Incentive Stock Option Agreement (1998 Stock Incentive Plan) - Media Arts Group Inc.
MEDIA ARTS GROUP, INC.
1998 STOCK INCENTIVE PLAN (THE "PLAN")
INCENTIVE STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Incentive Stock Option Agreement. You have been
granted an option to purchase Common Stock of the Company, subject to the terms
and conditions of the Plan and this Incentive Stock Option Agreement, as
follows:
<TABLE>
<CAPTION>
I. NOTICE OF STOCK OPTION GRANT
<S> <C> <C>
1. NAME: ("Grantee")
2. ADDRESS:
3. DATE OF GRANT: ("Grant Date")
4. TOTAL NUMBER OF COMMON SHARES
GRANTED: ("Option")
5. EXERCISE PRICE PER COMMON ("Exercise Price")
SHARE:
6. TOTAL EXERCISE PRICE: ("Total Exercise Price")
7. TERM OF STOCK Ten (10) years from the Grant Date ("Option Term")
OPTION/EXPIRATION DATE:
8. VESTING SCHEDULE: Date % of Stock Options as to which Option is Vested
per year
</TABLE>
Media Arts Group, Inc. Grantee:
By:
------------------------------ ----------------------
Raymond A. Peterson (insert name)
President & Chief Executive Officer
<PAGE>
II. AGREEMENT
1. GRANT OF OPTION The Committee of the Plan hereby grants to the Grantee
named in the Notice of Grant attached as Part I of this
Incentive Stock Option Agreement (the "Grantee") an
option (the "Option") to purchase the number of Common
Shares, as set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of
Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by
reference. In the event of a conflict between the
terms and conditions of the Plan and the terms and
conditions of this Incentive Stock Option Agreement,
the terms and conditions of the Plan shall prevail.
This Option is intended to qualify as an Incentive
Stock Option under Section 422 of the Code. However,
to the extent that this Option exceeds the $100,000
rule of Code Section 422(d), it shall be treated as a
Nonstatutory Stock Option ("NSO").
2. VESTING The Option is exercisable during its term in accordance
with the Vesting Schedule set out in the Notice of
Grant and the applicable provisions of the Plan and
this Incentive Stock Option Agreement.
3. EXERCISE OF OPTION (a) The Grantee may exercise the
Option with respect to all or any part of the
number of Option Shares then exercisable hereunder
by providing to the Secretary of the Company
written notice of intent to exercise. The notice
of exercise (in substantially the form attached
hereto as EXHIBIT A or in such other form as shall
then be acceptable to the Company (the "Exercise
Form")) shall specify the number of Common Shares
in respect of which the Option is being exercised
(the "Exercised Shares"), and such other
representations and agreements as may be required
by the Company pursuant to the provisions of the
Plan. The Exercise Form shall be accompanied by
payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to
be exercised upon receipt by the Company of such
fully executed Exercise Form accompanied by such
aggregate Exercise Price.
(b) Payment by the Grantee of the
aggregate Exercise Price shall be made pursuant to
Article 6 of the Plan.
(c) No Common Shares shall be
issued pursuant to the exercise of this Option
unless such issuance
2
<PAGE>
and exercise complies with all applicable local,
state and federal laws. Assuming such compliance,
for income tax purposes the Exercised Shares shall
be considered transferred to the Grantee on the
date the Option is exercised with respect to such
Exercised Shares.
4. TERMINATION
(a) The Option and all rights
hereunder with respect thereto, to the extent such
rights shall not have been exercised, shall
terminate and become null and void after the
expiration of the Option Term.
(b) Upon the occurrence of the
Grantee's ceasing for any reason to be employed by
the Company (such occurrence being a "termination"
of the Grantee's employment"), the Option, to the
extent not previously exercised, shall terminate
and become null and void immediately upon such
termination of the Grantee's employment, except in
a case where the termination of the Grantee's
employment is by reason of retirement, disability,
death, voluntary termination or his or her being
discharged not for good cause. Upon a termination
of the Grantee's employment by reason of
retirement, disability, death, voluntary
termination or his or her being discharged not for
good cause, the Option may be exercised during the
following periods, but only to the extent that the
Option was outstanding and exercisable on any such
date of retirement, disability, death, voluntary
termination or his or her being discharged not for
good cause: (i) the one-year period following the
date of such termination of the Grantee's
employment in the case of a disability (within the
meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended), (ii) the
one-year period following Grantee's death, and
(iii) the three-month period following the date of
such termination in the case of the Grantee's
termination of employment by reason of his or her
retirement, his or her voluntary termination or
his or her being discharged not for good cause,
unless the Grantee dies within said three-month
period. In no event, however, shall any such
period extend beyond the Option Term.
(c) In the event of the death of
the Grantee, the Option may be exercised by the
Grantee's legal representative(s), but only to the
extent that the Option would otherwise have been
exercisable by the Grantee.
(d) A transfer of the Grantee's
employment between the Company and any subsidiary
of
3
<PAGE>
the Company, or between any subsidiaries of the
Company, shall not be deemed to be a termination
of the Grantee's employment.
(e) Notwithstanding any other
provisions set forth herein or in the Plan, if, as
determined by the Committee within its sole
discretion, the Grantee shall (i) commit any act
of malfeasance or wrongdoing affecting the Company
or any subsidiary of the Company, (ii) breach any
covenant not to compete, or employment contract,
with the Company or any subsidiary of the Company,
or (iii) engage in conduct that would warrant the
Grantee's discharge for cause (excluding general
dissatisfaction with the performance of the
Grantee's duties, but including any act of
disloyalty or any conduct clearly tending to bring
discredit upon or any subsidiary of the Company),
then immediately upon the Committee's
determination, any unexercised portion of the
Option as of the date of such determination shall
terminate and be void.
5. RESTRICTIONS ON SALE
By signing this Incentive Stock Option Agreement, the
Grantee agrees not to sell any Exercised Shares at a
time when any applicable law, regulation or Company
policy prohibits a sale. This restriction will apply
as long as the Grantee is an employee of the Company
(or a subsidiary).
6. TRANSFER OF STOCK OPTIONS
During the Grantee's lifetime, the Option hereunder
shall be exercisable only by the Grantee or any
guardian or legal representative of the Grantee, and
the Option shall not be transferable except, in cases
of the death of the Grantee, by will or the laws of
descent and distribution, nor shall the Option be
subject to attachment, execution or other similar
process. The terms of the Plan and this Incentive
Stock Option Agreement shall be binding upon the
executors, administrators, heirs, successors and
assigns of the Grantee.
7. EMPLOYMENT The granting of the Option or its exercise shall not be
construed as granting to the Grantee any right with
respect to continuance of employment of the Company.
Except as may otherwise be limited by a written
agreement between the Company and the Grantee, the
right of the Company to terminate at will the Grantee's
employment at any time with or without cause (whether
by dismissal, discharge, retirement or otherwise) is
specifically reserved by the Company, as the employer
or on behalf of the employer (whichever the case may
be), and acknowledged by the Grantee.
4
<PAGE>
8. NOTICE
All notices and other communications under this
Incentive Stock Option Agreement shall be in writing.
Unless and until the Grantee is notified in writing to
the contrary, all notices, communications and documents
directed to the Company and related to the Incentive
Stock Option Agreement, if not delivered by hand, shall
be mailed, addressed as follows:
MEDIA ARTS GROUP, INC.
521 Charcot Avenue
San Jose, California 95131
Attn: James F. Landrum, Jr.
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 Grantee and related to this Incentive
Stock Option Agreement, if not delivered by hand, shall
be mailed to Grantee's last known address as shown on
the Company's payroll records. 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
Incentive Stock Option Agreement shall be deemed
received only when actually received.
9. APPLICABLE LAW
This Incentive Stock Option Agreement shall be
construed and interpreted pursuant to the internal
substantive laws, but not the choice of law rules, of
the State of California, and the parties hereto submit
and consent to the jurisdiction of the courts of the
State of California, including Federal Courts located
therein, should Federal jurisdiction requirements exist
in any action brought to enforce (or otherwise relating
to) this Incentive Stock Option Agreement.
Notwithstanding the proceeding sentence, nothing
contained in this Incentive Stock Option Agreement
shall preclude the Company from bringing an action in
any appropriate forum to enforce the terms and
provisions of this Incentive Stock Option Agreement.
Grantee hereby consents to the exclusive jurisdiction
of any State or Federal court empowered to enforce this
Incentive Stock Option Agreement in the State of
California, Santa Clara County, and waives any
objection thereto on the basis of personal jurisdiction
or venue.
10. ENTIRE AGREEMENT
This Incentive Stock Option Agreement and the Plan
constitute the entire understanding between the Grantee
and the Company 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.
This Incentive
5
<PAGE>
Stock Option Agreement may be amended only in writing
signed by the Grantee and an authorized officer of the
Company.
By the Grantee's signature and the signature of the Company's representative on
the Notice of Grant, the Grantee and the Company agree that this Option is
granted under and governed by the terms and conditions of the Plan and this
Incentive Stock Option Agreement. The Grantee has reviewed the Plan and this
Incentive Stock Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Incentive Stock Option
Agreement and fully understands all provisions of the Plan and Incentive Stock
Option Agreement. The Grantee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Plan Committee upon any
questions relating to the Plan and the Incentive Stock Option Agreement.
6