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MEDIA ARTS GROUP, INC.
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement"), is made and
entered into as of December 3, 1997 between MEDIA ARTS GROUP, INC., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇("Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Grant of Option; Effective Date.
1.1 Grant. The Company hereby grants to Optionee a NONQUALIFIED stock
option (the "NQO") to purchase all or any part of an aggregate of 600,000
shares (the "NQO Shares") of the Company's common stock ("Common Stock")
on the terms and conditions set forth herein.
1.2 Effective Date. The effective date of this NQO is December 3, 1997
("Effective Date").
2. Exercise Price. The exercise price for purchase of the shares of
Common Stock covered by this NQO shall be $12.375 per share.
3. Term. Subject to Section 5.2, this NQO shall expire on the fifteenth
anniversary of the Effective Date.
4. Adjustment of NQOs. The Company shall adjust the number and kind of
shares and the exercise price thereof in the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, stock
split, spin-off, sale of substantial assets, or other change in corporate
structure affecting the Common Stock; provided, that the number of shares
subject to this NQO shall always be rounded down to the nearest whole
number.
5. Exercise of Options.
5.1 Time of Exercise. This NQO shall be exercisable with respect to 100%
of the NQO Shares commencing on December 3, 1997.
5.2 Exercise After Termination of Employee Status. In the event that
Optionee ceases to be an employee of the Company or any of its
subsidiaries for any reason other than death or permanent disability, this
NQO may be exercised at any time within twelve (12) months after the date
of termination (but in no event after the expiration date of this NQO),
but not thereafter. If Optionee's termination is due to death or permanent
disability, or Optionee dies or becomes disabled within the period that
this NQO remains exercisable after termination, this NQO may be exercised
by the Optionee in the case of disability, by the Optionee's personal
representative or by the person to whom this NQO is transferred by will or
the laws of descent and distribution, at any time within two years after
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the death or two years after the disability, as the case may be, of
Optionee (but in no event after the expiration of this NQO).
5.3 Manner of Exercise. Optionee may exercise this NQO, or any portion
of this NQO, by giving written notice to the Company at its principal
executive office, to the attention of the Secretary of the Company,
accompanied by a copy of the Stock Purchase Agreement in substantially
the form attached hereto as Exhibit 1 executed by Optionee (or at the
option of the Company such other form of stock purchase agreement as shall
then be acceptable to the Company), payment of the exercise price and
payment of any applicable withholding taxes. The date the Company
receives written notice of an exercise hereunder accompanied by payment
will be considered as the date this NQO was exercised.
Promptly after receipt of written notice of exercise of the NQO, the
Company shall, without stock issue or transfer taxes to the Optionee or
other person entitled to exercise, deliver to the Optionee or other person
a certificate or certificates for the requisite number of Shares. The
Optionee or transferee of the Optionee shall not have any privileges as a
shareholder with respect to any NQO Shares covered by this NQO until the
date of issuance of a stock certificate.
5.4 Payment. Payment in full, shall be made for all NQO Shares purchased
at the time written notice of exercise of the NQO is given to the Company,
either (i) in cash or (ii) pursuant to a loan evidenced by a promissory
note; provided that the par value of the Common Stock shall be paid in
cash. Proceeds of any payment shall constitute general funds of the
Company. At the time of exercise of the NQO (or at such later time(s) as
the Company may prescribe), the Optionee shall remit to the Company all
United States federal and state withholding taxes determined by the
Company to be applicable.
6. Nonassignability of NQO. This NQO is not assignable or transferable
by Optionee except by will, the laws of descent and distribution and to
the extent approved by the Committee, pursuant to a qualified domestic
relations order as defined by the Code or the rules thereunder. Except
as otherwise provided in Section 5.2 in the event of an Optionee's death
or disability, only the Optionee may exercise the NQO. Any attempt to
assign, pledge, transfer, hypothecate or otherwise dispose of this NQO in
a manner not herein permitted, and any levy of execution, attachment or
similar process on this NQO, shall be null and void.
7. Market Standoff. Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters in connection with any
registration of the offering of the securities of the Company under the
Securities Act of 1933, as amended (the "Act"), Optionee shall not sell or
otherwise transfer any shares acquired upon exercise of this NQO (the
"Exercised Shares") for a period of up to 365 days following the effective
date of a Registration Statement filed under the Act. The Company may
impose stop-transfer instructions with respect to the Exercised Shares
subject to the foregoing restrictions until the end of each such 365-day
period.
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8. Restriction on Issuance of Shares.
8.1 Legality of Issuance. The Company shall not be obligated to sell or
issue any Exercised Shares pursuant to this Agreement if such sale or
issuance, in the opinion of the Company and the Company's counsel, might
constitute a violation by the Company of any provision of law, including
without limitation the provisions of the Act.
8.2 Registration or Qualification of Securities. The Company may, but
shall not be required to, register or qualify the sale of this NQO or any
Exercised Shares under the Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause
the grant or exercise of this option or the issuance or sale of any
Exercised Shares pursuant thereto to comply with any law.
9. Restriction on Transfer. Regardless of whether the sale of the
Exercised Shares has been registered under the Act or has been registered
or qualified under the securities laws of any state, the Company may
impose restrictions upon the sale, pledge or other transfer of Exercised
Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company and the Company's
counsel, such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Act, the securities laws of any
state, or any other law.
10. Stock Certificate Restrictive Legends. Stock certificates
evidencing Exercised Shares may bear such restrictive legends as the
Company and the Company's counsel deem necessary or advisable under
applicable law or pursuant to this Agreement, including, without
limitation, the following legends:
"The offering and sale of the securities represented hereby have not been
registered under the Securities Act of 1933, as amended (the "Act"). Any
transfer of such securities will be invalid unless a Registration
Statement under the Act is in effect as to such transfer or in the opinion
of counsel for the Company such registration is unnecessary in order for
such transfer to comply with the Act."
"The securities represented hereby are subject to restrictions on transfer
for a period of 365 days following the effective date of a registration
statement under the Act for an offering of the Company's securities as
more fully provided in an agreement relating to the option to purchase
such securities."
11. Information to Optionee. During the period this NQO is outstanding,
the Company shall provide Optionee on an annual or other periodic basis
financial and other information regarding the Company in accordance with
Rule 260.140.41.2 promulgated under the California Corporate Securities
Law of 1968, if applicable.
12. Assignment; Binding Effect. Subject to the limitations set forth in
this Agreement, this Agreement shall be binding upon and inure to the
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benefit of the executors, administrators, heirs, legal representatives
and successors of the parties hereto; provided, however, that Optionee may
not assign any of Optionee's rights under this Agreement.
13. Damages. Optionee shall be liable to the Company for all costs and
damages, including incidental and consequential damages, resulting from a
disposition of shares which is not in conformity with the provisions of
this Agreement.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of
California by California residents. The parties agree that the exclusive
jurisdiction and venue of any action with respect to this Agreement shall
be in the Superior Court of California for the County of San ▇▇▇▇ or the
United States District Court for the Northern District of California, and
each of the parties hereby submits to the exclusive jurisdiction and venue
of such courts for the purpose of such action. The parties agree that
service of process in any such action may be effected by delivery of the
summons to the parties in the manner provided for delivery of notices set
forth in Section 15.
15. Notices. All notices and other communications under this Agreement
shall be in writing. Unless and until the Optionee is notified in writing
to the contrary, all notices, communications and documents directed to the
Company and related to the Agreement, if not delivered by hand, shall be
mailed, addressed as follows:
MEDIA ARTS GROUP, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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 Optionee and
related to this Agreement, if not delivered by hand, shall be mailed to
Optionee's last known address as shown on the Company's books. 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 Agreement
shall be deemed received only when actually received.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
MEDIA ARTS GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Sr. Vice President and
General Counsel
The Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Optionee's spouse indicates by the execution of this NONQUALIFIED Stock
Option Agreement his/her consent to be bound by the terms thereof as to
his/her interests, whether as community property or otherwise, if any, in
the options granted hereunder, and in any Exercised Shares purchased
pursuant to this Agreement.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBITS
Exhibit 1 from Section 5.3 Stock Purchase Agreement
EXHIBIT 1 FROM SECTION 5.3 OF THE
MEDIA ARTS GROUP, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
MEDIA ARTS GROUP, INC.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of _________________, 199_, between MEDIA ARTS GROUP, INC., a
California corporation doing business in the State of California under
the name MAGI (the "Company"), and ___________ ("Purchaser").
THE PARTIES AGREE AS FOLLOWS:
1. Purchase of Shares. Pursuant to an NONQUALIFIED stock option
agreement ("Option Agreement") between the parties attached hereto as
Exhibit 1, the Company hereby sells to Purchaser, and Purchaser hereby
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buys from the Company, ______________ shares (the "Exercised Shares") of
the Company's Common Stock ("Common Stock") on the terms and conditions
set forth herein and in the Option Agreement, the terms and conditions of
the Option Agreement being hereby incorporated into this Agreement by
reference.
2. Purchase Price. Purchaser shall purchase the Exercised Shares from
the Company, and the Company shall sell the Exercised Shares to Purchaser,
at a price of $_______ per share (the "Exercise Price"), for a total
purchase price of $_____ (the "Purchase Price").
3. Manner of Payment. Purchaser shall pay the Purchase Price of the
Exercised Shares in cash.
4. Stock Certificate Restrictive Legends. Stock certificates evidencing
Exercised Shares may bear such restrictive legends as the Company and the
Company's counsel deem necessary or advisable under applicable law or
pursuant to this Agreement, including without limitation, the following
legends:
"The offering and sale of the securities represented hereby have not been
registered under the Securities Act of 1933, as amended (the "Act"). Any
transfer of such securities will be invalid unless a Registration
Statement under the Act is in effect as to such transfer or in the opinion
of counsel for the Company such registration is unnecessary in order for
such transfer to comply with the Act."
"The securities represented hereby are subject to restrictions on transfer
for a period of 365 days following the effective date of a registration
statement under the Act for an offering of the Company's securities as
more fully provided in an agreement relating to the option to purchase
such securities."
5. Representations, Warranties, Covenants, and Acknowledgments of
Purchaser. Purchaser hereby represents, warrants, covenants, acknowledges
and agrees that:
5.1 Investment. Purchaser is acquiring the Exercised Shares for
Purchaser's own account, and not for the account of any other person.
Purchaser is acquiring the Exercised Shares for investment and not with a
view to distribution or resale thereof except in compliance with
applicable laws regulating securities.
5.2 Business Experience. Purchaser is capable of evaluating the merits
and risks of Purchaser's investment in the Company evidenced by the
purchase of the Exercised Shares.
5.3 Relation of Company. Purchaser is presently an employee or advisor
to, the Company and in such capacity has become personally familiar with
the business, affairs, financial condition and results of operations of
the Company.
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5.4 Access to Information. Purchaser has had the opportunity to ask
questions of, and to receive answers from, appropriate executive officers
of the Company with respect to the terms and conditions of the
transactions contemplated hereby and with respect to the business,
affairs, financial condition, and results of operations of the Company.
Purchaser has had access to such financial and other information as is
necessary in order for Purchaser to make a fully-informed decision as to
investment in the Company by way of purchase of the Exercised Shares, and
has had the opportunity to obtain any additional information necessary to
verify any of such information to which Purchaser has had access.
5.5 Speculative Investment. Purchaser's investment in the Company
represented by the Exercised Shares is highly speculative in nature and is
subject to a high degree of risk of loss in whole or in part. The amount
of such investment is within Purchaser's risk capital means and is not so
great in relation to Purchaser's total financial resources as would
jeopardize the personal financial needs of Purchaser or Purchaser's family
in the event such investment were lost in whole or in part.
5.6 Registration. Purchaser may bear the economic risk of investment for
an indefinite period of time in the event the sale to Purchaser of the
Exercised Shares is not registered under the Securities Act of 1933, as
amended (the "Act"), and the Exercised Shares cannot be transferred by
Purchaser unless such transfer is registered under the Act or an exemption
from such registration is available. The Company has made no agreements
or covenants to register the transfer of any of the Shares under the Act.
The Company has made no representations, warranties, or covenants
whatsoever as to whether any exemption from the Act, including without
limitation any exemption for limited sales in routine brokers'
transactions pursuant to Rule 144, will be available; if the exemption
under Rule 144 is available at all, it will not be available until at
least two years after payment of cash for the Exercised Shares and not
then unless: (a) a public trading market then exists in the Company's
common stock; (b) adequate information as to the Company's financial and
other affairs and operations is then available to the public; and (c) all
other terms and conditions of Rule 144 have been satisfied.
5.7 Public Trading. The Company has made no representation, covenant or
agreement as to whether there will continue to be a public market for its
Common Stock.
5.8 Tax Advice. The Company has made no warranties or representations to
Purchaser with respect to the income tax consequences of the transactions
contemplated by this Agreement or the Option Agreement and Purchaser is
in no manner relying on the Company or its representatives for an
assessment of such tax consequences.
6. Binding Effect. Subject to the limitations set forth in this
Agreement, this Agreement shall be binding upon, and inure to the benefit
of, the executors, administrators, heirs, legal representatives,
successors and assigns of the parties hereto.
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7. Taxes. The Company may require Purchaser to pay to the Company, any
applicable withholding taxes resulting from the purchase of Exercised
Shares hereunder or from the lapse of any restrictions imposed on the
Exercised Shares.
8. Damages. Purchaser shall be liable to the Company for all costs and
damages, including incidental and consequential damages, resulting from a
disposition of Exercised Shares which is not in conformity with the
provisions of this Agreement.
9.Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of
California by California residents. The parties agree that the exclusive
jurisdiction and venue of any action with respect to this Agreement shall
be in the Superior Court of California for the County of San ▇▇▇▇ or the
United States District Court for the Northern District of California, and
each of the parties hereby submits to the exclusive jurisdiction and venue
of such courts for the purpose of such action. The parties agree that
service of process in any such action may be effected by delivery of the
summons to the parties in the manner provided for delivery of notices set
forth in Section 10.
10. Notices. All notices and other communications under this Agreement
shall be in writing. Unless and until Purchaser is notified in writing to
the contrary, all notices, communications and documents directed to the
Company and related to the Agreement, if not delivered by hand, shall be
mailed, addressed as follows:
MEDIA ARTS GROUP, INC.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Snr. Vice President & General Counsel
Unless and until the Company is notified in writing to the contrary, all
notices, communications and documents intended for Purchaser and related
to this Agreement, if not delivered by hand, shall be mailed to
Purchaser's last known address as shown on the Company's books. Notices
and communications shall be mailed by registered mail, return receipt
requested, postage prepaid. All mailings and deliveries related to this
Agreement shall be deemed received only when actually received.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MEDIA ARTS GROUP, INC.
By
Title
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Purchaser hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement.
Purchaser's spouse indicates by the execution of this Agreement her
consent to be bound by the terms herein as to her interests, whether as
community property or otherwise, if any, in the Exercised Shares hereby
purchased.
Purchaser's Spouse
EXHIBITS
Exhibit 1 from Section 1 Option Agreement