PRIZEPOINT ENTERTAINMENT CORPORATION
STOCK OPTION AGREEMENT
Number of shares subject to option:
This Agreement (the "Agreement") made this 9th day of October, 1998,
between Prizepoint Entertainment Corporation, a Delaware corporation (the
"Company"), and _________ (the "Optionee").
W I T N E S S E T H:
1. Grant of Option.
Pursuant to the provisions of the Prizepoint Entertainment Corporation
1998 Stock Option Plan (the "Plan"), the Company hereby grants to the Optionee,
subject to the terms and conditions of the Plan and subject further to the terms
and conditions herein set forth, the right and option (the "Option") to purchase
from the Company all or any part of an aggregate of 5,000 shares of the common
stock, par value $0.01 per share, of the Company (the "Common Stock" or the
"Shares") at a purchase price of $10 per Share (the "Exercise Price"), such
Option to be exercised as hereinafter provided. Capitalized terms contained
herein but not otherwise defined shall have the meanings ascribed to them in the
Plan.
2. Terms and Conditions.
It is understood and agreed that the Option evidenced hereby is subject
to the following terms and conditions:
(a) Expiration Date. The Option shall expire on the tenth
anniversary of the date hereof (the "Expiration Date").
(b) Type of Option. This option is not eligible to be an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
(c) Exercise of Option. (i) Subject to the other terms of this
Agreement regarding the exercisability of this Option, this Option may be
exercised in accordance with the following vesting schedule: 25% of the Options
shall vest on May 17, 1999, and 1/48 of the Options shall vest at the end of
each month thereafter. Options exercised in any one year shall be deducted from
the number of Options exercisable in any future year. Once vested, this Option
shall be exercisable at the following times prior to the expiration date: (A) if
the Optionee is employed by the Company at the time of exercise, at any time by
giving the Company 45 days' advance written notice or (B) if the Optionee is not
employed by the Company at the time of exercise but has the right to exercise
after termination in accordance with paragraph 2(d) of this Agreement, by giving
the Company written notice at any time during the period specified in paragraph
2(d) of this Agreement, in which case the Option shall be deemed exercised as of
the end of the calendar month in which the Company received notice of exercise
of the Option. In either case, the notice of exercise shall specify the number
of Shares as to which the Option is being exercised.
(i) Upon receipt of written notice of exercise by the
Company, the Company shall, upon full payment in cash to the Company of the
Exercise Price of the Shares as to which the Option shall be exercised, issue to
the Optionee the Shares subject to the Option. Any issuance of the Shares to an
Optionee pursuant to the preceding sentence shall be made by the Company within
90 days after the date of exercise. For purposes of this Agreement, the fair
market value of the Shares (the "Fair Market Value") shall be determined by such
methods or procedures as shall be established from time to time by the Board of
Directors of the Company (the "Board") acting in its sole discretion and in good
faith. In making such determinations, the Board may rely on a valuation report
by an investment banking or valuation firm selected by the Board. The Committee
established by the Board to administer the Plan (the "Committee") may, in its
sole discretion, permit the Optionee to pay the Exercise Price in previously
acquired Shares at the then fair market value of the Shares as determined above
rather than in cash.
(ii) Upon exercise of an Option, the Company may, in
the sole discretion of the Committee, either (A) issue to the Optionee the
Shares subject to the Option, or (B) in lieu of issuing the Shares, pay to the
Optionee in cash an amount equal to the excess, if any, of the aggregate Fair
Market Value of the Shares subject to such Option as of the close of the fiscal
year preceding the fiscal year in which exercise occurs over the aggregate
exercise price of the Shares purchasable under such Option. Notwithstanding the
foregoing, if at the time of exercise of the Option, the Company has issued
Common Stock in a public offering it will no longer have the right to pay cash
to an Optionee in lieu of issuing Shares.
(d) Exercise Upon Death or Termination of Employment.
(i) If the Optionee dies while an employee, director
or consultant of the Company, the Optionee's Designee may exercise the Option,
to the extent it was vested on the date of termination in accordance with the
vesting schedule in Section 2(c) hereof, by giving the Company written notice of
such exercise within 90 days after the date of Optionee's death, but in no event
later than the Expiration Date. An Optionee's "Designee" means the person
designated by the Optionee in his or her most recently filed beneficiary
designation filed with the Company to receive the Optionee's rights under the
Plan upon the Optionee's death, or if there is no such designation or no such
designated person survives the Optionee, by the person or persons to whom the
Optionee's rights pass by will or applicable law, or if no such person has such
right, by his executors or administrators.
(ii) If the Optionee's employment with the Company
shall terminate because of permanent disability, the Optionee may exercise the
Option to the extent it was vested on the date of termination in accordance with
the vesting schedule in Section 2(c), by giving the Company written notice of
such exercise within 90 days after the date of termination of employment, but in
no event later than the Expiration Date.
(iii) If the Optionee's employment shall terminate
for any reason other than death or permanent disability as aforesaid or for
Cause (as hereinafter defined), the Optionee may exercise the Option to the
extent it was vested on the date of termination in accordance with the vesting
schedule in Section 2(c), by giving the Company written notice of such exercise
within 90 days after the date of termination of employment, but in no event
later than the Expiration Date.
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(iv) If the Optionee's employment shall terminate for
Cause, all right to exercise the Option shall terminate at the date of such
termination of employment except that the Optionee may exercise the Option to
the extent vested as of the date of such termination by giving the Company
written notice thereof within 30 days after such termination. For purposes of
this Agreement, "Cause" shall mean (i) the Optionee' 5 conviction of, or plea of
guilty or nolo contendere to, a felony, (ii) the Optionee's gross negligence in
the performance of his duties and obligations to the Company, which is not
corrected within 10 business days after written notice, (iii) the Optionee's
knowingly dishonest act, or knowing bad faith or willful misconduct in the
performance of his duties and obligations to the Company, which is not corrected
within 10 business days after written notice, or (iv) the Optionee's other
material breach of his obligations under this Agreement, which is not corrected
within a reasonable period of time (determined in light of the cure appropriate
to such material breach, but in no event less than 10 business days) after
written notice.
(e) Change in Control Provisions. Upon a Change in Control,
any and all Options then outstanding shall terminate, provided that the lesser
of (i) 25% of the total number of Options granted to the Optionee under the Plan
and (ii) the then-current number of unvested Options granted to the Optionee
under the Plan, shall, immediately prior to the Change in Control, become fully
vested and immediately exercisable by the Optionee. Nothing contained herein
shall prevent the substitution of a new option by the Company after a Change in
Control.
(f) Entering into Shareholders' Agreement. As a condition to
exercising any Option, the Optionee shall exercise and deliver to the Company an
agreement in substantially the form of Exhibit A hereto or such other form as
the Company may reasonably require.
(g) Nontransferability. This Option shall not be transferable
other than by will or by the laws of descent and distribution. During the
lifetime of the Optionee, this Option shall be exercisable only by such
Optionee.
(h) Adjustments. In the event that the Committee shall
determine, in its sole discretion, that any dividend or other distribution
(whether in the form of cash, Common Stock, or other property),
recapitalization, stock split, reverse split, any reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, license
arrangement, strategic alliance or other corporate transaction or event, affects
the Shares such that an adjustment is appropriate in order to prevent dilution
or enlargement of the rights of the Optionee under the Plan, then the Committee
shall make such equitable changes or adjustments as it deems necessary or
appropriate to any or all of (i) the number and kind of Shares which may
thereafter be issued in connection with Options, (ii) the number and kind of
Shares issued or issuable in respect of outstanding Options, and (iii) the
Exercise Price relating to any Option; provided that, with respect to incentive
stock options, such adjustment shall be made in accordance with Section 424(h)
of the Code.
(i) No Rights as Stockholder. The Optionee shall have no
rights as a stockholder with respect to any Shares subject to the Option prior
to the date of issuance to the Optionee of a certificate or certificates for
such Shares.
(j) Optionee Acknowledgment. The Optionee acknowledges that:
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(i) the future value of the Company is highly
speculative;
(ii) the Optionee is not relying on the value of this
Option as current compensation;
(iii) the Company has no obligation to the Optionee
to sell the Company or to sell Shares publicly (which may have the effect of
reducing the value of the Company);
(iv) upon exercise of this Option, unless the Shares
issuable upon exercise of the Options have been registered under applicable
securities laws, there will be substantial restrictions on the transferability
of the Shares; and
(v) the past performance or experience of the
Company, the Company's officers, directors, agents, or employees, will not in
any way indicate or predict the results of the ownership of Shares or of the
Company's activities.
(k) No Right to Continued Employment. The Option shall not
confer upon the Optionee any right with respect to continuance of employment by
the Company, nor shall it interfere in any way with the right of the Optionee's
employer to terminate the Optionee's employment at any time.
(l) Compliance With Law and Regulations. The Option herein
granted and the obligation of the Company to sell and deliver shares hereunder,
shall be subject to all applicable Federal and State laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Company shall not be required to issue or deliver any certificates for
Shares prior to (i) the listing of such Shares on any stock exchange or national
market quotations system on which the Shares may then be listed and (ii) the
completion of any registration or qualification of such Shares under any Federal
or State law, or any rule or regulation of any government body which the Company
shall, in its sole discretion, determine to be necessary or advisable. Moreover,
the Option herein granted may not be exercised if its exercise, or the receipt
of Shares pursuant hereto, would be contrary to applicable law.
3. Optionee Bound by Plan.
The Optionee hereby acknowledges receipt of a copy of the Plan and
agrees to be bound by all the terms and provisions thereof.
4. Notices.
All notices or any other communications hereunder shall be in writing
and delivered personally or by registered or certified mail or overnight
courier, addressed, if to the Company, to Prizepoint Entertainment Corporation,
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
President, and if to the Optionee, at the address set forth below, subject to
the right of either party to designate at any time hereafter in writing some
other address.
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5. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws
principles.
6. No Assignment.
Neither this Agreement nor any of the rights or obligations of the
Optionee hereunder may be transferred or assigned by the Optionee.
7. Benefits.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto. This Agreement is for the sole benefit of the parties hereto and
not for the benefit of any other party.
8. Severability.
If any provision of this Agreement shall be determined to be illegal
and unenforceable by any court of law, the remaining provisions shall be
severable and enforceable in accordance with their terms.
9. Amendments.
No modification, amendment or waiver of any provision of this
Agreement, other than as required under Section 2(f), shall be effective unless
it is in writing and signed by the parties hereto.
10. Counterparts.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its Chairman, Chief Executive Officer, President or a Vice President
and Optionee has executed this Agreement, both as of the day and year first
above written.
PRIZEPOINT ENTERTAINMENT CORPORATION
By:
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Name: Xxxxxxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
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[Name]
[Address]
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