EXHIBIT 10.5
MEDIA ARTS GROUP, INC.
1998 STOCK INCENTIVE PLAN (THE "PLAN")
NONSTATUTORY STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Nonstatutory Stock Option Agreement. You have
been granted an option to purchase Common Stock of the Company, subject to the
terms and conditions of the Plan and this Nonstatutory Stock Option Agreement,
as follows:
I. NOTICE OF STOCK OPTION GRANT
1. NAME: ("Grantee")
2. ADDRESS:
3. DATE OF GRANT: ("Grant Date")
4. TOTAL NUMBER OF COMMON
SHARES GRANTED: ("Option")
5. EXERCISE PRICE PER ("Exercise Price")
COMMON SHARE:
6. TOTAL EXERCISE PRICE: ("Total Exercise
Price")
7. TERM OF STOCK ("Option Term")
OPTION/EXPIRATION DATE:
8. VESTING SCHEDULE:
Media Arts Group, Inc. Grantee:
By:
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Xxxxxxx X. Xxxxxxxx (insert name)
President & Chief Executive Officer
II. AGREEMENT
1. GRANT OF OPTION The Committee of the Plan hereby grants to the Grantee
named in the Notice of Grant attached as Part I of this
Nonstatutory Stock Option Agreement (the "Grantee") an
option (the "Option") to purchase the number of Common
Shares, as set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant
(the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by
reference. In the event of a conflict between the terms
and conditions of the Plan and the terms and conditions of
this Nonstatutory Stock Option Agreement, the terms and
conditions of the Plan shall prevail.
2. VESTING The Option is exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of Grant
and the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement.
3. EXERCISE OF OPTION
(a) The Grantee may exercise the Option with
respect to all or any part of the number of Option
Shares then exercisable hereunder by providing to the
Secretary of the Company written notice of intent to
exercise. The notice of exercise (in substantially the
form attached hereto as EXHIBIT A or in such other form
as shall then be acceptable to the Company (the
"Exercise Form")) shall specify the number of Common
Shares in respect of which the Option is being
exercised (the "Exercised Shares"), and such other
representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The
Exercise Form shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares.
This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.
(b) Payment by the Grantee of the aggregate
Exercise Price shall be made pursuant to Article 6 of
the Plan.
(c) No Common Shares shall be issued
pursuant to the exercise of this Option unless such
issuance and exercise complies with all applicable
local, state and federal laws. Assuming such
compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Grantee
on the date the Option is exercised with respect to
such Exercised Shares.
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4. TERMINATION
(a) The Option and all rights hereunder with
respect thereto, to the extent such rights shall not
have been exercised, shall terminate and become null
and void after the expiration of the Option Term.
(b) Upon the occurrence of the Grantee's
ceasing for any reason to be employed by the Company
(such occurrence being a "termination" of the Grantee's
employment"), the Option, to the extent not previously
exercised, shall terminate and become null and void
immediately upon such termination of the Grantee's
employment, except in a case where the termination of
the Grantee's employment is by reason of retirement,
disability, death, voluntary termination or his or her
being discharged not for good cause. Upon a
termination of the Grantee's employment by reason of
retirement, disability, death, voluntary termination or
his or her being discharged not for good cause, the
Option may be exercised during the following periods,
but only to the extent that the Option was outstanding
and exercisable on any such date of retirement,
disability, death, voluntary termination or his or her
being discharged not for good cause: (i) the one-year
period following the date of such termination of the
Grantee's employment in the case of a disability
(within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended), (ii) the one-year
period following Xxxxxxx's death, and (iii) the one-
year period following the date of such termination in
the case of the Grantee's termination of employment by
reason of his or her retirement, his or her voluntary
termination or his or her being discharged not for good
cause. In no event, however, shall any such period
extend beyond the Option Term.
(c) In the event of the death of the
Grantee, the Option may be exercised by the Grantee's
legal representative(s), but only to the extent that
the Option would otherwise have been exercisable by the
Grantee.
5. RESTRICTIONS ON SALE
By signing this Nonstatutory Stock Option Agreement, the
Grantee agrees not to sell any Exercised Shares at a time
when any applicable law, regulation or Company policy
prohibits a sale. This restriction will apply as long as the
Grantee is an employee of the Company (or a subsidiary).
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6. TRANSFER OF STOCK OPTIONS
During the Grantee's lifetime, the Option hereunder shall be
exercisable only by the Grantee or any guardian or legal
representative of the Grantee, and the Option shall not be
transferable except, in cases of the death of the Grantee, by
will or the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar
process. The terms of the Plan and this Nonstatutory Stock
Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Grantee.
7. NOTICE
All notices and other communications under this Nonstatutory
Stock Option Agreement shall be in writing. Unless and
until the Grantee is notified in writing to the contrary,
all notices, communications and documents directed to the
Company and related to the Nonstatutory Stock Option
Agreement, if not delivered by hand, shall be mailed,
addressed as follows:
MEDIA ARTS GROUP, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Xx.
Snr. Vice President & General Counsel
Unless and until the Company is notified in writing to the
contrary, all notices, communications and documents intended
for the Grantee and related to this Nonstatutory Stock Option
Agreement, if not delivered by hand, shall be mailed to
Xxxxxxx's last known address as shown on the Company's
payroll records. Notices and communications shall be mailed
by first class mail, postage prepaid; documents shall be
mailed by registered mail, return receipt requested, postage
prepaid. All mailings and deliveries related to this
Nonstatutory Stock Option Agreement shall be deemed received
only when actually received.
8. SAR/CHANGE
OF CONTROL In connection with the grant of the Option, the Grantee has
been granted an SAR (the "Tandem SAR") which may be
exercisable in lieu of all or part of the Option. The number
of Common Shares to which the Tandem SAR pertains shall be
equal to the number of Common Shares subject to the Option,
determined as of the date the Tandem SAR is exercised. The
Tandem SAR shall have an Exercise Price of $7.76 per Common
Share to which it pertains. The Tandem SAR granted hereunder
shall only be exercisable in the event of a Change in Control
of the Company, and shall only be exercisable within the
thirty (30) day period following such Change in Control. The
Tandem SAR shall immediately terminate and be canceled upon
the earlier of (i) the expiration of such thirty (30) day
period following a
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Change in Control; (ii) the exercise of the Option for all of
the Common Shares subject to the Option or (iii) the
termination of the Option pursuant to the provisions of this
Agreement and the Plan. The Tandem SAR may only be exercised
in whole for all of the Common Shares to which it pertains as
of the date of exercise, and notwithstanding any other
provision of this Agreement or the Plan to the contrary, any
unexercised portion of the Option shall immediately terminate
and be canceled upon the exercise of the Tandem SAR. Upon
exercise of the Tandem SAR, the Grantee shall receive from
the Company cash in an amount equal to (i) the excess of the
Fair Market Value of the Common Shares over (ii) the Tandem
SAR exercise price, multiplied by the number of Common Shares
to which the Tandem SAR pertains as of the date of exercise.
9. APPLICABLE LAW
This Nonstatutory Stock Option Agreement shall be construed
and interpreted pursuant to the internal substantive laws,
but not the choice of law rules, of the State of California,
and the parties hereto submit and consent to the jurisdiction
of the courts of the State of California, including Federal
Courts located therein, should Federal jurisdiction
requirements exist in any action brought to enforce (or
otherwise relating to) this Nonstatutory Stock Option
Agreement. Notwithstanding the proceeding sentence, nothing
contained in this Nonstatutory Stock Option Agreement shall
preclude the Company from bringing an action in any
appropriate forum to enforce the terms and provisions of this
Nonstatutory Stock Option Agreement. Grantee hereby consents
to the exclusive jurisdiction of any State or Federal court
empowered to enforce this Nonstatutory Stock Option Agreement
in the State of California, Santa Xxxxx County, and waives
any objection thereto on the basis of personal jurisdiction
or venue.
10. ENTIRE AGREEMENT
This Nonstatutory Stock Option Agreement and the Plan
constitute the entire understanding between the Grantee and
the Company with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the
subject matter hereof. This Nonstatutory Stock Option
Agreement may be amended only in writing signed by the
Grantee and an authorized officer of the Company.
By the Grantee's signature and the signature of the Company's representative on
the Notice of Grant, the Grantee and the Company agree that this Option is
granted under and governed by the terms and conditions of the Plan and this
Nonstatutory Stock Option Agreement. The Grantee has reviewed the Plan and this
Nonstatutory Stock Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Nonstatutory Stock Option
Agreement and fully understands all provisions of the Plan and Nonstatutory
Stock Option Agreement. The Grantee hereby
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agrees to accept as binding, conclusive and final all decisions or
interpretations of the Plan Committee upon any questions relating to the Plan
and the Nonstatutory Stock Option Agreement.
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