thereof, shall for any reason
and to any extent be invalid or unenforceable, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
All notices or other communications which are required to be given or may be
given to either party pursuant to the terms of this Agreement shall be in
writing and shall be delivered personally or by registered or certified mail,
postage prepaid, to the address of the parties as set forth following the
signature of such party. Notice shall be deemed given on the date of delivery in
the case of personal delivery or on the delivery or refusal date as specified on
the return receipt in the case of registered or certified mail. Either party may
change its address for such communications by giving notice thereof to the other
party in conformity with this Section 16.
4
<PAGE>
IN WITNESS WHEREOF, the Company by a duly authorized officer of the Company
and Optionee have executed this Agreement on ____________________, effective as
of the date of grant.
RACOM SYSTEMS, INC.
By:
-------------------------------
Title:
-----------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
OPTIONEE
-----------------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
5
<PAGE>
SCHEDULES
to
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
(With Limited Stock Appreciation Rights)
Schedule
- --------
3A Number of Shares of Stock:
-------------------------- ------------------------------------------------
3B Purchase Price per Share:
------------------------- ------------------------------------------------
4 Expiration Date:
---------------- ----------------------------------------------------------
6 Vesting Schedule:
----------------
Cumulative Number of Options and Limited SARs
Date Which Have Become Exercisable
-------- -------------
-------- -------------
-------- -------------
Additional Conditions to Vesting: Notwithstanding the foregoing, no portion
of the Option or the Limited SAR shall be vested and exercisable until the
following conditions have been satisfied:
6
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES
(Without Limited Stock Appreciation Rights)
OPTIONEE:
-----------------------------
DATE OF GRANT:
-------------------------
AGREEMENT between Racom Systems, Inc. (the "Company"), and the above named
Optionee ("Optionee"), an employee of the Company or a Subsidiary thereof.
The Company and Optionee agree as follows:
1. Grant of Option.
----------------
Optionee is hereby granted a Nonqualified Stock Option (the "Option") to
purchase Common Stock of the Company pursuant to the Racom Systems, Inc. 1993
Employee Stock Plan (the "Plan"). The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code. The Option
and this Agreement are subject to and shall be construed in accordance with the
terms and conditions of the Plan, as now or hereinafter in effect. Any terms
which are used in this Agreement without being defined and which are defined in
the Plan shall have the meaning specified in the Plan.
2. Date of Grant.
--------------
The date of the grant of the Option is the date first set forth above, the
date of the action by the Committee which administers the Plan (the "Committee")
in granting the same.
3. Number and Price of Shares.
---------------------------
The number of shares as to which the Option is granted is the number set
forth in Schedule 3A to this Agreement. The purchase price per share is the
amount set forth in Schedule 3B to this Agreement.
4. Expiration Date.
----------------
Unless sooner terminated as provided in Section 5.4 or Section 13 of the
Plan, the Option shall expire and terminate on the date set forth in Schedule 4
to this Agreement, and in no event shall the Option be exercisable after that
date.
5. Manner of Exercise.
-------------------
Except as provided in this Agreement, the Option shall be exercisable, in
whole or in part, from time to time, in the manner provided in Section 8 of the
Plan.
<PAGE>
6. Time of Exercise.
-----------------
The Option granted hereby shall become vested in and exercisable by
Optionee in the installments, on the dates and subject to the conditions set
forth in Schedule 6; provided, however, that Optionee must have been
continuously employed by the Company or a Subsidiary thereof from the date of
grant of the Option until the date specified on Schedule 6 or until the
conditions specified on Schedule 6 have been satisfied.
7. Stock Restriction Agreement.
----------------------------
Upon exercise of the Option, the Optionee shall execute and deliver to the
Company a Stock Restriction Agreement in substantially the form attached to this
Agreement as Exhibit A. Execution and delivery of the Stock Restriction
Agreement prior to the transfer or delivery of any shares and prior to the
expiration of the option period shall be a condition precedent to the right to
purchase such shares.
8. Nontransferability of Option.
-----------------------------
The Option is not transferable by Optionee other than by Will or the laws
of descent and distribution, and the Option shall be exercisable during
Optionee's lifetime only by Optionee. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of the Option contrary to the
provisions hereof, or upon the levy of any attachment or similar process upon
the Option, the Option shall immediately become null and void.
9. Withholding for Taxes.
----------------------
Optionee shall reimburse the Company, in cash or by certified or bank
cashier's check, for any federal, state or local taxes required by law to be
withheld with respect to the exercise of the Option. The Company shall have the
right to deduct from any salary or other payments to be made to Optionee any
federal, state or local taxes required by law to be so withheld. The Company's
obligation to deliver a certificate representing the Common Stock acquired upon
exercise of the Option is subject to the payment by Optionee of any applicable
federal, state and local withholding tax.
10. Legends.
--------
Certificates representing Common Stock acquired upon exercise of this
Option may contain such legends and transfer restrictions as the Company shall
deem reasonably necessary or desirable, including, without limitation, legends
restricting transfer of the Common Stock until there has been compliance with
federal and state securities laws.
2
<PAGE>
11. Employee Benefits.
------------------
Optionee agrees that the grant and vesting of the Option and receipt of
shares of Common Stock upon exercise of the Option constitute special incentive
compensation that will not be taken into account as "salary" or "compensation"
or "bonus" in determining the amount of any payment under any pension,
retirement, profit sharing or other remuneration plan of the Company.
12. Amendment.
----------
Subject to the terms and conditions of the Plan, the Committee may modify,
extend or renew the Option, or accept the surrender of the Option to the extent
not theretofore exercised and authorize the granting of new Options in
substitution therefor, except that no such action shall diminish or impair the
rights under the Option without the consent of the Optionee.
13. Interpretation.
---------------
The interpretations and constructions of any provision of and
determinations on any question arising under the Plan or this Agreement shall be
made by the Committee, and all such interpretations, constructions and
determinations shall be final and conclusive as to all parties.
14. Receipt of Plan.
----------------
By entering into this Agreement, Optionee acknowledges (i) that he or she
has received and read a copy of the Plan and (ii) that this Agreement is subject
to and shall be construed in accordance with the terms and conditions of the
Plan, as now or hereinafter in effect.
15. Governing Law.
--------------
This Agreement shall be construed and shall take effect in accordance with
the laws of the State of Colorado, without regard to the conflicts of laws rules
of such State.
16. Miscellaneous.
--------------
This Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. If any
provision of this Agreement, or the application thereof, shall for any reason
and to any extent be invalid or unenforceable, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
3
<PAGE>
All notices or other communications which are required to be given or may be
given to either party pursuant to the terms of this Agreement shall be in
writing and shall be delivered personally or by registered or certified mail,
postage prepaid, to the address of the parties as set forth following the
signature of such party. Notice shall be deemed given on the date of delivery in
the case of personal delivery or on the delivery or refusal date as specified on
the return receipt in the case of registered or certified mail. Either party may
change its address for such communications by giving notice thereof to the other
party in conformity with this Section 16.
IN WITNESS WHEREOF, the Company by a duly authorized officer of the Company
and Optionee have executed this Agreement on _____________, effective as of the
date of grant.
RACOM SYSTEMS, INC.
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
OPTIONEE
-----------------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
4
<PAGE>
SCHEDULES
to
NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES
(Without Limited Stock Appreciation Rights)
Schedule
- --------
3A Number of Shares of Stock:
-------------------------- -----------------------------------------------
3B Purchase Price per Share:
------------------------- -----------------------------------------------
4 Expiration Date:
---------------- --------------------------------------------------------
6 Vesting Schedule:
----------------- --------------------------------------------------------
Cumulative Number of Options
Date Which Have Become Exercisable
---- -----------------------------
-------- ---------
-------- ---------
-------- ---------
-------- ---------
-------- ---------
Additional Conditions to Vesting: Notwithstanding the foregoing, no portion
of the Option shall be vested and exercisable until the following conditions
have been satisfied:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES
(With Limited Stock Appreciation Rights)
OPTIONEE:
--------------------------------
DATE OF GRANT:
---------------------------
AGREEMENT between Racom Systems, Inc. (the "Company"), and the above named
Optionee ("Optionee"), an employee of the Company or a Subsidiary thereof.
The Company and Optionee agree as follows:
1. Grant of Option and Limited SARs.
---------------------------------
Optionee is hereby granted (i) a Nonqualified Stock Option to purchase
Common Stock of the Company (the "Option") and (ii) Limited SARs with respect to
all of the shares of Common Stock covered by the Option (the "Limited SAR").
Such grant is made pursuant to the Racom Systems, Inc. 1993 Employee Stock Plan
(the "Plan"). The Option, the Limited SAR and this Agreement are subject to and
shall be construed in accordance with the terms and conditions of the Plan, as
now or hereinafter in effect. Any terms which are used in this Agreement without
being defined and which are defined in the Plan shall have the meaning specified
in the Plan.
2. Date of Grant.
--------------
The date of the grant of the Option and the Limited SAR is the date first
set forth above, the date of the action by the Committee which administers the
Plan (the "Committee") in granting the same.
3. Number and Price of Shares.
---------------------------
The number of shares as to which the Option and the Limited SAR is granted
is the number set forth in Schedule 3A to this Agreement. The purchase price per
share is the amount set forth in Schedule 3B to this Agreement.
4. Expiration Date.
----------------
Unless sooner terminated as provided in Section 5.4 or Section 13 of the
Plan, the Option and the Limited SAR shall expire and terminate on the date set
forth in Schedule 4 to this Agreement, and in no event shall the Option or the
Limited SAR be exercisable after that date.
<PAGE>
5. Manner of Exercise.
-------------------
Except as provided in this Agreement, the Option and the Limited SAR shall
be exercisable, in whole or in part, from time to time, in the manner provided
in Sections 8 and 12.2 of the Plan.
6. Time of Exercise.
-----------------
The Option and the Limited SAR granted hereby shall become vested in and
exercisable by Optionee in the installments, on the dates and subject to the
conditions set forth in Schedule 6; provided, however, that Optionee must have
been continuously employed by the Company or a Subsidiary thereof from the date
of grant of the Option and the Limited SAR until the date specified on Schedule
6 or until the conditions specified on Schedule 6 have been satisfied.
7. Stock Restriction Agreement.
----------------------------
Upon exercise of the Option, the Optionee shall execute and deliver to the
Company a Stock Restriction Agreement in substantially the form attached to this
Agreement as Exhibit A. Execution and delivery of the Stock Restriction
Agreement prior to the transfer or delivery of any shares and prior to the
expiration of the option period shall be a condition precedent to the right to
purchase such shares.
8. Nontransferability of Option and the Limited SAR.
-------------------------------------------------
The Option and the Limited SAR is not transferable by Optionee other than
by Will or the laws of descent and distribution, and the Option and the Limited
SAR shall be exercisable during Optionee's lifetime only by Optionee. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
Option or the Limited SAR contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon the Option or the Limited SAR, the Option
and the Limited SAR shall immediately become null and void.
9. Withholding for Taxes.
----------------------
Optionee shall reimburse the Company, in cash or by certified or bank
cashier's check, for any federal, state or local taxes required by law to be
withheld with respect to the exercise of the Option or the Limited SAR. The
Company shall have the right to deduct from any salary or other payments to be
made to Optionee any federal, state or local taxes required by law to be so
withheld. The Company's obligation to deliver a certificate representing the
Common Stock acquired upon exercise of the Option is subject to the payment by
Optionee of any applicable federal, state and local withholding tax.
2
<PAGE>
10. Legends.
--------
Certificates representing Common Stock acquired upon exercise of this
Option may contain such legends and transfer restrictions as the Company shall
deem reasonably necessary or desirable, including, without limitation, legends
restricting transfer of the Common Stock until there has been compliance with
federal and state securities laws.
11. Employee Benefits.
-------------------
Optionee agrees that the grant and vesting of the Option and the Limited
SAR, the receipt of shares of Common Stock upon exercise of the Option and the
receipt of cash upon exercise of the Limited SAR constitute special incentive
compensation that will not be taken into account as "salary" or "compensation"
or "bonus" in determining the amount of any payment under any pension,
retirement, profit sharing or other remuneration plan of the Company.
12. Amendment.
----------
Subject to the terms and conditions of the Plan, the Committee may modify,
extend or renew the Option and the Limited SAR, or accept the surrender of the
Option and the Limited SAR to the extent not theretofore exercised and authorize
the granting of new Options and Limited SARs in substitution therefor, except
that no such action shall diminish or impair the rights under the Option or the
Limited SAR without the consent of the Optionee.
13. Interpretation.
---------------
The interpretations and constructions of any provision of and
determinations on any question arising under the Plan or this Agreement shall be
made by the Committee, and all such interpretations, constructions and
determinations shall be final and conclusive as to all parties.
14. Receipt of Plan.
----------------
By entering into this Agreement, Optionee acknowledges (i) that he or she
has received and read a copy of the Plan and (ii) that this Agreement is subject
to and shall be construed in accordance with the terms and conditions of the
Plan, as now or hereinafter in effect.
3
<PAGE>
15. Governing Law.
--------------
This Agreement shall be construed and shall take effect in accordance with
the laws of the State of Colorado, without regard to the conflicts of laws rules
of such State.
16. Miscellaneous.
--------------
This Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. If any
provision of this Agreement, or the application thereof, shall for any reason
and to any extent be invalid or unenforceable, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
All notices or other communications which are required to be given or may be
given to either party pursuant to the terms of this Agreement shall be in
writing and shall be delivered personally or by registered or certified mail,
postage prepaid, to the address of the parties as set forth following the
signature of such party. Notice shall be deemed given on the date of delivery in
the case of personal delivery or on the delivery or refusal date as specified on
the return receipt in the case of registered or certified mail. Either party may
change its address for such communications by giving notice thereof to the other
party in conformity with this Section 16.
4
<PAGE>
IN WITNESS WHEREOF, the Company by a duly authorized officer of the Company
and Optionee have executed this Agreement on _____________, effective as of the
date of grant.
RACOM SYSTEMS, INC.
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
OPTIONEE
-----------------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
5
<PAGE>
SCHEDULES
to
NONQUALIFIED STOCK OPTION AGREEMENT FOR EMPLOYEES
(Without Limited Stock Appreciation Rights)
Schedule
- --------
3A Number of Shares of Stock:
-------------------------- -----------------------------------------------
3B Purchase Price per Share:
------------------------- -----------------------------------------------
4 Expiration Date:
---------------- --------------------------------------------------------
6 Vesting Schedule:
----------------- --------------------------------------------------------
Cumulative Number of Options
Date and LImited SARs
Which Have Become Exercisable
---- -----------------------------
-------- ---------
-------- ---------
-------- ---------
-------- ---------
-------- ---------
Additional Conditions to Vesting: Notwithstanding the foregoing, no portion
of the Option or the Limited SAR shall be vested and exercisable until the
following conditions have been satisfied:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
6
<PAGE>
RESTRICTED STOCK AGREEMENT FOR EMPLOYEES
GRANTEE:
-----------------------------------
DATE OF GRANT:
----------------------------
AGREEMENT between Racom Systems, Inc. (the "Company"), and the above named
Grantee ("Grantee"), an employee of the Company or a Subsidiary thereof.
The Company and Grantee agree as follows:
1. Grant of Restricted Stock.
--------------------------
Optionee is hereby granted Restricted Stock (the "Restricted Stock Award")
pursuant to the Racom Systems, Inc. 1993 Employee Stock Plan (the "Plan"). The
Restricted Stock Award and this Agreement are subject to and shall be construed
in accordance with the terms and conditions of the Plan, as now or hereinafter
in effect. Any terms which are used in this Agreement without being defined and
which are defined in the Plan shall have the meaning specified in the Plan.
2. Date of Grant.
--------------
The date of the grant of the Restricted Stock Award is the date first set
forth above, the date of the action by the Committee which administers the Plan
(the "Committee") in granting the same.
3. Number and Price of Shares.
---------------------------
The number of shares as to which the Restricted Stock Award is granted is
the number set forth in Schedule 3A to this Agreement. The purchase price per
share of Restricted Stock, if any, is the amount set forth in Schedule 3B to
this Agreement. The Restricted Stock Award shall expire and shall be null and
void to the extent Grantee fails to pay the purchase price of the Restricted
Stock, if any, by the 30th day following the date of grant.
4. Vesting of Restricted Stock Award.
----------------------------------
The Restricted Stock Award shall become vested in the installments, on the
dates and subject to the conditions set forth in Schedule 4; provided, however,
that Grantee must have been continuously employed by the Company or a Subsidiary
thereof from the date of grant of the Restricted Stock Award until the date
specified on Schedule 4 or until the conditions specified on Schedule 4 have
been satisfied.
<PAGE>
5. Issuance of Certificates.
--------------------------
The stock certificate or certificates representing the Restricted Stock
shall be registered in the name of Grantee but shall remain in the custody of
the Company. Grantee shall deposit with the Company stock powers or other
instruments of assignment, each endorsed in blank, so as to permit retransfer to
the Company of all or a portion of the Restricted Stock that shall be forfeited
in accordance with the Plan and this Agreement. As soon as practicable after
Grantee has satisfied any applicable restrictions, terms and conditions set
forth in the Plan or in this Agreement with respect to a Restricted Stock Award,
and subject to the provisions of Sections 10 and 11 of the Plan, the Company
shall issue or transfer to Grantee the number of shares of Common Stock as to
which the Restricted Stock Award has been satisfied and shall deliver to Grantee
a certificate or certificates therefor, registered in Grantee's name.
6. Forfeiture.
-----------
In the event that Grantee terminates employment with the Company for any
reason, including the death or disability of Grantee, or otherwise fails to meet
any conditions to the vesting of the Restricted Stock within the allotted time
period, any Restricted Stock held by Grantee as of the date of such termination
of employment, and any Restricted Stock subject to such conditions, shall be
forfeited to the Company. The Company shall, within ten days of such forfeiture,
pay to the Grantee the purchase price, if any, paid by the Grantee for the
shares of Restricted Stock so forfeited. The Company and its officers are
authorized to reflect the forfeiture of Restricted Stock on the books of the
Company.
7. Non-transferability.
--------------------
Grantee may not sell, assign, transfer, pledge, exchange, encumber or
dispose of the Restricted Stock Award or the right to receive the Restricted
Stock during the Restriction Period. Any attempt to transfer, pledge, exchange,
encumber or dispose of the Restricted Stock Award or the Restricted Stock,
contrary to the provisions hereof, and levy of any attachment or similar process
upon the Restricted Stock Award or the Restricted Stock, shall be null and void.
Furthermore, the Company shall not recognize or give effect to such transfers on
its books and records or recognize the person or persons to whom such purported
transfer has been made as the legal or beneficial owner of the Restricted Stock
Award or the Restricted Stock.
8. Withholding.
Grantee shall reimburse the Company, in cash or by certified or bank
cashier's check, within ten days after the vesting of any Restricted Stock for
any federal, state or local taxes required by law to be withheld. The Company
shall have the right to deduct from any salary or other payments to be made to
Grantee any federal, state or local taxes required by law to be so withheld. The
Company's obligation to deliver a certificate representing the Restricted Stock
following vesting shall be subject to the payment by Grantee of any applicable
federal, state and local withholding tax.
2
<PAGE>
9. Legends.
--------
Certificates representing shares of Restricted Stock shall bear the
following legend:
NOTICE OF RESTRICTIONS ON TRANSFER
----------------------------------
THIS CERTIFICATE AND THE SHARES OF STOCK REPRE SENTED HEREBY ARE
SUBJECT TO THE PROVISIONS OF THE COMPANY'S 1993 EMPLOYEE STOCK PLAN
AND A RESTRICTED STOCK AGREEMENT, WHEREBY THE TRAN SFER IN ANY MANNER
OF SUCH SHARES OF STOCK OR ANY INTEREST THEREIN IS RESTRICTED AND THE
SHARES OF STOCK ARE SUBJECT TO FORFEITURE. A COPY OF SAID PLAN AND
SAID AGREEMENT IS ON FILE AT THE REGISTERED OFFICE OF THE COMPANY
WHERE IT MAY BE INSPECTED.
To the extent that restrictions on the Restricted Stock have lapsed,
certificates bearing the legend provided for herein may be submitted to the
Company, and the Company shall reissue such certificates free of such legend.
Certificates representing Restricted Stock and Common Stock acquired upon
vesting of the Restricted Stock may contain such further legends and transfer
restrictions as the Company shall deem reasonably necessary or desirable,
including, without limitation, legends restricting transfer until there has been
compliance with federal and state securities laws.
10. Stock Restriction Agreement.
----------------------------
Concurrent with the execution of this Agreement, Grantee shall execute and
deliver to the Company a Stock Restriction Agreement in substantially the form
attached to this Agreement as Exhibit A. Execution and delivery of the Stock
Restriction Agreement shall be a condition precedent to the right to receive the
Restricted Stock Award.
11. Employee Benefits.
Grantee agrees that the Restricted Stock Award and vesting of Restricted
Stock constitute special incentive compensation that will not be taken into
account as "salary" or "compensation" or "bonus" in determining the amount of
any payment under any pension, retirement, profit sharing or other remuneration
plan of the Company.
3
<PAGE>
12. Interpretation.
---------------
The interpretations and constructions of any provision of and
determinations on any question arising under the Plan or this Agreement shall be
made by the Committee and all such interpretations, constructions and
determinations shall be final and conclusive as to all parties.
13. Receipt of Plan.
----------------
By entering into this Agreement, Grantee acknowledges (i) that he or she
has received and read a copy of the Plan and (ii) that this Agreement is subject
to and shall be construed in accordance with the terms and conditions of the
Plan, as now or hereinafter in effect.
14. Governing Law.
--------------
This Agreement shall be construed and shall take effect in accordance with
the laws of the State of Colorado, without regard to the conflicts of laws rules
of such State.
15. Miscellaneous.
--------------
This Agreement constitutes the entire understanding and agreement of the
parties with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements or understandings, inducements or conditions, express
or implied, written or oral, between the parties with respect hereto. If any
provision of this Agreement, or the application thereof, shall for any reason
and to any extent be invalid or unenforceable, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to reasonably effect the intent of the parties hereto.
All notices or other communications which are required to be given or may be
given to either party pursuant to the terms of this Agreement shall be in
writing and shall be delivered personally or by registered or certified mail,
postage prepaid, to the address of the parties as set forth following the
signature of such party. Notice shall be deemed given on the date of delivery in
the case of personal delivery or on the delivery or refusal date as specified on
the return receipt in the case of registered or certified mail. Either party may
change its address for such communications by giving notice thereof to the other
party in conformity with this Section 15.
4
<PAGE>
IN WITNESS WHEREOF, the Company by a duly authorized officer of the Company
and Grantee have executed this Agreement on _____________, effective as of the
date of grant.
RACOM SYSTEMS, INC.
By:
-------------------------------
Title:
----------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
OPTIONEE
-----------------------------------
Address:
--------------------------
-----------------------------------
-----------------------------------
5
<PAGE>
SCHEDULES
to
RESTRICTED STOCK AGREEMENT FOR EMPLOYEES
Schedule
- --------
3A Number of Shares of Stock:
------------------------- ------------------------------------------------
3B Purchase Price per Share:
------------------------- ------------------------------------------------
4 Vesting:
-------
Cumulative Number of Shares
Date Which Have Become Vested
-------- ---------
-------- ---------
-------- ---------
Additional Conditions to Vesting: Notwithstanding the foregoing, the
Restricted Stock shall be subject to the following additional conditions upon
vesting:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Law Office of Gary A. Agron
5445 DTC Parkway
Suite 520
Englewood, Colorado 80111
Telephone (303) 770-7254
Facsimile (303) 770-7257
October 17, 1997
Racom Systems, Inc.
6080 Greenwood Plaza Blvd.
Greenwood Village, CO 80111
Gentlemen:
We have assisted in the preparation and filing by Racom Systems, Inc. (the
"Company") of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission relating to 1,700,000
shares of $.01 par value Common Stock (the "Option Shares") of the Company
issuable upon exercise of options granted under the Company's 1993 Employee
Stock Plan, as amended (the "Option").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinions set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that the
Option Shares have been duly authorized and reserved for issuance and such
Option Shares, when issued in accordance with the terms of the Option against
payment therefor, will be duly and validly issued, fully paid and nonassessable.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act of 1933, as amended, and applicable state
laws relating to the offer and sales of securities.
We consent to the filing of a copy of this opinion in the Registration
Statement and the use of our opinion in connection therewith.
Very truly yours,
/s/ Gary A. Agron
-----------------------------
Gary A. Agron
GAA/jp
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-8, dated October 24, 1997, of
Racom Systems, Inc. (the "Company") of our report dated February 19, 1997,
included in the Company's Form 10-KSB for the year ended December 31, 1996 and
to all references to our Firm included in this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Denver, Colorado
October 21, 1997.
