INCENTIVE STOCK OPTION AGREEMENT
Exhibit 10.5
THIS AGREEMENT, entered into as of June 7, 2011 (the “Grant Date”), by and between Xx
Xxxxxxxxx (the “Participant”) and Xxxxxx Interactive Inc. (the “Company”). This Agreement is made
in connection with the Employment Agreement (defined below).
WHEREAS, the Participant has entered into an Employment Agreement with the Company on June 7,
2011 (the “Employment Agreement”); and
WHEREAS, the Company maintains its 2007 Long-Term Incentive Plan (the “Plan”), which is
incorporated into and forms a part of this Agreement; and
WHEREAS, the Participant has been selected by the committee administering the Plan (the
“Committee”) to receive an Incentive Stock Option Award under the Plan.
NOW, THEREFORE, IT IS AGREED, by and between the Company and the Participant, as follows:
1. Terms of Award. The following terms used in this Agreement shall have the meanings
set forth in this Section 1:
(a) The number of “Covered Shares” shall be 100,000 shares of Stock.
(b) The “Initial Exercise Date” June 30, 2013.
(c) The “Exercise Price” is $0.70 per share.
(d) The “Stock” shall be par value $.001 shares of common stock of the Company.
Other terms used in this Agreement are defined in Section 8 and elsewhere in this Agreement.
2. Award and Exercise Price. The Participant is hereby granted an option (the
“Option”) to purchase the number of Covered Shares of Stock at the Exercise Price per share as set
forth in Section 1. The Option is intended to qualify as an “Incentive Stock Option,” as defined in
the Plan and in Section 422(b) of the Code. To the extent, however, that the aggregate Fair Market
Value of Stock (determined at the time of the Grant Date) with respect to which Incentive Stock
Options are exercisable for the first time by the Participant during any calendar year (under all
plans of the Company and all Related Companies) exceeds $100,000, such options shall be treated as
Non-Qualified Stock Options, to the extent required by Section 422 of the Code.
3. Date of Exercise. The Option shall vest and become exercisable with respect to the
Covered Shares on the Initial Exercise Date; provided, however, that to the extent that the Option
has not become exercisable on or before the Participant’s Date of Termination, such Option shall no
longer become exercisable in accordance with the foregoing as of any date
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subsequent to the Participant’s Date of Termination except as provided in the immediately
following paragraph. For purposes of this Agreement, the Participant’s “Date of Termination” shall
be the first day occurring on or after the Grant Date on which the Participant’s employment with
the Company terminates for any reason.
Notwithstanding the foregoing provisions of this Section 3, the Option shall become
immediately exercisable with respect to all of the Covered Shares (whether or not previously
vested) upon the occurrence of the date of a Change in Control (as defined in the Plan) under the
condition that the date of the Change of Control does not occur prior to July 1, 2012 or after the
Participant’s Date of Termination.
4. Expiration. The Option, to the extent not theretofore exercised, shall not be
exercisable on or after the Expiration Date. The “Expiration Date” shall be the earliest to
occur of:
(a) the ten-year anniversary of the Grant Date;
(b) breach by the Participant of his obligations under Section 4 of the Employment Agreement
(or any successor section(s) dealing with the same subject matter) subject to any rights to notice
and cure provided therein;
(c) if the Participant’s Date of Termination occurs by reason of Disability (as defined in the
Employment Agreement) or death, the one-year anniversary of such Date of Termination; and
(d) if the Participant’s Date of Termination occurs for reasons other than death or
Disability, sixty (60) days after the Date of Termination.
In the event of the Participant’s death while in the employ of the Company, the Participant’s
executors or administrators (or the person or persons to whom the Participant’s rights under the
Option shall have passed by the Participant’s will or by the laws of descent and distribution) may
exercise, any unexercised portion of the Option to the extent such exercise is otherwise permitted
by this Agreement.
Any Option exercised subsequent to the Participant’s Date of Termination as permitted
hereunder shall be exercisable only to the extent vested at the time of the Participant’s Date of
Termination, regardless of the reason for the termination, and no extension of time beyond the
Participant’s Date of Termination shall permit exercise beyond the date such Option would otherwise
expire if no termination had occurred.
5. Method of Option Exercise. The Option may be exercised in whole or in part by
filing a written notice with, and which must be received by, the Secretary of the Company at its
corporate headquarters prior to the Expiration Date. Such notice shall (a) specify the number of
shares of Stock which the Participant elects to purchase; provided, however, that not less than one
hundred (100) shares of Stock may be purchased at any one time unless the number purchased is the
total number of shares available for purchase at that time under the Option, and
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(b) be accompanied by payment of the Exercise Price for such shares of Stock indicated by the
Participant’s election. Payment shall be by cash or by check payable to the Company, or, at the
discretion of the Committee at any time: (a) all or a portion of the Exercise Price may be paid by
the Participant by delivery of shares of Stock acceptable to the Committee (including, if the
Committee so approves, the withholding of shares otherwise issuable upon exercise of the Option)
and having an aggregate Fair Market Value (valued as of the date of exercise) that is equal to the
amount of cash that would otherwise be required; and (b) the Participant may pay the Exercise Price
by authorizing a third party to sell shares of Stock (or a sufficient portion of the shares)
acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale
proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.
6. Withholding. All distributions under this Agreement are subject to withholding of
all applicable taxes. At the election of the Participant, and subject to such rules as may be
established by the Committee, such withholding obligations may be satisfied through the surrender
of shares of Stock which the Participant already owns, or to which the Participant is otherwise
entitled under the Plan.
7. Transferability. The Option is not transferable other than as designated by the
Participant by will or by the laws of descent and distribution, and during the Participant’s life,
may be exercised only by the Participant or the Participant’s legal guardian or legal
representative. However, the Participant, with the approval of the Committee, may transfer the
Option for no consideration to or for the benefit of the Participant’s immediate family (including,
without limitation, to a trust for the benefit of the Participant or the Participant’s immediate
family or to a partnership or limited liability company for the exclusive benefit of the
Participant or one or more members of the Participant’s immediate family), subject to such limits
as the Committee may establish, and the transferee shall remain subject to all the terms and
conditions applicable to the Option prior to such transfer. The foregoing right to transfer the
Option shall apply to the right to consent to amendments to this Agreement and, in the discretion
of the Committee, shall also apply to the right to transfer ancillary rights associated with the
Option.
8. Definitions. Capitalized terms not otherwise defined in this Agreement shall have
the meanings given to them in the Plan, and to the extent not inconsistent therewith and herewith,
shall have the meanings given to them in the Employment Agreement.
9. Heirs and Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns, and upon any person or entity acquiring,
whether by merger, consolidation, purchase of assets or otherwise, all or substantially all of the
Company’s assets and business. In the event of the Participant’s death prior to exercise of this
Award, the Award may be exercised by the estate of the Participant to the extent such exercise is
otherwise permitted by this Agreement. Subject to the terms of the Plan, any benefits distributable
to the Participant under this Agreement that are not paid at the time of the Participant’s death
shall be paid at the time and in the form determined in accordance with the provisions of this
Agreement and the Plan, to the beneficiary designated by the Participant in writing filed with the
Committee in such form and at such time as the Committee shall require. If a deceased Participant
fails to designate a beneficiary, or if the designated beneficiary of the
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deceased Participant dies before the Participant or before complete payment of the amounts
distributable under this Agreement, the amounts to be paid under this Agreement shall be paid to
the legal representative or representatives of the estate of the last to die of the Participant and
the beneficiary. Neither the benefits nor obligations under this Agreement may be transferred or
assigned by Participant except as otherwise expressly provided herein or in the Plan.
10. Administration. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Committee, and the Committee shall have all
powers with respect to this Agreement as it has with respect to the Plan. Any interpretation of
this Agreement by the Committee and any decision made by it with respect to this Agreement is final
and binding.
11. Plan Definitions. Notwithstanding anything in this Agreement to the contrary, the
terms of this Agreement shall be subject to the terms of the Plan, a copy of which may be obtained
by the Participant from the office of the Secretary of the Company.
12. Amendment. This Agreement may be amended by written agreement of the Participant
and the Company, without the consent of any other person.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer
thereunto duly authorized, and Participant has executed this Agreement, all effective as of the
Grant Date.
| Participant |
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| /s/ Xx Xxxxxxxxx | ||||
| Xx Xxxxxxxxx | ||||
| Xxxxxx Interactive Inc. |
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| By: | /s/ Xxxx X. Xxxxx | |||
| Its: | EVP, General Counsel & Corporate Secretary | |||
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