EXHIBIT 10.21
STOCK OPTION AGREEMENT
WITH LAWRENCE BERNSTEIN, APRIL 15, 1996
STOCK OPTION AGREEMENT
(Vesting Schedule-Employee)
This Stock Option Agreement (the "Agreement") is effective as of the 15th
day of April, 1996 by and between Janex International, Inc., a Colorado
corporation (the "Company") and Lawrence I. Bernstein (the "Optionee").
RECITALS
A. The Company's Board of Directors (the "Board") has the authority to
issue stock options to employees and directors of the Company and its
subsidiaries, and others, from time to time, in its discretion.
B. The Company has sufficient authorized, but unissued shares of its
common stock, to issue the options to be granted hereunder.
C. The Company desires to grant to Optionee and Optionee desires to obtain
from the Company an option to purchase shares of the common capital stock of the
Company pursuant to the terms and conditions set forth below.
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION.
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Subject to the provisions of this Agreement, the Company hereby grants to
Optionee, the right, option, and privilege to purchase (the "Option" or
"Options") TWO HUNDRED FIFTY THOUSAND (250,000) shares of the restricted common
stock, no par value, of the Company or any other replacement security therefor
(the "Option Stock").
2. NON-TRANSFERABILITY OF OPTION.
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No Option, or any interest therein, may be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution, and except as provided in paragraph
8(a)(2), shall be exercised only during the lifetime of the Optionee, and only
by the Optionee. Any sale, pledge, assignment, hypothecation, transfer or
disposition in violation of the foregoing provisions shall be void.
3. TERM.
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The term of the Option (the "Option Period") shall commence on the date of
this Agreement (the "Option Commencement Date") and shall continue until the
earlier of (a) the date of Optionee's termination as an employee of the Company
(subject to paragraph 8), or (2)
at 5:00 p.m., California time, on April 14, 2001. The Option shall terminate
without notice if Optionee fails to exercise the Option during the Option Period
in the manner described herein.
4. VESTING OF OPTION.
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No Option granted hereunder shall be exercisable until it is vested.
The Options granted hereunder shall vest in Optionee according to the following
schedule:
a. Fifty Thousand (50,000) as of the date of this Agreement;
b. Fifty Thousand (50,000) one year after the date of this
Agreement;
c. Fifty Thousand (50,000) two years after the date of this
Agreement;
d. Fifty Thousand (50,000) three years after the date of this
Agreement; and
e. Fifty Thousand (50,000) four years after the date of this
Agreement.
Notwithstanding the foregoing vesting schedule, if during Optionee's
employment by the Company or its subsidiary, Janex Corporation, there is: (i) a
merger between the Company and another entity wherein after the merger the
shareholders of the Company immediately prior to the merger have beneficial
ownership of less than 50% of the voting power of the surviving corporation, or
(ii) an acquisition of more than 50% of the voting stock of the Company, then
upon the occurrence of either of such events, or if all or substantially all the
assets of the Company are sold, all unvested options set forth above shall vest.
5. EXERCISE OF OPTION.
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Vested Options may be exercised in full or in part (but not in increments
of less than 1,000 shares) at any time during the Option Period by Optionee's
delivery and the Company's receipt of written notice (in the form attached
hereto as Exhibit A), which shall state the election to exercise the Option, the
number of shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder's investment intent with
respect to such shares as may be required by the Company. Such written notice
shall be signed by the Optionee and shall be delivered in person or by certified
mail to the Secretary of the Company. The written notice shall be accompanied by
payment of the Exercise Price. This option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the Exercise Price.
6. EXERCISE PRICE.
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The Exercise Price for each share of Option Stock shall be ONE DOLLAR AND
FORTY-FIVE CENTS ($1.45) per share. If the Company subdivides or combines its
outstanding shares of common stock, by reclassification, recapitalization,
reorganization, merger,
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or otherwise, the Exercise Price shall be proportionately decreased or
increased, as the case may be.
7. PAYMENT OF PURCHASE PRICE.
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The Exercise Price shall be paid in United States dollars, in cash or by
check, bank draft or money order (collectively referred to as "Cash") payable to
the order of the Company. To the extent that applicable law permits, payment
may, at the discretion of the Board, consist of any of the following:
a. The delivery and assignment to the Company of shares of the
Company's common stock, held by the Optionee for a minimum of six months, with
an aggregate Fair Market Value (as of the date of Optionee's exercise), equal to
the Exercise Price;
b. The delivery to the Company by the Optionee of a promissory note
with such collateral as the Board determines to be sufficient;
c. A combination of Cash, and/or (a) and/or (b) above; or
d. Without any obligation on the part of the Company to do so, the
Company may assist Optionee in paying the Exercise Price in the following
manner:
(1) The extension of a loan to the Optionee by the Company;
(2) Payment by the Optionee of the Exercise Price in
installments, or
(3) A guarantee by the Company of a loan obtained by the
Optionee from a third party.
8. CONDITIONS PRECEDENT.
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Optionee's exercise of the Option is conditioned upon the following:
a. Optionee being continuously employed by the Company from the date
of this Agreement to the date he or she exercises the Option; provided however:
(1) Disability of Employee.
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If the Optionee is unable to continue his employment with the Company
as a result of his permanent and total disability (as defined in Section
22(e)(3) of the Internal Revenue Code, as amended from time to time (the
"Code"), he or she may, but only within three (3) months (or such other period
of time as is specifically determined by the Board) from the date of
termination, exercise his or her Option to the extent he or she was entitled to
exercise
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it at the date the Optionee's employment was terminated due to a disability. To
the extent he or she was not entitled to exercise the Option at the date of such
termination, or if he or she does not exercise such Option (which he or she was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(2) Death of Optionee.
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If the Optionee dies during the Option Period and is at the time of
his or her death an employee of the Company who shall have been an employee
since the date of grant of the Option, without any interruptions or termination
of service as an employee (Optionee's status as an employee shall not be
considered interrupted in the case of sick leave or military leave or any other
leave of absence approved by the Board), the Option may be exercised, at any
time within one (1) year following the date of death (or such other period of
time as is specifically determined by the Board), by the Optionee's estate or by
bequest or inheritance, but only to the extent that Optionee was entitled to
exercise the Option on the date of his or her death. To the extent that the
Optionee was not entitled to exercise the Option on the date of his or her
death, or if the Optionee's estate, or person who acquired the right to exercise
the Option by bequest or inheritance, does not exercise such Option within the
time specified herein, the Option shall terminate.
(3) Termination With and Without Cause.
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If Optionee's employment with the Company is terminated for cause
(defined below), then the Option granted hereunder (regardless of whether vested
or unvested) shall terminate at the same time as Optionee's employment. If
Optionee's employment with the Company is terminated for reasons other than
death, disability, or cause, then he or she may, but only within thirty (30)
days (or such other period of time as is specifically determined by the Board)
from the date of termination, exercise his or her Option to the extent he or she
was entitled to exercise it at the date the Optionee's employment was
terminated. To the extent he or she was not entitled to exercise the Option at
the date of such termination, or if he or she does not exercise such Option
(which he or she was entitled to exercise) within the time specified herein, the
Option shall terminate. As used herein, Optionee shall be deemed terminated for
"cause" if he or she was terminated as a result of (i) the habitual neglect of
Optionee's duties, (ii) intentional wrongdoing or grossly negligent acts or
conduct toward or involving the Company or a co-worker, or (iii) being convicted
of a crime involving moral turpitude. Nothing herein shall be deemed to mean
that an employee may only be terminated for cause, nor shall such definition of
"cause" be used for any other purpose.
b. The exercise of such Option and the issuance and delivery of such
Shares pursuant thereto complying with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended (the
"Act"), the Securities Exchange Act of 1934, the rules and regulations
promulgated hereunder, the requirements of any stock exchange upon which the
Company's shares may then be listed, applicable state law, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. Assuming such
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compliance, for income tax purposes, the shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such shares.
c. The Optionee shall not be in breach under any of the
representations or warranties set forth in paragraph 9.
9. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
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As an inducement to the Company to grant the Option and to issue and sell
the Option Stock to Optionee, Optionee represents, warrants and acknowledges
that:
a. Any shares of Option Stock acquired by exercise of this Option
shall be acquired for Optionee's own account and not with a view to or for sale
in connection with any distribution of such shares.
b. Optionee has the requisite financial and/or business experience
necessary to evaluate the risks and rewards of investing in the shares of Option
Stock and that Optionee is capable of protecting himself or herself in that
regard.
c. Optionee 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 Option and the Option Stock
upon exercise of the Option.
d. The Option Stock that the Optionee will be acquiring, upon
exercise of the Option, will be "restricted securities" as that term is defined
in Rule 144, promulgated under the Act; that the exemption from registration
under Rule 144 will not be available in any event for at least two (2) years
from the date of issuance, and even then will not be available unless (1) a
public trading market then exists for the Option Stock, (2) adequate information
concerning the Company is then available to the public, and (3) other terms and
conditions of Rule 144 are complied with; and that any sale of the Option Stock
may be made by the undersigned only in accordance with such terms and
conditions. Optionee understands that the Option Stock must be held indefinitely
unless they are subsequently registered under the Act or an exemption from such
registration is available.
e. That the Optionee understands that the certificates representing
the Option Stock shall be stamped or otherwise imprinted with a legend, which
provides substantially as follows (and may also include references to state
law):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 ("THE ACT") AND ARE "RESTRICTED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
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PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY
OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
e. The foregoing representations and warranties shall be true as of
the date the Option is granted as well as at the time Optionee exercises any
Option.
10. TAX CONSEQUENCES.
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The Option will be a nonstatutory stock option for income tax
purposes. Optionee understands that Optionee may incur federal and state income
tax liability upon the exercise of the Option and upon the subsequent
disposition of the Option Stock. Optionee represents that Optionee has consulted
with a tax advisor in connection with the purchase or disposition of the Option
Stock and that Optionee is not relying upon the Company or its counsel for tax
advice.
11. RESERVATION OF SHARES.
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The Company shall at all times reserve and keep available out of its
authorized by unissued shares of Common Stock, solely for the purpose of
issuance of shares upon exercise of the Option, such number of shares of Common
Stock issuable upon exercise of the Option.
12. MISCELLANEOUS.
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a. Notices.
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All notices, requests, demands and other communications required or
permitted to be given hereunder shall be deemed to have been duly given if in
writing and delivered personally, given by prepaid telegram, or mailed first
class, postage prepaid, registered or certified mail, return receipt requested,
as follows:
If to Company: Janex International, Inc.,
21700 Oxnard Street, Suite 1610
Woodland Hills, California 91367
Attention: President
If to Option
Holder: At Option Holder's latest address
as shown on the books of the Company
Any party may change the address to which such communications are to be
directed to it by giving written notice to the other parties. Except as
otherwise provided in this Agreement, all notices shall be deemed to be given
when delivered in person, or if placed in the mail as aforesaid, then two (2)
days thereafter.
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b. Modifications.
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The provisions of this Agreement shall not be modified or amended
except by a writing signed by the parties hereto.
c. Entire Agreement.
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This Agreement and any documents, instruments or agreements expressly
referred to herein, set forth the entire agreement and understanding of the
parties with respect to the transactions contemplated hereby and supersede all
prior agreements, arrangements and understandings relating to the subject matter
hereof.
d. Headings.
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The section and paragraph headings contained in this Agreement are for
convenient reference only, and shall not in any way affect the meaning or
interpretation hereof.
e. Applicable Law and Venue.
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This Agreement shall be governed by and construed in accordance with
the laws of the state of California. Any action or proceeding pertaining in any
manner whatsoever to this Agreement, shall be brought and maintained solely in a
Court of competent jurisdiction in the County of Los Angeles, State of
California, to which jurisdiction and venue the parties irrevocably consent.
f. Severability.
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If any provision of this Agreement shall be held to be invalid,
illegal or unenforceable, it shall be deemed severable from the remaining
provisions hereof which shall remain in full force and effect.
g. Waiver.
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No waiver of any provision of this Agreement or any breach thereof
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar) or any other breach hereunder nor shall such waiver
constitute a continuing waiver. Either party may waive performance of any
provision of this Agreement, the non-performance of which would otherwise
constitute a breach of this Agreement, including but not limited to the non-
performance of any condition precedent to such party's performance, without
affecting the enforceability of this Agreement and the provisions contained
herein.
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h. Successors and Assigns.
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Subject to the provisions of paragraph 2 above, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective heirs, executors, administrators, personal representatives,
successors and assigns of the parties hereto.
i. Incorporation of Recitals.
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The Recitals set forth in the "Recitals" section, above, are incorporated
herein by this reference.
j. Counterparts.
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This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement,
at Los Angeles, California, as of the day and year first above written.
"Company" "Optionee"
- -------- --------
Janex International, Inc.,
a Colorado corporation
By: /s/ SHELDON F. MORICK /s/ LAWRENCE I. BERNSTEIN
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Sheldon F. Morick, Chief Lawrence I. Bernstein
Executive Officer
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EXHIBIT A
EXERCISE NOTICE
Janex International, Inc.
21700 Oxnard Street, Suite 1610
Woodland Hills, CA 91367
Attention: Secretary
1. Exercise of Option. Effective as of today, ______________, 199__, the
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undersigned ("Optionee") hereby elects to exercise Optionee's option (the
"Option") to purchase ____________ shares of the Common Stock (the "Shares") of
Janex International, Inc., a Colorado corporation (the "Company") under and
pursuant to the Stock Option Agreement dated April 15, 1996 (the "Option
Agreement"), the terms and provisions of which are incorporated herein by
reference. The purchase price shall be $1.45 per share, as required by the
Option Agreement. This Exercise Notice is sometimes referred to herein as the or
this "Agreement."
2. Delivery of Payment. Optionee herewith delivers to the Company the
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full exercise price for the Shares.
3. Representation of Optionee. Optionee acknowledges that Optionee has
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received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions, and affirms that Optionee's representations
and warranties set forth in the Option Agreement are true and correct as of the
date of this exercise of Option.
4. Rights as Shareholder. Until the stock certificate evidencing such
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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 Option Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. 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. Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares.
5. Tax Consultation. Optionee understands that Optionee may suffer
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adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
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6. Restrictive Legend and Stop-Transfer Orders.
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a. Legend. Optionee understands and agrees that the Company shall
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cause the legend set forth below or a legend substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required or desirable to comply with state or
federal securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 ("THE ACT") AND ARE "RESTRICTED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE COMPANY.
b. Stop-Transfer Notices. Optionee agrees that, in order to ensure
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compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent.
c. Refusal to Transfer. The Company shall not be required (i) to
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transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of the Option Agreement or this Agreement or
(ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
7. Successors and Assigns. The Company may assign any of its rights
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under this Agreement 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 Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. Interpretation. Any dispute regarding the interpretation of this
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Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors, which shall review such dispute at its next
regular meeting. The resolution of such a dispute by the board shall be final
and binding on the Company and on Optionee.
9. Notices. Any notice required or permitted hereunder shall be given in
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writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
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10. Further Instruments. The parties agree to execute such further
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instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
11. Entire Agreement. This Agreement and the Option Agreement constitute
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the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof and are governed by applicable California law except for
that body of law pertaining to conflict of laws. Should any provision of the
Option Agreement or this Agreement be determined by a court of law to be illegal
or unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable. In the event of a conflict between this Agreement and
the Option Agreement, the provisions of the Option Agreement shall prevail.
Dated:__________________, 199____
_________________________________
Signature of Optionee
_________________________________
Printed Name of Optionee
Address:
_________________________________
_________________________________
Accepted by:
JANEX CORPORATION
By:_______________________________
Its:______________________________
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