EXHIBIT 10.5
DATAMAX CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
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THIS STOCK OPTION AGREEMENT is effective as of the 12th day of September, 1996,
between DATAMAX INTERNATIONAL CORPORATION, a Delaware corporation (hereinafter
referred to as the "Company"), and XXXXXX X XXXXX (hereinafter referred to as
"Optionee").
RECITALS:
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A. Optionee is currently an employee of the Company's subsidiary Datamax
Corporation, a Delaware corporation ("Datamax").
B. The Company considers it desirable and in the Company's best interest that
Optionee be given an inducement to acquire a proprietary or equity interest
in the Company as an added incentive to advance the interests of the
Company and its Subsidiaries in the form of an option to purchase Common
Stock of the Company.
C. The Company has approved and implemented a 1996 Long-Term Performance
Incentive Plan (as amended, the "Plan"), all of the terms of which are
incorporated herein by reference. The Plan is available for inspection by
Optionee at the principal offices of the Company.
AGREEMENT:
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In consideration of Optionee's serving as the Chief Executive Officer of
Datamax, the mutual covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee the right and
option (the "Option") to purchase up to an aggregate of 135,000 shares of
the Company's Common Stock (the "Stock") at an exercise price equal to the
Stock's fair value as of the date of this Stock Option Agreement of $12.06
per share (the "Exercise Price"), on the terms and conditions herein set
forth. The date of grant of the Option is the date of this Agreement.
2. Period of Option and When Exercisable. The term of the Option shall be for
a period of five years from the date hereof, subject to earlier termination
as provided herein (the "Exercise Period"). During the Exercise Period,
Optionee may exercise the Option for portions of the total shares granted
above (the "Option Shares") only to the extent the Option has become
vested. The Option shall become vested based on the following vesting
schedule:
a. after one year from the date of this Agreement, provided that
Optionee is still employed by Datamax, Optionee may exercise this
Option with respect to one-third of the Option Shares;
b. after two years from the date of this Agreement, provided that
Optionee is still employed by Datamax, Optionee may exercise this
Option with respect
to two-thirds of the Option Shares (including the one-third of
the Option Shares previously vested under paragraph 2(a)); and
c. after three years from the date of this Agreement, provided that
Optionee is still employed by Datamax, Optionee may exercise this
Option with respect to 100% of the Option Shares.
The unvested portion of the Option will be forfeited and canceled upon the
termination of the Optionee's employment with Datamax.
3. Acceleration of Vesting on Sale of the Company. If the Optionee has been
continuously employed by Datamax from the date of this Stock Option
Agreement until a Sale of the Company for an aggregate consideration of
greater than $200,000,000 for the Common Stock of the Company and the
portion of the Option which has not become vested at the date of such Sale
of the Company shall immediately vest and become exercisable with respect
to 100% of the Option Shares simultaneously with the consummation of such
Sale of the Company. In any event, any portion of the Option which has not
been exercised prior to or in connection with any Sale of the Company shall
be forfeited and canceled, unless otherwise determined by the Committee (as
defined in the Plan) or the Company's Board of Directors (the "Board").
"Sale of the Company" means a merger or consolidation effecting a change in
control of the Company, a sale of all or substantially all of the Company's
assets or a sale of a majority of the Company's outstanding voting
securities except in connection with a public offering under the Securities
Act of 1933, as amended.
4. Exercise of Option. The Option shall be exercisable during the Exercise
Period the extent it has vested as long as Optionee is in Continuous
Employment with Datamax. Notwithstanding the preceding sentence and subject
to paragraph 9, the Option may be exercised for the number of shares vested
in Optionee as of the date of termination of Continuous Employment:
a. for a period ending 30 days after the Continuous Employment of the
Optionee with Datamax has terminated, unless the Optionee resigns or
is Terminated for Cause (as defined in the Optionee's Employment
Agreement) by Datamax, in which case the Option will terminate on
termination of employment; or
b. by the estate of the Optionee, within one year after the date of the
Optionee's death, if the Optionee dies while in the Continuous
Employment of Datamax; or
c. within one year after the Optionee's employment with Datamax
terminates, if the Optionee becomes disabled during the Continuous
Employment with Datamax and such disability is the reason for
termination.
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In no event, however, shall the Exercise Period of this Option extend
beyond five years from the execution of this Agreement. The term
"Continuous Employment" used in this section shall have the meaning set
forth in paragraph 9(b) of the Plan.
5. Nonassignability of Option Rights. The Option is exercisable only by
Optionee, except in the case of Optionee's death, in which case the Option
is exercisable by the Optionee's estate's personal representative pursuant
to paragraph 4(b), and except in the case of Optionee's disability, in
which case the Option is exercisable, if necessary, by Optionee's legal
representative pursuant to paragraph 4(c). The Option may not be sold,
exchanged, assigned, pledged, discounted, hypothecated, or otherwise
transferred except by will or by the laws of descent and distribution or to
the Company pursuant to this Stock Option Agreement. The Option shall not
be subject to execution, attachment, or similar process. Upon any attempt
to sell, exchange, assign, pledge, discount, hypothecate, or otherwise
transfer the Option or any right thereunder, contrary to the provisions
hereof and of the Plan, the Option and all rights thereunder shall
immediately become null and void.
6. Investment Representation and Agreement.
1. Optionee represents that this Option and any shares purchased pursuant
to this Option are purchased for investment purposes only and for
Optionee's own account. Optionee acknowledges that this Option and the
shares pertaining to this Option are not registered under the
Securities Act of 1993, as amended, the Florida Securities and
Investor Protection Act, or the securities laws of any other state.
2. Optionee agrees not to sell or otherwise transfer any shares of stock
purchased pursuant to this Option without registration under the
Securities Act of 1933, as amended, and under any applicable state
securities law, unless such sale or transfer is exempt from
registration and the Optionee first delivers to the Company an opinion
of counsel reasonably acceptable in form and substance to the Company
that registration under the Securities Act or any applicable state
securities law is not required in connection with such transfer.
Optionee acknowledges that the Company's books with respect to the
transfer of any shares of stock purchased pursuance to this Option
will reflect this transfer restriction.
7. Method of Exercise. Shares purchased pursuant to this Agreement shall, at
the time of purchase, be paid for in full at the Exercise Price of the
Option as provided in paragraph 1 above. To the extent that the right to
purchase shares has vested hereunder, the Option may be exercised from time
to time during the term of the Option as set forth in paragraph 2 above by
delivering written notice to the Company stating the number of shares with
respect to which the Option is being exercised and the time of the delivery
thereof, which time shall be at least 15 days after the giving of such
notice, unless an earlier date shall have been mutually agreed upon by the
parties. upon receipt of said written notice, the Company shall provide
Optionee with that information required by the applicable state and federal
securities
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laws. If, after receipt of said information, Optionee desires to withdraw
said notice of exercise, Optionee may withdraw said notice of exercise by
notifying the Company, in writing, prior to the time set forth for delivery
of the shares. Provided that Optionee does not withdraw his notice of
exercise as provided herein, at the time specified in such notice, the
Company shall deliver, without transfer or issue fee or tax, to Optionee,
at the main office of the Company or at such other place as shall be
mutually acceptable, a certificate or certificates for such shares out of
theretofore authorized but unissued or reacquired common shares as the
Company may elect, against payment of the Exercise Price, in form
acceptable to the Company and consistent with the Plan. If Optionee fails
to accept delivery of and pay for the number of shares specified in such
notice upon tender of delivery thereof, his right to exercise the Option
with respect to such undelivered shares may be terminated by the Company.
8. Changes in Capital Structure of Company. In the event of a change in
capital structure of the Company, the number of shares covered by the
Option and the price per share shall proportionately adjusted for any
increase or decrease in the number of issued shares of Stock resulting from
the splitting or consolidation of shares, or the payment of a stock
dividend, or effected in any other manner without receipt of additional or
further consideration by the Company. The Company shall give notice of any
adjustment to Optionee.
9. Right to Purchase Upon Termination of Employment.
1. Repurchase of Option Shares. If the Optionee's employment with
Datamax terminates, including by the Optionee's death, disability,
resignation or termination with or without Cause (the date on which
such termination occurs being referred to as the "Termination Date"),
then the Company shall have the option (i) to repurchase all or any
vested and unexercised portion of the Option (the "Unexercised
Option") at the price equal to the Fair Market Value of such vested
and unexercised portion of the Option minus the Exercise Price of such
vested and unexercised portion of the Option and (ii) to repurchase
all or any part of the Option Shares issued or issuable upon exercise
of this Option, whether held by the Optionee or by one or more of the
Optionee's transferees, at the price equal to the Fair Market Value of
such Option Shares as of the Termination Date ((i) and (ii)
collectively, the "Repurchase Option").
2. Repurchase by Company. The Company may elect to purchase all or any
portion of the Unexercised Option and/or the Option Shares by delivery
of written notice (the "Repurchase Notice") to the Optionee or any
other holders of the Option Shares within 120 days after the
Termination Date. The Repurchase Notice shall set forth the number of
Unexercised Options and/or Option Shares to be acquired from the
Optionee and such other holder(s), the aggregate consideration to be
paid for such Unexercised Options and/or Option Shares and the time
and place for the closing of the transaction. The number of Option
Shares to be repurchased by the Company shall first be satisfied to
the extent possible from the Option Shares held by the
Optionee at the time of delivery of the Repurchase Notice. If the
number of Option
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Shares then held by the Optionee is less than the total number of
Option Shares the Company has elected to purchase, then the Company
shall purchase the remaining shares elected to be purchased from the
other holders thereof, pro rata according to the number of shares held
by each such holder at the time of delivery of such Repurchase Notice
(determined as close as practical to the nearest whole shares).
3. Closing of Repurchase. The purchase of the Unexercised Option and/or
the Option Shares pursuant to this paragraph 9 shall be closed at the
Company's executive offices within 20 days after the expiration of the
120-day period referred to in paragraph 9(b). At the closing, the
Company shall pay the purchase price in the manner specified in
paragraph 9(d) and the Optionee and any other holders of Option Shares
being purchased shall deliver the certificate or certificates
representing such shares to the Company, accompanied by duly executed
stock powers. The Company shall be entitled to receive customary
representations and warranties from the Optionee and any other selling
holders of Option Shares regarding the sale of such shares (including
representations and warranties regarding good title to such shares,
free and clear of any liens or encumbrances) and to require all
sellers' signatures to be guaranteed by a national bank or reputable
securities broker.
4. Manner of Payment. If the Company elects to purchase all or any part
of the Option Shares, including Option Shares held by one or more
transferees, the Company shall pay for such shares: (i) first, by
certified check or wire transfer of funds to the extent such payment
would not cause the Company to violate the Corporation Law of the
State of Delaware and would not cause the Company to breach any
agreement to which it is a party relating to the indebtedness for
borrowed money or other material agreement; and (ii) thereafter, with
a subordinated promissory note of the Company. Such subordinated
promissory note shall bear interest at the rate of 7% per annum (which
shall be payable annually in cash unless otherwise prohibited), shall
have all principal payment due on the fifth anniversary of the date of
issuance and shall be subordinated on terms and conditions
satisfactory to the holders of the Company's indebtedness for borrowed
money. In addition, the Company may pay the purchase price for such
shares by offsetting amounts outstanding under any indebtedness or
obligations owed by the Optionee to the Company.
10. Restrictions on Transfer.
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1. Transfer of Option Shares. The Optionee shall not sell, pledge or
otherwise transfer any interest in any Option Shares except pursuant
to the public pursuant to an offering registered under the Securities
Act of 1933, as amended, or to the public through a broker, dealer or
market maker pursuant to the provisions of Rule 144 adopted under the
Securities Act (collectively, a "Public Sale") or the provisions of
paragraph 9 hereof ("Exempt Transfers") and except pursuant to the
provisions of this paragraph 10. At least 30 days prior to making any
transfer other than a Public Sale or an Exempt Transfer, the Optionee
shall deliver a written notice (the "Sale Notice") to the Company. The
Sale Notice shall disclose in reasonable detail the identity of the
prospective transferee(s) and the terms and conditions of the proposed
transfer. The Optionee agrees not to consummate any such transfer
until 30 days after the Sale Notice has been delivered to the Company,
unless the parties to the transfer have been finally determined
pursuant to this paragraph 10 prior to the expiration of such 30-day
period. (The date of the first to occur of such events is referred to
herein as the "Authorization Date").
2. First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the Option Shares to be transferred by the Optionee
upon the same terms and conditions as those set forth in the Sale
Notice by delivering a written notice of such election to the Optionee
within 20 days after the receipt of the Sale Notice by the Company.
The Company shall be given up to 30 days after delivery of its notice
to consummate the purchase and sale of Option Shares. If the Company
elects not to purchase all of the Option Shares specified in the Sale
Notice, the Optionee may transfer the Option Shares specified in the
Sale Notice at a price and on terms no more favorable to the
transferee(s) thereof than specified in the Sale Notice during the 60-
day period immediately following the Authorization Date. Any Option
Shares not transferred within such 60-day period shall be subject to
the provisions of this paragraph 10(b) upon subsequent transfer.
3. Certain Permitted Transfers. The restrictions contained in this
paragraph 10 shall not apply with respect to transfers of Option
Shares (i) pursuant to applicable laws of descent and distribution or
(ii) among the Optionee's family group; provided that the restrictions
contained in this paragraph shall continue to be applicable to the
Option Shares after any such transfer and the transferees of such
Option Shares have agreed in writing to be bound by the provisions of
this Agreement. The Optionee's "family group" means the Optionee's
spouse and descendants.
4. Termination of Restrictions. The restrictions on the transfer of
Option Shares set forth in this paragraph 10 shall continue with
respect to each Option Share until the date on which such Option Share
has been transferred in a transaction permitted by this paragraph
(except in a transaction contemplated by paragraph 10(c)); provided in
any event the restrictions on transfers set forth in this paragraph 10
shall terminate when the Company has sold shares of its Common Stock
pursuant to a public offering registered under the Securities Act.
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11. Limitation on Transfer during Registration Period. During the 180 day
period following the effective date of an initial registration statement
filed by the Company under the Securities Act of 1933, as amended, Optionee
shall not, to the extent requested by the Company and any underwriter,
sell, pledge, transfer, make any short sale of, loan, grant any option for
the purchase of, or otherwise transfer or dispose of (other than to donees
who agree to be similarly bound) any Stock held by him at any time during
such period except Stock included in such registration statement. Optionee
shall execute any agreement with any underwriter involved with such initial
registration statement deemed necessary by such underwriter to implement
the restrictions in this paragraph 11.
12. Restrictive Legend. Optionee hereby agrees that certificates evidencing
the shares of stock purchased by Optionee pursuant to this Agreement shall
be stamped or otherwise imprinted with a conspicuous legend in
substantially the following form:
The sales of Common Stock evidenced by this certificate have been
issued under the Datamax International Corporation 1996 Long-Term
Performance Incentive Plan (the "Plan") and pursuant to a Nonqualified
Stock Option Agreement, and are subject to the terms and provisions of
such Plan and Nonqualified Stock Option Agreement.
These shares have not been registered under the Securities Act of
1933, as amended, the Florida Securities and Investor Protection Act
or any other state securities laws, and, therefore, cannot be sold
unless they are subsequently registered under the Act and any
applicable state securities laws, or unless an exemption from
registration is available.
13. Withholding of Taxes. The Company shall be entitled, if necessary or
desirable, to withhold from the Optionee any amounts due and payable by the
Company to the Optionee (or secure payment from the Optionee in lieu of
withholding) the amount of any withholding or other tax due from the
Company with respect to any shares subject to this Option issuable under
the Plan, and the Company may defer such issuance unless indemnified by the
Optionee to its satisfaction.
14. Incorporation of Terms and Conditions in the Plan. This Option is subject
to the terms and conditions contained in the Plan, and all amendments
thereto made from time to time, a copy of which is on file with the Company
at its principal business office and which Plan is by this reference
thereto incorporated herein.
15. Governing Law. This Agreement shall be governed by, interpreted under, and
construed in accordance with the laws of the State of Florida.
16. Binding Effect. This Agreement will inure to the benefit of and be binding
on the Company, its successors and assigns, including, but not limited to,
any company or entity that may acquire all or substantial all of the
Company's assets and business or into which the Company
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may be consolidated or merged, and on Optionee and except as set forth in
paragraph 5 above, their heirs, legal representatives, and successors, as
the case may be.
17. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter of this Agreement and
supersedes any and all previous agreements between the parties, whether
written or oral, with respect to such subject matter.
18. Waiver or Modification. No waiver or modification of this Agreement or of
any covenant, condition, or limitation herein contained shall be valid
unless in writing and duly executed by the party to be charged therewith.
Furthermore, no evidence of any waiver or modification shall be offered or
received in evidence in any proceeding, arbitration, or litigation between
the parties arising out of or affecting this Agreement or the rights or
obligations of any party hereunder, unless such waiver or modification is
in writing and duly executed as aforesaid. The provisions of this
paragraph may not be waived except as herein set forth.
19. Number and Gender. Whenever used herein, singular numbers shall include
the plural, the singular, and the use of any gender shall, include all
genders.
20. Invalid Provision. The invalidity of unenforceability of any term of
provision of this Agreement or the nonapplication of any such term or
provision to any person or circumstance shall not impair or affect the
remainder of this Agreement, and the remaining terms and provisions hereof
shall not be invalidated but shall remain in full force and effect and
shall be construed as if such invalid, unenforceable, or nonapplicable
provision were omitted.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
February 25, 1997.
"COMPANY"
DATAMAX INTERNATIONAL CORPORATION
By: /s/ Xxxx X. Ring, Jr.
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Xxxx Ring, Chairman
"OPTIONEE"
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
