NETTER DIGITAL ENTERTAINMENT, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is made
and entered into as of _____________, 199_ (hereinafter referred to as the
"Date of Grant"), by and between NETTER DIGITAL ENTERTAINMENT,
INC., a Delaware corporation (the "Company"), and ___________________
("Optionee"), with reference to the following facts:
A. The Company has duly adopted a 1997 Incentive Stock
Option Plan (hereinafter referred to as the "Plan") which authorizes the
Board of Directors of the Company (the "Board") to grant nonstatutory
stock options or incentive stock options, within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
which is intended to encourage ownership of stock of the Company by
designated employees, executive officers and consultants, including
employee directors, and to provide additional incentive for them to
promote the success of the Company.
B. The Board has determined that Optionee is entitled to
participate in the Plan, and has taken appropriate action to authorize the
granting of an incentive stock option to Optionee for the number of
shares, at the price per share and on the terms set forth in this
Agreement.
C. Optionee desires to participate in the Plan and to receive an
incentive stock option on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option.
The Company hereby grants to Optionee the right and option
(hereinafter referred to as the "Option") to purchase all or any part of an
aggregate of _________ shares (the "Option Shares") of common stock,
$.01 par value, of the Company (the "Common Stock") on the terms and
conditions set forth in this Agreement.
2. Purchase Price.
The purchase price (the "Exercise Price") of each Option
Share shall be $__.__.
3. Option Period.
The Option shall commence on the Date of Grant and shall
expire, and all rights to purchase the Option Shares shall terminate, at
the close of business on the day immediately preceding the tenth
anniversary of the Date of Grant, unless terminated earlier as provided
in this Agreement. Notwithstanding the foregoing, the term of the Option
shall not exceed five years if, on the Date of Grant, Optionee owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any parent or subsidiary. The
Option shall not be exercisable until the time at which all legal
requirements in connection with the Plan have been fully complied with.
Subject to the foregoing, the Option shall be subject to the following
vesting schedule:_______________; provided, however, if Optionee shall not
in any one exercise period purchase all of the Option Shares which
Optionee is entitled to purchase in such period, Optionee may purchase
all or any part of such Option Shares at any time after the end of such
period and prior to the expiration of the Option. Notwithstanding the
foregoing, (a) if Optionee is subject to the reporting requirements of
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
the Option shall not be exercisable until at least six months and one day
from the Date of Grant and (b) the sum of the fair market value of (i) the
Option Shares which are subject to incentive stock options and (ii) all
shares of Common Stock which are subject to incentive stock options
that have been granted to Optionee under the Plan or any other option
plan of the Company, which are first exercisable in any one calendar year
may not exceed $100,000.00 (determined on the Date of Grant).
4. Exercise of Option.
4.1 The Option shall be exercised by delivering this
Agreement for endorsement to the Company, at its principal office,
attention of the Corporate Secretary, together with a Notice and
Agreement of Exercise (in the form attached hereto or specified from time
to time by the Board) indicating the number of Option Shares Optionee
wishes to purchase and full payment of the Exercise Price of such shares.
In no event shall the Company be required to issue or transfer fractional
shares.
4.2 Payment for Option Shares may be made in cash, by
cashier's or certified check or (if the Board authorizes payment in stock)
by delivery to the Company of shares of Common Stock, duly assigned to
the Company by a stock power with signatures guaranteed as provided
on the back of the stock certificate. The value of each share delivered in
payment of the Exercise Price of Option Shares shall be the fair market
value ("Fair Market Value") of the Common Stock on the date such shares
are delivered. The Fair Market Value of a share of the Common Stock on
any date shall be equal to the closing price of the Common Stock for the
last preceding day on which the Company's shares were traded, and the
method for determining the closing price shall be determined by the
Board.
5. Employment of Optionee.
5.1 Except as otherwise provided in paragraph 6 of this
Agreement, Optionee may not exercise the Option unless, at the time of
exercise, Optionee is an employee of the Company and has been in the
employ of the Company continuously since the Date of Grant. For
purposes of this paragraph, the period of continuous employment with
the Company shall be deemed to include (without extending the term of
the Option) any period during which Optionee is on leave of absence with
the consent of the Company, provided that such leave of absence shall
not exceed three months and Optionee returns to the employ of the
Company at the expiration of such leave of absence. If Optionee fails to
return to the employ of the Company at the expiration of such leave of
absence, Optionee's employment with the Company shall be deemed
terminated as of the date such leave of absence commenced. The
continuous employment of Optionee with the Company shall also be
deemed to include any period during which Optionee is a member of the
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Armed Forces of the United States, provided that Optionee returns to the
employ of the Company within 90 days (or such longer period as may be
prescribed by law) from the date Optionee first becomes entitled to dis-
charge. If Optionee does not return to the employ of the Company within
90 days from the date Optionee first becomes entitled to discharge (or
such longer period as may be prescribed by law), Optionee's employment
with the Company shall be deemed to have terminated as of the date
Optionee's military service ended.
5.2 Nothing contained herein shall be construed to impose
upon the Company any obligation to employ Optionee for any period or
to supersede or in any way alter, increase or diminish the respective
rights and obligations of the Company and Optionee under any
employment contract now or hereafter existing between them.
6. Termination of Employment.
6.1 If the employment of Optionee with the Company shall
terminate by reason of death, unless otherwise provided by the Board,
(a) the Option, to the extent then presently exercisable, shall remain in
full force and effect and may be exercised pursuant to the provisions
hereof, including expiration at the end of the fixed term hereof, and (b)
the Option, to the extent not then presently exercisable, shall terminate
as of the date of such termination of employment and shall not be
exercisable thereafter. If the employment of Optionee with the Company
shall terminate by reason of Disability (as defined in the Plan), unless
otherwise provided by the Board, (a) the Option, to the extent then
presently exercisable, shall remain in full force and effect and may be
exercised pursuant to the provisions hereof, at any time until the earlier
of the end of the fixed term hereof and the expiration of twelve months
following termination of Optionee's employment, and (b) the Option, to
the extent not then presently exercisable, shall terminate as of the date
of such termination of employment and shall not be exercisable there-
after.
6.2 If the employment of Optionee with the Company shall
terminate for any reason other than the reasons set forth in paragraph
6.1 hereof, unless otherwise provided by the Board, (a) the Option, to the
extent then presently exercisable shall remain exercisable only for a
period of three months after the date of such termination of employment
and may be exercised during such period pursuant to the provisions
hereof, including expiration at the end of the fixed term hereof, and (b)
the Option, to the extent not then presently exercisable, shall terminate
as of the date of such termination of employment and shall not be
exercisable thereafter.
7. Securities Laws Requirements.
7.1 The Option shall not be exercisable unless and until any
applicable registration or qualification requirements of federal and state
securities laws, and all other requirements of law or any regulatory
bodies having jurisdiction over such exercise or issuance and delivery,
have been fully complied with. The Company will use reasonable efforts
to maintain the effectiveness of a Registration Statement under the
Securities Act of 1933 (the "Securities Act") for the issuance of the Option
and the Option Shares but there may be times when no such Registration
Statement will be currently effective. Exercise of the Option may be
temporarily suspended without liability to the Company during times
when no such Registration Statement is currently effective, or during
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times when, in the reasonable opinion of the Board, such suspension is
necessary to preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If the Option
would expire for any reason except the end of its term during such a
suspension, then if exercise of the Option is duly tendered before its
expiration, the Option shall be exercisable and exercised (unless the
attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company shall have no obligation to file any
Registration Statement covering resales of the Option Shares.
7.2 Upon each exercise of the Option, Optionee shall
represent, warrant and agree, by the Notice and Agreement of Exercise
delivered to the Company, that (a) no Option Shares will be sold or
otherwise distributed in violation of the Securities Act or any other
applicable federal or state securities laws, (b) if Optionee is subject to the
reporting requirements under Section 16(a) of the Exchange Act,
Optionee will furnish to the Company a copy of each Form 4 or Form 5
filed by Optionee and will timely file all reports required under federal
securities laws, and (c) Optionee will report all sales of Option Shares to
the Company in writing on the form prescribed from time to time by the
Company. All Option Share certificates may be imprinted with legend
conditions reflecting federal and state securities law restrictions and
conditions and the Company may comply therewith and issue "stop
transfer" instructions to its transfer agents and registrars without
liability.
8. Non-transferability of Option.
The Option shall be transferable only pursuant to Optionee's
will or the laws of descent and distribution, and may be exercised, during
the lifetime of Optionee, only by Optionee. Without limiting the generality
of the foregoing, the Option may not be assigned, transferred (except as
provided above), pledged or hypothecated in any way, shall not be
assignable by operation of law and shall not be subject to attachment,
execution, garnishment, sequestration, the law of bankruptcy or any
other legal or equitable process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition contrary to the provisions of
this Agreement, and the levy of any execution, attachment or similar
process thereupon, shall be null and void and without effect.
9. Changes in Capitalization.
9.1 The number and class of shares subject to the Option,
the Exercise Price (but not the total price), and the minimum number of
shares as to which the Option may be exercised at any one time, shall be
proportionately adjusted in the event of any increase or decrease in the
number of the issued shares of Common Stock which results from a
split-up or consolidation of shares, payment of a stock dividend or stock
dividends exceeding a total of five percent (5%) for which the record dates
occur in any one fiscal year, a recapitalization (other than the conversion
of convertible securities according to their terms), a combination of
shares or other like capital adjustment, so that upon exercise of the
Option, Optionee shall receive the number and class of shares Optionee
would have received had Optionee been the holder of the number of
shares of Common Stock for which the Option is being exercised upon
the date of such change or increase or decrease in the number of issued
shares of the Company.
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9.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the
Company is not the surviving corporation, or in which the Company
survives as a wholly-owned subsidiary of another corporation, or upon
a sale of all or substantially all of the property of the Company to another
corporation, or any dividend or distribution to stockholders of more than
10% of the Company's assets, adequate adjustment or other provisions
shall be made by the Company or other party to such transaction so that
there shall remain and/or be substituted for the Option Shares provided
for herein, the shares, securities or assets which would have been
issuable or payable in respect of or in exchange for the Option Shares
then remaining under the Option, as if Optionee had been the owner of
such shares as of the applicable date. Any securities so substituted shall
be subject to similar successive adjustments.
10. Relationship to Other Employee Benefit Plans.
The Option shall not be deemed to be salary or other
compensation to Optionee for purposes of any pension, thrift, profit
sharing, stock purchase or other employee benefit plan now maintained
or hereafter adopted by the Company.
11. Misconduct of Optionee.
Notwithstanding any other provision of this Agreement or
the Plan, if Optionee shall commit fraud or dishonesty toward the
Company, wrongfully use or disclose any trade secret, confidential data
or other information proprietary to the Company or intentionally take any
other action materially inimical to the best interests of the Company, as
determined by the Board in its sole and absolute discretion, Optionee
shall forfeit all rights and benefits under this Agreement.
12. Subsidiary.
The term "subsidiary" as used herein, shall mean each
corporation which is a "subsidiary corporation" of the Company, within
the definition contained in Section 424(f) of the Code. Unless the context
indicates otherwise, references to the Company shall include all
subsidiaries of the Company and any parent it may have in the future.
13. Privileges of Ownership.
Optionee shall not have any of the rights of a stockholder
with respect to the shares covered by the Option except to the extent that
share certificates have actually been issued and registered in Optionee's
name on the books of the Company or its registrar upon the due exercise
of the Option. The Company shall be allowed a reasonable time following
notice of exercise in which to accomplish the issuance and registration.
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14. Reference to Plan and Internal Revenue Code.
This Agreement and the Option are subject to all of the
terms and conditions of the Plan, which are hereby incorporated by
reference. In the event of any conflict between this Agreement and the
Plan, the provisions of the Plan shall prevail. Inasmuch as the Option is
intended to constitute an "incentive stock option" within the meaning of
Section 422 of the Code, and the Regulations issued thereunder, as said
Section or Regulations may be amended from time to time, all
interpretations and provisions of this Agreement, the Option and the Plan
shall be resolved to the extent possible, in accordance with the
requirements of said Section and Regulations and in a way which
preserves the Option as an incentive stock option. To the extent that any
portion of the Option does not qualify as an incentive stock option, that
portion shall constitute a non-statutory stock option provided that the
status of the remaining portion of the Option as an incentive stock option
is not effected thereby.
15. Notices.
Any notice to be given under the terms of this Agreement
shall be addressed to the Company in care of its Corporate Secretary at
0000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxxxxx 00000, and any
notice to be given to Optionee shall be addressed to Optionee at the
address appearing on the employment records of the Company, or at
such other address or addresses as either party may hereafter designate
in writing to the other. Any such notice shall be deemed duly given when
enclosed in a properly sealed envelope, addressed as herein required and
deposited, postage prepaid, in a post office or branch post office regularly
maintained by the United States Government.
16. Withholding Taxes.
The Company shall have the right at the time of exercise of
the Option to make adequate provision for any federal, state, local or
foreign taxes which it believes are or may be required by law to be
withheld with respect to such exercise ("Tax Liability"), to ensure the
payment (through withholding from Optionee's salary or the Option
Shares or otherwise as the Company shall deem in its sole and
conclusive discretion to be in its best interests) of any such Tax Liability.
17. Number and Gender.
Terms used herein in any number or gender include other
numbers or genders, as the context may require.
18. Counterparts.
This Agreement may be executed in one or more counter-
parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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19. Governing Law.
This Agreement and performance under it, shall be
construed in accordance with and under the laws of the State of
Delaware. Should a court or other body of competent jurisdiction
determine that any term or provision of this Agreement is excessive in
scope, such term or provision shall be adjusted rather than voided and
interpreted so as to be enforceable to the fullest extent possible, and all
other terms and provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.
IN WITNESS WHEREOF, the Company and Optionee have
executed this Agreement as of the Date of Grant.
"OPTIONEE" "COMPANY"
NETTER DIGITAL ENTERTAINMENT, INC.
______________________________
(Signature)
______________________________ By ____________________________
(Print Name) Its____________________________
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NETTER DIGITAL ENTERTAINMENT, INC.
NOTICE AND AGREEMENT OF EXERCISE
OF INCENTIVE STOCK OPTION
_________ , 199_
I hereby exercise my Netter Digital Entertainment, Inc. Incentive
Stock Option dated _______ , 199_, as to _______ shares of Netter Digital
Entertainment, Inc. common stock, $.01 par value (the "Option Shares").
Enclosed are the documents and payment specified in Paragraph
4 of my Option Agreement. I understand that no Option Shares shall be
issued and delivered unless and until any applicable registration
requirements of the Securities Act of 1933, as amended, any listing
requirements of any securities exchange on which stock of the same class
is then listed, and any other requirements of law or any regulatory bodies
having jurisdiction over such issuance and delivery, shall have been fully
complied with. I hereby represent, warrant and agree, to and with Netter
Digital Entertainment, Inc. (the "Company"), that:
a. The Option Shares I am purchasing are being acquired for my
account, and no other person (except, if I am married, my spouse) will
own any interest therein.
b. I will not sell or dispose of my Option Shares in violation of the
Securities Act of 1933 or any other applicable Federal or state securities
laws. I will obtain the Company's advice prior to any disposition of my
Option Shares.
c. I agree that the Company may, without liability, place legend
conditions upon my Option Shares and issue "stop transfer" restrictions
requiring compliance with applicable securities laws and the terms of my
Option.
d. If and so long as I am subject to reporting requirements under
Section 16(a) of the Securities Exchange Act of 1934, I will furnish to the
Company a copy of each Form 4 or Form 5 filed by me and will timely file
all reports required under the Federal securities laws.
e. I will report to the Company all sales of Option Shares on the
form prescribed from time to time by the Company.
The number of Option Shares specified above are to be issued in
the following registration (husband and wife will be shown to be joint
tenants unless I state that the Option Shares will be held as community
property or as tenants in common):
__________________________________ _______________________________
(Print your name) (Signature)
__________________________________ _______________________________
(Option - Print name of spouse
if you wish joint registration _______________________________
Address
