Exhibit 10.07

 

STOCK OPTION AGREEMENT

 

AGREEMENT, dated as of August 12, 2002, between FRANKLIN ELECTRONIC PUBLISHERS,
INC. (the “Company”), a Pennsylvania corporation, and KURT A. GOSZYK
(“Optionee”).

 

WHEREAS, in accordance with Section 7 of the employment letter (the “Employment
Letter”) dated July 11, 2002 and revised July 15, 2002, between the Company and
Optionee, the Company has agreed to grant to Optionee an option to purchase
shares of common stock, no par value (the “Common Stock”), of the Company.

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1. Subject to the terms and conditions set forth in this Agreement, the Company
grants to Optionee an option (the “Option”) to purchase from the Company all or
any part of an aggregate of 50,000 shares (the “Optioned Shares”) of Common
Stock.

 

2. The purchase price per share shall be $1.50 (the “Option Price”).

 

3. Optionee may, with the prior approval of the Board of Directors of the
Company (the “Board”), transfer for no consideration the Option to or for the
benefit of the Optionee’s Immediate Family, a trust for the exclusive benefit of
Optionee and/or Optionee’s Immediate Family or to a partnership or limited
liability company for Optionee and/or one or more members of the Optionee’s
Immediate Family, subject to such limits as the Board may establish, and the
transferee shall remain subject to all the terms and conditions applicable to
the Option prior to such transfer. The term “Immediate Family” shall mean the
Optionee’s spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers and grandchildren and any of their respective spouses.

 

4. Subject to the condition that the Option shall not be exercised after August
12, 2012, Optionee may (a) during the period commencing on the first anniversary
of the date of this Agreement and ending on the day preceding the second
anniversary of such date, exercise the Option with respect to one-fourth of the
Optioned Shares, (b) during the period commencing on such second anniversary and
ending on the day preceding the third anniversary of the date of this Agreement,
exercise the Option with respect to one-half of the Optioned Shares, (c) during
the period commencing on such third anniversary and ending on the day preceding
the fourth anniversary and ending on the day preceding the fourth anniversary of
the date of this Agreement, exercise the Option with respect to three-fourths of
the Optioned Shares and (d) during the period beginning on such fourth
anniversary, exercise the Option with respect to all of the Optioned Shares.
Subject to the foregoing, any exercise of the Option may be either in whole at
any time or in part at any time and from time to time.

 

5. Optionee shall not be deemed to be the holder of any of the Optioned Shares
unless and until a certificate for such Shares shall have been issued. Nothing
contained in this Agreement shall be deemed to confer upon Optionee the right to
vote or to consent, or to receive notice as a shareholder, in respect of
meetings of shareholders for the election of directors of the Company or any
other matters or any other rights whatsoever as a shareholder of the Company. No
dividends or rights shall be payable or accrued in respect of the Option or the
Optioned Shares until, and only to the extent, that this Option shall have been
exercised.

 

6. Upon payment of the purchase price therefor, the Optioned Shares issued upon
exercise of the Option shall be fully paid and nonassessable except as otherwise
provided in the Business Corporation Law of 1988 of the Commonwealth of
Pennsylvania.

 

7. (a) In order to exercise the Option, Optionee shall deliver to the Company
written notice of intent to exercise the Option, in form and substance
satisfactory to the Company, specifying the number of Optioned Shares with
respect to which the Option is being exercised, and accompanied by payment to
the Company of the Option Price for the Shares so specified. Payment shall be
made by

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certified check, payable to the order of the Company; provided, however, that
all or any portion of such payment may be made in kind by the delivery of shares
of the Common Stock which have been owned by Optionee for a minimum period of
six months having a fair market value on the date of delivery equal to the
portion of the Option Price so paid; provided, further, however, that, subject
to the requirements of Regulation T (as in effect from time to time) promulgated
under the Securities Exchange Act of 1934, as amended, the Board may implement
procedures to allow a broker chosen by Optionee to make payment of all or any
portion of the option price payable upon the exercise of the Option and to
receive, on behalf of Optionee, all or any portion of the Optioned Shares
issuable upon such exercise. The Company shall cause the certificates
representing the Optioned Shares to be issued upon such exercise to be issued as
promptly as practicable upon receipt of such payment.

 

(b) Certificates representing the Optioned Shares issued upon exercise of the
Option shall bear the following legend:

 

“The securities represented by this certificate have not been registered under
the Securities Act of 1933. Such securities may not be sold or transferred
except pursuant to a registration statement under such Act, which is effective
and current with respect to such securities, or upon receipt by the Company of
an opinion of counsel reasonably satisfactory to the Company that such sale or
transfer is exempt from the registration requirements of such Act.”

 

8. The Company shall, at all times until the expiration of the Option, reserve
for issuance and delivery upon exercise thereof, the number of Optioned Shares
that the Company would be required to issue and deliver upon such exercise.

 

9. In the event that a dividend shall be declared upon the Common Stock payable
in shares of Common Stock, the Optioned Shares shall be adjusted by adding to
such Shares the number of shares which would be distributable thereon if such
Shares had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend. In the event that the outstanding
shares of Common Stock shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Company or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, sale of assets, merger or consolidation, whether or not
the Company is the surviving corporation, then there shall be substituted for
the Optioned Shares the number and kind of shares of stock or other securities
into which each outstanding share of Common Stock shall be so changed, or for
which each such Share shall be exchanged. In the event that there shall be any
change, other than as specified in this paragraph 9, in the number or kind of
outstanding shares of Common Stock, or of any stock or other securities into
which the Common Stock shall have been changed, or for which it shall have been
exchanged, then, if the Board shall, in its sole discretion, determine that such
change equitably requires an adjustment in the number or kind of shares subject
to the Option, such adjustment shall be made by the Board and shall be effective
and binding for all purposes of the Option. In the case of any such substitution
or adjustment as provided for in this paragraph 9, the Option Price for each
Optioned Share shall be the Option Price for all shares of stock or other
securities which shall have been substituted for such Optioned Share or to which
such Optioned Share shall have been adjusted in accordance with the provisions
of this paragraph 9. No adjustment or substitution provided for in this
paragraph 9 shall require the Company to sell a fractional share. In the event
of the dissolution or liquidation of the Company, or a merger in which the
Company is not the surviving corporation, the Option shall terminate.

 

10. The existence of the Option shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

 

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11. By acceptance hereof, Optionee represents and warrants that the Option is
being acquired by Optionee solely for his own account and not with a view to, or
for sale in connection with, the distribution thereof. The Optioned Shares to be
purchased upon exercise of the Option shall be registered by the Company under
the Securities Act of 1933 on a Registration Statement on Form S-8 as promptly
as reasonably practicable following the date of this Agreement. Optionee shall
not attempt to dispose of any or all of the Optioned Shares unless and until
they have been validly registered under said Act or the Company has determined,
based on an opinion of counsel reasonably satisfactory to the Company, that the
intended disposition is exempt from the registration requirements of said Act.

 

12. In the event Optionee’s employment or service with the Company terminates by
reason of death, retirement, or subsequent to his or her 65th birthday or
permanent disability, the Option shall become immediately exercisable in full.
In the event Optionee leaves the employ or service of the Company for any
reason, whether voluntarily or otherwise, other than by reason of death, the
Option shall, to the extent it is exercisable on the date of such termination of
employment or service, terminate upon the earlier to occur of (a) the expiration
of two years after such termination of employment or service or (b) August 12,
2012; provided, however, that in the case in which Optionee dies subsequent to
leaving the employ or service of the Company, the Option shall terminate upon
the earlier to occur of (i) the expiration of six months after the date of such
death, or (ii) August 12, 2012.

 

13. As a condition of the granting of the Option, Optionee agrees that any
dispute or disagreement which may arise under or as a result of or pursuant to
this Agreement shall be determined by the Board, in its sole discretion, and
that any interpretations by the Board of the terms of this Agreement shall be
final, binding and conclusive.

 

14. All notices provided for in the Option shall be in writing and shall be
given when personally delivered or sent by registered or certified mail, return
receipt requested; if intended for the Company, shall be addressed to it,
attention of its General Counsel, at Franklin Electronic Publishers, Inc., One
Franklin Plaza, Burlington, New Jersey 08016, or at such other address of which
the Company shall have given notice to Optionee in the manner herein provided;
and if intended for Optionee, shall be addressed to him at the address set forth
in handwriting below, or at such other address of which Optionee shall have
given notice to the Company in the manner herein provided.

 

15. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New Jersey applicable to contracts made and to be performed
wholly within said State without giving effect to the conflict of laws
principles thereof.

 

IN WITNESS WHEREOF, the Company and Optionee have duly executed this Agreement
as of the date first above written.

 

FRANKLIN ELECTRONIC PUBLISHERS, INC.

By

 

 

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Title:

   

AGREED TO:

 

 

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Kurt A. Goszyk

 

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