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EXHIBIT 4.3
INTERVISUAL BOOKS, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement") between INTERVISUAL BOOKS, INC.,
a California corporation (the "Company"), and Xxxxxx X. Xxxxxx ("Employee") is
entered into as of the 1st day of April, 1998.
RECITALS
A. Pursuant to your employment offer letter, the Company has agreed to
grant to Employee this option to purchase shares of the Company's common stock.
B. As a condition precedent to the effectiveness of this Agreement,
Employee must commence full time employment with the Company.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant. The Company hereby grants to Employee the right to
purchase up to 50,000 shares of common stock of the Company at a price of
$2.8125 per share (which price equals the fair market value of the Company's
common stock as of the date of this Agreement), on the terms and conditions set
forth herein. This option is not intended to qualify as an incentive stock
option under Section 422 of the Internal Revenue Code, as amended, and is not
made pursuant to any Company stock option plan. Employee agrees that Employee
and any other person who may be entitled hereunder to exercise this option shall
be bound by all terms and conditions of this Agreement.
2. Exercisability. The option granted herein shall become
exercisable at the following times and in the following amounts:
The option shall become exercisable in cumulative increments of
25,000 shares on each of April 1, 1999, and April 1, 2000. The
option granted hereunder shall lapse and expire on the seventh
(7th) anniversary of the date hereof.
If Employee does not purchase the full number of shares he
is entitled to purchase in any one year, the right to purchase such shares
carries over to the subsequent years during the term of this option.
Notwithstanding the foregoing, this option shall
automatically become fully exercisable upon a "Change in Control of the
Company," as such term is defined below.
For purposes of this Agreement, a "Change in Control of
the Company" shall be deemed to have occurred if:
(a) the shareholders of the Company approve a definitive
agreement to sell, transfer, or otherwise dispose of all or
substantially all of the Company's assets and properties; or
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(b) any "person" (as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934), other than the Company or any
"person" who as of the date this Agreement is a director or officer of
the Company (including any trust of such director or officer), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined
voting power of the Company's then outstanding securities; provided,
however, that the following shall not constitute a "Change in Control"
of the Company:
(i) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of a conversion or exchange
privilege in respect of outstanding convertible or exchangeable
securities);
(ii) any acquisition by an employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or
(iii) upon the death of any person who as of the date of
this Agreement is a director or officer of the Company, the transfer (A)
by testamentary disposition or the laws of intestate succession to the
estate or the legal beneficiaries or heirs of such person, or (B) by the
provisions of any trust to the beneficiaries thereof of the securities
of the Company beneficially owned by such director or officer of the
Company; or
(c) the shareholders of the Company approve the dissolution or
liquidation of the Company or a definitive agreement to merge or
consolidate the Company with or into another entity in which the Company
is not the continuing or surviving corporation or pursuant to which any
shares of the Company's stock would be converted into cash, securities
or other property of another entity, other than a merger of the Company
in which holders of the Company's common stock immediately prior to the
merger have the same proportionate ownership of common stock (or
equivalent securities) of the surviving entity immediately after the
merger as immediately before.
3. Exercise. This option may be exercised on the terms and
conditions contained herein by giving ten (10) days' prior written notice of
exercise to the Company, specifying the number of shares to be purchased and the
price to be paid therefor and by delivering a check in the amount of the
purchase price payable to the Company. The purchase price may also be paid, in
whole or in part, by delivery to the Company of outstanding shares of the
Company's common stock previously held by the Employee valued at "Fair Market
Value".
For the purposes of this Agreement, "Fair Market Value" as
of a certain date (the "Determination Date") means: (a) the closing price of a
share of the Company's common stock on the principal exchange on which shares of
the Company's common stock are then trading, if any, on the Determination Date,
or, if shares were not traded on the Determination Date, then on the nearest
preceding trading day during which a sale occurred; or (b) if such stock is not
traded on an exchange but is quoted on NASDAQ or a successor quotation system,
(i) the last sales price (if the stock is then
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listed as a National Market Issue under The Nasdaq National Market System) or
(ii) the mean between the closing representative bid and asked prices (in all
other cases) for the stock on the Determination Date as reported by NASDAQ or
such successor quotation system; or (c) if such stock is not publicly traded on
an exchange and not quoted on NASDAQ or a successor quotation system, the mean
between the closing bid and asked prices for the stock, on the Determination
Date, as determined in good faith by the Board; or (d) if the Company's stock is
not publicly traded, the fair market value established in good faith by the
Board.
4. Termination of Employment.
(a) Termination by Employee. If Employee's employment is
terminated by Employee, Employee shall have ninety (90) days following the date
of termination to exercise this option, but only to the extent that this option
was exercisable on such date of termination.
(b) Termination for Cause. If Employee's employment is
terminated by the Company for cause, neither Employee nor his estate shall be
entitled to exercise this option after the date of termination.
(c) Death or Incapacity. If Employee's employment is
terminated for death, disability or incapacity, Employee or Employee's estate,
as the case may be, shall have the right for six (6) months following the date
of termination to exercise this option, but only to the extent that this option
was exercisable on such date of termination.
(d) Other. If Employee's employment is terminated for any
reason other than as set forth in Sections 4(a), (b) and (c) above, Employee
shall have ninety (90) days following such date of termination to exercise this
option, but only to the extent that this option was exercisable on such date of
termination.
5. Transferability. This option shall be transferable only by
will or by the law of descent and distribution to the estate (or other personal
representative) of Employee and shall be exercisable during Employee's lifetime
only by him. Except as otherwise provided herein, any attempt at alienation,
assignment, pledge, hypothecation, transfer, sale, attachment, execution or
similar process, whether voluntary or involuntary, with respect to all or any
part of this option or any right under this Agreement, shall be null and void
and, at the Company's option, shall cause Employee's rights under this Agreement
to terminate.
6. Withholding Requirements. In the event the Company determines
that it is required to withhold state or Federal income taxes as a result of the
exercise of this option, Employee shall be required, as a condition to the
exercise hereof, to make arrangements satisfactory to the Company to enable it
to satisfy such withholding requirements.
7. Rights as a Stockholder. Employee, or any permitted transferee
of Employee, shall have no rights as a stockholder with respect to any shares
covered by this option until the date of the issuance of a stock certificate for
such shares. 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
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such stock certificate is issued, except as provided in Section 8 of this
Agreement. This Agreement shall not confer upon Employee any right of continued
employment by the Company or interfere in any way in the Company's right to
terminate Employee.
8. Recapitalization. Subject to any required action by
stockholders, the number of shares of Common Stock covered by this option and
the exercise price thereof shall be proportionately adjusted for any increase or
decrease in the number of issued shares of common stock resulting from a
subdivision or consolidation of such shares or the payment of a stock dividend
(but only of common stock) or any other increase or decrease in the number of
issued shares of common stock effected without receipt of consideration by the
Company. Subject to any required action by stockholders, if the Company is the
surviving corporation in any merger or consolidation, this option shall pertain
and apply to the securities to which a holder of the number of shares of common
stock subject to the option would have been entitled.
The foregoing adjustments shall be made by the Company's
Board of Directors, whose determination shall be conclusive and binding on the
Company and Employee.
Except as expressly provided in this Section 8, Employee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class, or by reason of any
dissolution, liquidation, merger, consolidation or spin-off of assets or stock
of another corporation, and any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares subject to this option or the exercise price thereof.
This option shall not affect in any way the right or power
of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.
9. Securities Act and Other Regulatory Requirements. This option
is not exercisable, in whole or in part, and the Company is not obligated to
sell any shares of the Company's common stock subject to this option, if such
exercise or sale, in the opinion of counsel for the Company, would violate the
Securities Act of 1933 (or any other federal or state statutes having similar
requirements) as it may be in effect at that time.
Further, the Board of Directors of the Company may require
as a condition of issuance of any shares under this option that Employee furnish
a written representation that he is acquiring the shares for investment and not
with a view to distribution to the public. The certificate evidencing any shares
issued pursuant to this option shall bear such restrictive legends as required
by federal or state law.
Further, the Board of Directors of the Company may decide,
in its sole discretion, that the listing or qualification of the shares of stock
subject to the option under any securities exchange requirements or under any
applicable law is necessary or desirable. If such a decision is made, this
option shall not be exercisable in whole or in part unless and until such
listing, qualification, consent or approval shall have been
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effected or obtained free of any conditions that are not acceptable to the Board
of Directors of the Company.
10. Effect of Exercise. Upon the exercise of all or any part of
this option, the number of shares of common stock subject to the option under
this Agreement shall be reduced by the number of shares with respect to which
such exercise is made.
11. Right of First Refusal. If Employee desires to transfer any
shares of common stock which he has acquired pursuant to the exercise of the
option granted herein ("Shares"), Employee shall deliver to the Company written
notice of his intention to transfer such Shares (the "Notice") together with
either a copy of a signed and binding offer by the proposed transferee (a
"Negotiated Sale") or a statement that such Shares are to be sold into the
public market at Fair Market Value at the time of sale (a "Market Sale"). The
Notice for a Negotiated Sale shall state the name and address of the proposed
transferee, the number of Shares to be transferred, the price per Share, and the
other terms of such transfer. The Notice for a Market Sale shall state the
expected date of the proposed sale and the number of Shares to be sold. For
thirty (30) days following delivery of the Notice, the Company shall have the
option to purchase all (but not less than all) of the Shares proposed to be sold
by Employee at the price and terms stated in the Notice. In the event of a
Market Sale, such purchase price shall be the Fair Market Value of the Shares on
the day the Company exercises its option, less five (5) percent. Such option
shall be exercisable by delivery of written notice to Employee within such
thirty (30) day period. Any Shares not purchased by the Company may, for a
period of sixty (60) days commencing on the expiration of the Company's option
to purchase such Shares, be sold to the proposed transferee at the price and
upon the terms specified in the Notice. Shares which are not transferred by
Employee within such sixty (60) day period shall again become subject to the
notice and option provisions of this Section 11. The certificate evidencing any
shares issued pursuant to this option shall bear a restrictive legend stating
that such shares are subject to the right of first refusal set forth in this
Section 11.
12. Notices. Any notice or other communication required or
permitted hereunder or by law shall be validly given or made only if in writing
and delivered in person to an officer or duly authorized representative of the
other party, or deposited in the United States mail, duly certified or
registered, return receipt requested, postage prepaid, and addressed to the
party to whom intended. If sent to the Company, it shall be addressed in care of
the President, 0000 Xxxxx Xxxx Xxxxxxxxx, Xxxxx 0000, Xxxxx Xxxxxx, Xxxxxxxxxx
00000, and if sent to Employee, it shall be addressed to Employee's address on
file with the Company on the date of such notice. If sent by mail, notice shall
be deemed given two days after deposit of such notice in the mail and in
accordance with this section. Any party may from time to time, by written notice
to the other, designate a different address for notice which shall be
substituted for that specified above.
13. Choice of Law; Counterparts. This Agreement, and all rights
and obligations hereunder, shall be governed by the laws of the State of
California. This Agreement may be executed in one or more counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
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14. Successor. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs,
beneficiaries, executors and administrators.
15. Paragraph Headings; Employment. Paragraph headings are for
convenience only and are not part of the context. This Agreement shall not
obligate the Company or any affiliate to employ Employee for any period of time
nor does this Agreement constitute a contract or agreement for employment.
IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above.
INTERVISUAL BOOKS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: President
EMPLOYEE:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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