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EXHIBIT 10.37
Schedule I
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is entered
into as of the 15th day of October, 1996 (the "Grant Date"), by and between DOVE
AUDIO, INC., a California corporation (the "Corporation"), and Xxxxx Xxxxxxx
(the "Participant").
W I T N E S S E T H
WHEREAS, pursuant to the Corporation's 1994 Stock Incentive Plan (the
"Plan"), the Corporation's Stock Incentive Plan Committee (the "Committee")
committed to grant to the Participant, effective as of the Grant Date, a
non-qualified stock option (the "Option") to purchase all or any part of 30,000
shares of Common Stock, par value $0.01 per share, of the Corporation (the
"Common Stock") upon the terms and conditions hereinafter set forth (capitalized
terms not otherwise defined herein shall have the respective meanings assigned
to them in the Plan).
NOW, THEREFORE, in consideration of the mutual promises and covenants
made herein and the mutual benefits to be derived herefrom, the parties hereto
agree as follows:
1. Grant of Option. The Corporation has granted to the Participant as a matter
of separate inducement and agreement in connection with the Participant's
employment with, or other services provided by the Participant to, the
Corporation, but not in lieu of any salary or other compensation for such
employment or services, the right and option to purchase, in accordance with the
Plan and on the terms and conditions hereinafter set forth, all or any part of
an aggregate of 30,000 shares (the "Shares") of Common Stock at the price of $
2.50 per share (the "Exercise Price"), exercisable from time to time subject to
the provisions of this Agreement and the Plan prior to the close of business on
November 29, 2004 (the "Expiration Date").
2. Vesting and Exercise of Option. The Option is to vest in three
equal parts: 33.33% of the Shares are to vest immediately as of the Grant Date
and 33.33% are to vest on each of the first and second anniversaries of the
Grant Date, such that except as otherwise provided in this Agreement, the Option
may be exercised from time to time ; provided, however, that the Option may not
be exercised as to less than 100 shares at any one time unless the number of
Shares purchased is the total number at the time available for purchase under an
installment of the Option. The Option may be exercised only as to whole shares;
fractional share interests shall be disregarded except that they may be
accumulated. The Option may not be exercised within the first six months
following the date of grant.
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3. Method of Exercise and Payment.
(a) Exercise of Option. Each exercise of the Option shall be by
means of written notice of exercise in the form attached hereto as Exhibit A
duly delivered to the Corporation, specifying the number of whole Shares with
respect to which the Option is being exercised (the "Exercised Shares"),
together with any written statements required pursuant hereunder and payment
equaling the Exercise Price multiplied by the number of Exercised Shares (the
"Aggregate Price"), in cash or by check payable to the order of the Corporation.
The Participant may also deliver in payment of a portion or all of the Aggregate
Price certificates for Common Stock, which shall be valued at the Fair Market
Value of such Common Stock on the date of exercise of the Option. With the prior
written consent of the Committee, the Participant may pay for all or a portion
of the Aggregate Price by means of a promissory note to the Corporation, on such
terms and conditions as the Committee may determine.
4. Continuance of Employment. Nothing contained in this Agreement or in
the Plan shall confer upon the Participant any right to continue in the employ
of, or to continue rendering services to, the Corporation or constitute any
contract or agreement of engagement or employment. The Participant acknowledges
that the Corporation has the right to terminate the Participant's employment or
services at will except as may be otherwise provided by separate agreement.
Nothing contained in this Agreement or in the Plan shall interfere in any way
with the right of the Corporation to (i) terminate the employment or services of
the Participant at any time for any reason whatsoever, with or without cause, or
(ii) reduce the compensation received by the Participant from the rate in
existence on the Grant Date.
5. Non-Assignability of Option. Other than by will or the laws of
descent and distribution, or pursuant to a "qualified domestic relations order"
as defined by the Code, no benefit payable under, or interest in, the Plan or in
any Grant shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or charge, regardless of any community
property or other interest therein of the Participant's spouse or such spouse's
successor in interest, and any such attempted action shall be void and no such
benefit or interest shall be, in any manner, liable for, or subject to, debts,
contracts, liabilities, engagements or torts of any Eligible Person, Participant
or Beneficiary. In the event that the spouse of the Participant shall have
acquired a community property interest in the Option, the Participant, or his or
her permitted transferee, may exercise it on behalf of the spouse of the
Participant or such spouse's successor in interest. Amounts payable pursuant to
a Grant shall be paid only to the Participant or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Total Disability, to the Participant's Personal Representative or,
if there is none, to the Participant.
6. Adjustments Upon Specified Changes. Upon the occurrence of certain
Events relating to the Corporation's stock, such as stock splits, combinations,
extraordinary cash dividends, or mergers in which the Corporation is not the
Surviving Corporation as further set forth in the Plan, adjustments will be made
in the number and kind of shares that may be issuable under, or in the
consideration payable with respect to, the Option.
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7. Acceleration. Upon the occurrence of certain Events, the Option may
become immediately exercisable to the full extent theretofore not exercisable
unless prior to an Event the Committee determines otherwise. However, no Option
may become exercisable on a date less than six months after the Grant Date.
8. Application of Securities Laws.
(a) No shares of Common Stock may be purchased pursuant to the
Option unless and until any then applicable requirements of the Commission, and
any other regulatory agencies, including any other state securities agencies
having jurisdiction over the Corporation or such issuance, and any exchanges
upon which the Common Stock may be listed, shall have been fully satisfied. The
Participant represents, agrees and certifies that:
(1) The Participant (A) can bear the economic risk of
losing the Participant's entire investment in the Shares; and (B) has adequate
means of providing for the Participant's current needs and possible personal
contingencies.
(2) The Participant has had an opportunity to ask
questions of and receive answers from the Chief Financial Officer and President
concerning the terms and conditions of this investment. The Participant has
received and reviewed a copy of the Plan.
(3) The Participant understands that the Option and the
Shares issuable upon exercise of the Option have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities act, in reliance on available exemptions from registration or
qualification thereunder, as the case may be, and that the Corporation is
relying upon the Participant's representations and warranties herein in availing
itself of said exemptions.
(4) The Option hereby granted to the Participant is being
acquired solely for the Participant's own account for investment purposes, and
is not being purchased with a view to or for the purposes of the resale,
transfer or other distribution thereof; and the Participant has no present plans
to enter into any contract, undertaking, agreement or arrangement for such
resale, transfer or distribution, and the Participant further agrees that the
Option and Common Stock acquired pursuant to the Option will not be transferred
or distributed without (a) first having presented to the Corporation a written
opinion of legal counsel in form and substance satisfactory to the Corporation's
counsel indicating the proposed transfer will not be in violation of any of the
provisions of the Securities Act and applicable state securities laws and the
rules and regulations promulgated thereunder, or (b) a registration statement
covering the resale of such Common Stock being effective. Finally, the
Participant recognizes that a legend reading substantially as follows shall be
placed on all certificates representing the Common Stock and a stop order shall
be placed against a transfer of same in accordance with the following legend:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THESE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
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STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
(5) The Participant either has a preexisting personal or
business relationship with the Corporation or any of its officers, directors or
controlling persons, or by reason of the Participant's business or financial
experience reasonably can be assumed to have the capacity to protect his or her
own interests in connection with acquisition of the Option and exercise thereof.
The foregoing representations and warranties are and will be true
and accurate as of both the Grant Date and the date of delivery of Common Stock
acquired pursuant to the Option and shall survive such delivery.
(b) The Committee may impose such conditions on the Option or on
its exercise or acceleration or on the payment of any withholding obligation
(including without limitation restricting the time of exercise to specified
periods) as may be required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 (or any successor rule) promulgated by
the Commission pursuant to the Securities Exchange Act of 1934, as amended.
9. Notices. Any notice to be given to the Corporation under the terms of
this Agreement or pursuant to the Plan shall be in writing and addressed to the
Secretary of the Corporation at its principal office and any notice to be given
to the Participant shall be sent to the Participant at the address given beneath
the Participant's signature hereto, or at such other address as either party may
hereafter designate in writing to the other party. Any such notice shall be
deemed to have been duly given on the date of delivery, if delivered by hand, or
3 days after deposit into U.S. mails of a notice sent by registered or certified
mail (postage and registry or certification fee prepaid).
10. Effect of Agreement. This Agreement shall be assumed by, be
binding upon and inure to the benefit of any successor or successors of the
Corporation to the extent provided in the Plan.
11. Tax Withholding. The provisions of the Plan are hereby incorporated
and shall govern any withholding that the Corporation is required to make with
respect to an exercise of the Option as well as the Corporation's right to
condition a transfer of Common Stock upon compliance with the applicable
withholding requirements of federal, state and local authorities. No Common
Stock acquired pursuant to an exercise of the Option may be transferred until
the Corporation has withheld, or has received payment from the Participant of,
all amounts the Corporation is required to withhold.
12. Terms of the Plan Govern. Except with respect to terms specifically
set forth in this Agreement, the Option and this Agreement are subject to, and
the Corporation and the Participant agree to be bound by, all of the terms and
conditions of the Plan, which terms and conditions are hereby incorporated as
though set forth at length. In the event of a conflict between this Agreement
and the Plan, the terms of the Plan shall govern. The rights of the Participant
are
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subject to limitations, adjustments, modifications, suspension and termination
in certain circumstances and upon the occurrence of certain conditions as set
forth in the Plan.
13. Liability of Corporation. The inability of the Corporation to obtain
approval from any regulatory body having authority deemed by the Corporation to
be necessary to the lawful issuance and sale of any Common Stock pursuant to the
Option shall relieve the Corporation of any liability in respect of the
non-issuance or sale of the Common Stock as to which such approval shall not
have been obtained.
14. Stockholder Rights. The Participant shall not have any rights of a
stockholder with respect to any Shares covered by this Option unless such Shares
have been issued to the Participant by the Corporation pursuant to the valid
exercise of the Option and the full payment by the Participant of the Exercise
Price in respect thereof.
15. Laws Applicable to Construction. The interpretation, performance
and enforcement of the Participant's Grant and this Agreement shall be governed
by the laws of the State of California.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to
be executed on its behalf by a duly authorized officer and the Participant has
hereunto set his or her hand as of the date and year first above written.
DOVE AUDIO, INC.
By: /s/ Xxxxxxx Xxxxx
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Title:
PARTICIPANT
/s/ Xxxxx Xxxxxxx
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(Print Name)
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(Address)
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(City, State, Zip Code)
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(Social Security Number)
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