Exhibit 10(w)
SANDBOX ENTERTAINMENT CORPORATION
NONQUALIFIED STOCK OPTION AWARD AGREEMENT
[DATE]
____________________________
____________________________
____________________________
____________________________
Dear___________________:
The Board of Directors (the "Board") administering the 1995 Equity
Incentive Plan for Sandbox Entertainment Corporation, a Delaware corporation
(the "Company"), has granted to _________________ ("Holder") an option to
purchase up to __________________ (______) shares of the Company's Common Stock,
$.001 par value (the "Stock") at a price of _____________ ($______) per share,
for an aggregate price of _________________________________ Dollars ($______).
This option is a so-called "nonqualified option". It is strongly recommended
that Holder consult with tax counsel or a tax advisor with respect to this
option prior to its exercise of the option.
The option granted to Holder is subject to the terms and conditions of
the Company's 1995 Equity Incentive Plan (the "Plan") and such additional terms
and conditions as are set forth in this Option Agreement. The terms of the Plan
are incorporated by reference in this Option Agreement and govern the granting,
holding and exercise of Holder's option as though set forth in full in this
letter. Capitalized terms used but not otherwise defined herein shall have the
same meanings as are assigned thereto in the Plan, unless the context herein
otherwise requires. A copy of the Plan is attached as Exhibit A for Holder's
review.
The Board has imposed the following additional terms and conditions
relating to Holder's option and its exercise:
1. Holder may exercise its option by delivery to the Company written,
irrevocable notice of exercise in the form attached hereto as Exhibit B
specifying the number of shares with respect to which the option is being
exercised (subject to any limitations below), together with payment in full of
the exercise price for those shares in cash, by check or by transferring to the
Company shares of the Company's Stock at their fair market value as determined
pursuant to the Plan. Any other form of exercise or tender may be refused by the
Company, acting through the Board or otherwise, in its
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discretion. Except as provided in the Plan or in this Option Agreement, Holder's
option will terminate in its entirety on the tenth (10th) anniversary date of
this letter.
2. (a) Holder's option has vested as to all ____________ shares.
Holder may exercise its option, in whole or in part, subject to the terms and
conditions of this Option Agreement and of the Plan.
(b) In the event any shares of Stock acquired pursuant to
exercise of the option hereunder, or any interest therein, are to be
transferred, voluntarily or involuntarily (including, without limitation, any
sale, encumbrance, foreclosure or transfer in lieu thereof, or by operation of
law, any division of marital property on account of divorce or legal separation
being deemed a "transfer" for purposes hereof, the Company (or its nominees)
shall have a right of first refusal as follows: Holder (or the holder of such
shares if not Holder) shall give the Company advance written notice detailing
all the terms of the proposed transfer. The Company (or its nominees) shall have
the right (but not the obligation), exercisable upon delivery to the
transferring shareholder of written notice of acceptance within thirty (30) days
following receipt of the notice of proposed transfer described in the preceding
sentence or within ninety (90) days of receiving notification that a transfer
has occurred, to repurchase all or any of such shares on the terms and
conditions set forth in such notice; provided that the per share purchase price
shall be the lesser of (i) the price, plus the fair market value of any non-cash
consideration (determined by the Company in good faith) (or, if applicable, 110%
of the loan amount), stated in the notice or (ii) the Agreed Value of the
shares, determined in accordance with Paragraph 2(c) (and shall be the Agreed
Value, determined in accordance with Paragraph 2(c), in the event of a transfer
not involving any consideration); and provided further that the purchase price
shall be payable, at the election of the Company (or its nominees), either on
the terms set forth in the transferor's notice or in five equal annual
installments of principal and accrued interest (at an annual interest rate,
adjusted on a daily basis, equal to the prime rate of interest publicly
announced as such from time to time by Citibank, N.A. in New York City) due
commencing on the Company's (or its nominees') purchase and on the next four (4)
anniversaries of such purchase. The date for consummating such purchase shall be
the sixtieth (60th) day following delivery of the company's (or its nominees')
notice of exercise. Failure by the Company (or its nominees) (without default by
the transferring shareholder) to close such purchase within the above 60-day
period shall give the transferring shareholder the right to transfer such shares
or interest therein on the terms and to the person described in the notice
during the 60 days following expiration of the original 60-day period; provided
that the shares or interest therein to be transferred shall for all purposes
remain subject to this agreement. If the transferring shareholder fails to close
the proposed transfer on those terms within such second 60-day period, the
proposed transfer shall again be subject to the terms of this Paragraph 2(b).
Notwithstanding the foregoing, such shares may be transferred or retransferred
without invoking this right of first refusal between Holder and trusts of which
Holder is the sole beneficiary by giving prior written notice certifying such a
transfer is to be made; provided that following any such transfer, such shares
shall remain subject to this right of first
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refusal and all the other provisions of this agreement. The restrictions set
forth in this Paragraph 2(b) shall expire upon the closing of a registered
"public offering" of the Company's common stock pursuant to the Securities Act
of 1933, as amended, and commencement of trading of Company common stock over
the counter on NASDAQ or on any national securities exchange.
(c) The "Agreed Value" of a share of the Stock shall mean that
value which is determined by the Board of Directors of the Company, by majority
vote, acting in good faith, as the then fair market value of the Stock. The
Board of Director's decision as to the Agreed Value shall be final and
conclusive.
(d) For so long as the Company's right to repurchase the Stock
as set forth in this Paragraph 2 remains effective, Holder shall not sell,
assign or otherwise transfer any shares of Stock or interest therein without
obtaining the written agreement of the purchaser, assignee or transferee that
the shares remain subject to this repurchase right, and Holder agrees that
certificates evidencing the Stock may be legended to reflect the foregoing
restrictions.
(e) In its sole discretion, the Board may waive or extend
expiration dates, subject to limitations set forth in the Plan.
3. Holder's option is not transferable and is exercisable only by
Holder.
4. The Company will reserve or keep available at all times sufficient
shares of its Stock to permit the exercise of Holder's option and other options
granted or to be granted under the Plan.
5. It is contemplated that the common stock in the Company to be issued
to Holder upon exercise of Holder's option will not be registered under the
Securities Act of 1933, as amended (the "Act") or any applicable state
securities laws, in reliance on counsel satisfactory to the Company, no
exemption from registration is then available, or if such issuance is otherwise
in violation of applicable law at the time purchase rights are exercised under
this option, then the Company's obligation to issue shares of its common stock
upon exercise of Holder's option shall be suspended until such time as the
Company's counsel determines that an exemption from registration is available
and such shares can be issued without violation of law. If such an exemption is
available in the opinion of such counsel, and such issuance is not otherwise in
violation of applicable law, Holder will deliver to the Company as a condition
precedent to giving notice of each exercise, an investment letter agreement in
form and substance satisfactory to the Company to enable the Company to comply
with the Act or other applicable securities laws and which may, among other
things, limit or condition the right to dispose of shares acquired under
Holder's option. Dispositions of the shares of Stock acquired by exercise of
Holder's option will be permitted only if in the opinion of counsel satisfactory
to the Company such disposition is not in violation of the Act, any applicable
state securities laws, or any other applicable
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law, regulation or rule, and Holder delivers to the Company a letter agreement
in form and substance satisfactory to the Company whereby Holder's successor(s)
agrees to be bound by the terms and conditions of this Option Agreement. Holder
agrees to pay all costs of obtaining any legal opinions and all costs in
connection with proposed exercise of Holder's option or dispositions of shares
acquired pursuant to Holder's option. Holder agrees to indemnify the Company,
its officers and directors, against any and all liabilities, losses, damages and
expenses (including reasonable attorney fees) arising from or in connection with
any disposition of the Stock, or any interest therein, in violation of
applicable securities laws or regulations or this letter.
6. Holder agrees to pay to the Company or to make arrangements
satisfactory to the Board to pay to the Company, at such time as any income is
recognized by Holder with respect to this option, any Federal, state, or local
taxes of any kind required by law to be withheld on such income by the Company.
In the event of a disposition or other transfer by Holder of common stock issued
to Holder upon exercise of Holder's options, Holder agrees to provide to the
Company promptly written notice describing in reasonable detail the disposition
or transfer, including without limitation the sale price, if any, and date of
transfer or disposition.
7. The Board may effect certain amendments to the Plan (within the
limitations prescribed by the Plan) and has the ultimate and conclusive
authority to interpret and administer the Plan and options (including this
option) granted under it.
8. The Plan and this option granted to Holder thereunder are governed
by, and shall be interpreted according to, the laws of the State of Arizona.
Holder's acceptance of the option granted pursuant to this Option
Agreement shall signify that Holder represents, warrants and agrees that all
shares of Stock purchased pursuant to the exercise of the option will be
acquired for investment and not for resale or distribution.
Because the tax effect may vary depending on Holder's circumstances,
and the tax laws may change from time to time, it is strongly recommended that
upon receipt of this option and prior to any exercise of this option Holder
consult with tax counsel or Holder's tax advisor concerning this option and the
current tax treatment relating thereto.
Please acknowledge Holder's receipt of this Option Agreement, together
with the materials referred to herein and Holder's agreement to the terms and
conditions of Holder's option as set forth
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herein and in the Plan by signing the enclosed copy of this Option Agreement and
returning it promptly to the Company.
Very truly yours,
Sandbox Entertainment Corporation
a Delaware corporation
By ___________________________________
Its President
ACCEPTED AND AGREED:
________________________
By ________________________
Its ____________________
Date: __________________
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EXHIBIT A
Attach a copy of the Plan
EXHIBIT B
NOTICE OF EXERCISE OF OPTION
TO PURCHASE SHARES OF
SANDBOX ENTERTAINMENT CORPORATION
AND RECORD OF STOCK TRANSFER
The undersigned hereby exercises its Stock Option granted by Sandbox
Entertainment Corporation under its 1995 Equity Incentive Plan (the "Plan")
subject to all the terms and provisions referred to in the Plan and that certain
option grant letter dated ___________________ (the "Option Letter "), and
notifies Sandbox Entertainment Corporation (the "Company") of its desire to
purchase __________ shares of the Common Stock of the Company, which were
offered to it pursuant to said Option Letter. Enclosed is a check in the sum of
$_________________ in full payment for such shares. The undersigned agrees to
hold these shares in accordance with and subject to the provisions of the Option
Letter.
The undersigned hereby represents that the shares of the Company's
Common Stock to be delivered to it pursuant to the above-mentioned exercise of
the Option are being acquired by the undersigned as an investment and not with a
view to, or for sale in connection with, the distribution of any such shares.
The undersigned also represents that it has read and fully understands the Plan,
including without limitation the restrictions on transfer of the shares hereby
being acquired. The undersigned agrees to indemnify the Company and its
subsidiaries, together with their officers and directors, for any liabilities,
losses, damages and expenses (including reasonable attorney fees) arising from
or in connection with any disposition of the shares hereby being acquired, or
any interest therein, in violation of applicable securities laws or regulations.
The undersigned further represents that it has been given access to all
information necessary to allow it to make a decision as to the advisability of
an investment in the Company's stock and the value of such stock, and that it
has the skill and experience necessary to make such decision.
Dated:____________________.
______________________________________
Signature of Option Holder
______________________________________
Print Name of Option Holder
Receipt is hereby acknowledged of the delivery to the undersigned by
Sandbox Entertainment Corporation, on ____________, of stock certificates for
________________ shares of Common Stock purchased by the undersigned pursuant to
the terms and conditions of the 1995 Equity Incentive Plan referred to above,
which shares were transferred to the undersigned on such Company's stock record
books on _________________.
___________________________________
By____________________________________
Its___________________________________
