Document:

formcicagreement.htm

EXHIBIT 10.1

[Date]

[Name]

Numerex Corp.

3330 Cumberland Blvd SE, Suite 700

Atlanta, GA 30339

 

Re: Change in Control Severance Arrangement

Dear [             ]:

1. Purpose.  The purpose of this letter agreement (this “Agreement”) is to confirm to you that the Board of Directors of Numerex Corp. (“NMRX”) has approved the Change in Control severance arrangement for you set forth below.

 

2. Severance.  If upon or within [one] year following a Change in Control, either NMRX terminates your employment without Cause or you terminate your employment with NMRX for Good Reason, NMRX will, subject to paragraph 3 of this Agreement, pay to you within 60 days after your termination of employment a lump sum severance payment (the “Severence Payment”) equal to ___ times your monthly base salary in effect immediately prior to your termination of employment.  The Severance Payment shall be subject to reduction for all applicable withholding taxes and any other applicable deductions.

 

3. General Release of Claims.  You will not be entitled to the Severance Payment unless you have executed and delivered to NMRX a general release of claims (in such form as NMRX shall specify) (the “Release”) upon or after your termination of employment and such Release has become irrevocable not later than fifty-six (56) days after the date of your termination of employment hereunder.  Your entitlement to the Severance Payment is further conditioned upon your returning to NMRX all property of NMRX and any of its affiliates in your possession on or prior to the date of your termination of employment and complying with the terms of the Release.  NMRX will deliver to you a copy of the Release not later than three days after your termination of employment with NMRX.

 

4. Certain Definitions.  For purposes of this Agreement:

 

(a) “Cause” means (i) your gross negligence or willful misconduct in the performance of your duties to NMRX; (ii) conduct by you that constitutes a material or willful violation of federal or state law injurious to the business or reputation of NMRX; (iii) your willful refusal or willful failure to act in accordance with any specific lawful direction or order of NMRX, its Board of Directors, or any officer of NMRX to whom you report; (iv) your commission of an act of fraud with respect to NMRX; or (v) your conviction of either a felony or a crime causing material harm to the standing or reputation of NMRX.

 

(b) “Change in Control” means the occurrence of any of the following (i) the consummation by NMRX of a sale, transfer or assignment, in one transaction or a series of related transactions, of all or substantially all of the assets of NMRX other than to one or more affiliates of NMRX or one or more entities owned by stockholders of NMRX in substantially the same proportions as their stock ownership in NMRX, (ii) any “person” (as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), excluding affiliates of NMRX and employee benefit plans of NMRX and its affiliates, becomes the beneficial owner of more than 50% of the outstanding voting stock of NMRX other than as the result of the direct purchase of securities from NMRX, or (iii) the consummation by NMRX of a merger or consolidation with or into any other entity, other than a merger or consolidation that results in the voting securities of NMRX outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent of the combined voting power of the surviving entity immediately after such merger or consolidation.

 

(c) “Good Reason” means the existence of any of the following conditions (without your prior consent) after you have provided written notice to NMRX of such condition (which notice must be provided within 30 days of the initial existence of the condition and must specify the particular condition in reasonable detail):   (i) a material diminution in your title, duties or responsibilities or base compensation or (ii) a required relocation of your principal place of employment outside of 50 miles from NMRX’s headquarters immediately prior to the Change in Control.  Notwithstanding the foregoing provisions of this paragraph 4(c), Good Reason shall only exist if NMRX is provided with a 30-day period to cure the event or condition giving rise to Good Reason, and it fails to do so within such 30-day cure period and you resign from your employment within fifteen days following the end of the cure period.

 

5. Section 409A.  The severance payment provided for by paragraph 2 of this Agreement is intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) as a ”short-term deferral” and this Agreement shall be interpreted and construed accordingly.  For purposes of this Agreement, your employment will not be treated as having terminated unless such termination constitutes a “separation from service” for purposes of Section 409A of the Code.

 

6. Employment At-Will.  Notwithstanding anything to the contrary in this Agreement, you acknowledge and agree that your employment relationship with NMRX is at will and may be terminated by you or NMRX at any time, with or without cause or notice.

 

7. Notice of Voluntary Termination.  You agree that in the event you elect to terminate your employment with NMRX, other than for Good Reason after a Change in Control, you will provide NMRX with sixty (60) days prior written notice in order to permit NMRX to effectuate an orderly transition.

 

8. Golden Parachute Limit.  Notwithstanding any other provision of this Agreement, in the event that any portion of the Severance Payment or any other payment or benefit received or to be received by you (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (collectively, the "Total Benefits") would be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Total Benefits shall be reduced to the extent necessary so that no portion of the Total Benefits is subject to the Excise Tax; provided, however, that no such reduction in the Total Benefits shall be made if by not making such reduction, your Retained Amount (as hereinafter defined) would be [more than 5%] greater than your Retained Amount if the Total Benefits are so reduced.  All determinations required to be made under this paragraph 6 shall be made by tax counsel selected by NMRX and reasonably acceptable to you (“Tax Counsel”), which determinations shall be conclusive and binding on you and NMRX absent manifest error.  All fees and expenses of Tax Counsel shall be borne solely by NMRX.  In the event any such reduction is required, the Total Benefits shall be reduced in the following order: (i) the Severance Payment, (ii) any other portion of the Total Benefits that are not subject to Section 409A of the Code (other than Total Benefits resulting from any accelerated vesting of equity and other compensation awards), (iii) Total Benefits that are subject to Section 409A of the Code (on a proportionate basis), and (iv) Total Benefits that are not subject to Section 409A and arise from any accelerated vesting of equity and other compensation awards.  The parties hereto hereby elect to use the applicable federal rate that is in effect on the date this Agreement is entered into for purposes of determining the present value of any payments provided for hereunder for purposes of Section 280G of the Code.  “Retained Amount” shall mean the present value (as determined in accordance with sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of the Total Benefits net of all federal, state and local taxes imposed on you with respect thereto.

 

9. Successors and Assigns.  This Agreement will inure to the benefit of and be binding upon you, your legal representatives and estate and intestate distributees, and NMRX, its successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of NMRX may be sold or otherwise transferred.  Any such successor to NMRX shall be deemed to have assumed this Agreement and to have become obligated hereunder to the same extent as NMRX, and your obligations hereunder shall continue in favor of such successor.

 

10. Entire Agreement.  This Agreement embodies the complete agreement and understanding between the parties hereto relating to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

 

11. Amendment. This Agreement may not be modified or amended, except by written agreement between the parties hereto.

 

12. Counterparts.  This Agreement may be executed by the parties hereto in counterpart, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.

 

13. Governing Law.  This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Georgia, without reference to conflicts of law principles, except to the extent governed by federal law in which case federal law shall govern.

 

If the foregoing accurately describes our agreement, please sign the enclosed copy of this agreement.

 

 

Very truly yours,

                    NUMEREX CORP.

                  

  

By: 

 

Accepted and Agreed:

                         ____________________formstockopt2014.htm

EXHIBIT 10.2

OPTION NUMBER:

NAME OF OPTIONEE:

DATE OF GRANT:

EXERCISE PRICE:

COVERED SHARES:

NUMEREX CORP.

2014 STOCK AND INCENTIVE PLAN

[INCENTIVE] STOCK OPTION AGREEMENT

1. Definitions.  In this Agreement, capitalized terms used herein and not defined in the Plan or elsewhere herein shall have the following meanings:

 

1.1  “Agreement” means this Stock Option Agreement.

 

1.2  “Cause” means the Optionee’s (a) failure to substantially perform his duties (other than by reason of disability) with respect to the Company or any of its Affiliates, (b) engaging in conduct injurious to the Company or any of its Affiliates, (c) breach of fiduciary duty to the Company or any of its Affiliates, (d) dishonesty, fraud, alcohol or illegal drug abuse, or misconduct with respect to the business or affairs of the Company or any of its Affiliates, (e) willful violation of the policies of the Company or any of its Affiliates after receiving written notice of such violation, or (f) conviction of a felony or crime involving moral turpitude.  All determinations of Cause hereunder shall be made by the Committee in its discretion and shall be binding for all purposes hereunder.

 

1.3 “Change in Control” means the occurrence of any of the following (i) the consummation by the Company of a sale, transfer or assignment, in one transaction or a series of related transactions, of all or substantially all of the assets of the Company other than to one or more affiliates of the Company or one or more entities owned by stockholders of the Company in substantially the same proportions as their stock ownership in the Company, (ii) any “person” (as the term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), excluding affiliates of the Company and employee benefit plans of the Company and its affiliates, becomes the beneficial owner of more than 50% of the outstanding voting stock of the Company other than as the result of the direct purchase of securities from the Company, or (iii) the consummation by the Company of a merger or consolidation with or into any other entity, other than a merger or consolidation that results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent of the combined voting power of the surviving entity immediately after such merger or consolidation.

 

1.4 “Covered Shares” means the shares of Common Stock subject to the Option.

 

1.5 “Date of Exercise” means the date on which the Company receives notice pursuant to Section 5.1 of the exercise, in whole or in part, of the Option.

 

1.6 “Date of Expiration” means the date on which the Option shall expire, which shall be the earliest of the following times:

 

(a) the date of the first notification to the Optionee that the Optionee’s Service is terminated by the Company or an Affiliate for Cause;

 

(b) Three months after termination of the Optionee’s Service for any reason other than by the Company or an Affiliate for Cause, death or Disability; provided, however, that if the Optionee dies within thirty days of such termination, the Option shall be exercisable for a period of one year after such termination;

 

(c) one year after termination of the Optionee’s Service with the Company or an Affiliate by reason of death or Disability; or

 

(d) ten years after the Date of Grant.

 

1.7 “Date of Grant” means the date set forth at the beginning of this Agreement.

 

1.8 “Disability” means total and permanent disability under Section 22(e)(3) of the Code.

 

1.9 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

1.10 “Exercise Price” means the dollar amount per share of Common Stock set forth on page 1 of this Agreement, as it may be adjusted from time to time pursuant to Section 4 hereof.

 

1.11  “Option” means the stock option granted to the Optionee in Section 2 of this Agreement.

 

1.12 “Optionee” means the person identified on page 1 of this Agreement.

 

1.13 “Person” means the term “person” within the meaning of Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)(3) and 14(d) thereof.

 

1.14  “Service” means, if the Optionee is (a) an employee of the Company and/or any of its Affiliates (as determined by the Committee in its discretion), the Optionee’s service as an employee of the Company and/or any of its Affiliates, (b) a member of the Board or the board of directors of an Affiliate but not an employee of the Company or any of its Affiliates (as determined by the Committee in its discretion), the Optionee’s service as a member of such Board or board of directors, or (c) a consultant or independent contractor to the Company or any of its Affililiates (as determined by the Committee in its discretion) and is not described in the preceding clause (b), the Optionee’s service as a consultant or independent contractor to the Company and/or any of its Affiliates.  The Optionee’s Service shall not be treated as having terminated if the capacity in which the Optionee provides Service, as described in the preceding sentence, changes, provided that the Optionee’s Service is continuous notwithstanding such change.

 

2. Grant of Option.  Pursuant to the Plan and subject to the terms of this Agreement, the Company hereby grants to the Optionee, as of the Date of Grant, the Option to purchase from the Company that number of shares identified as the “Covered Shares” on page 1 of this Agreement, exercisable at the Exercise Price.

 

3. Terms of the Option.

 

3.1 Type of Option.  The Option is intended to be [a nonstatutory stock option] [an incentive stock option under Section 422 of the Code; provided, however, that to the extent that, during any calendar year, the Option becomes exercisable for the first time with respect to Shares having an aggregate fair market value in excess of the limit imposed by Section 422(d) of the Code or all or any portion of the Option does not otherwise qualify as an incentive stock option under Section 422 of the Code, (a) the Option shall be treated as a nonstatutory stock option and not as an incentive stock option, and (b) upon any exercise of the Option, the Optionee shall be required to designate the extent to which the exercise of the Option is with respect to that portion, if any, of the Option that is a nonstatutory stock option and that portion, if any, of the Option that is an incentive stock option.  If, as of the same date, the Optionee exercises the Option with respect to a portion of the Option that is an incentive stock option and with respect to a portion of the Option that is a nonstatutory stock option, the Company shall issue separate certificates to the Optionee representing (i) those Shares that were acquired pursuant to the exercise of an incentive stock option (which Shares shall be identified on the Company’s stock transfer records as such), and (ii) those Shares that were acquired pursuant to the exercise of a nonstatutory stock option].  [Include bracketed language relating to incentive stock options only if Option is an incentive stock option.]

 

3.2 Option Period; Exercisability.  The Option may be exercised in whole shares during the period commencing on the Date of Grant and terminating on the Date of Expiration, as follows:

 

(a) no part of the Option may be exercised during the first year following the Date of Grant or at any time after the Date of Expiration;

 

(b) beginning on the first anniversary after the Date of Grant, the Option may be exercised as to a maximum of twenty-five percent (25%) of the Covered Shares;

 

(c) beginning on the second anniversary of the Date of Grant and on each anniversary thereafter, the Option may be exercised as to an additional twenty-five percent (25%) of the Covered Shares until the Option is exercisable as to all of the Covered Shares.

 

If the Optionee’s Service terminates as a result of death prior to the Option becoming exercisable as to all of the Covered Shares, the Option may be exercised as to an additional  number of Covered Shares calculated by multiplying (i) a fraction, the numerator of which is the number of months of the Optionee’s Service since the immediately preceding annual anniversary date of the Date of Grant (rounded up to the nearest whole month) and the denominator of which is twelve (12) by (ii) 25% of the total number of Covered Shares.

 

Notwithstanding the foregoing, in the event of a Change in Control, the Option shall thereupon become exercisable at any time prior to the Date of Expiration, as to the full number of Covered Shares.  In no event shall the number of Covered Shares as to which the Option is exercisable increase after termination of the Optionee’s Service.

 

3.3 Nontransferability. The Option is not transferable by the Optionee other than by will or by the laws of descent and distribution, and is exercisable, during the Optionee’s lifetime, only by the Optionee, or, in the event of the Optionee’s legal disability, by the Optionee’s legal representative.

 

3.4 Payment of the Exercise Price.  The Optionee, upon exercise, in whole or in part, of the Option, may pay the Exercise Price by any or all of the following means, either alone or in combination:

 

(a) cash or check payable to the order of the Company;

 

(b) if approved by the Committee and, if at the time of exercise, the Common Stock is listed for trading on a national securities exchange or automated dealer quotation system, delivery (either actual or constructive) of shares of unencumbered Common Stock (provided that such shares, if acquired under the Option or under any other option or award granted under the Plan or any other plan sponsored or mentioned by the Company, have been held by the Optionee for such period, if any, as the Committee may specify) that have an aggregate Fair Market Value on the Date of Exercise equal to that portion of the Exercise Price being paid by delivery of such shares; or

 

(c) if at the time of exercise, the Common Stock is listed for trading on a national securities exchange or automated dealer quotation system] and in accordance with such rules as may be specified by the Committee, delivery to the Company of a properly executed exercise notice and irrevocable instructions to a registered securities broker promptly to deliver to the Company cash equal to the Exercise Price for that portion of the Option being exercised.

 

4. Capital Adjustments.  The number of Covered Shares as to which the Option has not been exercised, the Exercise Price, and the type of stock or other consideration to be received on exercise of the Option shall be subject to such adjustment or change, if any, as the Committee in its sole discretion deems appropriate to reflect such events as stock dividends, split-ups, spin-offs, recapitalizations, reclassifications, combinations or exchanges of shares, mergers, consolidations, liquidations, or the like, of or by the Company.  Any adjustment determined to be appropriate by the Committee shall be conclusive and shall be binding on the Optionee.

 

5. Exercise.

 

5.1 Notice.  The Option shall be exercised, in whole or in part (but in no event for less than [100] Covered Shares or the number of Covered Shares remaining subject to the Option, if less) by the delivery to the Company of written notice of such exercise, in such form as the Committee may from time to time prescribe, accompanied by full payment (or means of full payment permitted by Section 3.5 hereof) of the Exercise Price with respect to that portion of the Option being exercised.  Until the Committee notifies the Optionee to the contrary, the form attached to this Agreement as Exhibit A shall be used to exercise the Option.

 

5.2 Withholding.  The Company’s obligation to issue or deliver shares of Common Stock upon the exercise of the Option shall be subject to the satisfaction of any applicable federal, state and local tax withholding requirements.  The Optionee may satisfy any such withholding obligation by any of the following means or by a combination of such means: (a) tendering a cash payment; (b) if at the time the withholding obligation arises, the Common Stock is listed for trading on a national securities exchange or automated dealer quotation system, authorizing the Company to withhold shares of Common Stock from the shares otherwise issuable to the Optionee upon exercise of the Option; or (c) if at the time the withholding obligation arises, the Common Stock is listed for trading on a national securities exchange or automated dealer quotation system, delivering to the Company already-owned and unencumbered shares of Common Stock.  For purposes of this Section 5.2, shares of Common Stock that are withheld or delivered to satisfy applicable withholding taxes shall be valued at their Fair Market Value on the date the withholding tax obligation arises, and in no event shall the aggregate Fair Market Value of the shares of Common Stock withheld and/or delivered pursuant to this Section 5.2 exceed the minimum amount of taxes required to be withheld in connection with exercise of the Option.

 

5.3 Effect.  The exercise, in whole or in part, of the Option shall cause a reduction in the number of Covered Shares as to which the Option may be exercised in an amount equal to the number of shares of Common Stock as to which the Option is exercised.

 

6. Representations.  The Optionee agrees that, upon the issuance of any shares of Common Stock upon the exercise of the Option, the Optionee will, upon the request of the Company, represent and warrant in writing that the Optionee (a) has received and reviewed a copy of the Plan; (b) is capable of evaluating the merits and risks of exercising the Option and acquiring the shares and able to bear the economic risks of such investment; (c) has made such investigation as he or she deems necessary and appropriate of the business and financial prospects of the Company and (d) is acquiring the shares for investment only and not with a view to resale or other distribution thereof.  The Optionee shall make such other representations and warranties that the Committee may request for the purpose of complying with applicable law.

 

7.  Early Disposition of Stock.  The Optionee hereby agrees to notify the Company in writing within 30 days after the date of any disposition of shares of Common Stock acquired upon exercise of the Option within two years after the Date of Grant or within one year after such shares were transferred to the Optionee, which notice shall state the number of shares sold or transferred, the date the shares were sold or transferred, and the sale price.  [Note: Only include if Option is an ISO.]

 

8. Legends.  The Optionee agrees that the certificates evidencing the shares of Common Stock issued upon exercise of the Option may include any legend which the Committee deems appropriate to reflect the transfer and other restrictions contained in the Plan, this Agreement, or to comply with applicable laws.

 

9. Rights as Stockholder.  The Optionee shall have no rights as a stockholder with respect to any shares of Common Stock subject to the Option until and unless a certificate or certificates representing such shares are issued to the Optionee pursuant to this Agreement.

 

10. Service.  Neither the grant of the Option evidenced by this Agreement nor any term or provision of this Agreement shall constitute or be evidence of any understanding, express or implied, on the part of the Company to employ or retain the Optionee for any period.

 

11. Subject to the Plan.  The Option evidenced by this Agreement and the exercise thereof are subject to the terms and conditions of the Plan, which is incorporated by reference and made a part hereof, but the terms of the Plan shall not be considered an enlargement of any rights or benefits under this Agreement.  In addition, the Option is subject to any rules and regulations promulgated by the Committee.

 

12. Governing Law.  The validity, construction, interpretation and enforceability of this agreement shall be determined and governed by the laws of the Commonwealth of Pennsylvania without giving effect to the principles of conflicts of laws.

 

13. Further Restrictions with Respect to Common Stock.  Optionee may not offer, sell, or otherwise dispose of any Common Stock underlying this Option in a manner that would: (i) require the Company to file any registration statement with the Securities and Exchange Commission (or make any similar filing under state law) or to amend or supplement any such filing or (ii) violate or cause the Company to violate the Securities Act of 1933, as amended (the “Securities Act”), the rules and regulations promulgated thereunder, or any other state or federal law. In connection with any transfer of Common Stock, the Company may require the transferor to provide, at the transferor's own expense, an opinion of counsel, satisfactory to the Company, that such transfer is in compliance with all applicable foreign, federal, and state securities laws. Any attempted disposition of the Common Stock not in accordance with the terms and conditions of this Section 13 shall be null and void.

 

14. Severability.  If any provision of this Agreement shall be held to be invalid, illegal or unenforceable in any material respect, such provision shall be replaced with a provision that is as close as possible in effect to such invalid, illegal or unenforceable provision, and still be valid, legal and enforceable, and the validity, legality and enforceability of the remainder of this Agreement shall not in any way be affected or impaired thereby.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on its behalf by the undersigned, thereunto duly authorized, effective as of the Date of Grant.

 

                                                                         NUMEREX CORP.

By:                                                      

       Richard Flynt

       Chief Financial Officer

                         Accepted and agreed to as of the Date of Grant:

Optionee

“EXHIBIT A”

EXERCISE OF OPTION

Board of Directors

Numerex Corp.

Ladies and Gentlemen:

The undersigned, the Optionee under the Stock Option Agreement (“Agreement”) identified as Option No. ____—___ granted pursuant to the Numerex Corp. 2014 Stock and Incentive Plan, hereby irrevocably elects to exercise the Option granted in the Agreement to purchase ___ shares of Common Stock of Numerex Corp., no par value per share (the “Option Shares”), and herewith makes payment of $   in the form of (check all that apply and if more than one is checked, indicate the amount to be paid by each payment method):

	
[ ]  Cash or Check:

	  
	
[ ]  Delivery of Common Stock:*

	  
	
[ ]  Brokerage Transaction:

	  

The undersigned hereby elects to satisfy applicable withholding requirements by (check all that apply and, if more than one is checked, indicate the amount to be withheld by each withholding method):

	
[ ]  Cash or Check:

	  
	
[ ]  Withholding of Common Stock:

	  
	
[ ]  Delivery of Common Stock:

	  

[If applicable pursuant to Section 3.1 of the Agreement, Optionee elects that __________ of the Option Shares shall be treated as being acquired pursuant to the exercise of an incentive stock option and _______ of the Option Shares shall be treated as acquired pursuant to the exercise of a nonqualified stock option that is not an incentive stock option.]  [Include only if option is an incentive stock option.]

Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Agreement:

The undersigned hereby represents as follows:

1.           The Optionee has received and reviewed a copy of the Plan and the statutory prospectus relating to the Plan.

      2.           The certificate(s) for the Option Shares may be legended, for certain officers who may be deemed affiliates of the Company, to the effect that such officers may not reoffer or resell the Option Shares in a transaction which is not registered under the Securities Act of 1933, as amended ("the Act"), except pursuant to the Securities and Exchange Commission's Rule 144 under the Act, or another exemption thereunder.

 

Date:                                

(Signature of Optionee)

Date received by Numerex Corp:                                                                                      

Received by:  _________________________

Note: Shares of Common Stock being delivered in payment of all or any part of the Exercise Price must be represented by certificates registered in the name of the Optionee and duly endorsed by the Optionee and by each and every other co-owner in whose name the shares may also be registered.

  

* If approved by the Committee.

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