EXHIBIT 4.14
NON-QUALIFIED STOCK OPTION
THIS OPTION HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
February 11, 2002
TELENETICS CORPORATION
WHEREAS, in connection with the services rendered and to be rendered to
Telenetics Corporation, a California corporation (the "COMPANY"), by Xxxx X.
XxXxxx, an individual ("HOLDER"), pursuant to that certain Amended and Restated
Employment Agreement executed as of the date hereof to be effective as of
January 7, 2000 by and between the Company and Holder (the "SERVICE AGREEMENT"),
the Company desires to grant to Holder a non-qualified stock option to purchase
shares of the Company"s common stock, no par value per share ("COMMON STOCK").
NOW, THEREFORE, IN CONSIDERATION OF THE FOREGOING, the Company hereby
grants to Holder an option to purchase (this "OPTION") up to One Hundred Fifty
Thousand (150,000) shares (such shares as adjusted from time to time are
referred to herein individually, each as an "OPTION SHARE," and collectively, as
the "OPTION SHARES") of Common Stock of the Company at the Exercise Price (as
defined below). This Option may be exercised in accordance with the terms of
this Option by surrendering this Option, with (i) the form of Election to
Purchase set forth hereon duly executed by Holder and (ii) the form of
Restricted Stock Letter attached hereto duly executed by Holder, at the
Company"s principal executive office ("OFFICE"), and by paying in full the
Exercise Price, plus transfer taxes, if any, in United States currency by cash,
certified check, bank cashier's check or money order payable to the order of the
Company.
1. DURATION, VESTING AND EXERCISE OF OPTION.
(a) This Option shall vest and become exercisable according to
the following schedule: On the date hereof, One Hundred Thousand
(100,000) Option Shares shall be vested and exercisable. On January 6,
2003, and subject to the terms of this Option, the remaining Fifty
Thousand (50,000) Option Shares shall become vested and exercisable, at
which time all of the Option Shares shall have become vested and
exercisable.
(b) This Option (to the extent not earlier exercised) shall
expire on January 6, 2005 (such date being referred to herein as the
"EXPIRATION DATE"). If this Option is not surrendered to the Company
for exercise in accordance with SECTION 1(C) prior to the close of
business on the Expiration Date it shall be void.
(c) This Option may be exercised, to the extent vested and not
previously exercised, in whole or in part, prior to the Expiration Date
at the per Option Share Exercise Price determined in accordance with
SECTIONS 2 AND 4. In order to exercise such right, Holder shall
surrender this Option to the Company at the Office with the form of
Election to Purchase and the Restricted Stock Letter attached hereto
duly completed and signed, and shall tender payment in full of the
Exercise Price to the Company for the Company's account, together with
such taxes as are specified in SECTION 8, for each Option Share with
respect to which this Option is being exercised. If this Option is
exercised as to less than all of the Option Shares purchasable, one or
more new option(s) shall be issued to Holder for the remaining number
of Option Shares evidenced by this Option.
2. EXERCISE PRICE. Subject to adjustment pursuant to SECTION 4, the
price per share at which Option Shares shall be purchasable upon exercise of
this Option (the "EXERCISE PRICE") shall be $0.45.
3. ISSUANCE OF OPTION SHARE CERTIFICATES.
(a) Upon surrender of this Option, delivery of an Election to
Purchase and delivery of a Restricted Stock Letter in the forms
attached hereto and payment of the Exercise Price and transfer taxes,
the Company shall issue and deliver certificates representing shares of
Common Stock ("Certificates") in the manner set forth in the Election
to Purchase delivered by Holder to the Company.
(b) The Certificates shall bear a legend in substantially the
following form:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE `ACT'), AND MAY NOT BE RESOLD, ASSIGNED, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE ISSUER THAT REGISTRATION UNDER SAID ACT IS NOT
REQUIRED."
4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES
PURCHASABLE. The Exercise Price and the number and kind of Option Shares
purchasable upon the exercise of this Option are subject to adjustment from time
to time upon the occurrence of the events specified in this SECTION 4. If, by
reason of any merger, consolidation, combination, liquidation, reorganization,
recapitalization, stock dividend, stock split, split-off, spin-off, combination
of shares, exchange of shares, or other similar changes in the capital structure
of the Company (each, a "REORGANIZATION"), the outstanding securities of the
same class as the Option Shares (the "OPTION SHARE CLASS OF SECURITIES") are
substituted or exchanged for, combined or changed into any cash, property or
other securities or into a greater or lesser number of shares, the number and/or
kind of shares and/or interests subject to this Option and the Exercise Price
shall be appropriately adjusted to prevent dilution or enlargement of the rights
of Holder so that, thereafter, this Option shall be exercisable for the
securities, cash and/or other property that would have been received in respect
of the Option Shares if this Option had been exercised in full immediately prior
to such event. Such adjustments shall be made successively whenever any event
described in the foregoing sentence occurs.
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5. FRACTIONAL OPTION SHARES. The Company shall not be required to issue
fractions of Option Shares upon exercise of this Option or to distribute
certificates that evidence fractional Option Shares. All fractions of Option
Shares to which Holder would otherwise be entitled shall be aggregated and in
lieu of such remaining fractional Option Share, there shall be paid to Holder at
the time this Option is exercised as herein provided an amount in cash equal to
the stated fraction of the fair market value of an Option Share as determined in
good faith by the Board of Directors of the Company.
6. RESERVATION AND ISSUANCE OF OPTION SHARES. The Company represents
and warrants that it shall use its best efforts to obtain shareholder approval
of an amendment to the Company's articles of incorporation to permit the Company
to reserve out of its authorized Common Stock a number of shares of Common Stock
sufficient to provide for the exercise of the rights of purchase represented by
this Option. The Company covenants and agrees that it will not amend its
articles of incorporation or bylaws in any manner that adversely affects the
Company's ability to issue Option Shares upon exercise of this Option. The
Company further represents and warrants that all shares of its Common Stock
issued upon exercise of this Option will, upon issuance in accordance with the
terms of this Option, be validly issued, fully paid and nonassessable.
7. MUTILATED OR MISSING OPTION CERTIFICATES. If this Option is
mutilated, lost, stolen or destroyed, the Company shall issue and deliver, in
exchange and substitution for and upon cancellation of the mutilated Option, or
in lieu of and substitution for the lost, stolen or destroyed Option, a new
option in substantially the same form as this Option and representing an option
to purchase an equivalent number of Option Shares, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of this
Option and an indemnity or bond, if requested, satisfactory to the Company.
Holder shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.
8. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes
attributable to the issuance of Option Shares issuable upon the exercise of this
Option; PROVIDED, HOWEVER, that the Company shall not be required to pay any tax
or taxes that may be payable in respect of any transfer involved in the issuance
of any options or any Option Share certificates in a name other than that of
Holder, and the Company shall not be required to issue or deliver such Option
Share certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
9. CERTAIN NOTICES TO HOLDER. Upon any adjustment to the number of
Option Shares issuable pursuant to exercise of this Option or to the Exercise
Price pursuant to SECTION 4, the Company, within fifteen (15) calendar days
thereafter, shall cause to be given to Holder, at his address appearing on the
Company's records, written notice of such adjustments in accordance with this
SECTION 9. Where appropriate such notice may be given in advance and included as
part of the notice required to be mailed under the other provisions of this
SECTION 9. If:
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(a) The Company authorizes the issuance or distribution of
securities or assets to holders of its shares of Common Stock or makes
any distribution (other than cash dividends and distributions payable
out of consolidated earnings) to the holders of its shares of Common
Stock;
(b) The Company becomes a party to any consolidation or merger
for which approval of any shareholder of the Company is required,
conveys or transfers all or substantially all of its properties,
assets, or business, shall engage in any reorganization or
recapitalization or makes any tender or exchange offer for shares of
its Common Stock;
(c) The Company becomes subject to voluntary or involuntary
dissolution, liquidation or winding up; or
(d) The Company proposes to take any other action that would
require an adjustment of the Exercise Price pursuant to SECTION 4;
then the Company shall cause to be given to Holder at his address appearing on
the Company"s records, at least fifteen (15) calendar days prior to the
applicable record date hereinafter specified, a written notice in accordance
with this SECTION 9 stating (i) the date as of which the holders of record of
Common Stock to be entitled to receive any such securities or assets or
distribution are to be determined, (ii) the initial expiration date set forth in
any tender or exchange offer made by the Company for shares of its Common Stock
or (iii) the date on which any such consolidation or merger, conveyance,
transfer, reorganization or recapitalization, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of Common Stock shall be entitled to
exchange such Common Stock for securities or other property that may be
deliverable upon such consolidation or merger, conveyance, transfer,
reorganization or recapitalization, dissolution, liquidation or winding up. The
failure to give the notice required by this SECTION 9 or any defect therein
shall not affect the legality or validity of any distribution, right, option,
consolidation, conveyance, transfer, reorganization, dissolution, liquidation or
winding up or the vote upon any action.
Nothing contained in this Option shall be construed as conferring upon
Holder the right to vote or to consent or to receive notice as a shareholder in
respect of any rights or other matter whatsoever as a shareholder of the
Company, or any other rights or liabilities as a shareholder of the Company.
10. NONTRANSFERABILITY OF OPTION. Except by will, the laws of descent
and distribution or qualified domestic relations order, this Option is not
transferable by Holder.
11. NOTICES. Any notice or demand authorized by this Option to be given
or made by Holder to or on the Company shall be sufficiently given or made if
personally delivered or sent by first class United States mail, by overnight
courier guaranteeing next-day delivery, or by facsimile confirmed by letter,
addressed (until another address is given in writing by the Company) to the
Office.
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Any notice pursuant to this Option to be given by the Company to Holder
shall be sufficiently given if personally delivered or sent by first class
United States mail, by overnight courier guaranteeing next-day delivery, or by
facsimile confirmed by letter, addressed (until another address is filed in
writing by Holder with the Company) to the address specified in the Company's
records.
12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
supplement or amend this Option without the consent or concurrence of Holder in
order to cure any ambiguity, manifest error or other mistake in this Option, or
to make provision in regard to any matters or questions arising hereunder that
the Company may deem necessary or desirable and that shall not adversely affect,
alter or change the interests of Holder.
13. TERMINATION OF SERVICE. If Holder's service under the Service
Agreement terminates, then Holder (or if termination was due to Holder's death
or Holder's disability (as defined in Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended), then Holder or Holder's guardians, conservators or
other legal representatives), may at any time prior to the Expiration Date
exercise the Option to the extent that Holder was entitled to exercise this
Option at the date of termination, provided that in no event shall this Option,
or any part thereof, be exercisable after the Expiration Date.
14. SUCCESSORS. All the representations, warranties, agreements,
covenants and provisions of this Option by or for the benefit of the Company or
Holder shall bind and inure to the benefit of their respective permitted heirs,
successors and assigns hereunder.
15. GOVERNING LAW. This Option shall be deemed to be a contract made
under the laws of the State of California and for all purposes shall be
construed in accordance with the internal laws of the State of California
without regard to conflicts of laws principles.
16. BENEFITS OF THIS AGREEMENT. Nothing in this Option shall be
construed to give to any person or entity other than the Company and Holder any
legal or equitable right, remedy or claim under this Option, and this Option
shall be for the sole and exclusive benefit of the Company and Holder, except as
otherwise provided in SECTION 15.
17. INVALIDITY OF PROVISIONS. If any provision of this Option is or
becomes invalid, illegal or unenforceable in any respect, such provision shall
be deemed amended to the extent necessary to cause it to express the intent of
the parties to the maximum possible extent and be valid legal and enforceable.
The invalidity or deemed amendment of such provision shall not affect the
validity, legality or enforceability of any other provision hereof.
18. NO IMPAIRMENT. The Company will not, by amendment of its articles
of incorporation or through any reorganization, recapitalization transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Option and in the taking of all such actions as may be necessary or
appropriate in order to protect the rights of Holder against impairment.
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19. SECTION HEADINGS. The section headings contained in this Option are
for convenience only and shall be without substantive meaning or content.
20. REGISTRATION OF OPTION SHARES. Holder shall, with respect to the
Option Shares ("Registrable Securities"), have piggyback registration rights. If
the Company shall determine to file with the Securities and Exchange Commission
a registration statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents relating to equity securities
to be issued in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans and other than securities issued or to become issuable in
connection with the Company's 6% senior secured convertible notes and related
investor and placement agent warrants), the Company shall send to the Holder
written notice of such determination and, if within five days after the
effective date of such notice, the Holder shall so request in writing and shall
thereafter comply with the Company's reasonable requests for information in
connection with the registration statement, the Company shall include in such
registration statement all or any part of the Registrable Securities the Holder
requests to be registered, except that if, in connection with any underwritten
public offering for the account of the Company the managing underwriter(s)
thereof shall impose a limitation on the number of shares of Common Stock that
may be included in the registration statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include
in the registration statement only such limited portion of the Registrable
Securities with respect to which the Holder has requested inclusion hereunder as
the underwriter shall permit. Any exclusion of Registrable Securities shall be
made pro rata with holders of other securities having the right to include such
securities in the registration statement other than holders of securities
entitled to inclusion of their securities in the registration statement by
reason of demand registration rights. If an offering in connection with which
the Holder elects to participate in registration under this SECTION 20 is an
underwritten offering, then the Holder shall, unless otherwise agreed by the
Company, offer and sell such Registrable Securities in an underwritten offering
using the same underwriter or underwriters and, subject to the provisions of
this Option, on the same terms and conditions as other shares of Common Stock
included in such underwritten offering.
The Company has caused this Option to be duly executed on or about the
day and year first above written.
TELENETICS CORPORATION
By: /S/ Xxxxx Xxxxxxxx Xxxx
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Xxxxx Xxxxxxxx Xxxx, President and
Chief Executive Officer
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TELENETICS CORPORATION
NON-QUALIFIED STOCK OPTION
ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to purchase ____________
Option Shares issuable upon the exercise of the Non-Qualified Stock Option dated
February 11, 2002 ("OPTION"), and requests that certificates for such Option
Shares be issued and delivered as follows:
ISSUE TO:
-----------------------------------------------------
(Name)
-----------------------------------------------------
(Address, including Zip Code)
-----------------------------------------------------
(Social Security or Tax Identification Number)
DELIVER TO:
-----------------------------------------------------
(Name)
at
-----------------------------------------------------
(Address, including Zip Code)
If the number of Option Shares hereby exercised is less than all the
Option Shares represented by the Option, the undersigned requests that a new
option representing the number of Option Shares not exercised be issued and
delivered as set forth above or otherwise as the undersigned shall direct in
writing.
In full payment of the purchase price of the Option Shares being issued
upon exercise of the Option and transfer taxes, if any, the undersigned hereby
tenders payment of $_____________ by cash, certified check, bank cashier's check
or money order payable in United States currency to the order of Telenetics
Corporation.
Dated:
------------------ --------------------------------------------
(Signature)
(Signature must conform in all respects to
name of holder as specified on the face of
the Option.)
PLEASE INSERT SOCIAL SECURITY OR TAX
IDENTIFICATION NUMBER OF HOLDER
Signature Guaranteed:
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EXHIBIT A
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FORM OF RESTRICTED STOCK LETTER
THE UNDERSIGNED (hereinafter referred to as "PURCHASER") is exercising
the Non-Qualified Stock Option tendered with this Restricted Stock Letter, and
in connection with such exercise, makes the following representations and
warranties to Telenetics Corporation (the "COMPANY") with the knowledge and
intent that the Company shall be entitled to rely thereon in delivering shares
of the Company's Common Stock ("SHARES") to Purchaser upon exercise of the
Non-Qualified Stock Option:
1. Purchaser is acquiring the Shares for investment for Purchaser's own
account, and not with a view to or for sale in connection with any distribution
thereof. Purchaser understands that the issuance of the Shares to be purchased
has not been registered pursuant to the Securities Act of 1933, as amended (the
"ACT"), and the offer and sale of the Shares is intended to be exempt from
registration under the Act, which exemption depends upon, among other things,
the bona fide nature of the investment intent and the accuracy of Purchaser's
representations as expressed herein.
2. Purchaser is an "accredited investor" as defined in the rules and
regulations of the Act and Purchaser has such knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of Purchaser"s investment in the Shares, and Purchaser is capable of
bearing the economic risks of such investment, including the risk of loss of
Purchaser"s entire investment in the Shares.
3. Purchaser acknowledges that the Company has made available to
Purchaser or Purchaser"s agents all documents and information relating to an
investment in the Shares requested by or on behalf of Purchaser.
4. All Shares issued on delivery of this Restricted Stock Letter shall
bear the legend set forth in SECTION 3 of the annexed Non-Qualified Stock Option
and the Shares received on delivery of this Restricted Stock Letter shall be
subject to the restrictions set forth therein.
Executed ______________________
Purchaser:
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Signature:
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