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Exhibit 10.1.4
NON-QUALIFIED STOCK OPTION AGREEMENT
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Xxx Xxxxx - Xxxxx Number 1539
THIS AGREEMENT made as of the 17th day of October, 1988, between
TELXON CORPORATION, a Delaware corporation (the "Corporation"), and XXX
XXXXX, an independent Director of the Corporation (the "Optionee").
WHEREAS, on the date hereof (the "Grant Date"), a non-qualified stock
option for the purchase of shares of common stock, par value $.01 per
share, of the Corporation ("Common Stock") was granted to Optionee by the
Corporation's Board of Directors in order to provide the Optionee with
additional incentive to promote the interests of the Corporation;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
have agreed, and do hereby agree, as follows:
1. GRANT OF OPTION.
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Under Grant Number 1539, the Corporation has granted to the Optionee
the right and option (the "Option") to purchase all or any part of an
aggregate of 6,000 shares of Common Stock, such number of shares being
subject to adjustment as provided herein (as so adjusted, the "Shares").
2. OPTION PRICE.
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The option price of the Shares covered by the Option is $14.625 per
share, such price being subject to adjustment as provided herein (as so
adjusted, the "Option Price").
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3. TERM OF OPTION.
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(a) The term of the Option shall be for a period commencing on the
Grant Date and ending on the fifth (5th) anniversary of the Grant Date (the
"Expiration Date"), subject to earlier termination as provided herein.
(b) Prior to its expiration or termination, the Option may be
exercised, in whole or in part, for such number of the Shares as the
Optionee may from time to time elect, in accordance with the following
limitations:
(i) From and after the Grant Date, it may be exercised
as to one-third (1/3) of the Shares, subject to the provisions
of Section 13 hereof.
(ii) After the first (lst) anniversary of the Grant Date, it may
be exercised as to two-thirds (2/3) of the Shares, less such number of
the Shares as to which the Option has theretofore been exercised.
(iii) After the second (2nd) anniversary of the Grant Date, it may
be exercised as to any part or all of the Shares, less such number of the
Shares as to which the Option has theretofore been exercised.
(c) Shares shall not be issued with respect to the Option unless the
exercise of such Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, the Securities Exchange Act of 1934
(the "Exchange Act"), the rules and regulations
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promulgated thereunder, any applicable state "blue sky" laws, and the
requirements of any inter-dealer quotation system or stock exchange upon
which the Shares may then be included or listed, and shall be further
subject to the approval of counsel for the Corporation with respect to such
compliance.
As a condition to the exercise of the Option or the issuance of the
Shares on exercise of the Option, the Corporation may require the person
exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Corporation, such a representation is required
by any of the aforementioned laws.
Inability of the Corporation to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Corporation's
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Corporation of any liability in respect of the
failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
(d) Nothing in this Agreement shall confer upon the Optionee any
right to continue to be a Director of the Corporation.
4. EXERCISE OF OPTION.
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(a) In order to exercise the Option, the person or persons entitled
to exercise it shall deliver to the Corporation written notice of the
number of Shares with respect to which the Option is to be exercised,
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accompanied by payment in full of the Option Price for the Shares being
purchased. No fractional shares will be issued. The payment of the Option
Price shall be either in cash, or through delivery to the Corporation of
shares of Common Stock evidenced by negotiable certificates registered in
the sole name of the Optionee, or by any combination of cash and such
shares.
(b) The value of shares delivered for payment of the Option Price
shall be the fair market value of such shares at the time the Option is
exercised. For purposes of this Agreement, the "fair market value" of a
share of Common Stock shall be the closing price on the last trading day
preceding the date of determination for which a sale price was reported on
the NASDAQ National Market System or on a stock exchange on which the
Common Stock is then listed (or for the next preceding day within thirty
(30) days prior to the date of determination on which sales occurred). In
the event no such quotations are available, the other members of the
Corporation's Board of Directors shall use any reasonable valuation method,
as determined in their sole discretion. If certificates representing
shares of Common Stock are used to pay all or part of the Option Price, the
Corporation shall cause two certificates to be delivered to the Optionee,
one certificate representing the number of shares, if any, represented by
the certificates delivered by Optionee for use in payment of the Option
Price in excess of the number of shares represented thereby necessary,
valued as hereinabove provided, to pay the portion of the Option Price not
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paid in cash, and a separate certificate representing the number of shares
with respect to which the Optionee exercised the Option.
(c) Until the issuance (as evidenced by the appropriate entry on
the books of the Corporation or of a duly authorized transfer agent of the
Corporation) of the stock certificate evidencing such Shares, no right to
vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Shares notwithstanding the exercise of the Option.
Except as otherwise provided in this Agreement, no adjustment will be made
for a dividend or other right for which the record date is prior to the
date the stock certificate is issued.
5. NONTRANSFERABILITY.
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The Option shall not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws
of descent and distribution, and the Option may be exercised, during the
lifetime of the Optionee, only by him.
6. TERMINATION OF DIRECTORSHIP.
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In the event that the Optionee shall cease to be a Director of the
Corporation (otherwise than by reason of the Optionee's death or
disability), the Option may be exercised (to the extent the Optionee shall
have been entitled to do so as of the date he ceases to be a Director)
until the earlier of (i) the date three (3) months after the date the
Optionee ceases to be a Director and (ii) the Expiration Date, and the
Option shall terminate on the earlier of such dates.
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7. DISABILITY OF OPTIONEE.
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In the event that the Optionee shall cease to be a Director of the
Corporation as a result of his having become "disabled" (as determined by
the other members of the Corporation's Board of Directors in their sole and
absolute discretion), the Option may be exercised (to the extent the
Optionee shall have been entitled to do so as of the date he ceases to be a
Director on account of his becoming so disabled) until the earlier of (i)
the date one (1) year after the date he ceases to be a Director and (ii)
the Expiration Date, and the Option shall terminate on the earlier of such
dates.
8. DEATH OF OPTIONEE.
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(a) In the event of the death of the Optionee at a time when he is
a Director of the Corporation, the Option may be exercised (to the extent
the Optionee would have been entitled to do so had he continued living and
terminated his Directorship six (6) months after the date of his death) by
the Optionee's estate or by a person who acquires the right to exercise the
Option by bequest or inheritance until the earlier of (i) the date six (6)
months following the date of the Optionee's death or (ii) the Expiration
Date, and the Option shall terminate on the earlier of such dates.
(b) In the event of the Death of the Optionee within thirty (30)
days after the termination of his Directorship other than on account of his
becoming disabled, the Option may be exercised (to the extent the Optionee
would have been entitled to do so at the date of termination of his
Oirectorship) by the Optionee's estate or by a person who acquires the
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right to exercise the Option by bequest or inheritance until the earlier of
(i) the date six (6) months following the date of the Optionee's death or
(ii) the Expiration Date, and the Option shall terminate on the earlier of
such dates.
9. TAXES.
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(a) The Corporation shall have the right to deduct any taxes
required by law to be withheld in connection with the exercise of the
Option from any amounts payable in cash to the Optionee at the time of any
exercise or any time thereafter. The Corporation shall also have the right
to require a person entitled to receive Shares pursuant to the exercise of
the Option to pay to the Corporation the amount of any taxes which the
Corporation is or will be required to withhold with respect to the exercise
of the Option before the certificate for such Shares is delivered to him.
(b) The Optionee shall have the right to borrow from the
Corporation an amount sufficient to pay the income tax liability resulting
from the exercise of the Option. Such loan shall be for a term of five (5)
years at a rate of interest equal to the Corporation's then primary
commercial lender's prime or base rate as in effect from time to time.
Payments of interest on such loan shall be made quarterly and the principal
shall be repaid at the earlier of the expiration of the five (5) year term
or a disposition of any of the Shares acquired upon exercise of the Option.
10. CHANGES IN CAPITAL STRUCTURE.
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(a) Subject to the provisions of Section 10(b) hereof and to any
required action by the stockholders of the Corporation, the number of
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Shares covered by the Option, and the Option Price, shall be
proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock,
or any other increase or decrease in the aggregate number of issued shares
of Common Stock effected without receipt of consideration by the
Corporation; provided, however, that conversion of any convertible
securities of the Corporation shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the
other members of the Corporation's Board of Directors, whose determination
in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Corporation of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of the Shares subject to the Option.
In the event of the proposed dissolution or liquidation of the
Corporation, the Option will terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the
other members of the Corporation's Board of Directors. The other members
of the Corporation's Board of Directors may, in the exercise of their sole
discretion in such instances, declare that the Option shall terminate as of
a date fixed by them and give the Optionee the right to exercise the Option
as to all or any part of the Shares, including Shares as to which the
Option would not otherwise be exercisable.
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Subject to the provisions of Section 10(b) hereof, in the event of a
proposed sale of all or substantially all of the assets of the Corporation, or
the merger or consolidation of the Corporation with or into another
corporation, the Option shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, unless the other members of the Corporation's Board of
Directors determine, in the exercise of their sole discretion and in lieu of
such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to all Shares, including Shares as to which the Option
would not otherwise be exercisable. If, in the event of a merger,
consolidation or sale of assets, the other members of the Corporation's Board
of Directors make the Option fully exercisable in lieu of assumption or
substitution, the Corporation shall notify the Optionee that the Option shall
be fully exercisable for a period of thirty (30) days from the date of such
notice, and the Option will terminate upon the expiration of such period.
(b) In the event of a "Change in Control" of the Corporation, as
defined in Section 10(c) below, unless otherwise determined by the other
members of the Corporation's Board of Directors prior to the occurrence of
such Change in Control, the following acceleration and valuation provisions
shall apply:
(i) As of the date of such Change in Control, the Option
shall become fully exercisable and vested as to all of the Shares;
and
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(ii) The value of the Option, measured by the excess of the
Change in Control Price (as hereinafter defined) over the Option
Price, shall, unless otherwise determined by the other members of the
Corporation's Board of Directors, be cashed out. The cash out
proceeds shall be paid to the Optionee or, in the event of death of
the Optionee prior to payment, to the estate of the Optionee or to a
person who acquires the right to exercise the Option by bequest or
inheritance.
(c) For purposes of this Section 10, a "Change in Control" means
the happening of any of the following:
(i) When any "person", as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Corporation, a
Subsidiary or a Corporation or Subsidiary employee benefit plan,
including any trustee of such plan acting as trustee) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
fifty percent (50%) or more of the combined voting power of the
Corporation's then outstanding securities; or
(ii) The consummation of a transaction requiring stockholder
approval, and involving the sale of all or substantially all of the
assets of the Corporation or the merger or consolidation of the
Corporation with or into another corporation.
(d) For purposes of this Section 10, "Change in Control Price"
shall be, as determined by the other members of the Corporation's Board of
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Directors, (i) the highest closing sale price of a share of Common Stock as
reported by the NASDAQ National Market System (or, if the Common Stock is
listed on a stock exchange, the highest closing price on such exchange as
reported by such exchange), at any time within the sixty (60) day period
immediately preceding the date of the Change in Control (the "Sixty-Day
Period"), or (ii) the highest price paid or offered, as determined by the
other members of the Corporation's Board of Directors, in any bona fide
transaction or bona fide offer related to the Change in Control of the
Corporation, at any time within the Sixty-Day Period.
11. ACCELERATION OF OPTION.
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The other members of the Corporation's Board of Directors may, with
the consent of the Optionee, if the Option is not then immediately
exercisable in full, accelerate the time or times at which the Option may
be exercised to any earlier time or times.
12. RESERVATION OF SHARES.
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The Corporation, during the term of the Option, shall at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of this Agreement.
13. STOCKHOLDER APPROVAL.
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The Option shall be submitted to the Corporation's stockholders for
their approval at the 1989 Annual Meeting of such stockholders in order
that the Option qualify for certain protections from the "short-swing
profit" liability provisions of the Exchange Act available under Securities
and Exchange Commission regulations. Notwithstanding anything in this
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Agreement to the contrary, the Option shall not be exercisable, in whole or
in part, unless and until it has been approved by the Corporation,s
stockholders.
14. COUNTERPARTS.
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This Agreement may be executed by the parties hereto in several
counterparts, each of which when so executed shall be an original, but all
of such counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
duly executed by a duly authorized officer, and the Optionee has hereunto
set his hand, all as of the day and year first above written.
TELXON CORPORATION
By: /s/ Xxxxxxx X. Xxxx
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Its: President
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/s/ Xxx Xxxxx
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Xxx Xxxxx
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