NETTER DIGITAL ENTERTAINMENT, INC.
DIRECTOR STOCK OPTION AGREEMENT
This Director Stock Option Agreement (the "Agreement") is made
and entered into as of ________________, by and between NETTER
DIGITAL ENTERTAINMENT, INC., a Delaware corporation (the
"Company"), and _________________ ("Optionee"), with reference to the
following facts:
A. The Company has duly adopted a 1997 Directors' Stock
Option Plan (hereinafter referred to as the "Plan"), under which (1) each
present Non-Employee Director who was reelected a director after the
Plan was adopted by the Board was granted automatically an initial stock
option to purchase 10,000 shares of the Company's Common Stock at
Fair Market Value as of the Date of Grant, (2) each present and future
Non-Employee Director who was or will be first elected a director after the
Plan was adopted by the Board was or will be granted automatically an
initial stock option to purchase 30,000 shares of the Company's Common
Stock at Fair Market Value as of the Date of Grant, and (3) each present
and future Non-Employee Director will be granted automatically an
additional stock option to purchase 10,000 shares of the Company's
Common Stock at Fair Market Value as of the Date of Grant on each
successive anniversary of the date on which such Non-Employee Director
was granted an initial stock option, in order to promote an increased
incentive and personal interest in the Company by those individuals who
are primarily responsible for shaping the long-range plans of the
Company. The Plan is administered by the Committee. All capitalized
terms used in this Agreement that are not otherwise defined herein shall
have the meanings attributed to them in the Plan.
B. Optionee became a Non-Employee Director on
________________, and the stock option represented by this Agreement was
granted to Optionee automatically on _____________, 19__ (the "Date of
Grant").
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option
The Company has granted to Optionee the right and option
(hereinafter referred to as the "Option") to purchase from time to time all
or any part of an aggregate of _______ shares (the "Option Shares") of the
common stock, $.01 par value, of the Company ("Common Stock") on the
terms and conditions set forth in this Agreement.
2. Purchase Price
The purchase price (the "Exercise Price") of each Option
Share shall be $_____.
3. Option Period
The Option shall commence on the Date of Grant and shall
expire, and all rights to purchase Option Shares shall terminate, at the
close of business on the day immediately preceding the fifth anniversary
of the Date of Grant, unless terminated earlier as provided in this
Agreement. Subject to the foregoing, the Option shall first be exercisable
in full six months and one day after the Date of Grant.
4. Exercise of Option
The Option shall be exercised (in whole or in part) by
delivering this Agreement for endorsement to the Company, at its
principal office, attention of the Corporate Secretary, together with a
Notice and Agreement of Exercise (in the form attached hereto or
specified from time to time by the Committee) indicating the number of
Option Shares Optionee wishes to purchase and full payment of the
Exercise Price of such Option Shares. Payment shall be made in cash,
by cashier's or certified check, or by surrender of previously owned
shares of the Common Stock valued at Fair Market Value on the date of
exercise (if the Committee authorizes payment in stock). In no event
shall the Company be required to issue or transfer fractional shares.
5. Directorship of Optionee
5.1 Except as provided in Paragraph 5.2, Optionee may
not exercise the Option unless Optionee serves as a director of the
Company continuously from the Date of Grant to the date of exercise.
5.2 Upon the termination of Optionee's service as a
director of the Company for any reason, the Option (a) to the extent then
presently exercisable, shall remain exercisable only for a period of ninety
(90) days after the date of such termination of service and may be
exercised pursuant to the provisions hereof, including expiration at the
end of the fixed term thereof, and (b) to the extent not then presently
exercisable, shall terminate as of the date of such termination of service
and shall not be exercisable thereafter.
6. Securities Laws Requirements
6.1 The Option shall not be exercisable unless and until
any applicable registration or qualification requirements of federal and
state securities laws and all other requirements of law or any regulatory
bodies having jurisdiction over such exercise or issuance and delivery
have been fully complied with. The Company will use reasonable efforts
to maintain the effectiveness of a Registration Statement under the
Securities Act of 1933 (the "Securities Act") for the issuance of the Option
Shares, but there may be times when no such Registration Statement will
be currently effective. Exercise of the Option may be temporarily
suspended without liability to the Company during times when no such
Registration Statement is currently effective, or during times when, in the
reasonable opinion of the Committee, such suspension is necessary to
preclude violation of any requirements of applicable law or regulatory
bodies having jurisdiction over the Company. If the Option would expire
for any reason except the end of its term during such a suspension, then,
if exercise of the Option is duly tendered before its expiration, the Option
shall be exercisable and exercised (unless the attempted exercise is
withdrawn) as of the first day after the end of such suspension. The
Company shall have no obligation to file any Registration Statement
covering resales of the Option Shares.
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6.2 Upon each exercise of the Option, Optionee shall
represent, warrant and agree, by the Notice and Agreement of Exercise
delivered to the Company, that (a) no Option Shares will be sold or other-
wise distributed in violation of the Securities Act or any other applicable
federal or state securities laws, (b) Optionee will furnish to the Company
a copy of each Form 4 filed by Optionee pursuant to the reporting
requirements under Section 16(a) of the Securities Exchange Act of 1934
(the "Exchange Act") and will timely file all reports required under federal
securities laws, and (c) Optionee will report all sales of Option Shares to
the Company in writing on the form prescribed from time to time by the
Company. All certificates for Option Shares may be imprinted with
legend conditions reflecting federal and state securities law restrictions
and conditions and the Company may comply therewith and issue "stop
transfer" instructions to its transfer agents and registrars without
liability.
7. Withholding Taxes
The Committee shall have the right at the time of exercise of
the Option to make adequate provision in any manner permitted by the
Plan for any federal, state, local or foreign taxes which it believes are or
may be required by law to be withheld with respect to such exercise, to
ensure the payment of any such taxes.
8. Non-transferability of Option
If Optionee is subject to the reporting requirements of
Section 16(a) of the Exchange Act at the time of a proposed transfer, the
Option shall be transferable only if such transferability or transfer would
not cause the Option to fail to qualify for the exemption provided for in
Section 16b-3 of the Exchange Act, as determined by the Committee in
its sole and absolute discretion. The Option may be exercised, during the
lifetime of Optionee, only by Optionee and Optionee's legal representative.
Notwithstanding the foregoing, the Option shall not be assignable by
operation of law and shall not be subject to attachment, execution,
garnishment, sequestration, the law of bankruptcy or any other legal or
equitable process. Any attempted assignment, transfer, pledge, hypothe-
cation or other disposition contrary to the provisions of this Agreement,
and the levy of any execution, attachment or similar process thereupon,
shall be null and void and without effect.
9. Changes in Capitalization
9.1 The number and class of shares subject to the Option,
the Exercise Price (but not the total price) and the minimum number of
shares as to which the Option may be exercised at any one time shall be
proportionately adjusted in the event of any increase or decrease in the
number of the issued shares of Common Stock of the Company which
results from a split-up or consolidation of shares, payment of a stock div-
idend or stock dividends exceeding a total of five percent (5%) for which
the record dates occur in any one fiscal year, a recapitalization (other
than the conversion of convertible securities according to their terms), a
combination of shares or other like capital adjustment, so that upon
exercise of the Option, Optionee shall receive the number and class of
shares Optionee would have received had Optionee been the holder of the
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number of shares of Common Stock for which the Option is being exer-
cised upon the date of such change or increase or decrease in the
number of issued shares of the Company.
9.2 Upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the
Company is not the surviving corporation or in which the Company
survives as a subsidiary of another corporation, a sale of all or substan-
tially all of the property of the Company to another corporation or any
dividend or distribution to shareholders of more than ten percent of the
Company's assets, adequate adjustment or other provisions shall be
made by the Company or other party to such transaction so that there
shall remain and/or be substituted for the Option Shares provided for
herein, the shares, securities or assets which would have been issuable
or payable in respect of or in exchange for the Option Shares then
remaining under the Option, as if Optionee had been the owner of such
shares as of the applicable date. Any securities so substituted shall be
subject to similar successive adjustments.
10. Misconduct of Optionee
Notwithstanding any other provision of this Agreement, all
unexercised Options held by Optionee hereunder shall automatically
terminate as of the date Optionee's directorship is terminated, if such
directorship is terminated on account of any act of fraud, embezzlement,
misappropriation or conversion of assets or opportunities of the
Company. Upon such termination of the Option, Optionee shall forfeit
all rights and benefits under this Agreement.
11. Privileges of Ownership
Optionee shall not have any of the rights of a stockholder
with respect to the shares covered by the Option except to the extent that
share certificates have actually been issued and registered in Optionee's
name on the books of the Company or its registrar upon the due exercise
of the Option. The Company shall be allowed a reasonable time following
notice of exercise in which to accomplish the issuance and registration.
12. Reference to Plan
This Agreement and the Option are subject to all of the
terms and conditions of the Plan, which are hereby incorporated by
reference. In the event of any conflict between this Agreement and the
Plan, the provisions of the Plan shall prevail.
13. Notices
Any notice to be given under the terms of this Agreement
shall be addressed to the Company in care of its Corporate Secretary at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and any
notice to be given to Optionee shall be addressed to Optionee at
Optionee's address appearing on the records of the Company, or at such
other address or addresses as either party may hereafter designate in
writing to the other. Any such notice shall be deemed duly given when
enclosed in a properly sealed envelope, addressed as herein required and
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deposited, postage prepaid, in a post office or branch post office regularly
maintained by the United States Government.
14. Governing Law.
This Agreement shall be construed in accordance with, and
governed by, the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company and Optionee have
executed this Agreement as of the Date of Grant.
"OPTIONEE"
____________________________________
"COMPANY"
NETTER DIGITAL ENTERTAINMENT, INC.
By__________________________________
Its_________________________________
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NETTER DIGITAL ENTERTAINMENT, INC.
NOTICE AND AGREEMENT OF EXERCISE
OF DIRECTOR STOCK OPTION
_________ , ____
I hereby exercise my Netter Digital Entertainment, Inc. Director
Stock Option dated ______________, as to ______ shares of Netter Digital
Entertainment, Inc. common stock, $.01 par value (the "Option Shares").
Enclosed are the documents and payment specified in Paragraph
4 of my Option Agreement. I understand that no Option Shares will be
issued and delivered to me unless and until any applicable registration
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and any applicable requirements of law or any regulatory bodies
having jurisdiction over such issuance and delivery have been fully
complied with. I hereby represent, warrant and agree, to and with Netter
Digital Entertainment, Inc. (the "Company"), that:
a. The Option Shares are being acquired for my account, and no
other person (except, if I am married, my spouse) will own any interest
therein.
b. I will not sell or dispose of my Option Shares in violation of the
Securities Act or any other applicable federal or state securities laws.
c. The Company may, without liability, place legend conditions
upon the Option Shares and issue "stop transfer" restrictions requiring
compliance with applicable securities laws and the terms of my Option
Agreement.
d. So long as I am subject to reporting requirements under Section
16(a) of the Securities Exchange Act of 1934, I will furnish to the
Company a copy of each Form 4 filed by me and will timely file all reports
required under the federal securities laws.
e. I will report to the Company all sales of Option Shares on the
form prescribed from time to time by the Company.
The Option Shares specified above are to be issued in the following
registration (husband and wife will be shown to be joint tenants unless
I state that the Option Shares will be held as community property or as
tenants in common):
__________________________________ ________________________________
(Print your name) (Signature)
__________________________________ ________________________________
(Option - Print name of spouse if
you wish joint registration)
________________________________
Address