Nonexecutive Employee Stock Option Plan - THQ Inc.
THQ INC.
SECOND AMENDED AND RESTATED NONEXECUTIVE EMPLOYEE STOCK
OPTION PLAN
I. INTRODUCTION
1.1. Purposes. The purposes of this THQ Inc. Second Amended and Restated
Nonexecutive Employee Stock Option Plan (the "Plan") maintained by THQ Inc., a
Delaware corporation (the "Company"), are (i) to align the interests of the
Company's stockholders and its eligible employees by increasing the proprietary
interest of such employees in the Company's growth and success, (ii) to advance
the interests of the Company by attracting and retaining employees of the
Company and (iii) to motivate eligible employees to act in the long-term best
interests of the Company and its stockholders.
1.2. Certain Definitions.
"Administrator" shall mean the Board or a delegate of the Board, to the
extent then authorized to administer the Plan pursuant to Section 1.3 hereof.
"Agreement" shall mean the written agreement evidencing an award
hereunder between the Company and the recipient of such award.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean the occurrence of any of the following, as determined
by the Administrator: (i) the failure, neglect or refusal of an Optionee to
perform his or her regularly assigned employment duties (including, without
limitation, Optionee's inability to perform such duties as a result of alcohol
or drug use, chronic alcoholism or drug addition), (ii) any willful, intentional
or grossly negligent act by an Optionee having the effect of materially injuring
the interest, business or reputation of the Company, any of its parents,
subsidiaries or affiliates or any division that an Optionee may manage, (iii)
willful misconduct by an Optionee, including insubordination, in respect of the
duties or obligations of the Optionee under the Optionee's employment with the
Company, (iv) the violation or failure by an Optionee to comply in any material
respect with the Company's published rules, regulations or policies, as in
effect from time to time, (v) the Optionee's commission of a felony or
misdemeanor involving moral turpitude, fraud, theft or dishonesty (including
entry of a nolo contendere plea), or (vi) any misappropriation or embezzlement
of the property of the Company or its affiliates (whether or not a misdemeanor
or felony).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, $.01 par value, of the
Company.
"Company" shall have the meaning set forth in Section 1.1.
"Corporate Transaction" shall mean (i) any consolidation or merger of
the Company, other than (A) any merger or consolidation with any Subsidiary of
the Company or (B) any
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merger or consolidation resulting in the holders of the capital stock of the
Company immediately prior to such consolidation or merger entitled to vote for
the election of directors holding, directly or indirectly, a majority of the
capital stock of the surviving or resulting entity entitled to vote for the
election of directors, (ii) any sale or issuance or series of sales and/or
issuances of Common Stock by any holders thereof (excluding an initial public
offering) which result in any person or entity or group of affiliated persons
and entities (other than the stockholders of the Company as of the original
issuance date of the first Option awarded under this Plan) owning, directly or
indirectly, a majority of the capital stock of the Company entitled to vote for
the election of directors, or (iii) any sale or other disposition by the Company
of all or substantially all of its assets, other than to one or more
Subsidiaries of the Company.
"Disability" shall mean the inability of an Optionee substantially to
perform his or her duties and responsibilities for the Company, as determined in
the sole discretion of the Administrator, for a period of at least 90 days in
any 365-day period.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, as of any date, the value of a share of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, its Fair Market Value
shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
exchange or system for the last market trading day prior to
the time of determination, as reported in The Wall Street
Journal;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its
Fair Market Value shall be the mean between the high bid and
low asked prices for the Common Stock on the last market
trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good
faith by the Administrator.
"Mature Shares" shall mean previously-acquired shares of Common Stock
for which the holder thereof has good title, free and clear of all liens and
encumbrances and which such holder either (i) has held for at least six months
or (ii) has purchased on the open market.
"Option" shall mean an option to purchase shares of Common Stock which
is granted under the Plan.
"Optionee" shall mean a person to whom an Option is granted under the
Plan.
"Performance Measures" shall mean the criteria and objectives,
established by the Administrator and set forth in an Agreement, which shall be
satisfied or met as a condition to the
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exercisability of all or a portion of an Option. Such criteria and objectives
may include, without limitation, one or more of the following: the achievement
of business plan objectives, the attainment of individual sales or other
performance goals, the attainment by a share of Common Stock of a specified Fair
Market Value for a specified period of time, earnings per share, return to
stockholders (including dividends), return on equity, earnings of the Company,
revenues, market share, cash flow or cost reduction goals, or any combination of
the foregoing.
"Subsidiary" shall mean any corporation, limited liability company,
partnership, association or other business entity of which the Company, or any
other Subsidiary, has the voting power to elect a majority of such entity's
board of directors or analogous governing body.
"Tax Date" shall have the meaning set forth in Section 3.5.
1.3. Administration. This Plan shall be administered by the Board,
except to the extent the Board delegates some or all of its administrative
duties hereunder to a committee of the Board or to one or more executive
officers of the Company, as the Board deems appropriate. The Administrator
shall, subject to the terms of this Plan, select the eligible persons for
participation in the Plan and determine the form, amount and timing of each
award to such persons, and the exercise price associated with the award, the
time and conditions of exercise of the award and all other terms and conditions
of the award, including, without limitation, the form of the Agreement
evidencing the award. The Board may, in its sole discretion and for any reason
at any time take action such that any or all outstanding Options shall become
exercisable in part or in full. The Administrator shall, subject to the terms of
this Plan, interpret the Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the administration of the Plan
and may impose, incidental to the grant of an award, conditions with respect to
the award, such as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be final, binding and
conclusive.
No person serving as Administrator shall be liable for any act,
omission, interpretation, construction or determination made in connection with
this Plan in good faith, and each person serving as Administrator shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including attorneys' fees) arising therefrom to
the full extent permitted by law, except as otherwise may be provided in the
Company's Certificate of Incorporation and/or By-laws, and under any directors'
and officers' liability insurance that may be in effect from time to time.
1.4. Eligibility. Participants in this Plan shall consist of such
employees of the Company and its Subsidiaries as the Administrator in its sole
discretion may select from time to time; provided, however, that no executive
officer of the Company shall be eligible to participate in this Plan. For
purposes of this Plan, references to employment by the Company shall also mean
employment by a Subsidiary. The Administrator's selection of a person to
participate in this Plan at any time shall not require the Administrator to
select such person to participate in the Plan at any other time.
1.5. Shares Available. Subject to adjustment as provided in Section 3.7,
the maximum number of shares of Common Stock available for awards under the Plan
shall be 1,428,000 shares, reduced by the sum of the aggregate number of shares
of Common Stock which become
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subject to outstanding Options. No more than 20% of such maximum number of
shares shall be available for awards to employees of the Company who are
corporate officers, but not executive officers, of the Company and no more than
15% of such maximum number of shares shall be available for awards to employees
who are officers, but not corporate officers, or general managers of a
Subsidiary or division of the Company. To the extent that shares of Common Stock
subject to an outstanding Option are not issued or delivered by reason of the
expiration, termination, cancellation or forfeiture of such award or by reason
of the delivery or withholding of shares of Common Stock to pay all or a portion
of the exercise price of an award or to satisfy all or a portion of the tax
withholding obligations relating to an award, then such shares of Common Stock
shall again be available under this Plan.
Shares of Common Stock shall be made available from authorized and
unissued shares of Common Stock, or authorized and issued shares of Common Stock
reacquired and held as treasury shares or otherwise or a combination thereof.
II. STOCK OPTION AWARDS
2.1. Granting of Stock Option Awards. The Administrator may, in its
discretion, grant Options to purchase shares of Common Stock to such eligible
employees as may be selected by the Administrator. Each Option shall be a
nonqualified stock option--that is, an option that is not an incentive stock
option under Section 422 of the Code.
2.2. Terms and Conditions of Awards. Options shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Administrator
shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of
Common Stock subject to an Option and the purchase price per share of
Common Stock purchasable upon exercise of the Option shall be determined
by the Administrator; provided, however, that the purchase price per
share of Common Stock purchasable upon exercise of an Option shall not
be less than 100% of the Fair Market Value of a share of Common Stock on
the date the Option is granted, or, in the case of a newly-hired
employee, on the first day of employment.
(b) Option Period and Exercisability. The period during which an
Option may be exercised shall be determined by the Administrator. The
Administrator may, in its discretion, establish Performance Measures
which shall be satisfied or met as a condition to the grant of an Option
or to the exercisability of all or a portion of an Option. The
Administrator shall determine whether an Option shall become exercisable
in cumulative or non-cumulative installments and in part or in full at
any time. An exercisable Option, or portion thereof, may be exercised
only with respect to whole shares of Common Stock.
(c) Method of Exercise. An Option may be exercised (i) by giving written
notice to the Company specifying the number of whole shares of Common
Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either
(A) in cash, (B) by delivery (either actual delivery or by attestation
procedures established by the Company) of Mature Shares
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having an aggregate Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason of
such exercise, (C) in cash by a broker-dealer acceptable to the Company
to whom the Optionee has submitted an irrevocable notice of exercise (if
the Common Stock has been registered under the Exchange Act and is
publicly traded) or (D) a combination of (A), (B) and (C), in each case
to the extent set forth in the Agreement relating to the Option and (ii)
by executing such documents as the Company may reasonably request. The
Company shall have sole discretion to disapprove of an election pursuant
to any of clauses (B)-(D). Any fraction of a share of Common Stock which
would be required to pay such purchase price shall be disregarded and
the remaining amount due shall be paid in cash by the Optionee. No
certificate representing Common Stock shall be delivered until the full
purchase price therefor has been paid (or arrangement made for such
payment to the Company's satisfaction).
2.3. Termination of Employment or Service.
(a) All of the terms relating to the exercise, cancellation or
other disposition of an Option upon a termination of employment with the
Company of the holder of such Option, whether by reason of Disability,
retirement, death or any other reason, shall be determined by the
Administrator.
(b) Unless otherwise provided in the Agreement relating to an
Option, if the Optionee's employment terminates for any reason other
than Cause, Disability or death, the Option may thereafter be exercised,
only to the extent it is exercisable at the time of such termination, by
the Optionee until and including the earlier to occur of (i) the date
which is 90 days after the effective date of the Optionee's termination
of employment and (ii) the expiration date of the Option.
(c) Unless otherwise provided in the Agreement relating to an
Option, if the Optionee's employment with the Company terminates by
reason of Disability or death, the Option may thereafter be exercised,
only to the extent it is exercisable at the time of such termination, by
the Optionee or the Optionee's legal representative or similar person
until and including the earlier to occur of (i) the date which is one
year after the effective date of the Optionee's termination of
employment and (ii) the expiration date of the Option.
(d) Unless otherwise provided in the Agreement relating to an
Option, if the Optionee's employment with the Company is terminated by
the Company for Cause, the Option shall terminate automatically on the
effective date of the Optionee's termination of employment.
(e) Unless otherwise provided in the Agreement relating to an
Option, if the Optionee dies during the period set forth in Section
2.3(b) following termination of employment for a reason other than
Cause, or during the period set forth in Section 2.3(c) following
termination of employment by reason of Disability, the Option may
thereafter be exercised by the Optionee's legal representative or
similar person, to the extent it is exercisable at the time of death,
until and including the earlier to occur of (i) the date which is one
year after the date of death and (ii) the expiration date of the Option.
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(f) If the Optionee breaches a covenant set forth in any
employment, noncompetition, nonsolicitation, confidentiality, inventions
or similar agreement between the Optionee and the Company at any time,
the Option shall terminate automatically upon such breach.
III. GENERAL
3.1. Effective Date and Term of Plan. This Plan shall be effective as of
June 8, 2000. This Plan shall terminate ten years after its effective date,
unless terminated earlier by the Board. Termination of this Plan shall not
affect the terms or conditions of any award granted prior to termination.
3.2. Amendments. The Board may amend this Plan as it shall deem
advisable. No amendment may impair the rights of a holder of an outstanding
award without the consent of such holder.
3.3. Agreement. Each award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions applicable to such award. No
Option may be exercised unless an Agreement evidencing such Option has been
executed by the Optionee.
3.4. Non-Transferability of Awards. Unless otherwise specified in the
Agreement relating to an award, no award shall be transferable other than by
will, the laws of descent and distribution or pursuant to beneficiary
designation procedures approved by the Company. Except to the extent permitted
by the foregoing sentence or the Agreement relating to an award, each award may
be exercised or settled during the holder's lifetime only by the holder or the
holder's legal representative or similar person. Except to the extent permitted
by the second preceding sentence or the Agreement relating to an award, no award
may be sold, transferred, assigned, pledged, hypothecated, encumbered or
otherwise disposed of (whether by operation of law or otherwise) or be subject
to execution, attachment or similar process. Any attempt to so sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of any such award,
shall be null and void.
3.5. Tax Withholding. The Company shall have the right to require, prior
to the issuance or delivery of any shares of Common Stock or the payment of any
cash pursuant to an award made hereunder, payment by the holder of such award of
any Federal, state, local or other taxes which may be required to be withheld or
paid in connection with such award. An Agreement may provide that (i) the
Company shall withhold whole shares of Common Stock which would otherwise be
delivered to a holder, having an aggregate Fair Market Value determined as of
the date the obligation to withhold or pay taxes arises in connection with an
award (the "Tax Date"), or withhold an amount of cash which would otherwise be
payable to a holder, in the amount necessary to satisfy any such obligation or
(ii) the holder may satisfy any such obligation by any of the following means:
(A) a cash payment to the Company, (B) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company of Mature
Shares having an aggregate Fair Market Value, determined as of the Tax Date,
equal to the amount necessary to satisfy any such obligation, (C) authorizing
the Company to withhold whole shares of Common Stock which would otherwise be
delivered having an aggregate Fair Market Value, determined as of the Tax Date,
or withhold an amount of cash
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which would otherwise be payable to a holder, equal to the amount necessary to
satisfy any such obligation, (D) a cash payment by a broker-dealer acceptable to
the Company to whom the Optionee has submitted an irrevocable notice of exercise
(if the Common Stock has been registered under the Exchange Act and is publicly
traded) or (E) any combination of (A), (B), (C) and (D), in each case to the
extent set forth in the Agreement relating to the award; provided, however, that
the Company shall have sole discretion to disapprove of an election pursuant to
any of clauses (B)-(E). Any fraction of a share of Common Stock which would be
required to satisfy such an obligation shall be disregarded and the remaining
amount due shall be paid in cash by the holder.
3.6. Restrictions on Shares. Each award made hereunder shall be subject
to the requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
award upon any securities exchange or under any law, or the consent or approval
of any governmental body, or the taking of any other action is necessary or
desirable as a condition of, or in connection with, the exercise or settlement
of such award or the delivery of shares thereunder, such award shall not be
exercised or settled and such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any award made hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder. The Company may also require that any shares of Common
Stock purchased pursuant to the exercise of an option awarded hereunder shall be
subject to repurchase by the Company upon such terms and conditions prescribed
by the Company and that certificates evidencing such shares bear a legend
indicating such repurchase rights.
3.7. Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding Option and the
purchase price per security shall be appropriately adjusted by the
Administrator, such adjustments to be made without an increase in the aggregate
purchase price. The decision of the Administrator regarding any such adjustment
shall be final, binding and conclusive. If any such adjustment would result in a
fractional security being (a) available under this Plan, such fractional
security shall be disregarded, or (b) subject to an award under this Plan, the
Company shall pay the holder of such award, in connection with the exercise of
such award in whole or in part occurring after such adjustment, an amount in
cash determined by multiplying (i) the fraction of such security (rounded to the
nearest hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on
the exercise date over (B) the exercise price of such award.
3.8. No Right of Participation or Employment. No person shall have any
right to participate in this Plan. Neither this Plan nor any award made
hereunder shall confer upon any person any right to continued employment by the
Company, any Subsidiary or any affiliate of the Company or affect in any manner
the right of the Company, any Subsidiary or any affiliate of the Company to
terminate the employment of any person at any time without liability hereunder.
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3.9. Rights as Stockholder. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock or other
equity security of the Company which is subject to an award hereunder unless and
until such person becomes a stockholder of record with respect to such shares of
Common Stock or equity security. Any rights of such person as a stockholder of
record shall be subject to any restrictions set forth in a stockholders
agreement, the Agreement or any other agreement between the Company and such
person.
3.10. Governing Law. This Plan, each award hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Delaware and construed in
accordance therewith without giving effect to principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer as of March 6, 2002.
THQ INC.
By: /s/ Brian J. Farrell
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Brian J. Farrell
President, Chief Executive Officer and
Chairman of the Board
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