Exhibit 10.3
INCENTIVE STOCK OPTION AGREEMENT
NORTHWEST TELEPRODUCTIONS, INC.
1993 STOCK OPTION PLAN
THIS AGREEMENT, made effective as of this 2nd day of November , 1996, by
and between Northwest Teleproductions, Inc., a Minnesota corporation (the
"Company"), and Xxxx X. XxXxxxx ("Optionee").
W I T N E S S E T H:
WHEREAS, the Optionee on the date hereof is a key employee or officer of
the Company or one of its Subsidiaries; and
WHEREAS, the Company wishes to grant an incentive stock option to Optionee
to purchase shares of the Company's Common Stock pursuant to the Company's 1993
Stock Option Plan (the "Plan"); and
WHEREAS, the Company's Board of Directors has authorized the grant of an
incentive stock option to Optionee and has determined that, as of the effective
date of this Agreement, the fair market value of the Company's Common Stock is
$2.50 per share;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee on the date set
forth above (the "Date of Grant"), the right and option (the "Option") to
purchase all or portions of an aggregate of Fifty Thousand (50,000) shares of
Common Stock at a per share price of $2.50 on the terms and conditions set forth
herein, and subject to adjustment pursuant to Section 12 of the Plan. This
Option is intended to be an incentive stock option within the meaning of Section
422, or any successor provision, of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations thereunder.
2. Duration and Exercisability.
a. The term during which this Option may be exercised shall terminate on
November 2, 2001, unless terminated earlier under the provisions of Paragraphs
4(f) or 4(g) below. This Option shall not be exercisable during the first year
after the Date of Grant. Thereafter, on each succeeding anniversary of the Date
of Grant (the "vesting date"), this Option shall become exercisable to the
extent of one-third of the aggregate number of shares specified in Paragraph 1,
until the earlier of: (i) the time the Option shall have become exercisable to
the extent of one hundred percent (100%) of the total number of shares granted,
and (ii) the termination of the Option as provided herein. Once the Option
becomes exercisable to the extent of one hundred percent (100%) of the aggregate
number of shares specified in Paragraph 1, the Optionee may continue to exercise
this Option under the terms and conditions of this Agreement until the
termination of the Option as provided herein. If Optionee does not purchase upon
an exercise of this Option the full number of shares which Optionee is then
entitled to purchase, Optionee may purchase upon any subsequent exercise prior
to this Option's termination such previously unpurchased shares in addition to
those Optionee is otherwise entitled to purchase.
b. During the lifetime of Optionee, the accrued Option shall be exercisable
only by the Optionee or by the Optionee's guardian or other legal
representative, and shall not be assignable or transferable by the Optionee, in
whole or in part, other than by will or by the laws of descent and distribution.
3. Manner of Exercise.
a. The Option may be exercised only by Optionee (or other proper party in
the event of death or incapacity), subject to the conditions of the Plan and
subject to such other administrative rules as the Board of Directors may deem
advisable, by delivering within the Option Period written notice of exercise to
the Company at its principal office. The notice shall state the number of shares
as to which the Option is being exercised and shall be accompanied by payment in
full of the Option price for all shares designated in the notice. The exercise
of the Option shall be deemed effective upon receipt of such notice by the
Company and upon payment that complies with the terms of the Plan and this
Agreement. The Option may be exercised with respect to any number or all of the
shares as to which it can then be exercised and, if partially exercised, may be
so exercised as to the unexercised shares any number of times during the Option
period as provided herein.
b. Payment of the Option price by Optionee shall be in the form of cash,
certified check or previously acquired shares of Common Stock of the Company, or
any combination thereof; provided, however, that the Board or any Committee
appointed by the Board to administer the Plan may, in its sole discretion, limit
the form of payment to cash or certified check and may exercise its discretion
any time prior to the termination of this Option or upon any exercise of this
Option by the Optionee. Any stock so tendered as part of such payment shall be
valued at its fair market value as provided in the Plan. As soon as practicable
after the effective exercise of all or any part of the Option, the Optionee
shall be recorded on the stock transfer books of the Company as the owner of the
shares purchased, and the Company shall deliver to the Optionee one or more duly
issued stock certificates evidencing such ownership. All requisite original
issue or transfer documentary stamp taxes shall be paid by the Company. For
purposes of this Agreement, "previously acquired shares of Common Stock" shall
include shares of Common Stock that are already owned by the Optionee at the
time of exercise.
4. Miscellaneous.
a. Employment; Rights as Shareholder. This Agreement shall not confer on
Optionee any right with respect to continuance of employment by the Company or
any of its Subsidiaries, nor will it interfere in any way with the right of the
Company to terminate such employment. Optionee shall have no rights as a
shareholder with respect to shares subject to this Option until such shares have
been issued to Optionee upon exercise of this Option. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property), distributions or other rights for which the record date is
prior to the date such shares are issued, except as provided in Section 12 of
the Plan.
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b. Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
Optionee may be required by the Company, as a condition of the effectiveness of
any exercise of this Option, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held, until such time that such
Common Stock is registered and freely tradable under applicable state and
federal securities laws, for Optionee's own account without a view to any
further distribution thereof, that the certificates for such shares shall bear
an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and
federal securities laws. Notwithstanding the foregoing, it is understood that
the Company intends to file a Form S-8 Registration Statement with the
Securities and Exchange Commission covering the granting of options and the
issuance of stock upon exercise of options under the Company's "1993 Stock
Option Plan." This registration will become effective on the date it is filed.
Once filed, the Company presently intends to maintain such registration, subject
always to the discretion of the Company's Board of Directors.
c. Mergers, Recapitalizations, Stock Splits, Etc. Pursuant and subject to
Section 12 of the Plan, certain changes in the number or character of the Common
Stock of the Company (through sale, merger, consolidation, exchange,
reorganization, divestiture (including a spin-off), liquidation,
recapitalization, stock split, stock dividend or otherwise) shall result in an
adjustment, reduction or enlargement, as appropriate, in Optionee's rights with
respect to any unexercised portion of the Option (i.e., Optionee shall have such
"anti-dilution" rights under the Option with respect to such events, but shall
not have "preemptive" rights).
d. Shares Reserved. The Company shall at all times during the Option Period
reserve and keep available such number of shares as will be sufficient to
satisfy the requirements of this Agreement.
e. Withholding Taxes on Disqualifying Disposition. In the event of a
disqualifying disposition of the shares acquired through the exercise of this
Option, the Optionee hereby agrees to inform the Company of such disposition.
Upon notice of a disqualifying disposition, the Company may take such action as
it deems appropriate to insure that, if necessary to provide the Company with
the opportunity to claim the benefit of any income tax deduction which may be
available to it upon such disqualifying disposition and to comply with all
applicable federal or state income tax laws or regulations, all applicable
federal and state payroll, income or other taxes are withheld from any amounts
payable by the Company to Optionee. If the Company is unable to withhold such
federal and state taxes, for whatever reason, the Optionee hereby agrees to pay
to the Company an amount equal to the amount the Company would otherwise be
required to withhold under federal or state law. The Optionee may, subject to
the approval and discretion of the Board of Directors or such other
administrative rules it may deem advisable, elect to have all or a portion of
such tax withholding obligations satisfied by delivering shares of the Company's
Common Stock having a fair market value equal to such obligations.
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f. Termination of Employment (other than Disability or Death). If Optionee
ceases to be an employee of the Company or any Subsidiary for any reason
(including, without limitation, termination of employment as a result of the
reorganization, sale or liquidation by the Company or the Subsidiary which
employs Optionee where Optionee does not thereafter continue as an employee of
the Company or another Subsidiary), other than because of disability or death,
this Option shall completely terminate on the earlier of (i) the close of
business on the three-month anniversary date of such termination of employment,
and (ii) the expiration date of this Option stated in Paragraph 2 above. Except
as otherwise provided in Section 17 of the Plan, in such period following such
termination of employment, this Option shall be exercisable only to the extent
the Option was exercisable on the vesting date immediately preceding the date of
the Optionee's termination of employment but had not previously been exercised.
Subject to the provisions of Paragraph 4(h) below, to the extent this Option was
not exercisable upon such termination of employment, or if the Optionee does not
exercise the Option within the time specified in this Paragraph 4(f), all rights
of the Optionee under this Option shall be forfeited.
g. Disability. If Optionee ceases to be an employee of the Company or any
Subsidiary due to disability (as such term is defined in Section 22(e)(3), or
any successor provision, of the Code), this Option shall completely terminate on
the earlier of (i) the close of business on the twelve-month anniversary date of
such termination of employment, and (ii) the expiration date under this Option
stated in Paragraph 2 above. In such period following such termination of
employment, this Option shall be exercisable only to the extent the Option was
exercisable on the vesting date immediately preceding the date of the Optionee's
termination of employment, but had not previously been exercised. Subject to the
provisions of Paragraph 4(h) below, to the extent this Option was not
exercisable upon such termination of employment, or if the Optionee does not
exercise the Option within the time specified in this Paragraph 4(g), all rights
of the Optionee under this Option shall be forfeited.
h. Death. If Optionee dies (i) while in the employ of the Company or any
Subsidiary; (ii) within the three-month period after the termination of
employment in the case of Paragraph 4(f) above; or (iii) within the twelve-month
period after the termination of employment in the case of Paragraph 4(g) above,
this Option shall become fully exercisable, if not already fully exercisable by
such time, and shall terminate on the expiration date of this Option stated in
Paragraph 2 above. In such period following Optionee's death, this Option may be
exercised by the person or persons to whom Optionee's rights under this Option
shall have passed by Optionee's will or by the laws of descent and distribution
to the extent the Option had not previously been exercised.
i. 1993 Stock Option Plan. The Option evidenced by this Agreement is
granted pursuant to the Plan, a copy of which Plan has been made available to
Optionee and is hereby incorporated into this Agreement. This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan.
The Plan governs this Option and, in the event of any questions as to the
construction of this Agreement or in the event of a conflict between the Plan
and this Agreement, the Plan shall govern, except as the Plan otherwise
provides.
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j. Scope of Agreement. This Agreement shall bind and inure to the benefit
of the Company and its successors and assigns and the Optionee and any successor
or successors of the Optionee permitted by Paragraph 2(b) above.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
NORTHWEST TELEPRODUCTIONS, INC.
By: /s/ Xxxx X. Xxxxxxx
Its: Chairman
/s/ Xxxx X. XxXxxxx
Optionee
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