NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT ("Option Agreement") is made as of the 17th day of
April, 1997 (the "Effective Date") by and between MOOVIES, INC., a Delaware
corporation (the "Company"), and XXXXXX X. XXXXX ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee desires to be granted and the Company desires to
grant to Grantee a Non-Qualified Stock Option to acquire shares of Common Stock
of the Company, $.001 par value, pursuant to the Moovies, Inc. 1995 Stock Plan
(the "Plan"), on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Grant of Option. The Company hereby grants to Grantee and Grantee
accepts a Non Qualified Stock Option ("Option"), subject to the provisions of
this Option Agreement, to purchase such shares of Common Stock (the "Option
Shares") at such exercise price (the "Option Price") as set forth on Exhibit A
hereto and by this reference made a part hereof.
2. Vesting of Option. Except as may otherwise be provided in this
Option Agreement or the Plan, the Option will vest and may be exercised as to
the Option Shares prior to its termination (as such termination is described in
Section 4 hereof) on a cumulative basis as provided in Exhibit B hereto and by
this reference made a part hereof. This Option may not be exercised at any time
after its termination.
3. Method of Exercise. The Option to purchase Option Shares shall be
exercised by written notice directed to the Stock Plan Committee (as defined in
the Plan), at the Company's principal executive office, specifying the number of
Option Shares to be purchased, and accompanied by payment of the Option Price
payable (a) in U.S. dollars in cash or by check or (b) through delivery of
shares of Common Stock (including those underlying this Option on a "net
exercise" or "cashless exercise" basis) having a fair market value per share of
Common Stock determined in accordance with this Section 3, as described in the
attached Examples 1 and 2, or (c) in accordance with the Company's Stock Plan.
The written notice of exercise shall indicate the manner in which payment of the
Option Price is being made. Except as otherwise provided in Section 7 hereof,
the fair market value per share of Common Stock used as payment or partial
payment of the Option Price hereunder shall be the per share closing price (as
reported in The Wall Street Journal) of the Company's Common Stock for the
trading date immediately preceding the date on which the Company receives such
written notice of exercise.
4. Termination of Option; Non-Exercisability. The Option, to the
extent vested and to the extent not previously exercised, shall immediately
terminate and become non-exercisable, null and void upon the first to occur of
the following events:
(i) March 31, 1999; or
(ii) The occurrence of an "Event of Default" as defined in
that certain Agreement dated as of April 1, 1997 (the "Agreement") by and
between the Company and Grantee.
In addition, the Option, to the extent vested and to the extent not previously
exercised, shall immediately become non-exercisable at any time when a "Default"
(as defined in the Agreement) exists (and shall remain non-exercisable
thereafter unless and until such Default is timely cured as provided for in the
Agreement.)
5. Reclassification, Consolidation, or Merger. The number of shares
for which an Option has been granted shall be adjusted in accordance with the
Plan (and the calculations contemplated by Section 7 hereof shall be equitably
adjusted) if certain events such as recapitalization, merger or stock dividends
occur.
6. Rights Prior to Exercise of Option. The Option granted herein is
not transferable by Grantee, except in the event of Grantee's death, and then
only by Grantee's estate, heirs, executors, personal representatives or
administrators, and during Grantee's lifetime shall be exercisable only by
Grantee. This Option shall confer no rights of the holder hereof to act as a
shareholder with respect to any of the Option Shares until payment of the option
price and delivery of a share certificate has been made.
7. Special One-Time Election. Provided there has been no prior
termination of the Option under any other provision of this Option Agreement
(and only under any other provision of this Option Agreement), and provided that
no Default or Event of Default (as defined in the Agreement) then exists, if
Grantee so elects by giving written notice to the Company at least five (5)
business days prior to the last trading day in any of the calendar months
commencing with March 1998 through and including September 1998 (the last
trading day in such calendar month being herein referred to as the "Month End
Trading Date"), provided further, however, that if Grantee shall be in Default
as of September 1998, then the date for giving of said written notice shall,
provided such Default is timely cured, be extended to five (5) business days
prior to the last trading day in October 1998 (which, in such event, would be
treated as a Month End Trading Date):
(a) (i) if such Option were then "in the money" (i.e., the Month
End Trading Price exceeded the Option Price), then all (or a
portion) of the Option then outstanding (not previously
exercised or terminated) shall be exercised by Grantee (as
provided for in Section 3 above but using the Month End
Trading Price for determining the fair market value, if
applicable) as of the close of the applicable Month End
Trading Date, or
(ii) if such Option were not then "in the money" (i.e., the
Month End Trading Price did not exceed the Option Price),
then all of the Option then outstanding (not previously
exercised or terminated) would be then cancelled and
terminated and would thereafter be non-exercisable, null and
void as of the closing of the applicable Month End Trading
Date; and
(b) if the closing price of the Company's common stock as of the
applicable Month End Trading Date (The "Month End Trading
Price") were not $2.715 (or more) greater than the Option
Price of the Option, then the Company would pay to Grantee,
no later than 30 days after such Month End Trading Date, an
amount per then outstanding Option which was actually
exercised (per (a) (i) above) or cancelled (per (a) (ii)
above), or cancelled for reasons other than as provided
under any other provision of this Option Agreement, as of
such Month End Trading Date equal to the lesser of:
(i) an amount equal to (A) the Option Price of the Option
plus (B) $2.715 minus (C) such Month End Trading Price, OR
(ii) $2.715.
Any amounts to be paid by Company to Grantee under Section 7(b) hereof
which are not timely paid when due shall bear interest at the rate of 12% per
annum.
Notwithstanding anything contained in this Option Agreement which may
appear to the contrary, and without limitation of any right of Grantee to timely
cure any Default as provided for in the Agreement, (i) Grantee may not make the
special election provided for in this Section 7 if a Default or Event of Default
(as defined in the Agreement) then exists and (ii) no payment pursuant to the
special election provided for in this Section 7 shall be made if a Default or
Event of Default (as defined in the Agreement) then exists.
Notwithstanding anything contained in this Option Agreement which may
appear to the contrary, in the event that Employee makes the special election
provided for in this Section 7:
(i) the aggregate cash payments made by Company with respect to this
Section 7 shall in no event ever exceed $271,500; and
(ii) following such special election, none of the Option (except, in
the case of (a)(i) above, for the portion, if any, of the Option outstanding and
not exercised by Grantee as of the close of the applicable Month End Trading
Date) shall remain outstanding after the close of the applicable Month End
Trading Date.
8. Plan; Registration. The grant of the Option is, and the purchase of
the Option Shares described herein will be, pursuant to the Plan and the Option
Shares are and will be covered by a registration statement covering shares
underlying options granted pursuant to the Plan.
9. Binding Effect. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns.
10. Miscellaneous. This Option Agreement shall be governed by and
construed under the laws of the State of Delaware. If any term or provision
hereof shall be held invalid or unenforceable, the remaining terms and
provisions hereof shall continue in full force and effect. Any modification to
this Agreement shall not be effective unless the same shall be in writing and
such writing shall be signed by the parties hereto. This Option Agreement
constitutes the entire agreement between the parties with respect to the Option
granted hereunder and supersedes and terminates all prior understandings,
agreements, or arrangements between the parties, if any, both oral or written,
with respect thereto.
11. Notices. All notices, requests, demands, claims or other
communications hereunder will be in writing and shall be deemed duly given if
personally delivered, sent by telefax, or sent by a recognized overnight
delivery service which guarantees next day delivery ("Overnight Delivery") or
mailed registered or certified mail, return receipt requested, postage prepaid,
transmitted or addressed to the intended recipient as set forth below:
If to Grantee: Xx. Xxxxxx X. Xxxxx
00 Xxxxxx Xxx
Xxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Kleinbard, Ball & Brecker
Xxxxx 000
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telefax: (000) 000-0000
If to the Company: Moovies, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: President
Telefax: (000) 000-0000
and
Moovies, Inc.
000 Xxxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Corporate Secretary
Telefax: (000) 000-0000
(i) by personal delivery or telefax, will be deemed received on the day sent or
on the first business day thereafter if not sent on a business day, (ii) by
Overnight Delivery, will be deemed received on the first business day
immediately following the date sent, and (iii) by U.S. mail, will be deemed
received three (3) business days immediately following the date sent. For
purposes of this Agreement, a "business day" is a day on which the Company is
open for business but shall not include a Saturday or Sunday or legal holiday.
Notwithstanding anything to the contrary in this Agreement, no action is
required on a day which is not a business day, such action shall be required to
be performed on the next succeeding day which is a business day.
IN WITNESS WHEREOF, the parties hereto have executed this Option
Agreement as of the day and year first written above.
MOOVIES, INC.
By:_________________________________
Xxxx X. Xxxxxx,
Chief Executive Officer and President
GRANTEE:
__________________________[Signature]
_________________________[Print Name]
State of Residence:____________________
Mailing Address:
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EXHIBIT A
Options Granted; Exercise Price
Number of Options Granted Option Price
------------------------- ------------
100,000 $4.69
EXHIBIT B
Vesting Schedule
Cumulative Number of
Period Option Shares Vested
Prior to the execution, delivery and
effectiveness of the Agreement Zero
From and after the execution, delivery
and effectiveness of the Agreement until
termination of the Option 100,000
The right of exercise shall be cumulative so that if the Option is not exercised
to the maximum extent permissible during an exercise period, it shall be
exercisable, in whole or in part, with respect to all Option Shares not so
purchased at any time thereafter and prior to the termination of the Option.
