EXHIBIT 10.5
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OPTION AGREEMENT
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This OPTION AGREEMENT (the "Agreement") dated effective as of
February 1, 1995, provides for the granting of an option by Jungle Jim's
Playlands, Inc., a Delaware corporation (the "Corporation"), to Xxxxx X.
El-Xxxx, an employee of the Corporation (the "Optionee");
The Corporation and the Optionee have concurrently herewith entered
into an Executive Employment Agreement (the "Employment Agreement"), to which
this Agreement is attached as Exhibit A and incorporated by reference. In
connection with such Employment Agreement, the Board of Directors of the
Corporation has determined that the Optionee is to be granted an option to buy
shares of the Corporation's common stock, par value $.01 per share (the
"Shares"), on the terms and subject to the conditions hereinafter provided.
1. Number of Shares: Option Price. The Corporation hereby grants to
the Optionee an option (the "Option") to purchase Two Million (2,000,000) Shares
at a price of One Dollar Ten Cents ($1.10) per Share, One Million (1,000,000)
Shares at a price of One Dollar Sixty-Five Cents ($1.65) per Share and One
Million (1,000,000) Shares at a price of Two Dollars and Twenty Cents ($2.20)
per Share (collectively, the "Option Shares," and the various prices being
collectively referred to as the "Per Share Exercise Price") on the terms and
subject to the conditions set forth herein. The Optionee shall not have any of
the rights of a stockholder with respect to the Shares covered hereby unless and
until the valid exercise of this Option in accordance with the terms and
conditions contained herein. The Option shall be a nonqualified or nonstatutory
stock option within the meaning of the Internal Revenue Code of 1986, as
amended.
2. Period of Option and Conditions of Exercise.
(a) The term of this Option Agreement and the Option covered
hereby shall commence on the date hereof (the "Date of Grant") and terminate
upon the earlier of: (i) the expiration of eight (8) years from the Date of
Grant (the "Expiration Date"), and (ii) the time at which the Option is
completely terminated pursuant to Section 3 below.
Upon the termination of the Option, all rights of the Optionee hereunder shall
cease.
(b) The Option shall become exercisable as to one-sixteenth of
the Option Shares on a pro rata basis three (3) months after the Date of Grant
and as to an additional one-sixteenth of the Option Shares on a pro rata basis
upon each of the next fifteen succeeding three-month anniversary dates of the
Date of Grant thereafter. Upon the (i) liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary or (ii) merger or
consolidation of the Corporation with or into another corporation resulting in
the stockholders of the Corporation immediately prior to such transaction owning
less than a majority of the outstanding voting stock of the surviving or
successor entity, or the sale of all or substantially all of the Corporation's
assets, the Option shall become exercisable in full.
(c) If, prior to the date upon which this Option has become
exercisable with respect to all of the Option Shares, the Corporation determines
to effect a transaction (including, without limitation, a merger, consolidation
or sale of all or substantially all of the Corpora- tion's assets in one
transaction) in which the previously outstanding Shares are changed into or
exchanged for common stock or other securities of another corporation or
interests in a noncorporate entity or other property (including cash) or any
combination of any of the foregoing (each, a "Transfer Event"), the Option shall
be exercisable, subject to the satisfaction of the conditions to exercisability
provided in Section 2(b) hereof, for the same property into which the number of
Shares for which the Option shall be exercisable would have been changed into or
exchanged for had such exercise occurred immediately prior to such Transfer
Event (and the provisions of Section 5 hereof, permitting payment of the
exercise price in shares or withholding of shares to pay the exercise price or
withholding obligations shall be modified to the extent practicable so as to be
applicable to the property into which such shares have been changed into or
exchanged for).
(d) The Option may be exercised only to purchase whole Shares,
and in no case may a fraction of a Share be purchased. The right of the Optionee
to purchase Option Shares may be exercised in whole at any time or in part from
time to time to the extent the Option has become exercisable in accordance with
Section 2(b) hereof and prior
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to the earlier of: (1) the Expiration Date, and (ii) as to any portion of the
Option, the time at which such portion is terminated pursuant to Section 3
below.
3. Termination Upon Termination of Employment.
(a) If the Optionee's employment with the Corporation or its
subsidiaries terminates for Cause (as defined in Section 7(c) of the Employment
Agreement), the Option shall immediately terminate.
(b) If the Optionee shall die while an employee of the
Corporation or a subsidiary, to the extent the Option is exercisable on the date
of such death, the Optionee's estate shall be permitted to exercise the Option
as to the portion then exercisable and the Option shall not terminate, until the
earlier of (i) one year after the Date of Death, and (ii) the Expiration Date.
(c) If the Optionee's employment with the Corporation or its
subsidiaries terminates by reason of Disability (as defined in section 7(b) of
the Employment Agreement), to the extent the Option is exercisable on the date
of such Disability, the Optionee shall be permitted to exercise the Option as to
the portion then exercisable and the Option shall not terminate, until the
earlier of: (i) one year following the date of Disability, and (ii) the
Expiration Date.
(d) If the Optionee's employment with the Corporation or its
subsidiaries shall terminate by reason of resignation by the Optionee (other
than for Good Cause, as defined in the Employment Agreement), to the extent the
Option is exercisable on the date of such resignation, the Optionee shall be
permitted to exercise the Option as to the portion then exercisable and the
Option shall not terminate, until the earlier of: (i) the thirtieth day
following the date of resignation, and (ii) the Expiration Date.
(e) If the Optionee's employment with the Corporation or its
subsidiaries shall otherwise terminate, to the extent the Option is exercisable
on the date of such termination, the Optionee shall be permitted to exercise the
Option as to the portion then exercisable and the Option shall not terminate,
until the earlier of: (i) the one hundred eightieth day following the date of
such termination, and (ii) the Expiration Date.
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4. Non-Transferability of Option; Death of Optionee. The Option and
this Option Agreement shall not be transferable otherwise than by will or by the
laws of descent and distribution, or to a trust of which Optionee is the
trustee, and of which the Optionee, his spouse and/or his lineal descendants are
the beneficiaries; and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee, and, in the event of the death of the Optionee,
only by the Optionee's estate or, either during the Optionee's lifetime or upon
his death, by the trustee if the Option has been transferred to a trust in
accordance with this Section. More particularly, but 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 execution, attachment or similar
process. Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof shall be null and
void and without effect.
5. Exercise of Option. The Option shall be exercised in the
following manner: the Optionee or his or her estate shall deliver to the
Corporation written notice specifying the number of Option Shares which he or
she elects to purchase and a date, not more than ninety (90) day after the date
of such notice, upon which such Shares shall be purchased and payment therefor
shall be made. Upon delivery to the Corporation on such date of either (i) cash
or certified or bank cashier's check payable to the order of the Corporation, in
an amount equal to the product of the number of Option Shares specified in such
notice and the Per Share Exercise Price (such product being referred to as the
"Current Exercise Price") or (ii) shares of Common Stock registered in the name
of Employee (including by causing the Corporation to withhold shares of Common
Stock otherwise issuable pursuant to the exercise of the Option) which shares of
Common Stock have a Fair Market Value, as defined below, equal to the Current
Exercise Price of the Option Shares purchased, together with payment, by cash or
certified or bank cashier's check payable to the order of the Corporation or by
such other method as shall be acceptable to the Corporation, of such amount as
the Corporation deems necessary to satisfy its liability to withhold federal,
state or local income or other taxes incurred by reason of the exercise or the
transfer of Shares thereupon, the Option Shares so purchased shall thereupon be
promptly delivered to the Optionee or his estate. Provided, however,
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that if any securities or other law or regulation of any commission or agency of
competent jurisdiction shall require the Corporation or the exercising Optionee
to take any action with respect to the Shares acquired by the exercise of an
Option, then the date upon which the Corporation shall issue or cause to be
issued the certificate or certificates for the Shares shall be postponed until
full compliance has been made with all such requirements of law or regulation;
provided, that the Corporation and the Optionee shall each use its best efforts
to take all necessary action to comply with such requirements of law or
regulation. Notwithstanding the foregoing, the Optionee may elect to satisfy any
withholding obligations, in whole or in part, (i) by causing the Corporation to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
the Option or (ii) by delivering to the Corporation shares of Common Stock
already owned by the Optionee, in each case having a Fair Market Value equal to
the amount of such withholding obligations. The Fair Market Value of such shares
shall be determined as of the date that the amount of tax to be withheld is to
be determined. For purposes of this Agreement, the "Fair Market Value" per share
of the Corporation's Common Stock on any date shall be deemed to be the closing
price of the Common Stock on the principal national securities exchange on which
the Corporation's Common Stock is then listed or admitted to trading, if the
Common Stock is then listed or admitted to trading on any national securities
exchange. The closing price shall be the last reported sale price regular way,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices regular way, as reported by said exchange. If the Corporation's
Common Stock is not then so listed on a national securities exchange, the fair
market value per share of the Corporation's Common Stock on any date shall be
deemed to be the closing price (the last reported sale price regular way) in the
over-the-counter market as reported by the NASDAQ National Market System, if the
Common Stock closing price is then reported on the NASDAQ National Market
System, or, if the Corporation's Common Stock is not then reported by NASDAQ
National Market System, shall be deemed to be the mean between the
representative closing bid and asked prices of the Corporation's Common Stock in
the over-the-counter market as reported by the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), or if the
Corporation's Common Stock is not then quoted by NASDAQ, as furnished by any
member of the National Association of Securities Dealers, Inc. selected from
time to time by the
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Corporation for that purpose. If no member of the National Association of
Securities Dealers, Inc. furnishes quotes with respect to the Corporation's
Common Stock, such fair market value shall be determined by resolution of the
Corporation's Board of Directors. Notwithstanding the foregoing provisions of
this Section, if the Corporation shall at any time determine it is impracticable
to apply the foregoing methods of determining Fair Market Value, the
Corporation's Board of Directors is empowered to adopt other reasonable methods
of determining Fair Market Value for such purpose.
6. Specific Restrictions Upon Option Shares. The Optionee hereby
agrees with the Corporation as follows:
(a) The Optionee shall acquire the Option Shares for
investment purposes only and not with a view to resale or other distribution
thereof to the public in violation of the Securities Act of 1933, as amended
(the "1933 Act"), and shall not dispose of any Option Shares in transactions
which, in the opinion of counsel to the Corporation, violate the 1933 Act, or
the rules and regulations thereunder, or any applicable state securities or
"blue sky" laws; and further
(b) If any Option Shares shall be registered under the 1933
Act, no public offering (otherwise than on a national securities exchange, as
defined in the Securities Exchange Act of 1934, as amended) of any Option Shares
shall be made by the Optionee (or any other persons) under such circumstances
that he or she (or such person) may be deemed an underwriter, as defined in the
1933 Act; and further
(c) The Optionee agrees that the Corporation shall have the
authority to endorse upon the certificate or certificates representing the
Option Shares such legends referring to the foregoing restrictions, any
restrictions resulting from the fact that the Optionee is a party to the
Stockholders' Agreement and any other applicable restrictions as it may deem
appropriate.
7. Adjustments. In the event of the declaration of any stock
dividend on the Common Stock or in the event of any reorganization, merger,
consolidation, acquisition, separation, recapitalization, stock split, reverse
stock split, combination or exchange of the Common Stock or like adjustments,
the number of Shares subject to any Option granted pursuant to this Plan, and/or
the Per Share Exercise
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Price, shall be adjusted by appropriate changes in this Agreement and in any
Options outstanding pursuant to this Agreement. In the event of the payment of
any dividend or other distribution of cash or property in respect of the Common
Stock after the Date of Grant and prior to exercise of the Option, the exercise
price per share of the Option shall be reduced by the amount of cash or the fair
market value (as determined in good faith by the Board of Directors) of any
other property per share so paid.
8. Stockholders Agreement. Optionee is a party to the Amended and
Restated Stockholders and Voting Agreement dated as of April 29, 1994 by and
between the Corporation and the persons listed on Schedule I thereto (the
"Stockholders Agreement"). Optionee shall be subject to all of the terms and
provisions of the Stockholders Agreement as a "Management Stockholder" within
the meaning of Section 2.01(a)(ii) thereof (but not as to any shares of capital
stock of the Corporation held by Optionee as of the date hereof) if (but only
if) Optionee shall be terminated for Cause under the Employment Agreement or
Optionee shall violate the provisions of the Nondisclosure/Noncompetition
Agreement dated as of the date hereof between Optionee and the Corporation.
Optionee shall in any event remain subject to all of the term and provisions of
the Stockholders Agreement applicable to the "Stockholders".
9. Notice. Any notice required or permitted under this Option
Agreement shall be deemed given when delivered personally, or when deposited in
a United States Post Office as registered mail, postage prepaid, addressed, as
appropriate, either to the Optionee at his or her address set forth below or
such other address as he or she may designate in writing to the Corporation, and
to the Corporation at 0000 Xxxxxxxx, Xxx Xxxxxxx, Xxxxx 00000, Attention:
President, or such other address as the Corporation may designate in writing to
the Optionee.
10. Failure to Enforce Not a Waiver. The failure of the Corporation
to enforce at any time any provision of this Option Agreement shall in no way be
construed to be a waiver of such provision or of any other provision hereof.
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11. Governing Law. This Option Agreement shall be governed by and
construed according to the laws of the State of Delaware.
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IN WITNESS WHEREOF, the Corporation has executed this Option on the
day and year first above written.
JUNGLE JIM'S PLAYLANDS, INC.
By: /s/ Xxxx X. Xxxxxxxx
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The undersigned hereby accepts, and agrees to all terms and provisions of the
foregoing Option Agreement.
/s/ Xxxxx X. El-Xxxx
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Signature
Printed Name and Address:
Xxxxx X. El-Xxxx
000 Xxxxx Xxxxxx
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Xxxxxx, XX 00000
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AMENDMENT TO
OPTION AGREEMENT
AMENDMENT TO OPTION AGREEMENT (this "Amendment"), dated as of April
11, 1997, among Jeepers! Inc., a Delaware corporation (the "Company"), and Xxxxx
X. El-Xxxx ("Optionee").
RECITALS
A. The Company and Optionee previously entered into an Option Agreement,
dated as of February 1, 1995 (the "Existing Option Agreement"), under which the
Company has granted Optionee options to buy shares of the Company's Common
Stock.
B. The Company and Optionee wish to enter into this Amendment in order to
modify the Per Share Exercise Price of such options.
In consideration of the foregoing, the Company and Optionee agree as
follows:
SECTION 1
Amendment to Existing Option Agreement
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Section 1 of the Existing Option Agreement is amended by (i) deleting the
reference in such Section to the amount "One Dollar Ten Cents ($1.10)" and
inserting in lieu thereof the amount "Fifty Five Cents ($0.55)", (ii) deleting
the reference in such Section to "One Dollar Sixty-Five Cents ($1.65)" and
inserting in lieu thereof the amount "Fifty-Five Cents ($0.55)", and (iii)
deleting the reference in such Section to "Two Dollars and Twenty Cents ($2.20)"
and inserting in lieu thereof the amount "Fifty Five Cents ($0.55)".
SECTION 2
Miscellaneous
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(a) Effective Date. This Amendment shall be effective as of the date
hereof upon the execution and delivery hereof by the Company and Optionee.
Except as expressly amended herein, the Existing Option Agreement shall remain
in full force and effect in accordance with its terms.
(b) Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
(c) Entire Agreement. This Amendment contains the entire agreement of the
parties hereto and supersedes any and all prior agreements, oral or written, and
negotiations between said parties, regarding the subject matter hereof.
IN WITNESS WHEREOF, this Amendment has been executed by a duly authorized
officer of the Company and Optionee.
/s/ Xxxxx X. El-Xxxx
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Xxxxx X. El-Xxxx
COMPANY:
JEEPERS! INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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Name: X. Xxxxxxxxxx
Title: Chief Financial Officer
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