EXHIBIT 10.9
DIGITAL THEATER SYSTEMS, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (the "Agreement"), is made as
of __________________ by and between Digital Theater Systems, Inc., a Delaware
corporation (the "Company"), and ___________("Optionee").
R E C I T A L
Pursuant to the 1997 Stock Option Plan (the "Plan") of the Company, the
Board of Directors of the Company or a committee to which administration of the
Plan is delegated by the Board of Directors (in either case, the
"Administrator") has authorized the granting to Optionee of a nonqualified stock
option to purchase the number of shares of Common Stock of the Company specified
in Paragraph 1 hereof, at the price specified therein, such option to be for the
term and upon the terms and conditions hereinafter stated.
A G R E E M E N T
NOW, THEREFORE, in consideration of the promises and of the
undertakings of the parties hereto contained herein, it is hereby agreed:
1. Number of Shares; Option Price. Pursuant to said action of the
Administrator, the Company hereby grants to Optionee the option ("Option") to
purchase, upon and subject to the terms and conditions of the Plan, ________
shares of Common Stock of the Company ("Shares") at the price of $2.019 per
share.
2. Term. This Option shall expire on the day before the tenth
anniversary of the date hereof (the "Expiration Date") unless such Option shall
have been terminated prior to that date in accordance with the provisions of the
Plan or this Agreement. The term "Affiliate" and other capitalized terms used
and not otherwise defined herein shall have the meanings set forth in the Plan.
3. Shares Subject to Exercise. Shares subject to exercise shall
be 25% of such Shares on and after the first anniversary of the date hereof, 25%
of such Shares on and after the second anniversary of the date hereof, 25% of
such Shares on and after the third anniversary of the date hereof and 25% of
such Shares on and after the fourth anniversary of the date hereof. All Shares
shall thereafter remain subject to exercise for the term specified in Paragraph
2 hereof, provided that Optionee is then and has continuously been in the employ
of or providing services to the Company, or its Affiliates, subject, however, to
the provisions of Paragraph 6 hereof.
4. Method and Time of Exercise. The Option may be exercised by
written notice delivered to the Company at its principal executive office
stating the number of shares with respect to which the Option is being
exercised, together with:
(A) a check or money order made payable to the Company in
the amount of the exercise price and any withholding tax, as provided under
Paragraph 5 hereof; or
(B) if expressly authorized in writing by the
Administrator, in its sole discretion, at the time of the Option exercise, the
tender to the Company of shares of the Company's Common Stock owned by Optionee
having a fair market value, as determined by the Administrator, not less than
the exercise price, plus the amount of applicable federal, state and local
withholding taxes; or
(C) if expressly authorized in writing by the
Administrator, in its sole discretion, at the time of the Option exercise, the
Optionee's full recourse promissory note in a form approved by the Company; or
(D) if any other method such as cashless exercise is
expressly authorized in writing by the Administrator, in its sole discretion, at
the time of the Option exercise, the tender of such consideration having a fair
market value, as determined by the Administrator, not less than the exercise
price, plus the amount of applicable federal, state and local withholding taxes.
Not less than 100 shares may be purchased at any one time unless the number
purchased is the total number purchasable under such Option at the time. Only
whole shares may be purchased.
5. Tax Withholding. As a condition to exercise of this Option,
the Company may require Optionee to pay over to the Company all applicable
federal, state and local taxes which the Company is required to withhold with
respect to the exercise of this Option. At the discretion of the Administrator
and upon the request of Optionee, the minimum statutory withholding tax
requirements may be satisfied by the withholding of shares of Common Stock of
the Company otherwise issuable to Optionee upon the exercise of this Option.
6. Exercise on Termination of Employment. If for any reason other
than death or permanent and total disability or retirement past the age of 60,
Optionee ceases to be employed by the Company or any of its Affiliates (such
event being called a "Termination"), this Option (to the extent then
exercisable) may be exercised in whole or in part at any time within five years
of the date of such Termination, but in no event after the Expiration Date;
provided, however, that if such exercise of this Option would result in
liability for Optionee under Section 16(b) of the Securities Exchange Act of
1934, then such five-year period automatically shall be extended until the tenth
day following the last date upon which Optionee has any liability under Section
16(b), but in no event after the Expiration Date. If Optionee dies or becomes
permanently and totally disabled (as defined in the Plan) or retires past the
age of 60 while employed by the Company or an Affiliate or within the period
that this Option remains exercisable after Termination, this Option (to the
extent then exercisable) may be exercised, in whole or in part, by Optionee, by
Optionee's personal representative or by the person to whom this Option is
transferred by devise or the laws of descent and distribution, at any time
within six months after the death or six months after the permanent and total
disability of Optionee, or five years after retirement of the optionee but in no
event after the Expiration Date. For purposes of this Paragraph 6 "employment"
includes service as a director or as a consultant. For purposes of this
Paragraph 6, Optionee's employment shall not be deemed to terminate by reason of
sick leave, military leave or other leave of absence approved by the
Administrator, if the period of any such leave does not exceed 90 days or, if
longer, if Optionee's right to reemployment by the Company or any Affiliate is
guaranteed either contractually or by statute.
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7. Nontransferability. This Option may not be assigned or
transferred except by will or by the laws of descent and distribution, and may
be exercised only by Optionee during his lifetime and after his death, by his
personal representative or by the person entitled thereto under his will or the
laws of intestate succession.
8. Optionee Not a Shareholder. Optionee shall have no rights as a
shareholder with respect to the Common Stock of the Company covered by this
Option until the date of issuance of a stock certificate or stock certificates
to him upon exercise of this Option. No adjustment will be made for dividends or
other rights for which the record date is prior to the date such stock
certificate or certificates are issued.
9. No Right to Employment. Nothing in the Option granted hereby
shall interfere with or limit in any way the right of the Company or of any of
its Affiliates to terminate Optionee's employment or consulting at any time, nor
confer upon Optionee any right to continue in the employ of, or consult with,
the Company or any of its Affiliates.
10. Modification and Termination. The rights of Optionee are
subject to modification and termination in certain events as provided in
Sections 6.1 and 6.2 of the Plan.
11. Restrictions on Sale of Shares. Optionee represents and agrees
that upon his exercise of this Option, in whole or in part, unless there is in
effect at that time under the Securities Act of 1933 a registration statement
relating to the Shares issued to him, he will acquire the Shares issuable upon
exercise of this Option for the purpose of investment and not with a view to
their resale or further distribution, and that upon such exercise thereof he
will furnish to the Company a written statement to such effect, satisfactory to
the Company in form and substance. Optionee agrees that any certificates issued
upon exercise of this Option may bear a legend indicating that their
transferability is restricted in accordance with applicable state and federal
securities law. Any person or persons entitled to exercise this Option under the
provisions of Paragraph 6 hereof shall, upon each exercise of this Option under
circumstances in which Optionee would be required to furnish such a written
statement, also furnish to the Company a written statement to the same effect,
satisfactory to the Company in form and substance.
12. Plan Governs. This Agreement and the Option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan, as it may be construed
by the Administrator. Optionee hereby acknowledges receipt of a copy of the
Plan.
13. Notices. All notices to the Company shall be addressed to the
Chief Financial Officer at the principal executive office of the Company at 0000
Xxxxxxxx Xxxxx, Xxxxxx Xxxxx, XX 00000, and all notices to Optionee shall be
addressed to Optionee at the address of Optionee on file with the Company or its
subsidiary, or to such other address as either may designate to the other in
writing. A notice shall be deemed to be duly given if and when enclosed in a
properly addressed sealed envelope deposited, postage prepaid, with the United
States Postal Service. In lieu of giving notice by mail as aforesaid, written
notices under this Agreement may be given by personal delivery to Optionee or to
the Chief Financial Officer (as the case may be).
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14. Sale or Other Disposition. Optionee understands and agrees
with the Company that the Shares acquired pursuant to exercise of this Option
shall not be disposed of by Optionee (whether by sale, exchange, gift, or other
form of transfer) other than to a Permitted Transferee (as defined below) or by
will or the laws of descent and distribution, until the consummation of a
primary initial public offering by the Company of its securities. If Optionee at
any time contemplates the disposition (whether by sale, exchange, gift, or other
form or transfer) of any Shares acquired by exercise of this Option, he or she
shall first notify the Company in writing of such proposed disposition and
cooperate with the Company in complying with all applicable requirements of law,
which, in the judgment of the Company, must be satisfied prior to such
disposition. The terms and conditions of this Agreement shall be binding on any
Permitted Transferee of this Option or any Shares acquired upon exercise of this
Option. "Permitted Transferee" means Optionee's estate, spouse, heirs,
ancestors, lineal descendants, legatees and legal representatives, the trustee
of any bona fide trust of which one or more of the foregoing are the sole
beneficiaries or the grantors thereof and any person in which any of the
foregoing, individually or collectively, beneficially owns all of the capital
stock, provided that in each such case the transferee enters into an agreement
with the Company acknowledging the Company's repurchase rights under Paragraph
15.
15. Repurchase of Stock by Company. In the event of a Termination
of Optionee such that Optionee is no longer a director, officer, employee or
consultant of the Company or any of its Affiliates, the Company shall have the
right, upon such Termination and for a period of 120 days thereafter (the
"Repurchase Period"), to repurchase all or any part of the Shares acquired or to
be acquired by Optionee upon exercise of this Option and held or to be held of
record by Optionee at a price equal to the greater of (A) the fair market value
of the Shares as of the date of Termination and (B) the exercise price paid by
Optionee for such Shares. The Company shall exercise the foregoing repurchase
right by delivering a notice to Optionee during the Repurchase Period indicating
the total number of Shares the Company is repurchasing, together with a check in
an amount equal to the repurchase price per share multiplied by the number of
shares to be repurchased (reduced by the amount of taxes (if any) which the
Company is required to withhold under federal and/or state law with respect to
such Shares). The determination by the Administrator of the repurchase price
shall be conclusive. Upon delivery of such notice and payment of the repurchase
price, Optionee shall promptly surrender the certificate(s) representing the
Shares repurchased by the Company. Whether or not Optionee surrenders such
certificates, upon payment in full by the Company of the repurchase price for
the Shares on or prior to the last day of the Repurchase Period, all Shares
subject to the foregoing repurchase notice shall automatically be cancelled on
the books and records of the Company without any further action by the Company
or Optionee. Stock certificates issued pursuant to the exercise of this Option
shall bear a legend indicating the foregoing right of the Company to repurchase
the Shares held by Optionee which legend shall state:
The shares evidenced by this certificate are subject to the right of
Digital Theater Systems, Inc. (the "Issuer") under certain
circumstances to repurchase all or any part of such shares upon notice
by Digital Theater Systems, Inc. to the holder of this certificate as
set forth in that certain Digital Theater Systems, Inc. Nonqualified
Stock Option Agreement, dated as of ________________, a copy of which
is on file at the offices of the Issuer.
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For purposes of this Paragraph 15, Optionee's employment or service shall not be
deemed to terminate by reason of sick leave, military leave or other leave of
absence approved by the Administrator, if the period of any such leave does not
exceed 90 days or, if longer, if Optionee's right to reemployment by the Company
or any Affiliate is guaranteed either contractually or by statute. All of the
foregoing provisions of this Paragraph 15 shall terminate upon the consummation
of a primary initial public offering by the Company of its securities.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
DIGITAL THEATER SYSTEMS, INC.
By: _________________________________
Xxxx Xxxxxxxxx
President
OPTIONEE
By: _________________________________
Name:
Address:
_________________________________
_________________________________
_________________________________
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