EXHIBIT 99.1
PROTOCOL SYSTEMS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
TO: Xxxxx X. Xxxxxxxx Date of Grant: March 6, 1998
We are pleased to inform you that you have been selected by the Board of
Directors (the "Board") of Protocol Systems, Inc. (the "Company") to receive a
nonqualified stock option for the purchase of 80,000 shares of the Company's
Common Stock at an exercise price of $9.4375 per share.
1. TERM: The term of the option is ten years from date of grant, unless
sooner terminated.
2. VESTING: The option will vest and become exercisable according to the
following schedule:
Date on and After Which Exercisable Portion
Option is Exercisable of Total Option
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April 6, 1998 6,674 shares
May 6, 1998 13,340 shares
June 6, 1998 20,006 shares
July 6, 1998 26,672 shares
August 6, 1998 33,338 shares
September 6, 1998 40,004 shares
October 6, 1998 46,670 shares
November 6, 1998 53,336 shares
December 6, 1998 60,002 shares
January 6, 1999 66,668 shares
February 6, 1999 73,334 shares
March 6, 1999 80,000 shares
3. EXERCISE: During your lifetime only you can exercise the option. The
option may be exercised by the personal representative of your estate, by the
beneficiary you have designated on forms prescribed by and filed with the
Company, or the beneficiary of your estate following your death. You may use the
Notice of Exercise of Nonqualified Stock Option in the form attached to this
Agreement when you exercise the option.
4. PAYMENT FOR SHARES: The option may be exercised by the delivery of:
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a. Cash, personal check (unless, at the time of exercise, the Company
determines otherwise), bank certified or cashier's check;
b. Unless the Board in its sole discretion determines otherwise, shares
of the capital stock of the Company held by you for a period of at least six
months having a fair market value at the time of exercise, as determined in good
faith by the Board, equal to the exercise price; or
c. A properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price.
5. WITHHOLDING TAXES: As a condition to the exercise of the option, you must
make such arrangements as the Company may require for the satisfaction of any
federal, state or local withholding tax obligations that may arise in connection
with such exercise.
6. TERMINATION:
a. If your relationship with the Company ceases because both your
employment with the Company and your membership on the Company's Board of
Directors terminates, and unless by its terms the option sooner terminates or
expires, then you may exercise, for a twelve-month period following the later of
the termination of your employment or the termination of your Board membership,
that portion of the option which is exercisable at the time of such termination,
but the option will terminate at the end of such period following such
termination as to all shares for which it has not theretofore been exercised.
b. If your relationship with the Company ceases because of your death or
"total disability," and unless by its terms the option sooner terminates or
expires, then you or your personal representative may exercise, for a 12-month
period, that portion of the option which is exercisable at the time of such
cessation, but the option will terminate at the end of such period following
such cessation as to all shares for which it has not theretofore been exercised.
7. DEATH OF OPTIONEE: If you die while having a relationship with the Company
or within the three-month period (or 12-month period in the case of total
disability) following cessation of such relationship, this option (to the extent
that you would have been entitled to exercise this option) may be exercised
within one year after your death by the personal representative of your estate
or by the person or persons to whom your rights under the option pass (i) by
will or by the applicable laws of descent and distribution or (ii) by a
designation or transfer.
8. TRANSFERABILITY OF OPTION: This option and the rights and privileges
conferred hereby may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of
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descent and distribution and shall not be subject to execution, attachment or
similar process. This option is personal to you and is exercisable solely by
you. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose
of this option or of any right or privilege conferred hereby, contrary to the
provisions hereof, or the sale or levy or any attachment or similar process upon
the rights and privileges conferred hereby will be null and void.
Notwithstanding the foregoing, to the extent permitted by applicable law and
regulation, the Company, in its sole discretion, may permit you to (i) during
your lifetime, designate a person who may exercise the option after your death
by giving written notice of such designation to the Company (such designation
may be changed from time to time by you by giving written notice to the Company
revoking any earlier designation and making a new designation) or (ii) transfer
the option and the rights and privileges conferred hereby.
9. NO STATUS AS SHAREHOLDER: Neither you nor any party to whom your rights
and privileges under the option pass will be, or have any of the rights or
privileges of, a shareholder of the Company with respect to any of the shares
issuable upon the exercise of this option unless and until this option has been
exercised.
10. CONTINUATION OF RELATIONSHIP: Nothing in this option will confer upon you
any right to continue in the employ or other relationship of the Company, or to
interfere in any way with the right of the Company to terminate your employment
or other relationship with the Company at any time.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION: The aggregate number and class
of shares covered by this option and the exercise price per share thereof (but
not the total price), will all be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a split-up or consolidation of shares or any like capital adjustment, or
the payment of any stock dividend.
12. EFFECT OF LIQUIDATION OR REORGANIZATION
(1) Cash, Stock or Other Property for Stock. Except as provided in
subsection (2), upon a merger (other than a merger of the Company in which the
holders of shares of Common Stock immediately prior to the merger have the same
proportionate ownership of shares of Common Stock in the surviving corporation
immediately after the merger), consolidation, acquisition of property or stock,
separation, reorganization (other than a mere reincorporation or the creation of
a holding company) or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, this option will
terminate, but you will have the right immediately prior to any such merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to exercise your option in whole or in part whether or not the
vesting requirements set forth in this agreement have been satisfied.
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(2) Conversion of Options on Stock for Stock Exchange. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), this option will be converted into an option to purchase
shares of Exchange Stock. The amount and price of converted options will be
determined by adjusting the amount and price of this option in the same
proportion as used for determining the number of shares of Exchange Stock the
holders of the shares of Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The converted
option will be fully vested whether or not the vesting requirements set forth in
this agreement have been satisfied; provided that such acceleration will not
occur if, in the opinion of the Company's outside accountants, such acceleration
would render unavailable "pooling of interests" accounting treatment for any
reorganization, merger or consolidation of the Company for which pooling of
interests accounting treatment is sought by the Company.
13. FRACTIONAL SHARES: In the event of any adjustment in the number of shares
covered by this option, any fractional shares resulting from such adjustment
will be disregarded and the option will cover only the number of full shares
resulting from such adjustment.
14. DETERMINATION OF BOARD TO BE FINAL: All adjustments referred to herein
will be made by the Board, and its determination as to what adjustments will be
made, and the extent thereof, will be final, binding and conclusive.
15. SECURITIES REGULATION: Shares will not be issued with respect to this
option unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto complies with all relevant provisions of law, including,
without limitation, any applicable state securities laws, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed.
As a condition to the exercise of this option, the Company may require you
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 Company, such a
representation is required by any relevant provision of the aforementioned laws.
At the option of the Company, a stop-transfer order against any shares of stock
may be placed on the official stock books and records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred, unless an opinion of counsel is provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The
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Company may also require such other action or agreement by you as may from time
to time be necessary to comply with the federal and state securities laws. THIS
PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THIS
OPTION OR THE SHARES ISSUABLE HEREUNDER.
Please execute the Acceptance and Acknowledgment set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
PROTOCOL SYSTEMS, INC.
By:
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ACCEPTANCE AND ACKNOWLEDGMENT
I, Xxxxx X. Xxxxxxxx, a resident of the State of Oregon, accept the
nonqualified stock option described herein. I have read and understand the
Agreement.
Dated:
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Xxxxx X. Xxxxxxxx
Taxpayer I.D. Number:
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Address
By her signature below, the spouse of the Optionee, if such Optionee is
legally married as of the date of his execution of this Agreement, acknowledges
that she has read this Agreement and is familiar with the terms and provisions
thereof, and agrees to be bound by all the terms and conditions of this
Agreement.
Dated:
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Spouse's Signature
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Printed Name
By his signature below, the optionee represents that he is not legally
married as of the date of execution of this Agreement.
Dated:
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Optionee's Signature
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NOTICE OF EXERCISE OF NONQUALIFIED STOCK OPTION
To: Protocol Systems, Inc.
I, Xxxxx X. Xxxxxxxx, a resident of the State of Oregon, hereby exercise my
nonqualified stock option granted by Protocol Systems, Inc. (the "Company") on
March 6, 1998, and notify the Company of my desire to purchase shares of Common
Stock of the Company (the "Securities") at the exercise price of $_____ per
share which were offered to me pursuant to said option.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Securities; (2) I have had the opportunity to ask questions and
receive answers concerning the information received about the Securities and the
Company; and (3) I have been given the opportunity to obtain any additional
information I deem necessary to verify the accuracy of any information obtained
concerning the Securities and the Company.
Dated:
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Xxxxx X. Xxxxxxxx
Taxpayer I.D. Number:
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Address
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RECEIPT
_____________________ hereby acknowledges receipt from Xxxxx X. Xxxxxxxx in
payment for ________ shares of Common Stock of Protocol Systems, Inc., an Oregon
corporation, of $_________ in the form of
[ ] Cash
[ ] Check (personal, cashier's or bank certified)
[ ] ___________ shares of the Company's Common Stock, fair market value
$_______ per share held by the Optionee for a period of at least six
months
Copy of irrevocable instructions to Broker
Date:
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PROTOCOL SYSTEMS, INC.
By:
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