<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended FEBRUARY 28, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number: 1-7736
TAB PRODUCTS CO.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 94-1190862
------------------------ ------------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1400 PAGE MILL ROAD, PALO ALTO, CALIFORNIA 94304
- ------------------------------------------ --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number - including area code (415) 852-2400
--------------------
NOT APPLICABLE
- ------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common shares outstanding as
of February 28, 1997 - 4,881,826.
This report, including all exhibits and attachments, contains 35 pages.
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TAB PRODUCTS CO.
INDEX
PART I. FINANCIAL INFORMATION
Page No.
ITEM 1. Financial Statements:
Consolidated Condensed Balance Sheets
February 28, 1997 and May 31, 1996 3
Consolidated Condensed Statements of Earnings
Three months and nine months ended
February 28,1997 and February 29, 1996 4
Consolidated Condensed Statements of Cash Flows
Nine months ended February 28,
1997 and February 29, 1996 5
Supplemental Financial Data - Notes 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits 9
Signatures 12
2
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PART 1: FINANCIAL INFORMATION
ITEM 1: Financial Statements
TAB PRODUCTS CO.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(000's omitted except share data)
<TABLE>
<CAPTION>
ASSETS February 28, 1997 May 31, 1996
----------------- ---------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 10,987 $ 9,331
Short-term investments 3,336 2,322
Accounts receivable, less allowances of
$708 and $620 for doubtful accounts 25,865 23,898
Inventories 11,649 11,313
Prepaid income taxes and other expenses 2,718 1,851
----------------- ---------------
Total current assets 54,555 48,715
Property, plant and equipment, net of accumulated
depreciation of $34,216 and $33,250 20,143 20,800
Goodwill, net 4,426 4,777
Other assets 4,332 4,835
----------------- ---------------
$ 83,456 $ 79,127
----------------- ---------------
----------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 3,813 $ 3,813
Accounts payable 7,812 5,823
Compensation payable 3,698 3,553
Other accrued liabilities 8,739 8,102
----------------- ---------------
Total current liabilities 24,062 21,291
----------------- ---------------
Long-term debt 13,406 14,141
----------------- ---------------
Deferred taxes and other non-current liabilities 2,233 2,233
----------------- ---------------
Stockholders' equity:
Preferred stock: $.01 par value, authorized -
500,000 shares, issued - none - -
Common stock: $.01 par value, authorized -
25,000,000 shares, issued - February 1997
- 7,314,053 shares and May 1996
- 7,284,178 shares 73 73
Additional paid-in capital 12,886 12,705
Retained earnings 61,913 59,689
Treasury stock: February 1997 and May 1996 -
2,432,227 shares (31,365) (31,365)
Cumulative translation adjustment 248 360
----------------- ---------------
Total stockholders' equity 43,755 41,462
----------------- ---------------
$ 83,456 $ 79,127
----------------- ---------------
----------------- ---------------
</TABLE>
3
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TAB PRODUCTS CO.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
(000's omitted except share data)
<TABLE>
<CAPTION>
Three Months Ended
February 28/29
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Revenues $ 38,761 $ 37,674
---------- ----------
Costs and expenses:
Cost of revenues 22,822 22,996
Selling, general and administrative 13,570 12,836
Research and development 204 150
---------- ----------
Total costs and expenses 36,596 35,982
---------- ----------
Operating income 2,165 1,692
Interest, net (233) (411)
---------- ----------
Earnings before income taxes 1,932 1,281
Provision for income taxes 840 558
---------- ----------
Net earnings $ 1,092 $ 723
---------- ----------
---------- ----------
Earnings per common and equivalent share $ 0.22 $ 0.15
---------- ----------
---------- ----------
Average common and equivalent shares outstanding 5,071,620 4,858,400
Nine Months Ended
February 28/29
------------------------
1997 1996
---------- ----------
Revenues $ 114,028 $ 113,950
---------- ----------
Costs and expenses:
Cost of revenues 67,799 69,311
Selling, general and administrative 39,649 39,279
Research and development 584 350
---------- ----------
Total costs and expenses 108,032 108,940
---------- ----------
Operating income 5,996 5,010
Interest, net (768) (1,218)
---------- ----------
Earnings before income taxes 5,228 3,792
Provision for income taxes 2,274 1,650
---------- ----------
Net earnings $ 2,954 $ 2,142
---------- ----------
---------- ----------
Earnings per common and equivalent share $ 0.60 $ 0.44
---------- ----------
---------- ----------
Average common and equivalent shares outstanding 4,936,935 4,852,509
</TABLE>
4
<PAGE>
TAB PRODUCTS CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(000's omitted)
<TABLE>
<CAPTION>
Nine Months Ended
February 28/29
------------------------
1997 1996
---------- ----------
<S> <C> <C>
Operating Activities:
Net earnings $ 2,954 $ 2,142
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization of property, 2,599 2,676
plant and equipment
Other 90 (42)
Changes in operating assets and liabilities:
Accounts receivable (2,055) (342)
Inventories (336) 384
Prepaid income taxes and other expenses (867) 1,356
Goodwill and other assets 854 (609)
Accounts payable 1,989 (946)
Commissions payable 145 85
Other accrued liabilities 637 317
---------- ----------
Net cash provided by operating activities 6,010 5,021
---------- ----------
Investing Activities:
Purchase of property, plant and equipment, net (1,944) (1,983)
Purchases of short-term investments (4,361) (2,437)
Sales of short-term investments 3,347 1,990
---------- ----------
Net cash required by investing activities (2,958) (2,430)
---------- ----------
Financing Activities:
Repayment of long-term debt (735) (734)
Proceeds from issuance of common stock 181 -
Dividends paid (730) (728)
---------- ----------
Net cash required by financing activities (1,284) (1,462)
---------- ----------
Effect of exchange rate changes on cash (112) (54)
---------- ----------
Increase in cash and cash equivalents 1,656 1,075
Cash and cash equivalents at beginning of period 9,331 6,753
---------- ----------
Cash and cash equivalents at end of period $ 10,987 $ 7,828
---------- ----------
---------- ----------
</TABLE>
5
<PAGE>
TAB PRODUCTS CO.
SUPPLEMENTAL FINANCIAL DATA - NOTES (UNAUDITED)
1. Inventories consisted of the following (000's omitted):
February 28, 1997 May 31, 1996
----------------- ------------
Finished goods $ 7,334 $ 7,421
Work in process 918 516
Raw materials 3,397 3,376
----------------- ------------
$ 11,649 $ 11,313
----------------- ------------
----------------- ------------
2. Earnings per share data are computed using the average number of common and
dilutive common equivalent shares outstanding.
3. Dividends declared for the nine month periods ended February 28, 1997 and
February 29, 1996 were as follows:
RECORD DATE SHARES OUTSTANDING PER SHARE DIVIDEND
----------- ------------------ ------------------
February 25, 1997 4,881,826 $ 0.05
November 25, 1996 4,862,951 $ 0.05
August 26, 1996 4,851,951 $ 0.05
February 23, 1996 4,851,951 $ 0.05
November 22, 1995 4,851,951 $ 0.05
August 25, 1995 4,851,951 $ 0.05
4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128). The company is required to adopt SFAS 128 in the third quarter of
fiscal 1998 and will restate at that time earnings per share (EPS) data for
prior periods to conform with SFAS 128. Earlier application is not permitted.
SFAS 128 replaces current EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock.
If SFAS 128 had been in effect during the current and prior year periods,
basic EPS would have been $.22 and $.15 for the quarters ended February 28,
1997 and February 29, 1996, respectively, and $.61 and $.44 for the year to
date periods, respectively. Diluted EPS under SFAS 128 would not have been
significantly different than fully diluted EPS currently reported for the
periods.
5. The above financial information reflects all adjustments consisting of
normal recurring items which are, in the opinion of management, necessary for a
fair presentation of the results of the interim periods. These financial
statements should be read in conjunction with the company's audited financial
statements for the year ended May 31, 1996.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
At February 28, 1997 the company had cash and short-term investments of $14.3
million, an increase of $2.6 million from the $11.7 million at May 31, 1996.
The company's working capital position at February 28, 1997 was $30.5 million as
compared with $27.4 million at May 31, 1996. The current ratio of 2.3 at
February 28, 1997 remained unchanged from May 31, 1996. Accounts receivable at
February 28, 1997 was $25.9 million as compared to $23.9 million at May 31,
1996. The increase in accounts receivable is attributable to higher revenues in
the months preceding the February 28, 1997 quarter end as compared to May 31,
1996 and a slightly higher days sales outstanding. Management believes that the
company's cash and cash equivalents, available credit facilities and operational
cash flows will adequately finance anticipated growth, capital expenditures and
debt obligations for the foreseeable future.
Investments in property, plant and equipment to support operations were $1.9
million during the nine months ended February 28, 1997. Capital expenditures to
support operations for fiscal 1997 are expected to be in the range of $2.5 to
$3.0 million.
At February 28, 1997 the company had $13.4 million of long-term debt outstanding
which bears interest rates ranging from 6.9% to 8.75%.
For the nine month period ended February 28, 1997 the company paid cash
dividends of $730,000 as compared to $728,000 in the prior fiscal year.
The company has an unsecured revolving line of credit of $10 million with a bank
which expires on October 31, 1998. There were no borrowings outstanding under
the line of credit at February 28, 1997.
RESULTS OF OPERATIONS
REVENUES for the third quarter of fiscal 1997 were $38.8 million, up $1.1
million or 3% from revenues of $37.7 million for the third quarter of fiscal
1996. The increased revenues were attributable to both higher unit volumes and
to price increases. Revenues for the nine months ended February 28, 1997 were
$114.0 million, which were equal to the $114.0 million reported for the nine
months ended February 29, 1996.
COST OF REVENUES, as a percentage of revenues, was 58.9% for the third quarter
of fiscal 1997, down from the 61.0% reported for the third quarter of fiscal
1996. For the nine months ended February 28, 1997, cost of revenues was 59.5%
as compared to 60.8% in the first nine months of the prior fiscal year. Cost of
revenues, as a percentage of revenues, declined from the third quarter of fiscal
1996 and on a year to date basis, primarily as a result of continued emphasis on
product cost reductions and improved manufacturing efficiencies.
7
<PAGE>
OPERATING EXPENSES, for the quarter ended February 28, 1997 were $13.8 million
as compared to $13.0 million for the quarter ended February 29, 1996. The
increased operating expenses during the third quarter are primarily the result
of a $.3 million increase in commission expense as a result of higher revenues
in the quarter and a $.3 million charge for severance costs as a result of the
resignation of the Acting CEO and President during the quarter. For the nine
months ended February 28, 1997, operating expenses were $40.2 million as
compared to $39.6 million for the nine months ended February 29, 1996. As a
percentage of revenues, operating expenses were 35.5% for the quarter ended
February 28, 1997 as compared to 34.5% for the quarter ended February 29, 1996.
For the first nine months of fiscal 1997, operating expenses as a percentage of
revenues were 35.3% as compared to 34.8% for the prior year's first nine months.
INTEREST EXPENSE, net, was $233,000 in the third quarter of fiscal 1997 as
compared to $411,000 in the third quarter of fiscal 1996. For the nine months
ended February 28, 1997 interest expense, net, was $768,000 as compared to
$1,218,000 in the prior fiscal year. The decreases in interest expense, net, for
the quarter and nine months ended February 28, 1997 were primarily due to a
lower level of debt as a result of debt repayments and higher cash balances over
the comparable period of fiscal 1996.
EARNINGS PER SHARE for the three months ended February 28, 1997 were $.22 per
share, an increase of 47% over the $.15 per share earned in the third quarter of
the prior fiscal year. For the nine months ended February 28, 1997 earnings per
share were $.60 per share, an increase of 36% over the $.44 per share reported
for the nine months ended February 29, 1996.
FACTORS WHICH MAY AFFECT QUARTERLY RESULTS
The company's actual future results could differ materially from those
anticipated as a result of risks related to the company's ability to develop and
market new products and services, market acceptance of new products and
services, increasing demands for technological innovation, the costs of
components for the company's products, competition and economic conditions in
the company's markets, product sales mix and risks relating to government
contracting.
PART II: OTHER INFORMATION
ITEM 1. Not applicable.
ITEM 2. Not applicable.
ITEM 3. Not applicable.
ITEM 4. Not applicable.
ITEM 5. Not applicable.
8
<PAGE>
ITEM 6. Exhibits
(a) 3.1 Certificate of Incorporation (Exhibit 3.1 of 1993 Form
10-K)(2)
3.2 Certificate of Designation, Preferences and Rights of the
Terms of the Series A Preferred Stock (Exhibit 3.2 filed
with Form 10-Q for the quarter ended November 30, 1996)(2)
3.3 Second Amended and Restated Bylaws of the company
dated October 17, 1996 (Exhibit 4 of Form 8-K dated
October 17, 1996)(2)
4.1 Form of Rights Agreement between the company and
ChaseMellon Shareholder Services, L.L.C., as Rights
Agent (including as Exhibit A the form of Certificate of
Designation, Preferences and Rights of the Terms of the
Series A Preferred Stock, as Exhibit B the form of Right
Certificate, and as Exhibit C the Summary of Terms of
Rights Agreement) (Exhibit 1 of Form 8-K dated
October 17, 1996)(2)
10.1 Registrants 1981 Incentive Stock Option Plan (Exhibit (10) of
the 1983 10-K)(1,2)
10.2 Amended 1981 Incentive Stock Option Plan (Exhibit (10) of
the 1987 10-K)(1,2)
10.3 1991 Stock Option Plan (Exhibit 10.1 of the 1991 10-K)(1,2)
10.4 Employment Agreement between John W. Peth and the
Registrant dated August 18, 1991 (Exhibit 10.2 of the 1991
10-K)(1,2)
10.5 Agreement between John W. Peth and the Registrant dated
August 18, 1991 (Exhibit 10.3 of the 1991 10-K)(1,2)
10.6 Agreement between Michael A. Dering and the Registrant
dated May 15, 1989 (Exhibit 10.4 of the 1991 10-K)(1,2)
10.7 Amendment to Agreement between Michael A. Dering and
the Registrant dated August 28, 1991 (Exhibit 10.5 of the
1991 10-K)(1,2)
10.8 Common Stock Purchase Agreement (Exhibit 10.2 of the
1992 10-K)(2)
10.9 Promissory Note dated October 18, 1991 (Exhibit 10.3 of
the 1992 10-K)(2)
10.10 Bank of America Business Loan Agreement dated
October 24, 1991 (Exhibit 10.4 of the 1992 10-K)(2)
10.11 Note Agreement of Tab Products Co. dated as of March 20,
1992 in the aggregate principal amount of $15,000,000
(Exhibit 10.5 of the 1992 10-K)(2)
10.12 Bank of America Revision Agreement dated March 20, 1992
(Exhibit 10.6 of the 1992 10-K)(2)
10.13 Agreement for Purchase and Sale of Assets (Exhibit 10.7
of the 1992 10-K)(2)
10.14 Amendment dated September 15, 1992 to Business Loan
Agreement dated October 24, 1991 (Exhibit 10.14 filed with
Form 10-Q for the quarter ended November 30, 1993)(2)
10.15 Business Loan Agreement dated August 20, 1993 (Exhibit 10.15
filed with Form 10-Q for the quarter ended November 30,
1993)(2)
10.16 Amendment dated July 27, 1993 to Note Agreement of
Tab Products Co. dated as of March 20, 1992 (Exhibit 10.16
filed with Form 10-Q for the quarter ended August 31, 1993)
(2)
10.17 Bank of America Business Loan Agreement dated
August 20, 1993 (Exhibit 10.17 filed with Form 10-Q for the
quarter ended August 31, 1993)(2)
9
<PAGE>
10.18 Bank of America Amendment No. 1 dated October 6, 1993
to Business Loan Agreement (Exhibit 10.18 filed with Form 10-Q
for the quarter ended August 31, 1993)(2)
10.19 Bank of America Amendment No. 2 dated October 13, 1993
to Business Loan Agreement (Exhibit 10.19 filed with Form 10-Q
for the quarter ended August 31, 1993)(2)
10.20 Note Agreement of Tab Products Co. dated October 7, 1993
(Exhibit 10.20 filed with Form 10-Q for the quarter ended
August 31, 1993)(2)
10.21 Letter dated October 7, 1993 amending the Note Agreement
dated March 20, 1992 (Exhibit 10.21 filed with Form 10-Q for
the quarter ended August 31, 1993)(2)
10.22 Bank of America Amendment No. 3 dated December 3, 1993
to Business Loan Agreement dated August 20, 1993 (Exhibit
10.22 filed with Form 10-Q for the quarter ended
February 28, 1994)(2)
10.23 Bank of America Amendment No. 4 dated February 9, 1994 to
Business Loan Agreement dated August 20, 1993 (Exhibit
10.23 filed with Form 10-Q for the quarter ended
February 28, 1994)(2)
10.24 Bank of America Amendment No. 5 dated February 28, 1994
to Business Loan Agreement dated August 20, 1993
(Exhibit 10.24 filed with Form 10-Q for the quarter ended
February 28, 1994)(2)
10.25 Bank of America Amendment No. 6 dated March 30, 1994 to
Business Loan Agreement dated August 20, 1993 (Exhibit
10.25 filed with Form 10-Q for the quarter ended
February 28, 1994)(2)
10.26 Bank of America Amendment No. 7 dated April 4, 1994 to
Business Loan Agreement dated August 20, 1993 (Exhibit
10.26 filed with Form 10-Q for the quarter ended
February 28, 1994)(2)
10.27 Letter dated October 27, 1993 amending the Prudential Note
Agreement dated March 20, 1992 (Exhibit 10.27 filed with
the 1994 Form 10-K)(2)
10.28 Bank of America Amendment No. 8 dated May 9, 1994 to
Business Loan Agreement dated August 20, 1993 (Exhibit
10.28 filed with the 1994 Form 10-K)(2)
10.29 Bank of America Amendment No. 9 to Business Loan
Agreement dated August 20, 1993 (Exhibit 10.29 filed with
the 1994 Form 10-K)(2)
10.30 Bank of America Amendment No. 10 dated August 8, 1994
to Business Loan Agreement dated August 20, 1993
(Exhibit 10.30 filed with the 1994 Form 10-K)(2)
10.31 Bank of America Amendment No. 11 dated August 22, 1994
to Business Loan Agreement dated August 20, 1993
(Exhibit 10.31 filed with the 1994 Form 10-K)(2)
10.32 Letter dated June 15, 1995 amending the Prudential Note
Agreement dated March 20, 1992 (Exhibit 10.32 filed with
the 1995 Form 10-K)(2)
10.33 Letter dated July 21, 1995 amending the Prudential Note
Agreement dated March 20, 1992 (Exhibit 10.33 filed with
the 1995 Form 10-K)(2)
10.34 Bank of America Business Loan Agreement dated
December 7, 1995 (Exhibit 10.34 filed with Form 10-Q
for the quarter ended November 30, 1995)(2)
10
<PAGE>
10.35 Letter dated December 13, 1995 amending the Prudential
Note Agreement dated March 20, 1992 (Exhibit 10.35
filed with Form 10-Q for the quarter ended November 30,
1995)(2)
10.36 Bank of America Business Loan Agreement dated
August 26, 1996 (Exhibit 10.36 filed with the 1996 Form
10-K)(2)
10.37 Letter dated August 20, 1996 amending the Prudential Note
Agreement dated March 20, 1992 (Exhibit 10.37 filed with
the 1996 Form 10-K)(2)
10.38 Form of Indemnity Agreement between the company and each
of its Executive Officers and Directors (Exhibit 10.38 filed
with Form 10-Q for the quarter ended November 30, 1996)(1,2)
10.39 Change of Control Agreement between the company and
Jack Peth (Exhibit 10.39 filed with Form 10-Q for the quarter
ended November 30, 1996)(1,2)
10.40 Form of Change of Control Agreement between the company
and named Executive Officers other than the Acting Chief
Executive Officer (Exhibit 10.40 filed with Form 10-Q for the
quarter ended November 30, 1996)(1,2)
10.41 Outside Directors' Option Plan and Agreement (Exhibit 10.41
filed with Form 10-Q for the quarter ended November 30,
1996)(1,2)
10.42 Employment Agreement between the company and
Philip C. Kantz (1)
10.43 Nonqualified Stock Option Agreement between the company
and Philip C. Kantz (1)
10.44 Nonqualified Stock Option Agreement between the company
and Philip C. Kantz (1)
10.45 Nonqualified Stock Option Agreement between the company
and Philip C. Kantz (1)
(1) Compensatory Plan or Arrangement.
(2) Incorporated by reference from the noted previously filed
document.
(b) None
11
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TAB PRODUCTS CO.
---------------------------------------
(Registrant)
Date: April 11, 1997 /S/ John M. Palmer
---------------------------------------
John M. Palmer, Vice President,
Finance and Chief Financial Officer
Date: April 11, 1997 /S/ James L. Anderson
---------------------------------------
James L. Anderson, Controller
12
<PAGE>
Exhibit 10.42
January 27, 1997
Philip C. Kantz
c/o TAB Products Co.
1400 Page Mill Road
Palo Alto, California 94304
RE: EMPLOYMENT AGREEMENT
Dear Phil:
Pursuant to our recent discussions, this letter sets forth the terms of
your employment with TAB Products Co. (the "Company").
1. POSITION: You will be employed by the Company as its President and
Chief Executive Officer, reporting to the Company's Board of Directors (the
"Board"). The Company will undertake reasonable efforts to have you elected to
the Board during your employment, and you agree that upon the termination of
your employment for any reason you shall promptly resign from the Board. You
accept employment with the Company on the terms and conditions set forth in this
Agreement, and you agree to devote your full business time, energy and skill to
your duties at the Company. However, you shall be entitled to engage in other
professional activities, including, but not limited to, participating on other
boards of directors (provided that you give advance written notice to the Board
of your participation on such other boards), which activities do not materially
interfere with the performance of your duties for the Company. Your duties
shall include, but not be limited to, the overall general management of the
Company, as well as any other reasonable duties that may be assigned to you from
time to time by the Board.
2. TERM OF EMPLOYMENT: Your employment with the Company will start on
January 27, 1997, will be for no specified term, and may be terminated by you or
the Company at any time, with or without cause, subject to Paragraphs 4 and 5
below.
3. COMPENSATION: You will be compensated by the Company for your
services as set forth below. All amounts paid to you by the Company will be
subject to applicable withholding.
(a) SALARY: During your employment you will be paid an annual base
salary of $300,000.00 in accordance with the Company's normal payroll
procedures.
(b) INCENTIVE BONUS: Within 30 days following May 31, 1997, you will
be paid an incentive bonus for the Company's current fiscal year of $50,000.00.
Thereafter, you will be eligible to receive annual bonuses based upon the
Company's achievement of various financial and/or other goals established by you
and the Board. In each Company fiscal year (other than the current fiscal
year), you will be eligible for a bonus of up to 100% of your then-current
annual base salary, with a target bonus equal to 50% of your then-current annual
base salary. The goals that govern your bonus eligibility will be agreed upon
by you and the Board and confirmed in writing prior to (or within 30 days
following the start of) any Company fiscal year. To the extent earned, bonuses
will be paid to you on the later of 45 days after (i) the end of the applicable
fiscal year, or (ii) the date on which the financial or other data necessary to
determine your entitlement to the bonus becomes available.
(c) BENEFITS: You will have the right, on the same basis as other
executive employees of the Company, to participate in and to receive benefits
under the Company's executive medical program and other group
<PAGE>
insurance plans, as well as under the Company's 401(k) plan and business expense
reimbursement policy. You will also receive a car allowance of $500.00 per
month.
(d) VACATION: You will accrue four weeks' vacation per year during
your employment. Provided, however, that you shall schedule all of your
vacations at times that are mutually convenient and reasonable for both you and
the Company.
(e) STOCK OPTIONS: You will be granted options to purchase 250,000
shares of the Company's common stock (the "Options") at a price of $9.25 per
share. The Options will expire ten years after their grant date. During your
first three years of employment with the Company, you will become vested in
12,500 shares of stock subject to the Options at the end of each three month
period of employment (150,000 shares total), with the first shares vesting on
April 26, 1997. The remaining 100,000 shares of stock subject to the Options
will vest as follows:
(i) in the event that you are still employed by the Company,
50,000 shares will vest on the earlier of (1) the end of the first fiscal year
in which the Company's sales are $190,000,000.00 or more and its earnings per
share are $1.20 or more, or (2) January 27, 2001; and
(ii) in the event that you are still employed by the Company,
50,000 shares will vest on the earlier of (1) the end of the first fiscal year
in which the Company's sales are $240,000,000.00 or more and its earnings per
share are $1.50 or more, or (2) January 27, 2002.
Notwithstanding the foregoing, in the event that you are still employed by the
Company, the Options will become fully vested and exercisable as of the date
that is ten (10) days prior to the consummation of a "Transfer of Control"
(which term, as used in this Agreement, is defined in the Company's 1991 Stock
Option Plan). Except as provided herein, the Options shall be governed by and
subject to the terms and conditions of the Company's standard form of stock
option agreement (which you will be required to sign as a condition of the
issuance of the Options).
4. TERMINATION RESULTING FROM RESIGNATION, DEATH, OR DISABILITY:
In the event that you voluntarily resign from your employment with the Company,
or in the event that your employment terminates as a result of your death or
disability (meaning that you are unable to perform your duties for any 90 days
in any one year period as a result of a physical and/or mental impairment), you
will be entitled to no compensation or benefits from the Company other than
those earned under Paragraph 3 through the date of your termination (you will
not be entitled to any pro rated portion of your incentive bonus for that fiscal
year). You agree that in the event you voluntarily terminate your employment
with the Company for any reason, you will provide the Company with thirty days'
written notice of your resignation. The Company may, in its sole discretion,
elect to waive all or any part of such notice period and accept your resignation
at an earlier date.
5. TERMINATION BY THE COMPANY:
(a) TERMINATION FOR CAUSE: Your employment may be terminated by the
Company for cause as defined below. If your employment is terminated by the
Company for cause, you will be entitled to no compensation or benefits from the
Company other than those earned under Paragraph 3 through the date of your
termination for cause (you will not be entitled to any pro rated portion of your
incentive bonus for that fiscal year).
For purposes of this Agreement, a termination "for cause" occurs if you are
terminated for any of the following reasons: (i) theft, dishonesty, misconduct
or intentional falsification of any employment or Company records; (ii)
intentional and improper disclosure of the Company's confidential or proprietary
information; (iii) any action by you that has a material detrimental effect on
the Company's reputation or business; (iv) your failure or inability to perform
any assigned duties reasonably expected of a president or chief executive
officer after written
<PAGE>
notice from the Board to you of, and a reasonable opportunity to cure, such
failure or inability; or (v) your conviction (including any plea of guilty or
nolo contendere) for any criminal act that impairs your ability to perform your
duties for the Company.
(b) TERMINATION WITHOUT CAUSE: If your employment is terminated by
the Company without cause (and not as a result of your death or disability), or
in the event that you resign for Good Reason as defined below, you shall receive
severance payments at your final base salary and target bonus rate, less
applicable withholding, for a period of two years following the date of your
termination without cause. Severance payments will be made in accordance with
the Company's normal payroll procedures. (The bonus portion of your severance
will be paid in equal installments over the entire severance period.) You shall
also be entitled to receive any compensation and benefits that you earn under
Paragraph 3 through the date of your termination without cause (you will be
entitled to a pro rated portion of your target incentive bonus for that fiscal
year). Provided, however, that your right to receive the severance payments
described above shall be conditioned upon your execution and delivery of a
general release of claims in form satisfactory to the Company, and substantially
in the form attached as EXHIBIT A. This subparagraph shall not apply in the
event of your termination for cause, your resignation other than for Good
Reason, or the termination of your employment as a result of your death or
disability.
(c) TERMINATION WITHOUT CAUSE FOLLOWING TRANSFER OF CONTROL: If
within one year following any Transfer of Control, your employment is terminated
without cause, or you resign for a Good Reason as defined below, you shall
receive severance payments at your final base salary and target bonus rate, less
applicable withholding, for a period of two years following the date of your
termination without cause. Severance payments will be made in accordance with
the Company's normal payroll procedures. (The bonus portion of your severance
will be paid in equal installments over the entire severance period.) You shall
also be entitled to receive any compensation and benefits that you earn under
Paragraph 3 through the date of your termination without cause (you will be
entitled to a pro rated portion of your target incentive bonus for that fiscal
year). Provided, however, that your right to receive the severance payments
described above shall be conditioned upon your execution and delivery of a
general release of claims in form satisfactory to the Company, and substantially
in the form attached as EXHIBIT A. This subparagraph shall not apply in the
event of your termination for cause, your resignation other than for Good
Reason, or the termination of your employment as a result of your death or
disability.
(d) "GOOD REASON": For purposes of this Agreement, "Good Reason"
means any of the following conditions, which condition(s) remain(s) in effect 10
days after written notice to the Board from you of such condition(s):
(i) a decrease in your base salary and/or a material decrease in
your incentive bonus plan or employee benefits;
(ii) a material, adverse change in your title, authority,
responsibilities or duties, as measured against your title, authority,
responsibilities or duties immediately prior to such change; or
(iii) the relocation of your work place for the Company to a
location that is more than 50 miles from its location immediately prior to such
relocation.
6. ADDITIONAL PAYMENT.
(a) In the event that any payment or benefit received or to be
received by Employee pursuant to this Agreement (collectively, the "Payments")
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any similar or successor
provision (the "Excise Tax"), the Company shall pay to Employee within ninety
(90) days of the date Employee becomes subject to the Excise Tax, an additional
amount (the "Gross-Up Payment") such that the net amount retained by Employee,
after
<PAGE>
deduction of (1) any Excise Tax on the Payments and (2) any federal, state and
local income tax and Excise Tax upon the payment provided for by this Section,
shall be equal to the Payments.
(b) For purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amount of such Excise Tax:
(i) Any other payments or benefits received or to be received by
Employee in connection with transactions contemplated by a Change in Control
event or Employee's termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company),
shall be treated as "parachute payments" within the meaning of Section 280G of
the Code or any similar or successor provision, and all "excess parachute
payments" within the meaning of Section 280G or any similar or successor
provision shall be treated as subject to the Excise Tax, unless in the opinion
of tax counsel selected by the Company such other payments or benefits (in whole
or in part) do not constitute parachute payments, or such excess parachute
payments (in whole or in part) represent reasonable compensation for services
actually rendered within the meaning of Section 280G (or any similar or
successor provision of the Code) in excess of the base amount within the meaning
of Section 280G (or any similar or successor provision of the Code), or are
otherwise not subject to the Excise Tax.
(ii) The amount of the Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of (i) the total amount of the
Payments or (ii) the amount of the excess parachute payments within the meaning
of Section 280G (after applying paragraph (b)(1) above).
(iii) The value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's independent auditors in
accordance with the principles of Section 280G of the Code.
(c) For purposes of determining the amount of the Gross-Up Payment,
Employee shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rate of taxation in the state and locality of your residence on the date the
Gross-Up Payment is to be made, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes.
(d) In the event that the Excise Tax is subsequently determined to be
less than the amount taken into account hereunder, Employee shall repay to the
Company at the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being repaid
by Employee if such repayment results in a reduction in Excise Tax and/or a
federal, state or local) income tax deduction) plus interest on the amount of
such repayment at the rate provided in Section 1274(b)(2)(B) of the Code.
(e) In the event that the Excise Tax is determined to exceed the
amount taken into account hereunder (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional gross-up payment in respect of
such excess (plus any interest payable with respect to such excess) at the time
that the amount of such excess is finally determined.
7. CONFIDENTIAL AND PROPRIETARY INFORMATION: As a condition of your
employment, you agree to sign the Company's standard form of employee
confidentiality and assignment of inventions agreement.
8. DISPUTE RESOLUTION: In the event of any dispute or claim relating to
or arising out of your employment relationship with the Company, this Agreement,
or the termination of your employment with the
<PAGE>
Company for any reason (including, but not limited to, any claims of breach of
contract, wrongful termination or age, disability or other discrimination), you
and the Company agree that all such disputes shall be fully, finally and
exclusively resolved by binding arbitration conducted by the American
Arbitration Association in Santa Clara County, California. You and the Company
hereby knowingly and willingly waive your respective rights to have any such
disputes or claims tried to a judge or jury. Provided, however, that this
arbitration provision shall not apply to any disputes or claims relating to or
arising out of the actual or alleged misuse or misappropriation of the Company's
property, including, but not limited to, its trade secrets or proprietary
information.
9. INTERPRETATION: This Agreement shall be interpreted in accordance
with and governed by the laws of the State of California.
10. ASSIGNMENT: In view of the personal nature of the services to be
performed under this Agreement by you, you cannot assign or transfer any of your
rights or obligations under this Agreement.
11. ENTIRE AGREEMENT: This Agreement and the agreements referred to
above constitute the entire agreement between you and the Company regarding the
terms and conditions of your employment, and they supersede all prior
negotiations, representations or agreements between you and the Company
regarding your employment, whether written or oral.
12. MODIFICATION: This Agreement may only be modified or amended by a
supplemental written agreement signed by you and an authorized officer of the
Board.
Phil, we look forward to working with you at TAB Products Co. Please sign
and date this letter on the spaces provided below to acknowledge your acceptance
of the terms of this Agreement.
Sincerely,
TAB Products Co.
By: /s/ Hans A. Wolf
----------------------------------------
Hans A. Wolf,
Chairman of the Board
I agree to and accept employment with TAB Products Co. on the terms and
conditions set forth in this Agreement.
Date: January 27, 1997 /s/ Philip C. Kantz
--------------------------------------
Philip C. Kantz
<PAGE>
Exhibit 10.43
TAB PRODUCTS CO.
NONQUALIFIED STOCK OPTION AGREEMENT
Tab Products Co. hereby grants to Philip C. Kantz (the "Optionee") an
option to purchase a total of 142,000 shares of the common stock of the Company
(the "Number of Option Shares") at an exercise price of $9.25 per share and in
the manner and subject to the provisions of this Option Agreement (the
"Option"). This Option has not been granted pursuant to the Company's stock
option plan. For purposes of this Option Agreement, (i) "Company" means Tab
Products Co., a Delaware corporation, and any successor corporation thereto;
(ii) "Participating Company" means the Company and any present or future parent
or subsidiary corporations of the Company (as those terms are defined in
sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code"); and (iii) "Participating Company Group" means, at any point in time,
all corporations collectively which are then Participating Companies.
1. GRANT OF THE OPTION. The Option is granted effective as of January
27, 1997 (the "Date of Option Grant"). The Number of Option Shares and the
exercise price per share of the Option are subject to adjustment from time to
time as provided in paragraph 9.
2. STATUS OF THE OPTION. The Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in section 422 of the Code.
3. TERM OF THE OPTION. The Option shall terminate and may no longer be
exercised on the first to occur of (a) the date ten (10) years after the Date of
Option Grant (the "Option Term Date"), (b) the last date for exercising the
Option following termination of the Optionee's employment as described in
paragraph 4(g), or (c) a Transfer of Control of the Company to the extent
provided in paragraph 4(h) below.
4. EXERCISE OF THE OPTION.
(a) RIGHT TO EXERCISE. Subject to the Optionee's continued
employment with Participating Company Group, the Option shall become exercisable
in twelve (12) installments of 11,833.33 shares of common stock, with the first
such installment becoming exercisable on April 26, 1997 and subsequent
installments becoming exercisable at the end of each three (3) month period
thereafter. In no event shall the Option be exercisable for more shares than
the Number of Option Shares.
(b) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares of stock for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and must be
delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 3 above,
1
<PAGE>
accompanied by full payment of the exercise price for the number of shares of
stock being purchased.
(c) FORM OF PAYMENT OF OPTION PRICE. Such payment shall be made
(i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's stock owned by the Optionee having a value not less than
the exercise price of the Option, which either have been owned by the Optionee
for more than six (6) months or were not acquired, directly or indirectly, from
the Company, (iii) by Immediate Sales Proceeds, as defined below, or (iv) by any
combination of the foregoing. Notwithstanding the foregoing, the Option may not
be exercised by tender to the Company of shares of the Company's stock to the
extent such tender of stock would constitute a violation of the provisions of
any law, regulation and/or agreement restricting the redemption of the Company's
stock. "Immediate Sales Proceeds" shall mean the assignment in form acceptable
to the Company of the proceeds of a sale of some or all of the shares acquired
upon the exercise of the Option pursuant to a program and/or procedure approved
by the Company (including, without limitation, through an exercise complying
with the provisions of Regulation T as promulgated from time to time by the
Board of Governors of the Federal Reserve System). The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
decline to approve any such program and/or procedure.
(d) TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
shall authorize payroll withholding and otherwise agree to make adequate
provision for foreign, federal and state tax withholding obligations of the
Company, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares of stock
acquired on exercise of the Option, (iii) the operation of any law or regulation
providing for the imputation of interest, or (iv) the lapsing of any restriction
with respect to any shares acquired on exercise of the Option.
(e) CERTIFICATE REGISTRATION.. The certificate or certificates for
the shares of stock as to which the Option shall be exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the
Optionee.
(f) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of stock upon the exercise of the Option
(g) TERMINATION OF EMPLOYMENT.
(i) TERMINATION OF THE OPTION. If the Optionee ceases to
be an employee of the Participating Company Group for any reason except death or
disability within the meaning of section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within three
(3) months after the date on which the Optionee's employment terminates, but in
any event no later than the date of expiration of the Option term. If the
Optionee's employment with the Participating Company Group is terminated because
of the death or disability of the Optionee within the meaning of section 422(c)
of the Code, the Option, to the
2
<PAGE>
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee (or the
Optionee's legal representative) at any time prior to the expiration of twelve
(12) months from the date the Optionee's employment terminated, but in any event
no later than the date of expiration of the Option term. The Optionee's
employment shall be deemed to have terminated on account of death if the
Optionee dies within three (3) months after the Optionee's termination of
employment.
(ii) TERMINATION OF EMPLOYMENT DEFINED. For purposes of
this Option Agreement, the Optionee's employment shall be deemed to have
terminated either upon an actual termination of employment or upon the
Optionee's employer ceasing to be a Participating Company.
(iii) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth above is prevented because the issuance of
shares of Stock upon such exercise would constitute a violation of any
applicable federal or state securities law or other law or regulation, the
Option shall remain exercisable until three (3) months after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the date of expiration of the Option term.
(iv) LEAVE OF ABSENCE. For purposes hereof, the Optionee's
employment with the Participating Company Group shall not be deemed to terminate
if the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company of ninety (90) days or less. In the event of
a leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the exercisability
and/or vesting of the Option if and only if the leave of absence is designated
by the Company as (or required by law to be) a leave for which vesting credit is
given.
(h) TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to the
Company:
(i) the direct or indirect sale or exchange by the stockholders
of the Company of all or substantially all of the stock of the Company where the
stockholders of the Company before such sale or exchange do not retain, directly
or indirectly, at least a majority of the beneficial interest in the voting
stock of the Company after such sale or exchange;
(ii) a merger or consolidation of the Company into or with
another corporation as a result of which the stockholders of the Company before
such merger or consolidation shall own less than fifty percent (50%) of the
voting securities of the surviving corporation; or
3
<PAGE>
(iii) the sale of all or substantially all of the Company's
assets (other than a sale or transfer to a subsidiary corporation of the Company
as defined in section 425(f) of the Code).
In the event of a Transfer of Control, notwithstanding any provision hereof
to the contrary, the Option shall become fully exercisable and vested in full as
of the date ten (10) days prior to the consummation of the Transfer of Control.
In addition, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring Corporation"),
may either assume the Company's rights and obligations under the Option or
substitute for the Option a substantially equivalent option for the Acquiring
Corporation's stock. The Option shall terminate effective as of the date of the
Transfer of Control to that extent that the Option is neither assumed or
substituted for nor exercised as of the date of the Transfer of Control.
5. RESTRICTIONS ON GRANT OF OPTION AND ISSUANCE OF SHARES. The grant of
the Option and the issuance of shares of stock on exercise of the Option shall
be subject to compliance with all applicable requirements of federal and state
law with respect to such securities. The Option may not be exercised if the
issuance of shares of stock upon such exercise would constitute a violation of
any applicable federal or state securities laws or other law or regulations. In
addition, the Option may not be exercised unless (i) a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), shall at
the time of exercise of the Option be in effect with respect to the shares of
stock issuable on exercise of the Option or (ii) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
6. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.
7. LEGENDS. The Company may at any time place legends referencing any
applicable federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares of stock acquired pursuant
to the exercise of the Option in the possession of the Optionee in order to
effectuate the provisions of this paragraph.
8. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. The Optionee shall have no
rights as a stockholder with respect to any shares of stock covered by the
Option until the date of the issuance of a certificate or certificates for the
shares for which the Option has been exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such certificate or certificates are issued, except as provided in
paragraph 9
4
<PAGE>
below. Nothing in this Option Agreement shall confer upon the Optionee any
right to continue in the employ of a Participating Company or interfere in any
way with any right of the Participating Company Group to terminate the
Optionee's employment at any time.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. Appropriate adjustments
shall be made in the number and class of shares of stock subject to the Option
and in the option price of the Option in the event of a stock dividend, stock
split, reverse stock split, combination, reclassification, or like change in the
capital structure of the Company. In the event a majority of the shares which
are of the same class as the shares of stock that are subject to the Option are
exchanged for, converted into, or otherwise become shares of another corporation
(the "New Shares"), the Company may unilaterally amend the Option to provide
that the Option is exercisable for New Shares. In the event of any such
amendments, the number of shares of stock subject to and the option price of the
Option shall be adjusted in a fair and equitable manner.
10. BINDING EFFECT. This Option Agreement shall inure to the benefit of
the successors and assigns of the Company and be binding upon the Optionee and
the Optionee's heirs, executors, administrators, successors and assigns.
11. ADMINISTRATION. This Option Agreement shall be administered by the
Board of Directors of the Company (the "Board") and/or by a duly appointed
committee of the Board having such powers as shall be specified by the Board.
Any references herein to the Board shall also mean the committee if such
committee has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein. All questions of interpretation of this Option Agreement shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
12. TERMINATION OR AMENDMENT. The Board may terminate or amend the Option
at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee.
13. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.
5
<PAGE>
14. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
TAB PRODUCTS CO.
By:_________________________________
Title:_______________________________
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, and hereby accepts the Option subject to
all of the terms and provisions hereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
Date:__________________________ ____________________________________
Philip C. Kantz
6
<PAGE>
Exhibit 10.44
TAB PRODUCTS CO.
NONQUALIFIED STOCK OPTION AGREEMENT
Tab Products Co. hereby grants to Philip C. Kantz (the "Optionee") an
option to purchase a total of 50,000 shares of the common stock of the Company
(the "Number of Option Shares") at an exercise price of $9.25 per share and in
the manner and subject to the provisions of this Option Agreement (the
"Option"). This Option has not been granted pursuant to the Company's stock
option plan. For purposes of this Option Agreement, (i) "Company" means Tab
Products Co., a Delaware corporation, and any successor corporation thereto;
(ii) "Participating Company" means the Company and any present or future parent
or subsidiary corporations of the Company (as those terms are defined in
sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code"); and (iii) "Participating Company Group" means, at any point in time,
all corporations collectively which are then Participating Companies.
1. GRANT OF THE OPTION. The Option is granted effective as of January
27, 1997 (the "Date of Option Grant"). The Number of Option Shares and the
exercise price per share of the Option are subject to adjustment from time to
time as provided in paragraph 9.
2. STATUS OF THE OPTION. The Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in section 422 of the Code.
3. TERM OF THE OPTION. The Option shall terminate and may no longer be
exercised on the first to occur of (a) the date ten (10) years after the Date of
Option Grant (the "Option Term Date"), (b) the last date for exercising the
Option following termination of the Optionee's employment as described in
paragraph 4(g), or (c) a Transfer of Control of the Company to the extent
provided in paragraph 4(h) below.
4. EXERCISE OF THE OPTION.
(a) RIGHT TO EXERCISE. Provided that the Optionee remains employed
with the Participating Company Group, the Option shall become exercisable in
full on the earlier of (i) the last day of the first fiscal year of the Company
in which the Company's revenues (as publicly reported and determined in
accordance with generally accepted accounting principles) are $190,000,000.00 or
more and the Company's earnings per share (as publicly reported and determined
in accordance with generally accepted accounting principles) are $1.20 or more,
or (ii) January 27, 2001. For purposes of the preceding sentence, appropriate
adjustments shall be made in the earnings per share target in the event of any
change in the capital structure of the Company as provided in paragraph 9 below.
In no event shall the Option be exercisable for more shares than the Number of
Option Shares.
(b) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares of stock for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the provisions of this
Option Agreement. The written notice must be signed by the Optionee and
1
<PAGE>
must be delivered in person or by certified or registered mail, return receipt
requested, to the Chief Financial Officer of the Company, or other authorized
representative of the Participating Company Group, prior to the termination of
the Option as set forth in paragraph 3 above, accompanied by full payment of the
exercise price for the number of shares of stock being purchased.
(c) FORM OF PAYMENT OF OPTION PRICE. Such payment shall be made
(i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's stock owned by the Optionee having a value not less than
the exercise price of the Option, which either have been owned by the Optionee
for more than six (6) months or were not acquired, directly or indirectly, from
the Company, (iii) by Immediate Sales Proceeds, as defined below, or (iv) by any
combination of the foregoing. Notwithstanding the foregoing, the Option may not
be exercised by tender to the Company of shares of the Company's stock to the
extent such tender of stock would constitute a violation of the provisions of
any law, regulation and/or agreement restricting the redemption of the Company's
stock. "Immediate Sales Proceeds" shall mean the assignment in form acceptable
to the Company of the proceeds of a sale of some or all of the shares acquired
upon the exercise of the Option pursuant to a program and/or procedure approved
by the Company (including, without limitation, through an exercise complying
with the provisions of Regulation T as promulgated from time to time by the
Board of Governors of the Federal Reserve System). The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
decline to approve any such program and/or procedure.
(d) TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
shall authorize payroll withholding and otherwise agree to make adequate
provision for foreign, federal and state tax withholding obligations of the
Company, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares of stock
acquired on exercise of the Option, (iii) the operation of any law or regulation
providing for the imputation of interest, or (iv) the lapsing of any restriction
with respect to any shares acquired on exercise of the Option.
(e) CERTIFICATE REGISTRATION. The certificate or certificates for
the shares of stock as to which the Option shall be exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the
Optionee.
(f) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of stock upon the exercise of the Option
(g) TERMINATION OF EMPLOYMENT.
(i) TERMINATION OF THE OPTION. If the Optionee ceases to
be an employee of the Participating Company Group for any reason except death or
disability within the meaning of section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by the Optionee within three
(3) months after the date on which the Optionee's employment terminates, but in
any event no later than the date of expiration of the Option term. If the
2
<PAGE>
Optionee's employment with the Participating Company Group is terminated because
of the death or disability of the Optionee within the meaning of section 422(c)
of the Code, the Option, to the extent unexercised and exercisable by the
Optionee on the date on which the Optionee ceased to be an employee, may be
exercised by the Optionee (or the Optionee's legal representative) at any time
prior to the expiration of twelve (12) months from the date the Optionee's
employment terminated, but in any event no later than the date of expiration of
the Option term. The Optionee's employment shall be deemed to have terminated
on account of death if the Optionee dies within three (3) months after the
Optionee's termination of employment.
(ii) TERMINATION OF EMPLOYMENT DEFINED. For purposes of
this Option Agreement, the Optionee's employment shall be deemed to have
terminated either upon an actual termination of employment or upon the
Optionee's employer ceasing to be a Participating Company.
(iii) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth above is prevented because the issuance of
shares of Stock upon such exercise would constitute a violation of any
applicable federal or state securities law or other law or regulation, the
Option shall remain exercisable until three (3) months after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the date of expiration of the Option term.
(iv) LEAVE OF ABSENCE. For purposes hereof, the Optionee's
employment with the Participating Company Group shall not be deemed to terminate
if the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company of ninety (90) days or less. In the event of
a leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the exercisability
and/or vesting of the Option if and only if the leave of absence is designated
by the Company as (or required by law to be) a leave for which vesting credit is
given.
(h) TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to the
Company:
(i) the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange;
(ii) a merger or consolidation of the Company into or with
another corporation as a result of which the stockholders of the Company before
such merger or consolidation shall own less than fifty percent (50%) of the
voting securities of the surviving corporation; or
3
<PAGE>
(iii) the sale of all or substantially all of the Company's
assets (other than a sale or transfer to a subsidiary corporation of the Company
as defined in section 425(f) of the Code).
In the event of a Transfer of Control, notwithstanding any provision hereof
to the contrary, the Option shall become fully exercisable and vested in full as
of the date ten (10) days prior to the consummation of the Transfer of Control.
In addition, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring Corporation"),
may either assume the Company's rights and obligations under the Option or
substitute for the Option a substantially equivalent option for the Acquiring
Corporation's stock. The Option shall terminate effective as of the date of the
Transfer of Control to that extent that the Option is neither assumed or
substituted for nor exercised as of the date of the Transfer of Control.
5. RESTRICTIONS ON GRANT OF OPTION AND ISSUANCE OF SHARES. The grant of
the Option and the issuance of shares of stock on exercise of the Option shall
be subject to compliance with all applicable requirements of federal and state
law with respect to such securities. The Option may not be exercised if the
issuance of shares of stock upon such exercise would constitute a violation of
any applicable federal or state securities laws or other law or regulations. In
addition, the Option may not be exercised unless (i) a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), shall at
the time of exercise of the Option be in effect with respect to the shares of
stock issuable on exercise of the Option or (ii) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
6. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.
7. LEGENDS. The Company may at any time place legends referencing any
applicable federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares of stock acquired pursuant
to the exercise of the Option in the possession of the Optionee in order to
effectuate the provisions of this paragraph.
8. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. The Optionee shall have no
rights as a stockholder with respect to any shares of stock covered by the
Option until the date of the issuance of a certificate or certificates for the
shares for which the Option has been exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such certificate or certificates are issued, except as provided in
paragraph 9 below. Nothing in this Option Agreement shall confer upon the
Optionee any right to continue in
4
<PAGE>
the employ of a Participating Company or interfere in any way with any right of
the Participating Company Group to terminate the Optionee's employment at any
time.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. Appropriate adjustments
shall be made in the number and class of shares of stock subject to the Option
and in the option price of the Option in the event of a stock dividend, stock
split, reverse stock split, combination, reclassification, or like change in the
capital structure of the Company. In the event a majority of the shares which
are of the same class as the shares of stock that are subject to the Option are
exchanged for, converted into, or otherwise become shares of another corporation
(the "New Shares"), the Company may unilaterally amend the Option to provide
that the Option is exercisable for New Shares. In the event of any such
amendments, the number of shares of stock subject to and the option price of the
Option shall be adjusted in a fair and equitable manner.
10. BINDING EFFECT. This Option Agreement shall inure to the benefit of
the successors and assigns of the Company and be binding upon the Optionee and
the Optionee's heirs, executors, administrators, successors and assigns.
11. ADMINISTRATION. This Option Agreement shall be administered by the
Board of Directors of the Company (the "Board") and/or by a duly appointed
committee of the Board having such powers as shall be specified by the Board.
Any references herein to the Board shall also mean the committee if such
committee has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein. All questions of interpretation of this Option Agreement shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
12. TERMINATION OR AMENDMENT. The Board may terminate or amend the Option
at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee.
13. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.
5
<PAGE>
14. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
TAB PRODUCTS CO.
By:_________________________________
Title:_______________________________
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, and hereby accepts the Option subject to
all of the terms and provisions hereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
Date:__________________________ ____________________________________
Philip C. Kantz
6
<PAGE>
Exhibit 10.45
TAB PRODUCTS CO.
NONQUALIFIED STOCK OPTION AGREEMENT
Tab Products Co. hereby grants to Philip C. Kantz (the "Optionee") an
option to purchase a total of 50,000 shares of the common stock of the Company
(the "Number of Option Shares") at an exercise price of $9.25 per share and in
the manner and subject to the provisions of this Option Agreement (the
"Option"). This Option has not been granted pursuant to the Company's stock
option plan. For purposes of this Option Agreement, (i) "Company" means Tab
Products Co., a Delaware corporation, and any successor corporation thereto;
(ii) "Participating Company" means the Company and any present or future parent
or subsidiary corporations of the Company (as those terms are defined in
sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code"); and (iii) "Participating Company Group" means, at any point in time,
all corporations collectively which are then Participating Companies.
1. GRANT OF THE OPTION. The Option is granted effective as of January
27, 1997 (the "Date of Option Grant"). The Number of Option Shares and the
exercise price per share of the Option are subject to adjustment from time to
time as provided in paragraph 9.
2. STATUS OF THE OPTION. The Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in section 422 of the Code.
3. TERM OF THE OPTION. The Option shall terminate and may no longer be
exercised on the first to occur of (a) the date ten (10) years after the Date of
Option Grant (the "Option Term Date"), (b) the last date for exercising the
Option following termination of the Optionee's employment as described in
paragraph 4(g), or (c) a Transfer of Control of the Company to the extent
provided in paragraph 4(h) below.
4. EXERCISE OF THE OPTION.
(a) RIGHT TO EXERCISE. Provided that the Optionee remains employed
with the Participating Company Group, the Option shall become exercisable in
full on the earlier of (i) the last day of the first fiscal year of the Company
in which the Company's revenues (as publicly reported and determined in
accordance with generally accepted accounting principles) are $240,000,000.00 or
more and the Company's earnings per share (as publicly reported and determined
in accordance with generally accepted accounting principles) are $1.50 or more,
or (ii) January 27, 2002. For purposes of the preceding sentence, appropriate
adjustments shall be made in the earnings per share target in the event of any
change in the capital structure of the Company as provided in paragraph 9 below.
In no event shall the Option be exercisable for more shares than the Number of
Option Shares.
(b) METHOD OF EXERCISE. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares of stock for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares as may be required pursuant to the
1
<PAGE>
provisions of this Option Agreement. The written notice must be signed by the
Optionee and must be delivered in person or by certified or registered mail,
return receipt requested, to the Chief Financial Officer of the Company, or
other authorized representative of the Participating Company Group, prior to the
termination of the Option as set forth in paragraph 3 above, accompanied by full
payment of the exercise price for the number of shares of stock being purchased.
(c) FORM OF PAYMENT OF OPTION PRICE. Such payment shall be made
(i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
shares of the Company's stock owned by the Optionee having a value not less than
the exercise price of the Option, which either have been owned by the Optionee
for more than six (6) months or were not acquired, directly or indirectly, from
the Company, (iii) by Immediate Sales Proceeds, as defined below, or (iv) by any
combination of the foregoing. Notwithstanding the foregoing, the Option may not
be exercised by tender to the Company of shares of the Company's stock to the
extent such tender of stock would constitute a violation of the provisions of
any law, regulation and/or agreement restricting the redemption of the Company's
stock. "Immediate Sales Proceeds" shall mean the assignment in form acceptable
to the Company of the proceeds of a sale of some or all of the shares acquired
upon the exercise of the Option pursuant to a program and/or procedure approved
by the Company (including, without limitation, through an exercise complying
with the provisions of Regulation T as promulgated from time to time by the
Board of Governors of the Federal Reserve System). The Company reserves, at any
and all times, the right, in the Company's sole and absolute discretion, to
decline to approve any such program and/or procedure.
(d) TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
shall authorize payroll withholding and otherwise agree to make adequate
provision for foreign, federal and state tax withholding obligations of the
Company, if any, which arise in connection with the Option, including, without
limitation, obligations arising upon (i) the exercise, in whole or in part, of
the Option, (ii) the transfer, in whole or in part, of any shares of stock
acquired on exercise of the Option, (iii) the operation of any law or regulation
providing for the imputation of interest, or (iv) the lapsing of any restriction
with respect to any shares acquired on exercise of the Option.
(e) CERTIFICATE REGISTRATION.. The certificate or certificates for
the shares of stock as to which the Option shall be exercised shall be
registered in the name of the Optionee, or, if applicable, the heirs of the
Optionee.
(f) FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares of stock upon the exercise of the Option
(g) TERMINATION OF EMPLOYMENT.
(i) TERMINATION OF THE OPTION. If the Optionee ceases to
be an employee of the Participating Company Group for any reason except death or
disability within the meaning of section 422(c) of the Code, the Option, to the
extent unexercised and exercisable by the Optionee on the date on which the
Optionee ceased to be an employee, may be exercised by
2
<PAGE>
the Optionee within three (3) months after the date on which the Optionee's
employment terminates, but in any event no later than the date of expiration of
the Option term. If the Optionee's employment with the Participating Company
Group is terminated because of the death or disability of the Optionee within
the meaning of section 422(c) of the Code, the Option, to the extent unexercised
and exercisable by the Optionee on the date on which the Optionee ceased to be
an employee, may be exercised by the Optionee (or the Optionee's legal
representative) at any time prior to the expiration of twelve (12) months from
the date the Optionee's employment terminated, but in any event no later than
the date of expiration of the Option term. The Optionee's employment shall be
deemed to have terminated on account of death if the Optionee dies within three
(3) months after the Optionee's termination of employment.
(ii) TERMINATION OF EMPLOYMENT DEFINED. For purposes of
this Option Agreement, the Optionee's employment shall be deemed to have
terminated either upon an actual termination of employment or upon the
Optionee's employer ceasing to be a Participating Company.
(iii) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth above is prevented because the issuance of
shares of Stock upon such exercise would constitute a violation of any
applicable federal or state securities law or other law or regulation, the
Option shall remain exercisable until three (3) months after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the date of expiration of the Option term.
(iv) LEAVE OF ABSENCE. For purposes hereof, the Optionee's
employment with the Participating Company Group shall not be deemed to terminate
if the Optionee takes any military leave, sick leave, or other bona fide leave
of absence approved by the Company of ninety (90) days or less. In the event of
a leave in excess of ninety (90) days, the Optionee's employment shall be deemed
to terminate on the ninety-first (91st) day of the leave unless the Optionee's
right to reemployment with the Participating Company Group remains guaranteed by
statute or contract. Notwithstanding the foregoing, however, a leave of absence
shall be treated as employment for purposes of determining the exercisability
and/or vesting of the Option if and only if the leave of absence is designated
by the Company as (or required by law to be) a leave for which vesting credit is
given.
(h) TRANSFER OF CONTROL.. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to the
Company:
(i) the direct or indirect sale or exchange by the
stockholders of the Company of all or substantially all of the stock of the
Company where the stockholders of the Company before such sale or exchange do
not retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the Company after such sale or exchange;
(ii) a merger or consolidation of the Company into or with
another corporation as a result of which the stockholders of the Company before
such merger or
3
<PAGE>
consolidation shall own less than fifty percent (50%) of the voting securities
of the surviving corporation; or
(iii) the sale of all or substantially all of the Company's
assets (other than a sale or transfer to a subsidiary corporation of the Company
as defined in section 425(f) of the Code).
In the event of a Transfer of Control, notwithstanding any provision hereof
to the contrary, the Option shall become fully exercisable and vested in full as
of the date ten (10) days prior to the consummation of the Transfer of Control.
In addition, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "Acquiring Corporation"),
may either assume the Company's rights and obligations under the Option or
substitute for the Option a substantially equivalent option for the Acquiring
Corporation's stock. The Option shall terminate effective as of the date of the
Transfer of Control to that extent that the Option is neither assumed or
substituted for nor exercised as of the date of the Transfer of Control.
5. RESTRICTIONS ON GRANT OF OPTION AND ISSUANCE OF SHARES.. The grant of
the Option and the issuance of shares of stock on exercise of the Option shall
be subject to compliance with all applicable requirements of federal and state
law with respect to such securities. The Option may not be exercised if the
issuance of shares of stock upon such exercise would constitute a violation of
any applicable federal or state securities laws or other law or regulations. In
addition, the Option may not be exercised unless (i) a registration statement
under the Securities Act of 1933, as amended (the "Securities Act"), shall at
the time of exercise of the Option be in effect with respect to the shares of
stock issuable on exercise of the Option or (ii) in the opinion of legal counsel
to the Company, the shares issuable upon exercise of the Option may be issued in
accordance with the terms of an applicable exemption from the registration
requirements of the Securities Act. As a condition to the exercise of the
Option, the Company may require the Optionee to satisfy any qualifications that
may be necessary or appropriate, to evidence compliance with any applicable law
or regulation and to make any representation or warranty with respect thereto as
may be requested by the Company.
6. NON-TRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee and may not be assigned or
transferred in any manner except by will or by the laws of descent and
distribution.
7. LEGENDS.. The Company may at any time place legends referencing any
applicable federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares of stock acquired pursuant
to the exercise of the Option in the possession of the Optionee in order to
effectuate the provisions of this paragraph.
8. RIGHTS AS A STOCKHOLDER OR EMPLOYEE. The Optionee shall have no
rights as a stockholder with respect to any shares of stock covered by the
Option until the date of the
4
<PAGE>
issuance of a certificate or certificates for the shares for which the Option
has been exercised. No adjustment shall be made for dividends or distributions
or other rights for which the record date is prior to the date such certificate
or certificates are issued, except as provided in paragraph 9 below. Nothing in
this Option Agreement shall confer upon the Optionee any right to continue in
the employ of a Participating Company or interfere in any way with any right of
the Participating Company Group to terminate the Optionee's employment at any
time.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. Appropriate adjustments
shall be made in the number and class of shares of stock subject to the Option
and in the option price of the Option in the event of a stock dividend, stock
split, reverse stock split, combination, reclassification, or like change in the
capital structure of the Company. In the event a majority of the shares which
are of the same class as the shares of stock that are subject to the Option are
exchanged for, converted into, or otherwise become shares of another corporation
(the "New Shares"), the Company may unilaterally amend the Option to provide
that the Option is exercisable for New Shares. In the event of any such
amendments, the number of shares of stock subject to and the option price of the
Option shall be adjusted in a fair and equitable manner.
10. BINDING EFFECT. This Option Agreement shall inure to the benefit of
the successors and assigns of the Company and be binding upon the Optionee and
the Optionee's heirs, executors, administrators, successors and assigns.
11. ADMINISTRATION. This Option Agreement shall be administered by the
Board of Directors of the Company (the "Board") and/or by a duly appointed
committee of the Board having such powers as shall be specified by the Board.
Any references herein to the Board shall also mean the committee if such
committee has been appointed and, unless the powers of the committee have been
specifically limited, the committee shall have all of the powers of the Board
granted herein. All questions of interpretation of this Option Agreement shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Option. Any officer of a
Participating Company shall have the authority to act on behalf of the Company
with respect to any matter, right, obligation, or election which is the
responsibility of or which is allocated to the Company herein, provided the
officer has apparent authority with respect to such matter, right, obligation,
or election.
12. TERMINATION OR AMENDMENT. The Board may terminate or amend the Option
at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee.
13. INTEGRATED AGREEMENT. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Participating Company Group
with respect to the subject matter contained herein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Participating Company Group other than those as set forth
or provided for herein. To the extent contemplated herein, the provisions of
this Option Agreement shall survive any exercise of the Option and shall remain
in full force and effect.
5
<PAGE>
14. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within the State
of California.
TAB PRODUCTS CO.
By:_________________________________
Title:_______________________________
The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement, and hereby accepts the Option subject to
all of the terms and provisions hereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.
Date:__________________________ ____________________________________
Philip C. Kantz
6
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 10,987
<SECURITIES> 3,336
<RECEIVABLES> 26,573
<ALLOWANCES> 708
<INVENTORY> 11,649<F1>
<CURRENT-ASSETS> 54,555
<PP&E> 54,359
<DEPRECIATION> 34,216
<TOTAL-ASSETS> 83,456
<CURRENT-LIABILITIES> 24,062
<BONDS> 13,406
0
0
<COMMON> 43,507
<OTHER-SE> 248
<TOTAL-LIABILITY-AND-EQUITY> 83,456
<SALES> 106,278
<TOTAL-REVENUES> 114,028
<CGS> 61,008
<TOTAL-COSTS> 67,799
<OTHER-EXPENSES> 40,233
<LOSS-PROVISION> 251
<INTEREST-EXPENSE> 768
<INCOME-PRETAX> 5,228
<INCOME-TAX> 2,274
<INCOME-CONTINUING> 2,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,954
<EPS-PRIMARY> .60
<EPS-DILUTED> .60
<FN>
<F1>INVENTORY DETAIL AT FEBRUARY 28, 1997 WAS FINISHED GOODS $7,334; WORK IN
PROCESS $918; RAW MATERIAL $3,397.
</FN>
</TABLE>
