PRINTRAK INTERNATIONAL INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Nonqualifed Stock Option Agreement (the "Agreement") is entered into
as of December 8, 1997, by and between Printrak International Inc., a Delaware
corporation (the "Company") and Xxxxxx X. Xxxxxxxxx (the "Optionee") pursuant to
a special approval by the Company's Board of Directors on December 5, 1997.
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of 60,000 shares (the
"Shares") of the Common Stock of the Company at a purchase price of $10.625 per
share (the "Exercise Price"), subject to the terms and conditions set forth
herein. This Option shall constitute a nonqualified stock option.
2. VESTING OF OPTION. The right to exercise this Option shall vest in
quarterly installments, and this Option shall be exercisable from time to time
in whole or in part as to any vested installment. The Optionee's right to
exercise this Option shall vest in 3,000 Shares each and every three (3) month
period commencing on December 8, 1997 and subject to the terms of this
Agreement, continuing each three (3) month period and shall be fully vested as
of December 8, 2002.
No additional shares shall vest after the date of termination of Optionee's
"Continuous Service" (as defined in Section 3 below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee's Continuous Service. Notwithstanding the foregoing, immediately prior
to the consummation of a Change in Control (as defined in Section 10 below), the
vesting of this Option shall accelerate as if Optionee had held such Option for
a period two years longer than actually held.
3. TERM OF OPTION. Optionee's right to exercise this Option shall
terminate upon the first to occur of the following:
a. the expiration of ten (10) years from the date of this Agreement;
b. the expiration of thirty (30) days from the date of termination
of Optionee's Continuous Service if such termination occurs for any reason other
than permanent disability or death; provided, however, that if Optionee dies
during such three-month period the provisions of Section 3(d) below shall apply;
c. the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to permanent disability
of the Optionee (as defined in Section 22(e)(3) of the Internal Revenue Code
(the "Code"));
d. the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to Optionee's death or
if death occurs during either the three-month or one-month period following
termination of Optionee's Continuous Service pursuant to Section 3(b) or 3(c)
above, as the case may be; or
e. a Change in Control of the Company if such options are terminated
pursuant to Section 10.
As used herein, the term "Continuous Service" means (i) employment by
either the Company or any parent or subsidiary corporation of the Company, or by
a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code) or leaves of absence which are
approved in writing by the Company or any of such other employer corporations,
if applicable, (ii) service as a member of the Board of Directors of the
Company, or (iii) so long as
Optionee is engaged as a consultant or service provider to the Company or other
corporation referred to in clause (i) above.
4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Section 2 above, and until termination of this Option
in accordance with Section 3 above, the portion of this Option which has vested
may be exercised in whole or in part by the Optionee (or, after Optionee's
death, by the successor designated in Section 5 below) upon delivery of the
following to the Company at its principal executive offices:
a. a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares may
be purchased);
b. a check or cash in the amount of the Exercise Price (or payment
of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time (a) cash; (b) check; (c) the
surrender of shares of Common Stock owned by the Optionee that have been held
by the Optionee for at least six (6) months, which surrendered shares shall be
valued at Fair Market Value as of the date of such exercise; (d) the Optionee's
promissory note in a form and on terms acceptable to the Administrator; (e) the
cancellation of indebtedness of the Company to the Optionee; (f) the waiver of
compensation due or accrued to the Optionee for services rendered; (g) provided
that a public market for the Common Stock exists, a "same day sale" commitment
from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to
exercise the Option and to sell a portion of the shares so purchased to pay for
the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt
of such shares to forward the Exercise Price directly to the Company;
(h) provided that a public market for the Common Stock exists, a "margin"
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such shares to forward the Exercise Price directly to the
Company; or (i) any combination of the foregoing methods of payment or any other
consideration or method of payment as shall be permitted by applicable corporate
law.
c. the Company shall have the power to withhold, or require Optionee
to remit to the Company, an amount sufficient to satisfy any applicable Federal,
state, and local tax withholding requirements with respect to any Options
exercised hereunder. To the extent permissible under applicable tax, securities
and other laws, the Administrator may, in its sole discretion and upon such
terms and conditions as it may deem appropriate, permit Optionee to satisfy his
obligation to pay any such tax, in whole or in part, up to an amount determined
on the basis of the highest marginal tax rate applicable to Optionee, by
(a) directing the Company to apply shares of Common Stock to which Optionee is
entitled as a result of the exercise of an Option or (b) delivering to the
Company shares of Common Stock owned by Optionee hereunder. The shares of
Common Stock so applied or delivered in satisfaction of the Optionee's tax
withholding obligation shall be valued at their fair market value as of the date
of measurement of the amount of income subject to withholding.
d. a letter, if requested by the Company, in such form and substance
as the Company may require, setting forth the investment intent of the Optionee,
or person designated in Section 5 below, as the case may be.
5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee under
this Agreement may not be assigned or transferred except by will or by the laws
of descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement shall be void and shall have no effect. If the Optionee's Continuous
Service terminates as a result of Optionee's death, and provided Optionee's
rights hereunder shall have vested pursuant to Section 2 hereof, Optionee's
legal representative, Optionee's legatee, or the person who acquired the right
to exercise this Option by reason of the death of the Optionee (individually, a
"Successor") shall succeed to the Optionee's rights and obligations under this
Agreement. After the death of the Optionee, only a Successor may exercise this
Option.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
a. Optionee represents and warrants that this Option is being
acquired by Optionee for Optionee's personal account, for investment purposes
only, and not with a view to the distribution, resale or other disposition
thereof.
b. Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities Act
of l933, as amended (the "Act"), on the basis of certain exemptions from such
registration requirement. Accordingly, Optionee agrees that Optionee's exercise
of the Option may be expressly conditioned upon Optionee's delivery to the
Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Act and the resulting restrictions on transfer.
Optionee acknowledges that, because Shares received upon exercise of an Option
may be unregistered, Optionee may be required to hold the Shares indefinitely
unless they are subsequently registered for resale under the Act or an exemption
from such registration is available.
c. Optionee acknowledges that all rights and obligations connected
with this Option are set forth in this Agreement.
7. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that federal
securities laws and the securities laws of the state in which Optionee resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may deem necessary or advisable.
8. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. The Company agrees
to use its reasonable best efforts to obtain from any applicable regulatory
agency such authority or approval as may be required in order to issue and sell
the Shares to the Optionee pursuant to this Option. Inability of the Company to
obtain, from any such regulatory agency, authority or approval deemed by the
Company's counsel to be necessary for the lawful issuance and sale of the Shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such requisite authority or
approval shall not have been obtained.
9. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the
outstanding Shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company, then appropriate adjustment shall be made by
the Administrator to the number of Shares subject to the unexercised portion of
this Option and to the Exercise Price per share, in order to preserve, as nearly
as practical, but not to increase, the benefits of the Optionee under this
Option.
10. MERGERS AND OTHER REORGANIZATIONS. In the event that the Company at
any time proposes to enter into any transaction approved by the Board to sell
substantially all of its assets or merge or consolidate with any other entity as
a result of which either the Company is not the surviving corporation or the
Company is the surviving corporation and the ownership of the voting power of
the Company's capital stock changes by more than 50% as a result of such
transaction, or in the event of a "Recommended Share Purchase Offer" (as defined
below) (a "Change in Control"), this Option, if not already exercisable, shall
concurrent with and conditioned upon the effective date of the proposed
transaction, be accelerated according to Section 2 hereof and the Optionee shall
have the right to exercise the Option in respect to any or all of the vested
Shares at such time. In addition, in the event of a Change in Control, this
Option shall terminate upon the effective date of such transaction unless
provision is made in writing in connection with such transaction for the
continuance or assumption of this Option or the substitution for this Option of
a new option of comparable value covering shares of a successor corporation,
with appropriate adjustments as to the number and kind of shares and the
Exercise Price, in which event this Option or the new option substituted
therefor shall continue in the manner and under the terms so provided. If such
provision is not made in such transaction, then the Administrator shall cause
written notice of the proposed
transaction to be given to Optionee not less than fifteen (15) days prior to the
anticipated effective date of the proposed transaction. For purposes of this
Section 10, a "Recommended Share Purchase Offer" shall be a transaction in which
an offer is made to purchase outstanding securities of the Company constituting
more than 50% of the voting power of the Company's capital stock, which offer is
recommended to the Company's securityholders by the Company's Board.
11. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option
nor the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any of its
subsidiaries. The right of the Company or any of its subsidiaries to terminate
at will the Optionee's employment at any time (whether by dismissal, discharge
or otherwise), with or without cause, is specifically reserved, subject to any
other written employment agreement to which the Company and Optionee may be a
party.
12. RIGHTS AS SHAREHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.
13. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time, not to exceed
180 days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.
14. INTERPRETATION. This Option is granted by action of the Board of
Directors and shall in all respects be interpreted in accordance with the terms
hereof. The Administrator shall interpret and construe this Option, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the Board of
Directors of the Company.
15. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention:
the Chief Executive Officer, and if to the Optionee, at Optionee's most recent
address as shown in the employment or stock records of the Company.
16. ANNUAL AND OTHER PERIODIC REPORTS. During the term of this Agreement,
the Company will furnish to the Optionee copies of all annual and other periodic
financial and informational reports that the Company distributes generally to
its stockholders.
17. SEVERABILITY. Should any provision or portion of this Agreement be
held to be unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"PRINTRAK INTERNATIONAL INC." "OPTIONEE"
By: /s/ Xxxxxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxxx Xxxxxxx Xxxxxx X. Xxxxxxxxx
Its: Corporate Secretary SS#:
