Exhibit 10.4
AMENDMENT TO
EXECUTIVE EMPLOYMENT AGREEMENT
This Amendment to Executive Employment Agreement (the "Amendment"),
executed effective as of November 21, 2002 (the "Effective Date"), is between
BAM! Entertainment, Inc., a Delaware corporation, (the "Company") and Xxxxxxx
Xxxxxxxx ("Employee").
RECITALS
A. The Company and Employee have executed an Executive Employment
Agreement dated as of July 1, 2000, as amended (the "Employment Agreement"), in
which the Company hired Employee as an executive of the Company with a base
salary of $225,000 (the "Salary").
B. The Company is adjusting to the current economic climate and
has determined it to be in the best interests of the Company to have the
Employee agree to a reduction in his Salary as set forth in this Amendment.
C. Employee and the Company desire to amend the Employment
Agreement in accordance with the terms and conditions set forth below.
ACCORDINGLY, THEREFORE, for valuable consideration, receipt of which is
hereby acknowledged, the parties agree to amend the Employment Agreement as
follows:
1. Salary Reduction. As of the December 1, 2002 until June 30,
2003 (the "Salary Reduction Period"), Employee's Salary shall be reduced by 50%
in consideration for the Company granting Employee the option set forth in
Section 2 (the "Reduction").
2. Stock Option. As consideration for the Reduction, the Company
shall grant Employee an option to purchase Common Stock of the Company pursuant
to the option agreement, attached hereto as Exhibit A (the "Option"). The Option
shall be for 116,978 shares of the Company's Common Stock, which is equal to the
Reduction divided by 110% of the closing market price of the Company's Common
Stock on November 29, 2002. The exercise price of the Option shall be $0.561 per
share, which is equal to 110% of the closing market price of the Company's
Common Stock on November 29, 2002.
3. Corporate Transaction. In the event of a "Corporate
Transaction" (as defined in the Company's 2000 Stock Incentive Plan), the Option
shall not accelerate and the Reduction will no longer be in effect and any
portion of the Salary withheld during the Salary Reduction Period shall become
immediately payable upon the effective date of the "Corporate Transaction".
4. Termination. If Employee's employment is terminated for any
reason, including but not limited to a "Corporate Transaction", during the
Salary Reduction Period, Employee's salary on the date of termination shall be
deemed to be the Salary prior to the Reduction for purposes of any rights under
the Employment Agreement.
5. Effect of Remaining Terms. Except as expressly modified in
this Amendment, all terms and conditions of the Employment Agreement shall
continue in full force and effect; provided however, in the event of any
inconsistency or conflict between terms of the Employment Agreement and the
terms of this Amendment, the terms of this Amendment shall control.
6. Entire Agreement. The Employment Agreement, as amended by this
Amendment, shall constitute the final, complete, and exclusive statement of the
agreement with respect to its subject matter and may not be contradicted by
evidence of any prior or contemporaneous statements or agreements, except for
agreements specifically referenced herein and therein.
7. Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall be considered an original and all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties have duly executed this Amendment
effective as of the date first set forth above.
COMPANY:
BAM! Entertainment, Inc.,
a Delaware corporation:
By: /s/ XXXXXXX XXXXX
------------------------------
Xxxxxxx Xxxxx
Chief Executive Officer
EMPLOYEE:
/s/ XXXXXXX XXXXXXXX
----------------------------------
Xxxxxxx Xxxxxxxx
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EXHIBIT A
STOCK OPTION
BAM! ENTERTAINMENT, INC. 2000 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Grantee's Name and Address: Xxxxxxx X. Xxxxxxxx
c/o BAM! Entertainment, Inc.
000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
You have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the
"Notice"), the BAM! Entertainment, Inc. 2000 Stock Incentive Plan, as amended
from time to time (the "Plan") and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice.
Award Number: 213
Date of Award: December 2, 2002
Vesting Commencement Date: July 1, 2003
Exercise Price per Share: $0.561
Total Number of Shares Subject
to the Option (the "Shares"): 116,978
Total Exercise Price: $65,624.66
Type of Option: Non-Qualified Stock Option
Expiration Date: December 2, 2012
Post-Termination Exercise Period: Three (3) Months
Vesting Schedule:
Subject to Grantee's Continuous Service and other limitations set forth
in this Notice, the Plan and the Option Agreement, the Option may be exercised,
in whole or in part, in accordance with the following schedule:
100% of the Shares subject to the Option shall vest on the Vesting
Commencement Date.
During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence exceeds a
period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity.
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Except as set forth below, in the event of the Grantee's change in
status from Employee to Consultant or from an Employee whose customary
employment is 20 hours or more per week to an Employee whose customary
employment is fewer than 20 hours per week, vesting of the Option shall continue
only to the extent determined by the Administrator as of such change in status.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Notice and agree that the Option is to be governed by the terms and conditions
of this Notice, the Plan, and the Option Agreement.
BAM! Entertainment, Inc., a Delaware corporation
By: _____________________________________________
Xxxxxxx X. Xxxxx, Chief Executive Officer
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS
SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT
OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE.
The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 16 of the Option Agreement. The Grantee further agrees to notify the
Company upon any change in the residence address indicated in this Notice.
Dated: _____________ Signed: ____________________________
________________
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AWARD NUMBER: 213
BAM! ENTERTAINMENT, INC. 2000 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
1. Grant of Option. BAM! Entertainment, Inc., a Delaware
corporation (the "Company"), hereby grants to the Grantee (the "Grantee") named
in the Notice of Stock Option Award (the "Notice"), an option (the "Option") to
purchase the Total Number of Shares of Common Stock subject to the Option (the
"Shares") set forth in the Notice, at the Exercise Price per Share set forth in
the Notice (the "Exercise Price") subject to the terms and provisions of the
Notice, this Stock Option Award Agreement (the "Option Agreement") and the
Company's 2000 Stock Incentive Plan, as amended from time to time (the "Plan"),
which are incorporated herein by reference. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Option
Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable
during its term in accordance with the Vesting Schedule set out in the Notice
and with the applicable provisions of the Plan and this Option Agreement. The
Option shall be subject to the provisions of Section 11(b) of the Plan relating
to the exercisability or termination of the Option in the event of a Corporate
Transaction. No partial exercise of the Option may be for less than the lesser
of five percent (5%) of the total number of Shares subject to the Option or the
remaining number of Shares subject to the Option. In no event shall the Company
issue fractional Shares.
(b) Method of Exercise. The Option shall be exercisable
only by delivery of an Exercise Notice (attached as Exhibit A) which shall state
the election to exercise the Option, the whole number of Shares in respect of
which the Option is being exercised, and such other provisions as may be
required by the Administrator. The Exercise Notice shall be signed by the
Grantee and shall be delivered in person, by certified mail, or by such other
method as determined from time to time by the Administrator to the Company
accompanied by payment of the Exercise Price. The Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price, which, to the extent selected, shall be
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deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 3(d), below.
(c) Taxes. No Shares will be delivered to the Grantee or
other person pursuant to the exercise of the Option until the Grantee or other
person has made arrangements acceptable to the Administrator for the
satisfaction of applicable income tax, employment tax, and social security tax
withholding obligations, including, without limitation, obligations incident to
the receipt of Shares or the disqualifying disposition of Shares received on
exercise of an Incentive Stock Option. Upon exercise of the Option, the Company
or the Grantee's employer may offset or withhold (from any amount owed by the
Company or the Grantee's employer to the Grantee) or collect from the Grantee or
other person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.
3. Method of Payment. Payment of the Exercise Price shall be made
by any of the following, or a combination thereof, at the election of the
Grantee; provided, however, that such exercise method does not then violate any
Applicable Law:
(a) cash;
(b) check;
(c) surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares as the Administrator may
require (including withholding of Shares otherwise deliverable upon exercise of
the Option) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate Exercise Price of the Shares as to which the
Option is being exercised (but only to the extent that such exercise of the
Option would not result in an accounting compensation charge with respect to the
Shares used to pay the exercise price); or
(d) payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (i) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction.
4. Restrictions on Exercise. The Option may not be exercised if
the issuance of the Shares subject to the Option upon such exercise would
constitute a violation of any Applicable Laws.
5. Termination or Change of Continuous Service. In the event the
Grantee's Continuous Service terminates, the Grantee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise the Option during the Post-Termination Exercise Period. In no event
shall the Option be exercised later than the Expiration Date set forth in the
Notice. In the event of the Grantee's change in status from Employee, Director
or
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Consultant to any other status of Employee, Director or Consultant, the Option
shall remain in effect and, except to the extent otherwise determined by the
Administrator, continue to vest; provided, however, with respect to any
Incentive Stock Option that shall remain in effect after a change in status from
Employee to Director or Consultant, such Incentive Stock Option shall cease to
be treated as an Incentive Stock Option and shall be treated as a Non-Qualified
Stock Option on the day three (3) months and one (1) day following such change
in status. Except as provided in Sections 7 and 8 below, to the extent that the
Grantee is not entitled to exercise the Option on the Termination Date, or if
the Grantee does not exercise the Option within the Post-Termination Exercise
Period, the Option shall terminate.
6. Disability of Grantee. In the event the Grantee's Continuous
Service terminates as a result of his or her Disability, the Grantee may, but
only within twelve (12) months from the Termination Date (and in no event later
than the Expiration Date), exercise the Option to the extent he or she was
otherwise entitled to exercise it on the Termination Date; provided, however,
that if such Disability is not a "disability" as such term is defined in Section
22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive
Stock Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option to the extent so entitled within the time specified
herein, the Option shall terminate.
7. Death of Grantee. In the event of the termination of the
Grantee's Continuous Service as a result of his or her death, or in the event of
the Grantee's death during the Post-Termination Exercise Period or during the
twelve (12) month period following the Grantee's Termination of Continuous
Service as a result of his or her Disability, the Grantee's estate, or a person
who acquired the right to exercise the Option by bequest or inheritance, may
exercise the Option, but only to the extent the Grantee could exercise the
Option at the date of termination, within twelve (12) months from the date of
death (but in no event later than the Expiration Date). To the extent that the
Grantee is not entitled to exercise the Option on the date of death, or if the
Option is not exercised to the extent so entitled within the time specified
herein, the Option shall terminate.
8. Transferability of Option. The Option, if an Incentive Stock
Option, may not be transferred in any manner other than by will or by the laws
of descent and distribution and may be exercised during the lifetime of the
Grantee only by the Grantee. The Option, if a Non-Qualified Stock Option may be
transferred by will, by the laws of descent and distribution, and to the extent
and in the manner authorized by the Administrator, to members of the Grantee's
immediate family (as determined by the Administrator) or pursuant to a domestic
relations order. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
9. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.
10. Stop-Transfer Notices. In order to ensure compliance with the
restrictions on transfer set forth in this Option Agreement, the Notice or the
Plan, the Company may issue
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appropriate "stop transfer" instructions to its transfer agent, if any, and, if
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.
11. Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Option Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
12. Tax Consequences. Set forth below is a brief summary as of the
date of this Option Agreement of some of the federal tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option. If the Option
qualifies as an Incentive Stock Option, there will be no regular federal income
tax liability upon the exercise of the Option, although the excess, if any, of
the Fair Market Value of the Shares on the date of exercise over the Exercise
Price will be treated as income for purposes of the alternative minimum tax for
federal tax purposes and may subject the Grantee to the alternative minimum tax
in the year of exercise.
(b) Exercise of Incentive Stock Option Following
Disability. If the Grantee's Continuous Service terminates as a result of
Disability that is not total and permanent disability as defined in Section
22(e)(3) of the Code, to the extent permitted on the date of termination, the
Grantee must exercise an Incentive Stock Option within three (3) months of such
termination for the Incentive Stock Option to be qualified as an Incentive Stock
Option.
(c) Exercise of Non-Qualified Stock Option. On exercise
of a Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified
Stock Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding
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periods that apply to Shares acquired upon exercise of a Non-Qualified Stock
Option. If Shares purchased under an Incentive Stock Option are disposed of
prior to the expiration of such one-year or two-year periods, any gain realized
on such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the difference between the Exercise Price and the
lesser of (i) the Fair Market Value of the Shares on the date of exercise, or
(ii) the sale price of the Shares.
13. Lock-Up Agreement.
(a) Agreement. The Grantee, if requested by the Company
and the lead underwriter of any public offering of the Common Stock or other
securities of the Company (the "Lead Underwriter"), hereby irrevocably agrees
not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act of 1933, as amended, or such shorter
period of time as the Lead Underwriter shall specify. The Grantee further agrees
to sign such documents as may be requested by the Lead Underwriter to effect the
foregoing and agrees that the Company may impose stop-transfer instructions with
respect to such Common Stock subject until the end of such period. The Company
and the Grantee acknowledge that each Lead Underwriter of a public offering of
the Company's stock, during the period of such offering and for the 180-day
period thereafter, is an intended beneficiary of this Section 13.
(b) No Amendment Without Consent of Underwriter. During
the period from identification as a Lead Underwriter in connection with any
public offering of the Company's Common Stock until the earlier of (i) the
expiration of the lock-up period specified in Section 13(a) in connection with
such offering or (ii) the abandonment of such offering by the Company and the
Lead Underwriter, the provisions of this Section 13 may not be amended or waived
except with the consent of the Lead Underwriter.
14. Entire Agreement: Governing Law. The Notice, the Plan and this
Option Agreement constitute the entire agreement of the parties 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, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California (as permitted
by Section 1646.5 of the California Civil Code, or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of the Notice, the Plan or this Option Agreement be determined by a
court of law to be illegal or unenforceable, such
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provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.
15. Headings. The captions used in the Notice and this Option
Agreement are inserted for convenience and shall not be deemed a part of the
Option for construction or interpretation.
16. Dispute Resolution. The provisions of this Section 16 shall be
the exclusive means of resolving disputes arising out of or relating to the
Notice, the Plan and this Option Agreement. The Company, the Grantee, and the
Grantee's assignees (the "parties") shall attempt in good faith to resolve any
disputes arising out of or relating to the Notice, the Plan and this Option
Agreement by negotiation between individuals who have authority to settle the
controversy. Negotiations shall be commenced by either party by notice of a
written statement of the party's position and the name and title of the
individual who will represent the party. Within thirty (30) days of the written
notification, the parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to resolve the
dispute. If the dispute has not been resolved by negotiation, the parties agree
that any suit, action, or proceeding arising out of or relating to the Notice,
the Plan or this Option Agreement shall be brought in the United States District
Court for the Northern District of California (or should such court lack
jurisdiction to hear such action, suit or proceeding, in a California state
court in the County of Santa Xxxxx) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent
permitted by law, any objection the party may have to the laying of venue for
any such suit, action or proceeding brought in such court. THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 16
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.
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17. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail (if the parties are
within the United States) or upon deposit for delivery by an internationally
recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as
shown beneath its signature in the Notice, or to such other address as such
party may designate in writing from time to time to the other party.
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EXHIBIT A
BAM! ENTERTAINMENT, INC. 2000 STOCK INCENTIVE PLAN
EXERCISE NOTICE
BAM! Entertainment, Inc.
000 X. Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today, __________, ___ the
undersigned (the "Grantee") hereby elects to exercise the Grantee's option to
purchase ___________ shares of the Common Stock (the "Shares") of BAM!
Entertainment, Inc. (the "Company") under and pursuant to the Company's 2000
Stock Incentive Plan, as amended from time to time (the "Plan") and the [ ]
Incentive [ ] Non-Qualified Stock Option Award Agreement (the "Option
Agreement") and Notice of Stock Option Award (the "Notice") dated December 2,
2002. Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Exercise Notice.
2. Representations of the Grantee. The Grantee acknowledges that
the Grantee has received, read and understood the Notice, the Plan and the
Option Agreement and agrees to abide by and be bound by their terms and
conditions.
3. Rights as Shareholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11(a) of the Plan. The Grantee shall enjoy rights
as a shareholder until such time as the Grantee disposes of the Shares.
4. Delivery of Payment. The Grantee herewith delivers to the
Company the full Exercise Price for the Shares, which, to the extent selected,
shall be deemed to be satisfied by use of the broker-dealer sale and remittance
procedure to pay the Exercise Price provided in Section 3(d) of the Option
Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may
suffer adverse tax consequences as a result of the Grantee's purchase or
disposition of the Shares. The Grantee represents that the Grantee has consulted
with any tax consultants the Grantee deems advisable in connection with the
purchase or disposition of the Shares and that the Grantee is not relying on the
Company for any tax advice.
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6. Taxes. The Grantee agrees to satisfy all applicable federal,
state and local income and employment tax withholding obligations and herewith
delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations. In the case
of an Incentive Stock Option, the Grantee also agrees, as partial consideration
for the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Award Date or within one (1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any federal,
state or local income or employment tax withholding obligations as a result of
such an early disposition, the Grantee agrees to satisfy the amount of such
withholding in a manner that the Administrator prescribes.
7. Restrictive Legends. The Grantee understands and agrees that
the Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership of
the Shares together with any other legends that may be required by the Company
or by state or federal securities laws:
(a) Option Agreement Restrictions:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO RESTRICTIONS ON TRANSFER SET FORTH IN A CERTAIN
LOCK-UP AGREEMENT BETWEEN XXXXXXXX & COMPANY, INC. AND XXXXXX
XXXXXX & COMPANY, INC. (AS REPRESENTATIVES OF SEVERAL
UNDERWRITERS) AND THE REGISTERED OWNER OF THESE SHARES (OR HIS
PREDECESSOR IN INTEREST), AND SUCH AGREEMENT IS AVAILABLE FOR
INSPECTION WITHOUT CHARGE AT THE OFFICE OF THE SECRETARY OF
THE CORPORATION.
(b) Removal of Legend. Upon the expiration or
termination of the Lock-up Agreement of Section 13 of the Option Agreement (and
of any agreement entered pursuant to Section 13), the Shares then held by
Grantee will no longer be subject to the legend referred to in Section 7(a).
After such time, and upon Grantee's request, a new certificate or certificates
representing the Shares not repurchased shall be issued without the legend
referred to in Section 7(a), and delivered to Grantee.
8. Successors and Assigns. The Company may assign any of its
rights under this Exercise Notice to single or multiple assignees, and this
agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this Exercise
Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns.
9. Headings. The captions used in this Exercise Notice are
inserted for convenience and shall not be deemed a part of this agreement for
construction or interpretation.
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10. Dispute Resolution. The provisions of Section 16 of the Option
Agreement shall be the exclusive means of resolving disputes arising out of or
relating to this Exercise Notice.
11. Governing Law; Severability. This Exercise Notice is to be
construed in accordance with and governed by the internal laws of the State of
California (as permitted by Section 1646.5 of the California Civil Code, or any
similar successor provision) without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California to the rights and duties of the
parties. Should any provision of this Exercise Notice be determined by a court
of law to be illegal or unenforceable, such provision shall be enforced to the
fullest extent allowed by law and the other provisions shall nevertheless remain
effective and shall remain enforceable.
12. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery or
upon deposit in the United States mail by certified mail (if the parties are
within the United States) or upon deposit for delivery by an internationally
recognized express mail courier service (for international delivery of notice),
with postage and fees prepaid, addressed to the other party at its address as
shown below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.
13. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
14. Entire Agreement. The Notice, the Plan and the Option
Agreement are incorporated herein by reference and together with this Exercise
Notice constitute the entire agreement of the parties 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, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan, the Option Agreement and this Exercise Notice (except as expressly
provided therein) is intended to confer any rights or remedies on any persons
other than the parties.
[Signature Page Follows]
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Submitted by: Accepted by:
GRANTEE: BAM! ENTERTAINMENT, INC.
By:___________________________________
__________________________ Title:________________________________
Address: Address:
__________________________ BAM! Entertainment, Inc.
__________________________ 000 X. Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
I, _________________, spouse of the Grantee, have read and hereby approve the
foregoing Exercise Notice. In consideration of the Company's granting my spouse
the right to purchase the Shares as set forth in the Exercise Notice, I hereby
agree to be bound irrevocably by the Agreement and further agree that any
community property or similar interest that I may have in the Shares shall
hereby be similarly bound by the Exercise Notice. I hereby appoint my spouse as
my attorney-in-fact with respect to any amendment or exercise of any rights
under the Exercise Notice.
_______________________________
Spouse of Grantee
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