Exhibit 4.5
BAM! ENTERTAINMENT, INC.
NOTICE OF NONQUALIFIED STOCK OPTION AWARD
Xxxxxxx's Name and Address: Xxxxx Xxxxx
____________________________
____________________________
You have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the
"Notice") and the Stock Option Award Agreement (the "Option Agreement") attached
hereto, as follows. This Option is intended to be a Non-Qualified Stock Option.
This Option is not pursuant to the BAM! Entertainment, Inc.'s 2000 Stock
Incentive Plan (the "Plan"). Unless otherwise defined herein, the terms defined
in the Plan shall have the same defined meanings in this Notice.
Date of Award August 16, 2001
Vesting Commencement Date December 28, 2000
Exercise Price per Share $4.7936
Total Number of Shares Subject
to the Option (the "Shares") 18,800
Total Exercise Price $90,119.68
Type of Option: Non-Qualified Stock Option
Expiration Date: August 16, 2011
Post-Termination Exercise Period: Three (3) Months
Vesting Schedule:
Subject to Xxxxxxx's Continuous Service and other limitations set forth
in this Notice and the Option Agreement, the Option may be exercised, in whole
or in part, in accordance with the following schedule:
25% of the Shares subject to the Option shall vest twelve months after
the Vesting Commencement Date, and 1/48 of the Shares subject to the Option
shall vest on each monthly anniversary of the Vesting Commencement Date
thereafter.
During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence exceeds a
period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity.
In the event of the Grantee's change in status from Employee to
Consultant or from an Employee whose customary employment is 20 hours or more
per week to an Employee whose customary employment is fewer than 20 hours per
week, vesting of the Option shall continue only to the extent determined by the
Administrator as of such change in status.
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In the event the Company terminates Xxxxxxx's Continuous Service as a
Director and Grantee has not engaged in conduct during Xxxxxxx's Continuous
Service that would constitute Cause (as determined in accordance with the
then-effective Director's Agreement between Grantee and the Company), the Option
shall automatically become fully vested on the effective date of such
termination. For the purpose of this Option, a termination by the Company of
Grantee's Continuous Service shall include (but not be limited to) the failure
of the shareholders to reelect Grantee as a Director.
In addition, the Option automatically shall become fully vested
immediately prior to the closing of any Corporate Transaction.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Notice and agree that the Option is to be governed by the terms and conditions
of this Notice and the Option Agreement.
BAM! Entertainment, Inc., a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxx, President
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE OR THE OPTION AGREEMENT SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH
RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS SERVICE, NOR
SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT OF THE
GRANTEE'S EMPLOYER TO TERMINATE XXXXXXX'S CONTINUOUS SERVICE, WITH OR WITHOUT
CAUSE, AND WITH OR WITHOUT NOTICE.
The Grantee acknowledges receipt of the Option Agreement and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts the Option subject to all of the terms and provisions hereof. The
Grantee has reviewed this Notice and the Option Agreement in their entirety, has
had an opportunity to obtain the advice of counsel prior to executing this
Notice, and fully understands all provisions of this Notice and the Option
Agreement. The Grantee hereby agrees that all disputes arising out of or
relating to this Notice and the Option Agreement shall be resolved in accordance
with Section 18 of the Option Agreement. The Grantee further agrees to notify
the Company upon any change in the residence address indicated in this Notice.
Dated: ______________________ Signed: _____________________
Xxxxx Xxxxx
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BAM! ENTERTAINMENT, INC.
STOCK OPTION AWARD AGREEMENT
1. Grant of Option. BAM! Entertainment, Inc., a Delaware
corporation (the "Company"), hereby grants to the Grantee (the "Grantee") named
in the Notice of Stock Option Award (the "Notice"), an option (the "Option") to
purchase the Total Number of Shares of Common Stock subject to the Option (the
"Shares") set forth in the Notice, at the Exercise Price per Share set forth in
the Notice (the "Exercise Price") subject to the terms and provisions of the
Notice and this Stock Option Award Agreement (the "Option Agreement"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable
during its term in accordance with the Vesting Schedule set out in the Notice
and with the applicable provisions of this Option Agreement. In the event of a
Corporate Transaction, each Award will terminate upon the consummation of the
Corporate Transaction, unless the Award is assumed by the successor corporation
or Parent thereof in connection with the Corporate Transaction. Except as
provided otherwise in an individual Award Agreement, in the event of any
Corporate Transaction there will not be any acceleration of vesting or
exercisability of any Award. No partial exercise of the Option may be for less
than the lesser of five percent (5%) of the total number of Shares subject to
the Option or the remaining number of Shares subject to the Option. In no event
shall the Company issue fractional Shares.
(b) Method of Exercise. The Option shall be exercisable
only by delivery of an Exercise Notice (attached as Exhibit A) which shall state
the election to exercise the Option, the whole number of Shares in respect of
which the Option is being exercised, and such other provisions as may be
required by the Administrator. The Exercise Notice shall be signed by the
Grantee and shall be delivered in person, by certified mail, or by such other
method as determined from time to time by the Administrator to the Company
accompanied by payment of the Exercise Price. The Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price, which, to the extent selected, shall be
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deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 4(d), below.
(c) Taxes. No Shares will be delivered to the Grantee or
other person pursuant to the exercise of the Option until the Grantee or other
person has made arrangements acceptable to the Administrator for the
satisfaction of applicable income tax, employment tax, and social security tax
withholding obligations, including, without limitation, obligations incident to
the receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of the Option, the Company
or the Grantee's employer may offset or withhold (from any amount owed by the
Company or the Grantee's employer to the Grantee) or collect from the Grantee or
other person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.
3. Xxxxxxx's Representations. The Grantee understands that
neither the Option nor the Shares exercisable pursuant to the Option have been
registered under the Securities Act of 1933, as amended or any United States
securities laws. In the event the Shares purchasable pursuant to the exercise of
the Option have not been registered under the Securities Act of 1933, as
amended, at the time the Option is exercised, the Grantee shall, if requested by
the Company, concurrently with the exercise of all or any portion of the Option,
deliver to the Company his or her Investment Representation Statement in the
form attached hereto as Exhibit B.
4. Method of Payment. Payment of the Exercise Price shall be made
by any of the following, or a combination thereof, at the election of the
Grantee; provided, however, that such exercise method does not then violate any
Applicable Law :
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration
Date, surrender of Shares or delivery of a properly executed form of attestation
of ownership of Shares as the Administrator may require (including withholding
of Shares otherwise deliverable upon exercise of the Option) which have a Fair
Market Value on the date of surrender or attestation equal to the aggregate
Exercise Price of the Shares as to which the Option is being exercised (but only
to the extent that such exercise of the Option would not result in an accounting
compensation charge with respect to the Shares used to pay the exercise price);
or
(d) if the exercise occurs on or after the Registration
Date, payment through a broker-dealer sale and remittance procedure pursuant to
which the Grantee (i) shall provide written instructions to a Company designated
brokerage firm to effect the immediate sale of some or all of the purchased
Shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the purchased Shares and (ii) shall provide written directives to the
Company to deliver the certificates for the purchased Shares directly to such
brokerage firm in order to complete the sale transaction.
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5. Restrictions on Exercise. The Option may not be exercised if
the issuance of the Shares subject to the Option upon such exercise would
constitute a violation of any Applicable Laws.
6. Termination or Change of Continuous Service. In the event the
Grantee's Continuous Service terminates, the Grantee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise the Option during the Post-Termination Exercise Period. In no event
shall the Option be exercised later than the Expiration Date set forth in the
Notice. In the event of the Grantee's change in status from Employee, Director
or Consultant to any other status of Employee, Director or Consultant, the
Option shall remain in effect and, except to the extent otherwise determined by
the Administrator, continue to vest; provided, however, with respect to any
Incentive Stock Option that shall remain in effect after a change in status from
Employee to Director or Consultant, such Incentive Stock Option shall cease to
be treated as an Incentive Stock Option and shall be treated as a Non-Qualified
Stock Option on the day three (3) months and one (1) day following such change
in status. Except as provided in Sections 7 and 8 below, to the extent that the
Grantee is not entitled to exercise the Option on the Termination Date, or if
the Grantee does not exercise the Option within the Post-Termination Exercise
Period, the Option shall terminate.
7. Disability of Grantee. In the event the Grantee's Continuous
Service terminates as a result of his or her Disability, the Grantee may, but
only within twelve (12) months from the Termination Date (and in no event later
than the Expiration Date), exercise the Option to the extent he or she was
otherwise entitled to exercise it on the Termination Date; provided, however,
that if such Disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive
Stock Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option to the extent so entitled within the time specified
herein, the Option shall terminate.
8. Death of Grantee. In the event of the termination of the
Grantee's Continuous Service as a result of his or her death, or in the event of
the Grantee's death during the Post-Termination Exercise Period or during the
twelve (12) month period following the Grantee's Termination of Continuous
Service as a result of his or her Disability, the Grantee's estate, or a person
who acquired the right to exercise the Option by bequest or inheritance, may
exercise the Option, but only to the extent the Grantee could exercise the
Option at the date of termination, within twelve (12) months from the date of
death (but in no event later than the Expiration Date). To the extent that the
Grantee is not entitled to exercise the Option on the date of death, or if the
Option is not exercised to the extent so entitled within the time specified
herein, the Option shall terminate.
9. Transferability of Option. The Option, if an Incentive Stock
Option, may not be transferred in any manner other than by will or by the laws
of descent and distribution and may be exercised during the lifetime of the
Grantee only by the Grantee. The Option, if a Non-Qualified Stock Option may be
transferred by will, by the laws of descent and distribution, and to the extent
and in the manner authorized by the Administrator, to members of the Grantee's
immediate family
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(as determined by the Administrator) or pursuant to a domestic relations order.
The terms of the Option shall be binding upon the executors, administrators,
heirs and successors of the Grantee.
10. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.
11. Company's Right of First Refusal.
(a) Transfer Notice. Neither the Grantee nor a transferee
(either being sometimes referred to herein as the "Holder") shall sell,
hypothecate, encumber or otherwise transfer any Shares or any right or interest
therein without first complying with the provisions of this Section 11 or
obtaining the prior written consent of the Company. In the event the Holder
desires to accept a bona fide third-party offer for any or all of the Shares,
the Holder shall provide the Company with written notice (the "Transfer Notice")
of:
(i) The Holder's intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and
terms thereof.
(b) First Refusal Exercise Notice. The Company shall have
the right to purchase (the "Right of First Refusal") all but not less than all,
of the Shares which are described in the Transfer Notice (the "Offered Shares")
at any time during the period commencing upon receipt of the Transfer Notice and
ending forty-five (45) days after the first date on which the Company determines
that the Right of First Refusal may be exercised without incurring an accounting
expense with respect to such exercise (the "Option Period") at the per share
price or value and in accordance with the terms stated in the Transfer Notice,
which Right of First Refusal shall be exercised by written notice (the "First
Refusal Exercise Notice") to the Holder. During the Option Period and the
120-day period following the expiration of the Option Period, the Company also
may exercise its Repurchase Right in lieu or in addition to its Right of First
Refusal if the Repurchase Right is or becomes exercisable during the Option
Period or such 120-day period.
(c) Payment Terms. The Company shall consummate the
purchase of the Offered Shares on the terms set forth in the Transfer Notice
within 15 days after delivery of the First Refusal Exercise Notice; provided,
however, that in the event the Transfer Notice provides for the payment for the
Offered Shares other than in cash, the Company and/or its assigns shall have the
right to pay for the Offered Shares by the discounted cash equivalent of the
consideration described in the Transfer Notice as reasonably determined by the
Administrator. Upon payment for the Offered Shares to the Holder or into escrow
for the benefit of the Holder, the Company or its assigns shall become the legal
and beneficial owner of the Offered Shares and all rights and interest therein
or related thereto, and the Company shall have the right to transfer the Offered
Shares to its own name or its assigns without further action by the Holder.
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(d) Assignment. Whenever the Company shall have the right
to purchase Shares under this Right of First Refusal, the Company may designate
and assign one or more employees, officers, directors or shareholders of the
Company or other persons or organizations, to exercise all or a part of the
Company's Right of First Refusal.
(e) Non-Exercise. If the Company and/or its assigns do
not collectively elect to exercise the Right of First Refusal within the Option
Period or such earlier time if the Company and/or its assigns notifies the
Holder that it will not exercise the Right of First Refusal, then the Holder may
transfer the Shares upon the terms and conditions stated in the Transfer Notice,
provided that:
(i) The transfer is made within 120 days of the
expiration of the Option Period; and
(ii) The transferee agrees in writing that such
Shares shall be held subject to the provisions of this Option Agreement.
(f) Expiration of Transfer Period. Following such 120-day
period, no transfer of the Offered Shares and no change in the terms of the
transfer as stated in the Transfer Notice (including the name of the proposed
transferee) shall be permitted without a new written Transfer Notice prepared
and submitted in accordance with the requirements of this Right of First
Refusal.
(g) Exception for Certain Family Transfers. Anything to
the contrary contained in this section notwithstanding, the transfer of any or
all of the Shares during the Grantee's lifetime or on the Grantee's death by
will or intestacy to the Grantee's Immediate Family or a trust for the benefit
of the Grantee or the Grantee's Immediate Family shall be exempt from the
provisions of this Right of First Refusal (a "Permitted Transfer"); provided,
however, that (i) the transferee or other recipient shall receive and hold the
Shares so transferred subject to the provisions of this Option Agreement, and
there shall be no further transfer of such Shares except in accordance with the
terms of this Option Agreement and (ii) prior to any such transfer, each
transferee shall execute an agreement pursuant to which such transferee shall
agree to receive and hold such Shares subject to the provisions of this Option
Agreement. "Immediate Family" as used herein shall mean spouse, domestic partner
(as determined by the Administrator), child, lineal descendant or antecedent,
father, mother, brother or sister and the lineal descendants of such
individuals.
(h) Termination of Right of First Refusal. The provisions
of this Right of First Refusal shall terminate as to all Shares upon the
Registration Date.
(i) Additional Shares or Substituted Securities. In the
event of (i) any increase or decrease in the number of issued Shares resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Shares, or similar transaction affecting the Shares,
(ii) any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company, or (iii) as the Administrator
may determine in its discretion, any other transaction with respect to Common
Stock to which Section 424(a) of the Code applies or a similar transaction;
provided, however that conversion of any convertible
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securities of the Company shall not be deemed to have been "effected without
receipt of consideration, any new, substituted or additional securities or other
property which is by reason of any such transaction distributed with respect to
the Shares shall be immediately subject to the Right of First Refusal, but only
to the extent the Shares are at the time covered by such right.
(j) Corporate Transaction. Immediately prior to the
consummation of a Corporate Transaction, the Right of First Refusal shall
automatically lapse in its entirety, except to the extent this Option Agreement
is assumed by the successor corporation (or its Parent) in connection with such
Corporate Transaction, in which case the Right of First Refusal shall apply to
the new capital stock or other property received in exchange for the Shares in
consummation of the Corporate Transaction, but only to the extent the Shares are
at the time covered by such right.
12. Stop-Transfer Notices. In order to ensure compliance with the
restrictions on transfer set forth in this Option Agreement or the Notice, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
13. Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Option Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
14. Tax Consequences. Set forth below is a brief summary as of the
date of this Option Agreement of some of the federal tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option. If the Option
qualifies as an Incentive Stock Option, there will be no regular federal income
tax liability upon the exercise of the Option, although the excess, if any, of
the Fair Market Value of the Shares on the date of exercise over the Exercise
Price will be treated as income for purposes of the alternative minimum tax for
federal tax purposes and may subject the Grantee to the alternative minimum tax
in the year of exercise.
(b) Exercise of Incentive Stock Option Following
Disability. If the Grantee's Continuous Service terminates as a result of
Disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Grantee must exercise an Incentive Stock Option within three (3) months of such
termination for the Incentive Stock Option to be qualified as an Incentive Stock
Option.
(c) Exercise of Non-Qualified Stock Option. On exercise
of a Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at
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ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If the Grantee is
an Employee or a former Employee, the Company will be required to withhold from
the Grantee's compensation or collect from the Grantee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(d) Disposition of Shares. In the case of a Non-Qualified
Stock Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.
15. Lock-Up Agreement.
(a) Agreement. The Grantee, if requested by the Company
and the lead underwriter of any public offering of the Common Stock or other
securities of the Company (the "Lead Underwriter"), hereby irrevocably agrees
not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act of 1933, as amended, or such shorter
period of time as the Lead Underwriter shall specify. The Grantee further agrees
to sign such documents as may be requested by the Lead Underwriter to effect the
foregoing and agrees that the Company may impose stop-transfer instructions with
respect to such Common Stock subject until the end of such period. The Company
and the Grantee acknowledge that each Lead Underwriter of a public offering of
the Company's stock, during the period of such offering and for the 180-day
period thereafter, is an intended beneficiary of this Section 15.
(b) No Amendment Without Consent of Underwriter. During
the period from identification as a Lead Underwriter in connection with any
public offering of the Company's Common Stock until the earlier of (i) the
expiration of the lock-up period specified in Section 16(a) in connection with
such offering or (ii) the abandonment of such offering by the Company and the
Lead Underwriter, the provisions of this Section 15 may not be amended or waived
except with the consent of the Lead Underwriter.
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16. Entire Agreement: Governing Law. The Notice and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice
and this Option Agreement (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties. The Notice
and this Option Agreement are to be construed in accordance with and governed by
the internal laws of the State of California (as permitted by Section 1646.5 of
the California Civil Code, or any similar successor provision) without giving
effect to any choice of law rule that would cause the application of the laws of
any jurisdiction other than the internal laws of the State of California to the
rights and duties of the parties. Should any provision of the Notice or this
Option Agreement be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.
17. Headings. The captions used in the Notice and this Option
Agreement are inserted for convenience and shall not be deemed a part of the
Option for construction or interpretation.
18. Dispute Resolution. The provisions of this Section 18 shall be
the exclusive means of resolving disputes arising out of or relating to the
Notice and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees (the "parties") shall attempt in good faith to resolve any disputes
arising out of or relating to the Notice and this Option Agreement by
negotiation between individuals who have authority to settle the controversy.
Negotiations shall be commenced by either party by notice of a written statement
of the party's position and the name and title of the individual who will
represent the party. Within thirty (30) days of the written notification, the
parties shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to resolve the dispute. If the dispute
has not been resolved by negotiation, the parties agree that any suit, action,
or proceeding arising out of or relating to the Notice or this Option Agreement
shall be brought in the United States District Court for the Northern District
of California (or should such court lack jurisdiction to hear such action, suit
or proceeding, in a California state court in the County of Santa Xxxxx) and
that the parties shall submit to the jurisdiction of such court. The parties
irrevocably waive, to the fullest extent permitted by law, any objection the
party may have to the laying of venue for any such suit, action or proceeding
brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR
MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or
more provisions of this Section 18 shall for any reason be held invalid or
unenforceable, it is the specific intent of the parties that such provisions
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable.
19. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail (if the parties are
within the United States) or upon deposit for delivery by an internationally
recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as
shown beneath its signature
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in the Notice, or to such other address as such party may designate in writing
from time to time to the other party.
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EXHIBIT A
BAM! ENTERTAINMENT, INC.
EXERCISE NOTICE
BAM! Entertainment, Inc.
000 X. Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today, ______________, ___
the undersigned (the "Grantee") hereby elects to exercise the Grantee's option
to purchase ___________ shares of the Common Stock (the "Shares") of BAM!
Entertainment, Inc. (the "Company") pursuant to the Non-Qualified Stock Option
Award Agreement (the "Option Agreement") and Notice of Stock Option Award (the
"Notice") dated August 16, 2001. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Exercise
Notice.
2. Representations of the Grantee. The Grantee acknowledges that
the Grantee has received, read and understood the Notice and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
unless there is (i) any increase or decrease in the number of issued Shares
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Shares, or similar transaction affecting the Shares,
(ii) any other increase or decrease in the number of issued Shares effected
without receipt of consideration by the Company, or (iii) as the Administrator
may determine in its discretion, any other transaction with respect to Common
Stock to which Section 424(a) of the Code applies or a similar transaction;
provided, however that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration.
Such adjustment shall be made by the Administrator and its determination shall
be final, binding and conclusive. Except as the Administrator determines, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the number or price of Shares
subject to an Award.
The Grantee shall enjoy rights as a shareholder until such time as the
Grantee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal. Upon such
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exercise, the Grantee shall have no further rights as a holder of the Shares so
purchased except the right to receive payment for the Shares so purchased in
accordance with the provisions of the Option Agreement, and the Grantee shall
forthwith cause the certificate(s) evidencing the Shares so purchased to be
surrendered to the Company for transfer or cancellation.
4. Delivery of Payment. The Grantee herewith delivers to the
Company the full Exercise Price for the Shares, which, to the extent selected,
shall be deemed to be satisfied by use of the broker-dealer sale and remittance
procedure to pay the Exercise Price provided in Section 4(d) of the Option
Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may
suffer adverse tax consequences as a result of the Grantee's purchase or
disposition of the Shares. The Grantee represents that the Grantee has consulted
with any tax consultants the Grantee deems advisable in connection with the
purchase or disposition of the Shares and that the Grantee is not relying on the
Company for any tax advice.
6. Taxes. The Grantee agrees to satisfy all applicable federal,
state and local income and employment tax withholding obligations and herewith
delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations. In the case
of an Incentive Stock Option, the Grantee also agrees, as partial consideration
for the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Award Date or within one (1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any federal,
state or local income or employment tax withholding obligations as a result of
such an early disposition, the Grantee agrees to satisfy the amount of such
withholding in a manner that the Administrator prescribes.
7. Restrictive Legends. The Grantee understands and agrees that
the Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by the Company
or by state or federal securities laws:
(a) Securities Law Restrictions:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
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(b) Option Agreement Restrictions:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL
HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE
OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF
FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
(c) Removal of Legend. When all of the following events
have occurred, the Shares then held by Grantee will no longer be subject to the
legend referred to in Section 7(b): (i) the expiration or termination of the
Lock-up Agreement of Section 15 of the Option Agreement (and of any agreement
entered pursuant to Section 15); and (ii) the expiration or exercise in full of
the Right of First Refusal. After such time, and upon Xxxxxxx's request, a new
certificate or certificates representing the Shares not repurchased shall be
issued without the legend referred to in Section 7(b), and delivered to Grantee.
8. Successors and Assigns. The Company may assign any of its
rights under this Exercise Notice to single or multiple assignees, and this
agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this Exercise
Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns.
9. Headings. The captions used in this Exercise Notice are
inserted for convenience and shall not be deemed a part of this agreement for
construction or interpretation.
10. Dispute Resolution. The provisions of Section 18 of the Option
Agreement shall be the exclusive means of resolving disputes arising out of or
relating to this Exercise Notice.
11. Governing Law; Severability. This Exercise Notice is to be
construed in accordance with and governed by the internal laws of the State of
California (as permitted by Section 1646.5 of the California Civil Code, or any
similar successor provision) without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California to the rights and duties of the
parties. Should any provision of this Exercise Notice be determined by a court
of law to be illegal or unenforceable, such provision shall be enforced to the
fullest extent allowed by law and the other provisions shall nevertheless remain
effective and shall remain enforceable.
12. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail (if the parties are
within the United States) or upon deposit for delivery by an internationally
recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as
shown below beneath
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its signature, or to such other address as such party may designate in writing
from time to time to the other party.
13. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
14. Entire Agreement. The Notice and the Option Agreement are
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Option Agreement and this Exercise Notice (except as expressly provided
therein) is intended to confer any rights or remedies on any persons other than
the parties.
[Signature Page Follows]
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Submitted by: Accepted by:
GRANTEE: BAM! ENTERTAINMENT, INC.
By: _______________________________
_________________________ Title:_____________________________
Xxxxx Xxxxx
Address: Address:
_________________________ BAM! Entertainment, Inc.
_________________________ 000 X. Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
I, ______________________, spouse of the Grantee, have read and hereby approve
the foregoing Exercise Notice. In consideration of the Company's granting my
spouse the right to purchase the Shares as set forth in the Exercise Notice, I
hereby agree to be bound irrevocably by the Agreement and further agree that any
community property or similar interest that I may have in the Shares shall
hereby be similarly bound by the Exercise Notice. I hereby appoint my spouse as
my attorney-in-fact with respect to any amendment or exercise of any rights
under the Exercise Notice.
____________________________________
Spouse of Grantee
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EXHIBIT B
BAM! ENTERTAINMENT, INC.
INVESTMENT REPRESENTATION STATEMENT
GRANTEE: XXXXX XXXXX
COMPANY: BAM! ENTERTAINMENT, INC.
SECURITY: COMMON STOCK
AMOUNT: 18,800
DATE: __________________
In connection with the purchase of the above-listed Securities, the undersigned
Grantee represents to the Company the following:
(a) Grantee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Grantee
is acquiring these Securities for investment for Xxxxxxx's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Grantee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon among other things, the bona fide nature
of Xxxxxxx's investment intent as expressed herein. Grantee further understands
that the Securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Xxxxxxx further acknowledges and understands that the Company is
under no obligation to register the Securities. Xxxxxxx understands that the
certificate evidencing the Securities will be imprinted with a legend which
prohibits the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the Grantee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or
such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of
the conditions specified by Rule 144, including: (1) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); and, in the case of an affiliate, (2) the
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availability of certain public information about the Company, (3) the amount of
Securities being sold during any three month period not exceeding the
limitations specified in Rule 144(e), and (4) the timely filing of a Form 144,
if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Grantee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Grantee understands that no assurances can be given that any
such other registration exemption will be available in such event.
(e) Grantee represents that he is a resident of Massachusetts.
Signature of Grantee:
____________________________________
Date: _______________,_______
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