EXHIBIT 10.5
NQSO-XXX
NONQUALIFIED COMMON STOCK OPTION AGREEMENT
------------------------------------------
THIS NONQUALIFIED COMMON STOCK OPTION AGREEMENT (the "Agreement"), made
this [DATE], between INTERPLAY PRODUCTIONS, a California corporation
(hereinafter referred to as the "Company"), and [NAME], an employee of the
Company, its parent or one or more of its subsidiaries, or a director or advisor
of the Company (hereinafter referred to as the "Optionee"), is made with
reference to the following fact:
R E C I T A L
- - - - - - -
The Company desires, by affording the Optionee an opportunity to purchase
shares of Common Stock in the Company (hereinafter called "Shares"), as
hereinafter provided, to carry out the purpose of the "Incentive Stock Option
and Nonqualified Stock Option Plan-1994" (the "Plan").
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter set
forth, and for good and valuable consideration, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option.
---------------
The Company hereby irrevocably grants to the Optionee the right and
option (hereinafter called the "Option") to purchase all or any part of an
aggregate of [OPTION NO.] Shares (such number being subject to adjustment as
provided in Section 7 hereof) on the terms and conditions herein set forth. The
Option granted herein is a "nonqualified option" within the meaning of the Plan.
2. Purchase Price.
--------------
The purchase price of the Shares covered by the Option shall be
[EXERCISE PRICE] per share.
3. Term of Option.
--------------
The term of the Option shall commence on the date hereof and all
rights to purchase shares hereunder shall cease at 11:59 p.m. on April 1, 2006,
subject to earlier termination as provided herein. Except as may otherwise be
provided in this Agreement, options granted hereunder may be cumulative and
exercised as follows:
During the Period: Optionee May Purchase:
----------------- ---------------------
Before DATES 0% of the Shares
On and after DATES, but
before DATES 20% of the Shares
On and after DATES, but
before DATES 40% of the Shares
On and after DATES, but
before DATES 60% of the Shares
On and after DATES, but
before DATES 80% of the Shares
On and after DATES 100% of the Shares
The purchase price of the Shares as to which the Option shall be
exercised shall be paid in full at the time of exercise (i) in cash, or by
certified check or by bank draft; (ii) subject to any legal restrictions on the
acquisition or purchase of its shares by the Company and with the prior written
consent and approval of the Company, by the delivery of shares of Common Stock
of the Company which shall be deemed to have a value to the Company equal to the
aggregate fair market value of such shares determined in accordance with Section
5 of the Plan; or (iii) any combination of (i) or (ii) above. Except as provided
in Section 5 hereof, the Option may not be exercised at any time unless (i) if
the Optionee is an employee of the Company, the Optionee shall have been
continuously, from the date hereof to the date of the exercise of the Option, an
employee of the Company, its parent, if any, or of one or more of its
subsidiaries or a corporation or a parent or subsidiary of a corporation issuing
or assuming an option to which Section 425(a) of the Internal Revenue Code of
1986, as amended, applies (collectively the "Affiliates"); or (ii) if the
Optionee is a director of the Company, the Optionee shall have been
continuously, from the date hereof to the date of the exercise of the Option, a
director of the Company, or its Affiliates. The holder of the Option shall not
have any of the rights of a shareholder with respect to the shares covered by
the Option as to any shares of Common Stock not actually issued and delivered to
Optionee. Notwithstanding the foregoing, Optionee shall have no right to
exercise this Option to purchase Shares that have become exercisable herein
until such time as the Company takes such action as it deems necessary in good
faith to comply with the securities laws of the state of residence of Optionee.
4. Nontransferability.
------------------
The Option shall not be transferable other than by will or the laws of
descent and distribution, and the Option may be exercised, during the lifetime
of the Optionee, only by Optionee. More particularly (but without limiting the
generality of the foregoing), the Option may not be assigned, transferred
(except as provided in Section 5 hereof), pledged or hypothecated in any way,
shall not be assignable by operation of law and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.
5. Termination of Employment or Status as a Director or Advisor.
------------------------------------------------------------
2
In the event that the Optionee is an employee of the Company and the
Optionee shall cease to be employed by the Company, or its Affiliates, or in the
event the Optionee is a director or advisor of the Company and ceases to be a
director or advisor of the Company or its Affiliates, for any reason whatsoever,
other than by reason of death or disability, this Option shall terminate
immediately; provided, however, that the Optionee shall have the right to
exercise this Option at any time within three (3) months after such cessation of
employment or status as a director or advisor, but in no event later than the
date of expiration of the option period, but the number of Shares purchasable
upon such exercise of the Option shall not in any case exceed the number which
would have been purchasable if the Optionee had exercised the Option on the date
of such cessation. If the Optionee shall become disabled (within the meaning of
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended) and shall not
have fully exercised his options granted pursuant to the Plan, all of such
options, whether or not otherwise exercisable, may be exercised at any time
within one (1) year after the Optionee's cessation of employment or status as a
director or advisor as a result of such disability but in any event no later
than the date of expiration of the option period, by the Optionee. If the
Optionee shall die while an employee, director or advisor of the Company, or its
Affiliates, Optionee's estate, personal representative or beneficiary shall have
the right to exercise all of the shares subject to this Option, whether or not
they would otherwise have been purchasable if the Optionee's death had not
occurred, at any time within one (1) year from the date of Optionee's death, but
in no event later than the date of expiration of the option period.
6. Other Expirations.
-----------------
In addition to any other event causing an expiration or termination of
this Option, this Option shall expire and all rights to purchase Shares shall
cease (to the extent not theretofore terminated or expired as herein provided)
upon the effective date of the dissolution or liquidation of the Company or upon
a merger, consolidation, acquisition of property or shares, separation or
reorganization of the Company with one or more entities, corporate or otherwise,
as a result of which the Company is not the surviving entity, or if the Company
is the surviving entity and the ownership of the outstanding capital stock of
the Company following the transaction changes by 50% or more as a result of such
transaction, or of a sale of substantially all of the property or shares of the
Company to another entity, corporate or otherwise; provided, however, that the
Company may, in its discretion, and immediately prior to any such transaction,
cause a new option to be substituted for this Option or cause this Option to be
assumed by an employer entity or a parent or subsidiary of such entity; and such
new option shall apply to all shares issued in addition to or substitution,
replacement or modification of the shares theretofore covered by such option;
provided that,
(1) the excess of the aggregate fair market value of the shares
subject to the option immediately after the substitution or assumption over
the aggregate option price of such shares shall not be more than the excess
of the aggregate fair market value of all shares subject to the option
immediately before such substitution or assumption over the aggregate
option price of such shares; and
(2) the new option or the assumption of the existing option shall not
give the Optionee additional benefits which he did not have under the old
option or prior to such assumption; and
(3) an appropriate adjustment of the original option price shall be
made among original shares subject to the option and any additional shares
or shares issued in substitution, replacement or modification thereof.
3
If no provision is made for the continuance of the Plan and the assumption of
this Option, or the substitution of this Option of new options as hereinabove
provided, then the Company shall cause written notice to be given to the
Optionee of the proposed transaction not less than thirty (30) days prior to the
anticipated effective date thereof, and this Option, if not already exercisable,
shall thereupon become immediately exercisable and the Optionee shall have the
right to exercise this Option at any time prior to the effective date of the
termination of the option plan or the proposed transaction.
7. Adjustments.
-----------
The number and class of shares subject to this Option, and the
purchase price per share (but not the total purchase price), and the minimum
number of shares as to which this Option may be exercised at any one time, shall
all be proportionately adjusted in the event of any change or increase or
decrease in the number of issued shares of Common Stock in the Company, without
receipt of consideration by the Company, which result from a split-up or
consolidation of shares, payment of a share dividend (in excess of two percent
(2%)), a recapitalization, combination of shares or other like capital
adjustment, so that, upon exercise of this Option, the Optionee shall receive
the number and class of shares Optionee would have received had Optionee been
the holder of the number of shares of Common Stock in the Company, for which
this Option is being exercised, on the date of such change or increase or
decrease in the number of issued shares of Common Stock in the Company. Subject
to any required action by its shareholders, if the Company shall be a surviving
entity in any reorganization, merger or consolidation, this Option shall be
proportionately adjusted so as to apply to the securities to which the holder of
the number of shares of Common Stock in the Company subject to this Option would
have been entitled. Adjustments under this paragraph shall be made by the Board
of Directors whose determination with respect thereto shall be final and
conclusive. No fractional share shall be issued under this Option or upon any
such adjustment. No adjustments shall be made for issuances of any securities if
any consideration is received by the Company.
8. Repurchase of Shares.
--------------------
The Optionee agrees to sign the form of Buy-Sell Agreement attached
hereto. Optionee shall have no right to any shares subject to this Option unless
such Buy-Sell Agreement is signed and agreed to by the Optionee.
9. Notice.
------
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered or
mailed, by United States certified or registered mail, prepaid, to the parties
or their assignees at the addresses set forth opposite their signatures below
(or such other address as shall be given in writing by either party to the
other).
10. Method of Exercising Option.
---------------------------
Subject to the terms and conditions of this Nonqualified Common Stock
Option Agreement, this Option may be exercised by written notice to the Company,
at its principal office in the State of California, which presently is located
at 00000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000. Such notice shall state the
election to exercise the Option and the number of shares in respect of which it
is being exercised and shall be signed by the person or persons so exercising
the Option. Such notice shall be accompanied by (i) payment in cash, certified
check, bank draft or certificates for shares of the
4
Common Stock of the Company equal to, in the aggregate, the full purchase price
of such shares, and (ii) payment in cash, certified check or bank draft of any
payroll withholding taxes resulting from the exercise, as determined by the
Company. The Company shall deliver a certificate or certificates representing
the shares subject to such exercise as soon as practicable after the notice
shall be received. The certificate or certificates for the shares as to which
the Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option and shall be delivered as provided
above to or upon the written order of the person or persons exercising the
Option. In the event the Option shall be exercised by any person or persons
other than the Optionee in accordance with the terms hereof, such notice shall
be accompanied by appropriate proof of the right of such person or persons to
exercise the Option. All shares that shall be purchased upon the exercise of the
Option as provided herein shall be fully paid and nonassessable. The holder of
this Option shall not be entitled to the privileges of share ownership as to any
shares of Common Stock not actually issued and delivered to Optionee. The
Optionee hereby certifies that all shares of Common Stock in the Company
purchased or to be purchased by Optionee pursuant to the exercise of this Option
are being or are to be acquired by Optionee for investment and not with a view
to the distribution thereof. In addition, the person exercising the Option shall
execute and deliver to the Company with the notice provided for above an
investment letter in the form attached hereto as Exhibit A.
11. No Agreement to Employ.
----------------------
Nothing in this Agreement shall be construed to constitute or be
evidence of any agreement or understanding, express or implied, on the part of
the Company to employ or retain Optionee for any specific period of time.
12. General.
-------
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of Common Stock as will be sufficient
to satisfy the requirements of this Nonqualified Common Stock Option Agreement,
shall pay all original issue and transfer taxes with respect to the issue and
transfer of shares pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith, and will from time to time use
its best efforts to comply with all laws and regulations, which, in the opinion
of counsel for the Company, shall be applicable thereto.
5
IN WITNESS WHEREOF, the Company has caused this Nonqualified Common Stock
Option Agreement to be duly executed by its officers thereunto duly authorized,
and the Optionee has hereunto set his hand, all as of the day and year first
above written.
INTERPLAY PRODUCTIONS
00000 Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000 By: ___________________________________________
Xxxxxxxxxxx X. Xxxxxxxxxx, President
"Company"
_____________________
_____________________ _______________________________________________
NAME
"Optionee"
6
EXHIBIT A
TO NONQUALIFIED OPTION AGREEMENT
Interplay Productions
00000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Gentlemen:
1. (a) In connection with the acquisition of [NO. SHARES] shares of the
common stock of Interplay Productions, a California corporation (the "Company"),
by the undersigned, the undersigned represents that the shares which the
undersigned is acquiring are being acquired for investment and not with a view
to the sale or distribution of any part thereof, and that the undersigned has no
present intent of selling or otherwise distributing the same.
You have advised the undersigned that the shares have not been
registered under the Securities Act of 1933, as amended (the "Act"), as the
offering of the shares is to be effected pursuant to an exemption from the
registration provisions of such Act, and, in this connection, you are relying in
part on the representations of the undersigned set forth herein.
Without in any way limiting the representations set forth above, the
undersigned further agrees in no event to make any dispositions of all or any
part of said shares unless and until (i) the undersigned shall have notified you
of the proposed disposition; (ii) the undersigned shall have furnished you with
an opinion of counsel to the effect that such disposition will not require
registration of such shares under the Act, and (iii) such opinion of counsel
shall have been concurred in by the Company's counsel and the Company shall have
advised you of such concurrence.
(b) The undersigned acknowledges receipt of all information as the
undersigned deems necessary and appropriate to enable the undersigned to
evaluate the financial risk inherent in acquiring said shares and acknowledges
receipt of satisfactory and complete information covering the business and
financial condition of the Company, including the opportunity to obtain
information regarding the Company's financial status, in response to all
inquiries in respect thereof.
2. (a) The undersigned represents that he is an investor of sufficient
sophistication to evaluate the risks and merits involved in the acquisition of
the shares and to make an informed investment decision based on the
undersigned's personal knowledge of the business and affairs of the Company,
based upon such additional information as he may have requested and received
from the Company, and the independent inquiries and investigations undertaken by
the undersigned. The undersigned certifies that his financial situation is such
that he is able to bear the economic risk of the investment in the securities.
(b) The undersigned understands and agrees that the certificate
evidencing said shares will bear the following legends, in addition to any other
legends called for under the Plan:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED
BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED,
SOLD TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED
UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.
3. (a) The undersigned recognizes that said shares are unregistered and
must by held indefinitely unless they are subsequently registered under the Act
or an exemption from such registration is available, and further recognizes that
the Company is under no obligation to register said shares or to comply with any
exemption from such registration.
(b) The undersigned understands that Rule 144 under the Act does not
presently apply and may never apply to the Company's securities because the
Company does not now, and may never, file reports required by the Securities
Exchange Act of 1934, as amended ("Exchange Act"), and has not made, and may
never make, publicly available the information required by Rule 15c2-11 of the
Exchange Act. Furthermore, if Rule 144 were available, the undersigned
understands that sales of securities made in reliance thereof could be made only
in certain limited amounts, after certain holding periods and only when there
was available specified current public information, all in accordance with the
terms and conditions of said Rule. The undersigned understands that, in the case
of securities to which said Rule is not applicable, compliance with some other
exemption under the Act will be required.
DATED: ____________________
NAME
A-2
