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EXHIBIT 10.17
TELECOMMUNICATION SYSTEMS, INC.
1997 STOCK OPTION PLAN
OPTIONEE AGREEMENT
Incentive Stock Option No. 180.
No. of shares subject to Option: 139,437.
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This AGREEMENT dated this 29th day of July, 1998 (the "Option Date"),
between TeleCommunication Systems, Inc., a Maryland corporation, (the "Company")
and Xxxxxxx X. Xxxxxxx (the "Optionee").
W I T N E S S E T H:
1. Grant of Option. Pursuant to the provisions of the Company's 1997
Stock Option Plan (the "Plan"), the Company hereby grants to the Optionee,
subject to the terms and conditions of the Plan and subject further to the terms
and conditions herein set forth, the right and option to purchase from the
Company all or any part of an aggregate of 139,437 shares of non-voting Common
Stock at the purchase price of 28/100 Dollars ($.28) per share (the "Option").
2. Exercise of Option. (a) The right and option granted pursuant to this
Agreement may be exercised (subject to the conditions herein) as follows:
(i) On and after July 29, 1999, the Optionee shall be entitled to
purchase up to 40 percent of the shares of non-voting Common Stock - subject to
this Agreement, which right shall end on the Termination Date occurrence;
(ii) On and after July 29, 2000, the Optionee shall be entitled to
purchase up to an additional 20 percent of the shares of non-voting - Common
Stock subject to this Agreement, which right shall end on the Termination Date
occurrence;
(iii) On and after July 29, 2001, the Optionee shall be entitled to
purchase up to an additional 15 percent of the shares of non-voting - Common
Stock subject to this Agreement, which right shall end on the Termination Date
occurrence;
(iv) On and after July 29, 2002, the Optionee shall be entitled to
purchase up to an additional 15 percent of the shares of non-voting - Common
Stock subject to this Agreement, which right shall end on the Termination Date
occurrence;
(v) On or after July 29, 2003, the Optionee shall be entitled to
purchase up to an additional 10 percent of the shares of non-voting - Common
Stock subject to this Agreement, which right shall end on the Termination Date
occurrence; and
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(vi) The Optionee's right to exercise all or any portion of the Option
not previously exercised hereunder shall terminate on July 28, 2008 (the
"Termination Date"), occurrence.
(b) No option may be exercised unless the Optionee is at the time of
such exercise an employee of the Company or an Affiliate, or any person who
provides services to the Company or an Affiliate; provided, however, that if the
Optionee's employment is terminated by the Company or an Affiliate without
"cause", the Optionee shall have a period of ninety (90) days from the date of
such termination to exercise this Option. For purposes of this Agreement, the
term "cause" shall mean, as determined by the Board in its sole discretion, (A)
the willful commission by the Optionee of a criminal or other act that causes or
is likely to cause substantial economic damage to the Company or an Affiliate or
substantial injury to the business reputation of the Company or an Affiliate;
(B) the commission by the Optionee of an act of fraud in the performance of such
Optionee's duties on behalf of the Company or an Affiliate; or (C) the
continuing willful failure of the Optionee to perform the duties of such
Optionee to the Company or an Affiliate (other than such failure resulting from
the Optionee's incapacity due to physical or mental illness) after written
notice thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to the
Optionee by the Board. For purposes of this Agreement, no act, or failure to
act, on the Optionee's part shall be considered "willful" unless done or omitted
to be done by the Optionee not in good faith without reasonable belief that the
Optionee's action or omission was in the best interest of the Company or an
Affiliate. Absence or leave approved by the Administrator shall not be
considered an interruption of continuous employment for any purpose under the
Plan. Subject to the foregoing, the purchase rights represented by this Option
are exercisable at the option of the Optionee, from time to time, prior to the
Termination Date occurring; provided, however, that such purchase rights shall
not be exercisable until the Company has converted for tax purposes from an "S"
corporation to a "C" corporation, and that such rights shall not be exercisable
with respect to a fraction of a share of non-voting Common Stock.
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(c) This Option may be exercised in whole or in part as provided
herein by presentation and surrender an executed Exercise Notice (in the form
attached hereto as Exhibit 1) evidencing the Optionee's election to purchase
shares pursuant to the Option, and the number of such shares, and accompanied by
the purchase price for the number of shares for which the Option is being
exercised.
(d) To the extent that this Option is not exercised prior to the
Termination Date, it shall automatically expire immediately prior to the
Termination Date and the rights of the Optionee hereof shall become null and
void and of no effect.
3. Definitions. Capitalized terms contained in this Agreement that are
not otherwise defined in the Agreement have the same meaning as they are given
in the Plan.
4. Terms and Conditions. It is understood and agreed that the Option
evidenced hereby is subject to the terms and conditions set forth in the Plan,
including without limitation the exercisability and forfeiture of the Option and
restrictions on transfer.
5. Rights as a Stockholder. The Optionee shall have no rights as a
stockholder with respect to any shares of non-voting Common Stock issuable or
transferable upon exercise thereof until the issuance of the stock certificates
evidencing such shares of Common Stock.
6. No Right to Continued Employment. This Agreement shall not be
construed as giving the Optionee any right to be retained in the employ or
service of the Company or an Affiliate or to affect or limit in any way the
right of the Company to terminate the employment or service of the Optionee at
any time with or without assigning a reason therefor.
7. Compliance with Law and Regulations. This Option and the obligation of
the Company to sell and deliver shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any government or regulatory agency as the administrator may deem it
necessary or advisable.
8. Optionee Bound by Plan. The Optionee hereby acknowledges receipt of a
copy of the Plan and agrees to be bound by all the terms and provisions thereof.
9. Notice. Any notice hereunder to the Company shall be addressed to it
at its offices, TeleCommunication Systems, Inc., 000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Chief Financial Officer, and any notice hereunder to
the Optionee shall be addressed to him or her at 0000 Xxxxxxxxxx Xxxxx,
Xxxxxxxxx, XX 00000, subject to the right of either party to designate at any
time hereafter in writing some other address.
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IN WITNESS WHEREOF, TeleCommunication Systems, Inc. has caused this
Agreement to be executed by its officer and the Optionee has executed this
Agreement, as of the day and year first above written.
TELECOMMUNICATION SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: Sr. Vice President & Chief Financial Officer
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Optionee
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EXHIBIT 1
TeleCommunication Systems, Inc.
000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Re: Exercise of Stock Option
Gentlemen:
I hereby exercise the Option granted to me under the Stock Option Agreement
dated July 29, 1998, to purchase 145,161 shares of TeleCommunication Systems,
Inc. Class B non-voting common stock, $0.01 par value per share (the "Common
Stock"), with respect to _______ shares of non-voting Common Stock for an
aggregate purchase price of $_________. As consideration for such shares, I have
enclosed payment in the amount of $__________.
Please issue in my name and send the certificates representing the shares
purchased by my exercise of this Option to me at the address indicated below.
Date:
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Optionee, Xxxxxxx X. Xxxxxxx
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Address
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