Notice of Stock Option Award - Anthem Recording West Inc. and Melvyn Morris
ANTHEM RECORDING WEST, INC. 2000 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Grantee's Name and Address: MELVYN MORRIS
Redmire Gap
Intakes Lane, Turnditch
Derbyshire, UK DE56 2LU
You have been granted an option to purchase shares of Common Stock of
Anthem Recording West, Inc., subject to the terms and conditions of this
Notice of Stock Option Award (the "Notice"), the Anthem Recording West, Inc.
2000 Stock Incentive Plan, as amended from time to time (the "Plan") and the
Stock Option Award Agreement (the "Option Agreement") attached hereto, as
follows. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice.
Award Number No. 1
Date of Award May 23, 2000
Vesting Commencement Date May 23, 2000
Exercise Price per Share $7.50
Total Number of Shares Subject
to the Option (the "Shares") 525,000
Total Exercise Price $3,937,500
Type of Option: Incentive Stock Option
Expiration Date: May 22, 2010
Post-Termination Exercise Period: Three (3) Months
Vesting Schedule:
Subject to Grantee's Continuous Service and other limitations set
forth in this Notice, the Plan and the Option Agreement, the Option may be
exercised, in whole or in part, in accordance with the following schedule:
Fifty Percent (50%) of the Shares subject to the Option shall vest
twelve months after the Vesting Commencement Date, and 1/24th of the Shares
subject to the Option shall vest on each monthly anniversary of the Vesting
Commencement Date thereafter.
During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease. Vesting of the Option shall resume upon
the Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity.
In the event of termination of the Grantee's Continuous Service for
Cause, the Grantee's right to exercise the Option shall terminate concurrently
with the termination of the Grantee's Continuous Service, except as otherwise
determined by the Administrator.
In the event of the Grantee's change in status from Employee to
Consultant or from an Employee whose customary employment is 20 hours or more
per week to an Employee whose customary employment is fewer than 20 hours per
week, vesting of the Option shall continue
<PAGE> 2
only to the extent determined by the Administrator as of such change in status
consistent with any minimum vesting requirements set forth in the Plan.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Notice and agree that the Option is to be governed by the terms and conditions
of this Notice, the Plan, and the Option Agreement.
Anthem Recording West, Inc.,
a California corporation
By: /s/ ERIC BOEHNKE
------------------------------
Eric Boehnke
Title: President
THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION
SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS
SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR
ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON
THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF
GRANTEE'S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE
GRANTEE'S RIGHT OR THE RIGHT OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S
CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE, SUBJECT
TO ANY WRITTEN EMPLOYMENT AGREEMENT WITH THE GRANTEE.
The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he is familiar with the terms and provisions
thereof, and hereby accepts the Option subject to all of the terms and
provisions hereof and thereof. The Grantee has reviewed this Notice, the Plan,
and the Option Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Notice, and fully understands
all provisions of this Notice, the Plan and the Option Agreement. The Grantee
hereby agrees that all disputes arising out of or relating to this Notice, the
Plan and the Option Agreement shall be resolved in accordance with Section 19
of the Option Agreement. The Grantee further agrees to notify the Company upon
any change in the residence address indicated in this Notice.
Dated: ______________________ Signed: /s/ MELVYN MORRIS
Melvyn Morris
<PAGE> 3
AWARD NUMBER: 1
ANTHEM RECORDING WEST, INC. 2000 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
1. Grant of Option. Anthem Recording West, Inc., a California corporation
(the "Company"), hereby grants to the Grantee (the "Grantee") named in the
Notice of Stock Option Award (the "Notice"), an option (the "Option") to
purchase the Total Number of Shares of Common Stock subject to the Option (the
"Shares") set forth in the Notice, at the Exercise Price per Share set forth
in the Notice (the "Exercise Price") subject to the terms and provisions of
the Notice, this Stock Option Award Agreement (the "Option Agreement") and the
Company's 2000 Stock Incentive Plan, as amended from time to time (the
"Plan"), which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.
If designated in the Notice as an Incentive Stock Option, the Option
is intended to qualify as an Incentive Stock Option as defined in Section 422
of the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as
Incentive Stock Options which become exercisable for the first time by the
Grantee during any calendar year (under all plans of the Company or any Parent
or Subsidiary) exceeds $100,000, such excess Options, to the extent of the
Shares covered thereby in excess of the foregoing limitation, shall be treated
as Non-Qualified Stock Options. For this purpose, Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the date the Option
with respect to such Shares is awarded.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the
Notice and with the applicable provisions of the Plan and this
Option Agreement. No partial exercise of the Option may be for
less than the lesser of five percent (5%) of the total number
of Shares subject to the Option or the remaining number of
Shares subject to the Option. In no event shall the Company
issue fractional Shares.
(b) Acceleration in the Event of Corporate Transaction.
Notwithstanding any other provision hereof, in the event of a
Corporate Transaction, this
<PAGE> 4
Option shall automatically shall become fully vested and
exercisable and be released from any forfeiture rights,
immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time
represented by this Option. Effective upon the consummation of
the Corporate Transaction, this Option under the Plan shall
terminate; provided however that this Option shall not
terminate if it is assumed by the successor corporation or
Parent thereof in connection with the Corporate Transaction.
(c) Acceleration in the Event of Change in Control. Notwithstanding
any other provision hereof, in the event of a Change in Control
(other than a Change in Control which also is a Corporate
Transaction), this Option automatically shall become fully
vested and exercisable and be released from any forfeiture
rights, immediately prior to the specified effective date of
such Change in Control, for all of the Shares at the time
represented by this Option.
(d) Method of Exercise. The Option shall be exercisable only by
delivery of an Exercise Notice (attached as Exhibit A) which
shall state the election to exercise the Option, the whole
number of Shares in respect of which the Option is being
exercised, and such other provisions as may be required by the
Administrator. The Exercise Notice shall be signed by the
Grantee and shall be delivered in person, by certified mail, or
by such other method as determined from time to time by the
Administrator to the Company accompanied by payment of the
Exercise Price. The Option shall be deemed to be exercised
upon receipt by the Company of such written notice accompanied
by the Exercise Price, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and
remittance procedure to pay the Exercise Price provided in
Section 4(d), below.
(e) Taxes. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee
or other person has made arrangements acceptable to the
Administrator for the satisfaction of applicable income tax,
employment tax, and social security tax withholding
obligations, including, without limitation, obligations
incident to the receipt of Shares or the disqualifying
disposition of Shares received on exercise of an Incentive
Stock Option. Upon exercise of the Option, the Company or the
Grantee's employer may offset or withhold (from any amount owed
by the Company or the Grantee's employer to the Grantee) or
collect from the Grantee or other person an amount sufficient
to satisfy such tax obligations and/or the employer's
withholding obligations.
<PAGE> 5
3. Grantee's Representations. The Grantee understands that neither the Option
nor the Shares exercisable pursuant to the Option have been registered under
the Securities Act of 1933, as amended or any United States securities laws.
In the event the Shares purchasable pursuant to the exercise of the Option
have not been registered under the Securities Act of 1933, as amended, at the
time the Option is exercised, the Grantee shall, if requested by the Company,
concurrently with the exercise of all or any portion of the Option, deliver to
the Company his Investment Representation Statement in the form attached
hereto as Exhibit B and such other representations, warranties and covenants
reasonably requested by counsel for the Company .
4. Method of Payment. Payment of the Exercise Price shall be made by any of
the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law:
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration Date (as
defined by the Plan), surrender of Shares or delivery of a
properly executed form of attestation of ownership of Shares as
the Administrator may require (including withholding of Shares
otherwise deliverable upon exercise of the Option) which have a
Fair Market Value on the date of surrender or attestation equal
to the aggregate Exercise Price of the Shares as to which the
Option is being exercised (but only to the extent that such
exercise of the Option would not result in an accounting
compensation charge with respect to the Shares used to pay the
exercise price);
(d) if the exercise occurs on or after the Registration Date,
payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written
instructions to a Company designated brokerage firm to effect
the immediate sale of some or all of the purchased Shares and
remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall
provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such
brokerage firm in order to complete the sale transaction; or
(e) provided that the aggregate Exercise Price for the number of
Shares being purchased exceeds Twenty Five Thousand Dollars
($25,000), payment pursuant to a promissory note as described
below.
<PAGE> 6
(i) The promissory note shall have a term of three (3) years
with principal and interest payable in three (3) equal
annual installments;
(ii) The promissory note shall bear interest at the minimum
rate required by the federal tax laws to avoid the
imputation of interest income to the Company and
compensation income to the Grantee;
(iii) The Grantee shall be personally liable for payment of
the promissory note and the promissory note shall be
secured by the Shares purchased upon delivery of the
promissory note, or such other collateral of equal or
greater value, in a manner satisfactory to the
Administrator with such documentation as the
Administrator may request; and
The promissory note shall become due and payable upon the occurrence of any or
all of the following events: (A) the sale or transfer of the Shares purchased
with the promissory note; (B) termination of the Grantee's Continuous Service
for any reason other than death or Disability; or (C) the first anniversary of
the termination of the Grantee's Continuous Service due to death or
Disability.
5. Restrictions on Exercise. The Option may not be exercised if the issuance
of the Shares subject to the Option upon such exercise would constitute a
violation of any Applicable Laws. In addition, the Option may be exercised
prior to the time that the Plan has been approved by the shareholders of the
Company; provided however that all Shares issued upon any such exercise shall
be rescinded if shareholder approval is not obtained within the time
prescribed, and Shares issued on any such exercise shall not be counted in
determining whether shareholder approval is obtained.
6. Termination or Change of Continuous Service. In the event the Grantee's
Continuous Service terminates, other than for Cause, the Grantee may, to the
extent otherwise so entitled at the date of such termination (the "Termination
Date"), exercise the Option during the Post-Termination Exercise Period. In
the event of termination of the Grantee's Continuous Service for Cause, the
Grantee's right to exercise the Option shall, except as otherwise determined
by the Administrator, terminate concurrently with the termination of the
Grantee's Continuous Service. In no event shall the Option be exercised later
than the Expiration Date set forth in the Notice. In the event of the
Grantee's change in status from Employee, Director or Consultant to any other
status of Employee, Director or Consultant, the Option shall remain in effect
and, except to the extent otherwise determined by the Administrator, continue
to vest; provided, however, with respect to any Incentive Stock Option that
shall remain in effect after a change in status from Employee to Director or
Consultant, such Incentive Stock Option shall
<PAGE> 7
cease to be treated as an Incentive Stock Option and shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day
following such change in status. Except as provided in Sections 8 and 9 below,
to the extent that the Grantee is not entitled to exercise the Option on the
Termination Date, or if the Grantee does not exercise the Option to the extent
so entitled within the Post-Termination Exercise Period, the Option shall
terminate.
7. Definition of "Cause". For purposes of this Agreement, "Cause" means the
Grantee's (i) performance of any material act or failure to perform any
material act in bad faith and to the material detriment of the Company or a
Related Entity; (ii) performance of dishonest acts or intentional misconduct
to the material detriment of the Company or a Related Entity; (iii) material
breach of any agreement with the Company or a Related Entity; or (iv)
commission of any felony (excluding DWI and similar traffic offenses). At
least 30 days prior to the termination of the Grantee's Continuous Service
pursuant to any of the foregoing, the Administrator shall provide the Grantee
with notice of the Company's or such Related Entity's intent to terminate, the
reason therefor, and an opportunity for the Grantee to cure such defects in
his service to the Company's or such Related Entity's reasonable satisfaction.
During this 30 day (or longer) period, no Award issued to the Grantee under
the Plan may be exercised or purchased.
8. Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his Disability, the Grantee may, but only within
twelve (12) months from the Termination Date (and in no event later than the
Expiration Date), exercise the Option to the extent he was otherwise entitled
to exercise it on the Termination Date; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3)
of the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one
(1) day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee
does not exercise the Option to the extent so entitled within the time
specified herein, the Option shall terminate.
9. Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his death, or in the event of the Grantee's
death during the Post-Termination Exercise Period or during the twelve (12)
month period following the Grantee's termination of Continuous Service as a
result of his Disability, the Grantee's estate, or a person who acquired the
right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Grantee could exercise the Option at the
date of termination, within twelve (12) months from the date of death (but in
no event later than the Expiration Date). To the extent that the Grantee is
not entitled to exercise the Option on the date of death, or if the Option is
not exercised to the extent so entitled within the time specified herein, the
Option shall terminate.
<PAGE> 8
10. Transferability of Option. The Option, if an Incentive Stock Option, may
not be transferred in any manner other than by Will or by the laws of descent
and distribution and may be exercised during the lifetime of the Grantee only
by the Grantee. The Option, if a Non-Qualified Stock Option may be transferred
by Will, by the laws of descent and distribution, and to the extent and in the
manner authorized by the Administrator, to members of the Grantee's immediate
family (as determined by the Administrator) or pursuant to a domestic
relations order. The terms of the Option shall be binding upon the executors,
administrators, heirs and successors of the Grantee.
11. Term of Option. The Option may be exercised no later than the Expiration
Date set forth in the Notice or such earlier date as otherwise provided
herein.
12. Stop-Transfer Notices. In order to ensure compliance with the restrictions
on transfer set forth in this Option Agreement, the Notice or the Plan, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
13. Refusal to Transfer. The Company shall not be required (i) to transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Option Agreement or (ii) to treat as owner of
such Shares or to accord the right to vote or pay dividends or other
shareholders rights to any purchaser or other transferee to whom such Shares
shall have been so transferred.
14. Tax Consequences. Set forth below is a brief summary as of the date of
this Option Agreement of some of the federal tax consequences of exercise of
the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE
COMPANY SHALL HAVE NO OBLIGATION TO NOTIFY GRANTEE OF ANY SUCH CHANGES. THE
GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING
OF THE SHARES. WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT DISCUSS
THE TAX CONSEQUENCES OF THE EXERCISE OF THE OPTION AND THE DISPOSITION OF THE
SHARES UNDER THE LAWS OF THE UNITED KINGDOM.
(a) Exercise of Incentive Stock Option. If the Option qualifies as
an Incentive Stock Option, there will be no regular federal
income tax liability upon the exercise of the Option, although
the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price will be treated as
income for purposes of the alternative minimum tax for federal
tax purposes and may subject the Grantee to the alternative
minimum tax in the year of exercise.
<PAGE> 9
(b) Exercise of Incentive Stock Option Following Disability. If the
Grantee's Continuous Service terminates as a result of
Disability that is not total and permanent disability as
defined in Section 22(e)(3) of the Code, to the extent
permitted on the date of termination, the Grantee must exercise
an Incentive Stock Option within three (3) months of such
termination for the Incentive Stock Option to be qualified as
an Incentive Stock Option.
(c) Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as
having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise
Price. If the Grantee is an Employee or a former Employee, the
Company will be required to withhold from the Grantee's
compensation or collect from the Grantee and pay to the
applicable taxing authorities an amount in cash equal to a
percentage of this compensation income at the time of exercise,
and may refuse to honor the exercise and refuse to deliver
Shares if such withholding amounts are not delivered at the
time of exercise.
(d) Disposition of Shares. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain
realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes and
subject to tax at a maximum rate of 20%. In the case of an
Incentive Stock Option, if Shares transferred pursuant to the
Option are held for more than one year after receipt of the
Shares and are disposed more than two years after the Date of
Award, any gain realized on disposition of the Shares also will
be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to
Shares acquired upon exercise of a Non-Qualified Stock Option.
If Shares purchased under an Incentive Stock Option are
disposed of prior to the expiration of such one-year or
two-year periods, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income
rates) to the extent of the difference between the Exercise
Price and the lesser of (i) the Fair Market Value of the Shares
on the date of exercise, or (ii) the sale price of the Shares.
15. Lock-Up Agreement.
(a) Agreement. The Grantee, if requested by the Company and the
lead underwriter of any public offering of the Common Stock or
other securities of the Company (the "Lead Underwriter"),
hereby irrevocably agrees not to sell, contract to sell, grant
any option to purchase, transfer
<PAGE> 10
the economic risk of ownership in, make any short sale of,
pledge or otherwise transfer or dispose of any interest in any
Common Stock or any securities convertible into or exchangeable
or exercisable for or any other rights to purchase or acquire
Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering)
during the 180-day period following the Registration Date or
such shorter period of time as the Lead Underwriter shall
specify. The Grantee further agrees to sign such documents as
may be requested by the Lead Underwriter to effect the
foregoing and agrees that the Company may impose stop-transfer
instructions with respect to such Common Stock subject until
the end of such period. The Company and the Grantee acknowledge
that each Lead Underwriter of a public offering of the
Company's stock, during the period of such offering and for the
180-day period thereafter, is an intended beneficiary of this
Section 16.
(b) No Amendment Without Consent of Underwriter. During the period
from identification as a Lead Underwriter in connection with
any public offering of the Company's Common Stock until the
earlier of (i) the expiration of the lock-up period specified
in Section 16(a) in connection with such offering or (ii) the
abandonment of such offering by the Company and the Lead
Underwriter, the provisions of this Section 16 may not be
amended or waived except with the consent of the Lead
Underwriter.
16. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties 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, and may not be modified adversely to the Grantee's interest
except by means of a writing signed by the Company and the Grantee. Nothing in
the Notice, the Plan and this Option Agreement (except as expressly provided
therein) is intended to confer any rights or remedies on any persons other
than the parties. The Notice, the Plan and this Option Agreement are to be
construed in accordance with and governed by the internal laws of the State of
California (as permitted by Section 1646.5 of the California Civil Code, or
any similar successor provision) without giving effect to any choice of law
rule that would cause the application of the laws of any jurisdiction other
than the internal laws of the State of California to the rights and duties of
the parties. Should any provision of the Notice, the Plan or this Option
Agreement be determined by a court of law to be illegal or unenforceable, such
provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.
<PAGE> 11
17. Headings. The captions used in the Notice and this Option Agreement are
inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.
18. Notices. Any notice required or permitted hereunder shall be given in
writing and by personal delivery or by an internationally recognized
commercial courier service or by deposit in the United States mail by
certified mail (if the parties are within the United States) or upon deposit
for delivery by an internationally recognized express mail courier service
(for international delivery of notice), with postage and fees prepaid,
addressed to the other party at its address as shown beneath its signature in
the Notice, or to such other address as such party may designate in writing
from time to time to the other party; and shall be deemed effective on the
date of delivery in person or by courier or five (5) days after the date
mailed.
<PAGE> 12
EXHIBIT A
ANTHEM RECORDING WEST, INC. 2000 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Anthem Recording West, Inc.
-------------------------------
-------------------------------
Attention: Secretary
1. Effective as of today, ______________, ___ the undersigned (the "Grantee")
hereby elects to exercise the Grantee's option to purchase ___________ shares
of the Common Stock (the "Shares") of Anthem Recording West, Inc. (the
"Company") under and pursuant to the Company's 2000 Stock Incentive Plan, as
amended from time to time (the "Plan") and the [ ] Incentive [ ] Non-Qualified
Stock Option Award Agreement (the "Option Agreement") and Notice of Stock
Option Award (the "Notice") dated ______________, ________. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Exercise Notice.
2. Representations of the Grantee. The Grantee acknowledges that the Grantee
has received, read and understood the Notice, the Plan and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing such Shares
is issued (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised, subject to the Plan and Applicable Law. No adjustment
will be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in Section 11
of the Plan.
4. Delivery of Payment. The Grantee herewith delivers to the Company the full
Exercise Price for the Shares, which, to the extent selected, shall be deemed
to be
<PAGE> 13
satisfied by use of the broker-dealer sale and remittance procedure to pay the
Exercise Price provided in Section 4(d) of the Option Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may suffer
adverse tax consequences as a result of the Grantee's purchase or disposition
of the Shares. The Grantee represents that the Grantee has consulted with any
tax consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company
or its representatives for any tax advice.
6. Taxes. The Grantee agrees to satisfy all applicable federal, state and
local income and employment tax withholding obligations and herewith delivers
to the Company the full amount of such obligations or has made arrangements
acceptable to the Company to satisfy such obligations. In the case of an
Incentive Stock Option, the Grantee also agrees, as partial consideration for
the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Award Date or within one (1) year from the date the Shares were
transferred to the Grantee. If the Company is required to satisfy any federal,
state or local income or employment tax withholding obligations as a result of
such an early disposition, the Grantee agrees to satisfy the amount of such
withholding in a manner that the Administrator prescribes.
7. Restrictive Legends. The Grantee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares together with any other legends that may be required by the Company or
by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES,
SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET
<PAGE> 14
FORTH IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE BINDING
ON TRANSFEREES OF THESE SHARES.
8. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon the Grantee and his heirs, executors, administrators, successors
and assigns.
9. Headings. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction
or interpretation. .
10. Governing Law; Severability. This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of California
(as permitted by Section 1646.5 of the California Civil Code, or any similar
successor provision) without giving effect to any choice of law rule that
would cause the application of the laws of any jurisdiction other than the
internal laws of the State of California to the rights and duties of the
parties. Should any provision of this Exercise Notice be determined by a court
of law to be illegal or unenforceable, such provision shall be enforced to the
fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.
11. Notices. Any notice required or permitted hereunder shall be given in
writing and by personal delivery or by an internationally recognized
commercial courier service or by deposit in the United States mail by
certified mail (if the parties are within the United States) or upon deposit
for delivery by an internationally recognized express mail courier service
(for international delivery of notice), with postage and fees prepaid,
addressed to the other party at its address as shown beneath its signature in
the Notice, or to such other address as such party may designate in writing
from time to time to the other party; and shall be deemed effective on the
date of delivery in person or by courier or five (5) days after the date
mailed.
12. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
13. Entire Agreement. The Notice, the Plan and the Option Agreement are
incorporated herein by reference and together with this Exercise Notice
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their
<PAGE> 15
entirety all prior undertakings and agreements of the Company and the Grantee
with respect to the subject matter hereof, and may not be modified adversely
to the Grantee's interest except by means of a writing signed by the Company
and the Grantee. Nothing in the Notice, the Plan, the Option Agreement and
this Exercise Notice (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties.
Submitted by: Accepted by:
GRANTEE: ANTHEM RECORDING WEST, INC.
By:
(Signature) Title:
Address: Address:
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<PAGE> 16
EXHIBIT B
ANTHEM RECORDING WEST, INC. 2000 STOCK INCENTIVE PLAN
INVESTMENT REPRESENTATION STATEMENT
GRANTEE: MELVYN MORRIS
COMPANY: ANTHEM RECORDING WEST, INC.
SECURITY: COMMON STOCK
AMOUNT:
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DATE:
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In connection with the purchase of the above-listed Securities, the
undersigned Grantee represents to the Company the following:
(a) Grantee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
Securities. Grantee is acquiring these Securities for investment for
Grantee's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) Grantee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not
been registered under the Securities Act in reliance upon a specific
exemption therefrom, which exemption depends upon among other things, the
bona fide nature of Grantee's investment intent as expressed herein.
Grantee further understands that the Securities must be held indefinitely
unless they are subsequently registered under the Securities Act or an
exemption from such registration is available. Grantee further
acknowledges and understands that the Company is under no obligation to
register the Securities. Grantee understands that the certificate
evidencing the Securities will be imprinted with a legend which prohibits
the transfer of the Securities unless they are registered or such
registration is not required in the opinion of counsel satisfactory to the
Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of "restricted securities" acquired, directly
or indirectly from the issuer thereof, in a non-public offering subject to
the satisfaction of certain conditions.
<PAGE> 17
Rule 701 provides that if the issuer qualifies under Rule 701 at the time
of the grant of the Option to the Grantee, the exercise will be exempt
from registration under the Securities Act. In the event the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, ninety (90) days thereafter (or such
longer period as any market stand-off agreement may require) the
Securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as
said term is defined under the Securities Exchange Act of 1934); and, in
the case of an affiliate, (2) the availability of certain public
information about the Company, (3) the amount of Securities being sold
during any three month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
the resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two years, the satisfaction of the
conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Grantee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the
fact that Rules 144 and 701 are not exclusive, the Staff of the Securities
and Exchange Commission has expressed its opinion that persons proposing
to sell private placement securities other than in a registered offering
and otherwise than pursuant to Rules 144 or 701 will have a substantial
burden of proof in establishing that an exemption from registration is
available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own
risk. Grantee understands that no assurances can be given that any such
other registration exemption will be available in such event.
(e) Grantee represents that he is a resident of
_____________________________.
Signature of Grantee:
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Date: ,
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