EXHIBIT 4.10
NTN COMMUNICATIONS, INC.
2004 PERFORMANCE INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT (this "Option Agreement") dated
June 28, 2005 by and between NTN COMMUNICATIONS, INC., a Delaware corporation
(the "Corporation"), and XXXXXXX X. XXXXXX (the "Grantee") evidences the
incentive stock option (the "Option") granted by the Corporation to the Grantee
as to the number of shares of the Corporation's Common Stock first set forth
below.
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Number of Shares of Common Stock:(1) 250,000 Award Date: June 28, 2005
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Exercise Price per Share: $1.88 Expiration Date:(1)(2) June 27, 2015
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Vesting: (1,2) The Option shall become vested as to the total number of shares
of Common Stock subject to the Option in 12 substantially equal monthly
installments, with the first installment vesting on the first day of the month
following the month in which the Award Date occurs and an additional installment
vesting on the first day of each of the 11 months thereafter.
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The Option is granted under the NTN Communications, Inc. 2004
Performance Incentive Plan (the "Plan") and subject to the Terms and Conditions
of Incentive Stock Option (the "Terms") attached to this Option Agreement
(incorporated herein by this reference) and to the Plan. The Option has been
granted to the Grantee in addition to, and not in lieu of, any other form of
compensation otherwise payable or to be paid to the Grantee. Capitalized terms
are defined in the Plan if not defined herein. The parties agree to the terms of
the Option set forth herein. The Grantee acknowledges receipt of a copy of the
Terms, the Plan and the Prospectus for the Plan.
XXXXXXX X. XXXXXX NTN COMMUNICATIONS, INC.
a Delaware corporation
By: /s/Xxxxxxx X. Xxxxxx By: /s/Xxxx Xxxxxx
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Xxxxxxx X. Xxxxxx Xxxx Xxxxxx
Chief Financial Officer
TERMS AND CONDITIONS OF INCENTIVE STOCK OPTION
1. Vesting; Limits on Exercise.
The Option shall vest and become exercisable in percentage installments
of the aggregate number of shares subject to the Option as set forth on the
cover page of this Option Agreement. The Option may be exercised only to the
extent the Option is vested and exercisable.
o Cumulative Exercisability. To the extent that the Option is
vested and exercisable, the Grantee has the right to exercise
the Option (to the extent not previously exercised), and such
right shall continue, until the expiration or earlier
termination of the Option.
o No Fractional Shares. Fractional share interests shall be
disregarded, but may be cumulated.
o Minimum Exercise. No fewer than 100(1) shares of Common Stock
may be purchased at any one time, unless the number purchased
is the total number at the time exercisable under the Option.
o ISO Value Limit. If the aggregate fair market value of the
shares with respect to which ISOs (whether granted under the
Option or otherwise) first become exercisable by the Grantee
in any calendar year exceeds $100,000, as measured on the
applicable Award Dates, the limitations of Section 5.1.2 of
the Plan shall apply and to such extent the Option will be
rendered a nonqualified stock option.
2. Continuance of Employment/Service Required; No Employment/Service
Commitment.
The vesting schedule requires continued employment or service through
each applicable vesting date as a condition to the vesting of the applicable
installment of the Option and the rights and benefits under this Option
Agreement. Employment or service for only a portion of the vesting period, even
if a substantial portion, will not entitle the Grantee to any proportionate
vesting or avoid or mitigate a termination of rights and benefits upon or
following a termination of employment or services as provided in Section 4 below
or under the Plan, unless otherwise provided by an employment agreement.
Nothing contained in this Option Agreement or the Plan constitutes a
continued employment or service commitment by the Corporation or any of its
Subsidiaries, affects the Grantee's status, if he or she is an employee, as an
employee at will who is subject to termination without cause, confers upon the
Grantee any right to remain employed by or in service to the Corporation or any
Subsidiary, interferes in any way with the right of the Corporation or any
Subsidiary at any time to terminate such employment or service, or affects the
right of the Corporation or any Subsidiary to increase or decrease the Grantee's
other compensation.
3. Method of Exercise of Option.
The Option shall be exercisable by the delivery to the Secretary of the
Corporation (or such other person as the Administrator may require pursuant to
such administrative exercise procedures as the Administrator may implement from
time to time) of:
o a written notice stating the number of shares of Common Stock
to be purchased pursuant to the Option or by the completion of
such other administrative exercise procedures as the Committee
may require from time to time,
o payment in full for the Exercise Price of the shares to be
purchased in cash, check or by electronic funds transfer to
the Corporation, or (subject to compliance with all applicable
laws, rules, regulations and listing requirements and further
subject to such rules as the Administrator may adopt as to any
non-cash payment) in shares of Common Stock already owned by
the Participant, valued at their Fair Market Value on the
exercise date, provided, however, that any shares initially
acquired upon exercise of a stock option or otherwise from the
Corporation must have been owned by the Participant for at
least six (6) months before the date of such exercise;
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o any written statements or agreements required pursuant to
Section 8.1 of the Plan; and
o satisfaction of the tax withholding provisions of Section 8.5
of the Plan.
The Administrator also may, but is not required to, authorize a non-cash payment
alternative by notice and third party payment in such manner as may be
authorized by the Administrator.
The Option will qualify as an ISO only if it meets all of the applicable
requirements of the Code. The Option may be rendered a nonqualified stock option
if the Administrator permits the use of one or more of the non-cash payment
alternatives referenced above.
4. Early Termination of Option.
4.1 Possible Termination of Option upon Change in Control. The Option is subject
to termination in connection with a Change in Control Event or certain similar
reorganization events as provided in Section 7.4 of the Plan.
4.2 Termination of Option upon a Termination of Grantee's Employment or
Services. Subject to earlier termination on the Expiration Date of the Option or
pursuant to Section 4.1 above, if the Grantee ceases to be employed by or ceases
to provide services to the Corporation or a Subsidiary, the following rules
shall apply (the last day that the Grantee is employed by or provides services
to the Corporation or a Subsidiary is referred to as the Grantee's "Severance
Date"):
o other than as expressly provided below in this Section 4.2,
(a) the Grantee will have until the date that is 3 years after
his or her Severance Date to exercise the Option (or portion
thereof) to the extent that it was vested on the Severance
Date, (b) the Option, to the extent not vested on the
Severance Date, shall terminate on the Severance Date, and (c)
the Option, to the extent exercisable for the 3 year period
following the Severance Date and not exercised during such
period, shall terminate at the close of business on the last
day of the 3 year period;
o if the termination of the Grantee's employment or services is
the result of the Grantee's death or Total Disability (as
defined below), then the Grantee (or his beneficiary or
personal representative, as the case may be) will have until
the date that is 6 months after the Grantee's Severance Date
to exercise the Option, (b) the Option, to the extent not
vested on the Severance Date, shall terminate on the Severance
Date, and (c) the Option, to the extent exercisable for the 6
month period following the Severance Date and not exercised
during such period, shall terminate at the close of business
on the last day of the 6 month period;
o if the Grantee's employment or services are terminated by the
Corporation or a Subsidiary for Cause (as defined below), the
Option (whether vested or not) shall terminate on the
Severance Date.
For purposes of the Option, "Total Disability" means a "permanent and
total disability" (within the meaning of Section 22(e)(3) of the Code or as
otherwise determined by the Administrator).
For purposes of the Option, "Cause" means that the Grantee:
(1) has been negligent in the discharge of his or her duties to
the Corporation or any of its Subsidiaries, has refused to
perform stated or assigned duties or is incompetent in or
(other than by reason of a disability or analogous condition)
incapable of performing those duties;
(2) has been dishonest or committed or engaged in an act of theft,
embezzlement or fraud, a breach of confidentiality, an
unauthorized disclosure or use of inside information, customer
lists, trade secrets or other confidential information; has
breached a fiduciary duty, or willfully and materially
violated any other duty, law, rule, regulation or policy of
the Corporation, any of its Subsidiaries or any affiliate of
the Corporation or any of its Subsidiaries; or has been
convicted of a felony or misdemeanor (other than minor traffic
violations or similar offenses);
(3) has materially breached any of the provisions of any agreement
with the Corporation, any of its Subsidiaries or any affiliate
of the Corporation or any of its Subsidiaries; or
(4) has engaged in unfair competition with, or otherwise acted
intentionally in a manner injurious to the reputation,
business or assets of, the Corporation, any of its
subsidiaries or any affiliate of the Corporation or any of its
Subsidiaries; has improperly induced a vendor or customer to
break or terminate any contract with the Corporation, any of
its Subsidiaries or any affiliate of the Corporation or any of
its Subsidiaries; or has induced a principal for whom the
Corporation, any of its Subsidiaries or any affiliate of the
Corporation or any of its Subsidiaries acts as agent to
terminate such agency relationship.
In all events the Option is subject to earlier termination on the
Expiration Date of the Option or as contemplated by Section 4.1. The
Administrator shall be the sole judge of whether the Grantee continues to render
employment or services for purposes of this Option Agreement.
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Notwithstanding any post-termination exercise period provided for
herein or in the Plan, the Option will qualify as an ISO only if it is exercised
within the applicable exercise periods for ISOs under, and meets all of the
other requirements of, the Code. If the Option is not exercised within the
applicable exercise periods for ISOs or does not meet such other requirements,
the Option will be rendered a nonqualified stock option.
5. Non-Transferability.
The Option and any other rights of the Grantee under this Option
Agreement or the Plan are nontransferable and exercisable only by the Grantee,
except as set forth in Section 5.7 of the Plan.
6. Notices.
Any notice to be given under the terms of this Option Agreement shall
be in writing and addressed to the Corporation at its principal office to the
attention of the Secretary, and to the Grantee at the address last reflected on
the Corporation's payroll records, or at such other address as either party may
hereafter designate in writing to the other. Any such notice shall be delivered
in person or shall be enclosed in a properly sealed envelope addressed as
aforesaid, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government. Any such notice shall be given only
when received, but if the Grantee is no longer employed by the Corporation or a
Subsidiary, shall be deemed to have been duly given five business days after the
date mailed in accordance with the foregoing provisions of this Section 6.
7. Plan.
The Option and all rights of the Grantee under this Option Agreement
are subject to, and the Grantee agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Grantee agrees to be bound by the terms of the Plan and this Option
Agreement (including these Terms). The Grantee acknowledges having read and
understanding the Plan, the Prospectus for the Plan, and this Option Agreement.
Unless otherwise expressly provided in other sections of this Option Agreement,
provisions of the Plan that confer discretionary authority on the Board or the
Administrator do not and shall not be deemed to create any rights in the Grantee
unless such rights are expressly set forth herein or are otherwise in the sole
discretion of the Board or the Administrator so conferred by appropriate action
of the Board or the Administrator under the Plan after the date hereof.
8. Entire Agreement.
This Option Agreement (including these Terms) and the Plan together
constitute the entire agreement and supersede all prior understandings and
agreements, written or oral, of the parties hereto with respect to the subject
matter hereof. The Plan and this Option Agreement may be amended pursuant to
Section 8.6 of the Plan. Such amendment must be in writing and signed by the
Corporation. The Corporation may, however, unilaterally waive any provision
hereof in writing to the extent such waiver does not adversely affect the
interests of the Grantee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.
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9. Governing Law.
This Option Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of Delaware without regard to conflict
of law principles thereunder.
10. Effect of this Agreement.
Subject to the Corporation's right to terminate the Option pursuant to
Section 7.4 of the Plan, this Option Agreement shall be assumed by, be binding
upon and inure to the benefit of any successor or successors to the Corporation.
11. Counterparts.
This Option Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
12. Section Headings.
The section headings of this Option Agreement are for convenience of
reference only and shall not be deemed to alter or affect any provision hereof.
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(1) Subject to adjustment under Section 7.1 of the Plan.
(2) Subject to early termination under Section 4 of the Terms and Section
7.4 of the Plan.
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