<PAGE> 1
As filed with the Securities and Exchange Commission on July 26, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THQ INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 13-3541686
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
5016 North Parkway Calabasas
Calabasas, California 91302
(Address of Principal Executive Offices with Zip Code)
PACIFIC COAST POWER & LIGHT CO.
EMPLOYEE STOCK PLAN
(Full Title of Plan)
BRIAN J. FARRELL
President and Chief Executive Officer
THQ Inc.
5016 North Parkway Calabasas
Calabasas, California 91302
(818) 591-1310
(Name, Address and Telephone Number,
including Area Code, of Agent For Service)
Copies to:
KENNETH H. LEVIN, Esq.
Sidley & Austin
555 West Fifth Street
Los Angeles, California 90013
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE(1)
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<S> <C> <C> <C> <C>
Common Stock, $0.01
par value 130,000 shares $30.4375 $3,956,875 $1,100
=================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
and, pursuant to Rules 457(h)(1) and 457(c) under the Securities Act of
1993, as amended, based upon the exercise price of $30.4375 the average
of the high and low prices of the above described shares on the NASDAQ
National Market System on July 22, 1999 as reported by the National
Association of Securities Dealers Automated Quotation System.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION*
* Information required by Part I to be contained in the Section 10(a)
Prospectus is omitted from the Registration Statement in accordance
with Rule 428 under the Securities Act of 1933, as amended (the
"Securities Act"), and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by THQ Inc., a Delaware corporation (the
"Company" or the "Registrant"), with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Securities Act, are incorporated by reference and are
made a part hereof:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998.
(b) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1999.
(c) The Company's Current Reports on Form 8-K dated January 8, 1999 and
May 24, 1999 and the Current Report on Form 8-K/A filed March 10, 1999; and
(d) The Company's Registration Statement on Form 8-A (Registration No.
0-18813), filed with the Commission on September 23, 1991.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, are deemed to be incorporated by reference
into this Registration Statement and to be a part hereof from the respective
dates of filing of such documents (such documents, and the documents enumerated
in paragraphs (a) through (d) above, being hereinafter referred to as
"Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such first statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock is registered under Section 12 of the
Exchange Act. See Item 3(d) above.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Under the Delaware General Corporation Law, directors and officers, as
well as other employees or persons, may be indemnified against judgments, fines
and amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation, i.e., a "derivative
action"), and against expenses (including attorney's fees) in any action
(including a derivative action), if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. However, in the case of
a derivative action, a person cannot be indemnified for expenses
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<PAGE> 3
in respect of any matter as to which the person is adjudged to be liable to the
corporation unless and to the extent a court determines that such person is
fairly and reasonably entitled to indemnity for such expenses.
Delaware law also provides that, to the extent a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action or matter, the corporation must indemnify
such party against expenses (including attorneys' fees) actually and reasonably
incurred by such party in connection therewith.
Expenses incurred by a director or officer in defending any
action may be paid by a Delaware corporation in advance of the final disposition
of the action upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it is ultimately determined that such party is
not entitled to be indemnified by the corporation.
The Delaware General Corporation Law provides that the
indemnification and advancement of expenses provided thereby are not exclusive
of any other rights granted by bylaws, agreements or otherwise, and provides
that a corporation shall have the power to purchase and maintain insurance on
behalf of any person, whether or not the corporation would have the power to
indemnify such person under Delaware law.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Brian J. Farrell, the President and Chief Executive Officer and
a director of the Company, has entered into an employment agreement with the
Company pursuant to which the Company has agreed to indemnify Mr. Farrell for
losses, liabilities, damages and expenses incurred as a result of his acting on
behalf of the Company, subject to certain conditions and limitations.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
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<S> <C>
4.1 Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-3 filed on January 9, 1998
(File No. 333-32221) (the "S-3 Registration Statement)).
4.2 Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3.2 to Post-Effective Amendment No. 1
to the S-3 Registration Statement).
4.3 Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended June 30, 1998).
4.4* Pacific Coast Power & Light Company Employee Stock Plan.
4.5* Pacific Coast Power & Light Company Notice of Stock Option
Grant
5* Opinion of Sidley & Austin.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Sidley & Austin (Included in Exhibit 5).
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
24.1* Powers of Attorney (Set forth on the signature page hereto).
</TABLE>
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* Filed herewith
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low and the high and of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table
in the effective Registration Statement.
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby which remain
unsold at the termination of the offering.
The Company hereby undertakes that, for the purposes of determining any
liability under the Securities Act, each filing of the Company's Annual Report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Calabasas and State of California on the 22nd
day of July, 1999.
THQ Inc.
By: /s/ Brian J. Farrell
------------------------------------------
Brian J. Farrell, President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature to the Registration Statement appears below
hereby appoints Brian J. Farrell and Fred A. Gysi, and each of them, his
attorneys-in-fact, with full power of substitution and resubstitution, to
execute in the name and on behalf of such person, individually and in the
capacity stated below, and to file, all amendments to this Registration
Statement, which amendments may make such changes in and additions to this
Registration Statement as such attorneys-in-fact may deem necessary or
appropriate.
Pursuant to the requirement of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ Brian J. Farrell Director, President and Chief July 22, 1999
- ----------------------------- Executive Officer (Principal
Brian J. Farrell Executive Officer)
/s/ Lawrence Burstein Director July 22, 1999
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Lawrence Burstein
/s/ Bruce Jagid Director July 22, 1999
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Bruce Jagid
/s/ Jeffrey C. Lapin Director and Vice Chairman July 22, 1999
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Jeffrey C. Lapin
/s/ L. Michael Haller Director and Senior Vice President July 22, 1999
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L. Michael Haller
/s/ James L. Whims Director July 22, 1999
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James L. Whims
/s/ L. Greg Ballard Director July 22, 1999
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L. Greg Ballard
/s/ Fred A. Gysi Vice President-Finance and July 22, 1999
- ----------------------------- Administration, Chief Financial
Fred A. Gysi Officer and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
</TABLE>
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INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
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<S> <C>
4.1 Certificate of Incorporation (incorporated by reference to
Exhibit 3.1 to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-3 filed on January 9, 1998
(File No. 333-32221) (the "S-3 Registration Statement)).
4.2 Amendment to Certificate of Incorporation (incorporated by
reference to Exhibit 3.2 to Post-Effective Amendment No. 1 to
the S-3 Registration Statement).
4.3 Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.3 to the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1998).
4.4* Pacific Coast Power & Light Company Employee Stock Plan.
4.5* Pacific Coast Power & Light Company Notice of Stock Option Grant
5* Opinion of Sidley & Austin.
23.1* Consent of Deloitte & Touche LLP.
23.2* Consent of Sidley & Austin (Included in Exhibit 5).
24.1* Powers of Attorney (Set forth on the signature page hereto).
</TABLE>
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*Filed herewith
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<PAGE> 1
EXHIBIT 4.4
PACIFIC COAST POWER & LIGHT COMPANY
EMPLOYEE STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options, (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees appointed
pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(i) "Company" means Pacific Coast Power & Light Company, a California
corporation.
(f) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(g) "Continuous Status as an Employee" means the absence of any
interruption or termination of the employment relationship by the Company or any
<PAGE> 2
Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) sick leave, military leave or any other leave
of absence approved by the Board, provided that such leave is for a period of
not more than ninety (90) days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (ii) in the case of
transfers between locations of the Company or between the Company, its
Subsidiaries or its successor.
(h) "Employee" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(j) "Fair Market Value" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") 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 system or exchange for the last market trading
day prior to the time of determination) as reported in the Wall Street
Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market
Value shall be the mean between the high and low asked prices for the
Common Stock; 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
Board.
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(k) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(l) "Nonstatutory Stock Option" means an Option not intended to qualify as
an Incentive Stock Option.
(m) "Option" means a stock option granted pursuant to the Plan.
(n) "Optioned Stock" means the Common Stock subject to an Option.
(o) "Optionee" means an Employee or Consultant who receives an Option.
(p) "Parent" means a "parent corporation", whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(q) "Plan" means this Employee Stock Plan, as amended from time to time.
(r) "Purchaser" means an Employee or Consultant who exercises a Stock
Purchase Right.
(s) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 13 of the Plan.
(t) "Stock Purchase Right" means the right to purchase Restricted Stock
granted pursuant to Section 11 of the Plan.
(u) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 1,000,000 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right should expire or become unexercisable
for any reason without having been exercised in full, the unpurchased Shares
which were subject thereto shall, unless the Plan shall have been terminated,
become available for future grant under the Plan.
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<PAGE> 4
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Directors and Officers. With respect to
grants of Options or Stock Purchase Rights to Employees who are also officers
or directors of the Company, the Plan shall be administered by (A) the Board if
the Board may administer the Plan in compliance with Rule 16b-3 promulgated
under the Exchange Act or any successor thereto ("Rule 16b-3") with respect to
a plan intended to qualify thereunder as a discretionary plan, or (B) a
Committee designated by the Board to administer the Plan, which Committee shall
be constituted in such a manner as to permit the Plan to comply with Rule 16b-3
with respect to a plan intended to qualify thereunder as a discretionary plan.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder
as a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule 16b-3, the Plan
may be administered by different bodies with respect to directors, non-director
officers and Employees who are neither directors nor officers.
(iii) Administration With Respect to Consultants and Other Employees. With
respect to grants of Options or Stock Purchase Rights to Employees or
Consultants who are neither directors nor officers of the Company, the Plan
shall be administered by (A) the Board or (B) a Committee designated by the
Board, which Committee shall be constituted in such a manner as to satisfy the
legal requirements relating to the administration of incentive stock option
plans, if any, of state corporate and securities laws and of the Code (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies, however caused, and remove all
members of the Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws.
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<PAGE> 5
(b) Powers of the Administrator. Subject to the provisions of the Plan and
in the case of a Committee, the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(j) of the Plan;
(ii) to select the officers, Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted
hereunder;
(iii) to determine whether and to what extent Options and Stock
Purchase Rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to the share price and any restriction or limitation, based in
each case on such factors as the Administrator shall determine, in its
sole discretion);
(vii) to determine the terms and restrictions applicable to Stock
Purchase Rights and the Restricted Stock purchased by exercising such
Stock Purchase Rights; and
(viii) to make any other such determinations with respect to awards
under the Plan as it shall deem appropriate.
(c) Effect of Committee's Decision. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and Purchasers and any other holders of any Options or Rights.
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<PAGE> 6
5. Eligibility for Options.
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), 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 time of the Option with
respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause.
6. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.
7. Term of Option. The term of each Option shall be the term stated
in the Option Agreement; provided, however, that in the case of an Incentive
Stock Option, the term shall be no more than ten (10) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
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<PAGE> 7
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of such
Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price shall be
no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of such
Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary,
the per Share exercise price shall be no less than 110% of the Fair Market
Value per Share on the date of grant.
(B) granted to any person, the per Share exercise price shall be no
less than 85% of the Fair Market Value per Share on the date of grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (i) cash, (ii)
check, (iii) other Shares which (x) in the case of Shares acquired upon
exercise of an Option either have been owned by the Optionee for more than six
months on the date of surrender or were not acquired, directly or indirectly,
from the Company, and (y) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised, (iv) authorization from the
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<PAGE> 8
Company to retain from the total number of Shares as to which the Option is
exercised that number of Shares having a Fair Market Value on the date of
exercise equal to the exercise price for the total number of Shares as to which
the Option is exercised, (v) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(vi) by delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement,
(vii) any combination of the foregoing methods of payment, (viii) or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company under
California General Corporation Law.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. 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.
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<PAGE> 9
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Employment. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee with the
Company (as the case may be), such Optionee may, but only within the period
stated in the Option Agreement (which, in the case of an Incentive Stock
Option, shall be no more than ninety (90) days after the date of such
termination and in the case of any Option, shall be no later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent that Optionee was entitled to
exercise it at the date of such termination. To the extent that Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of Section
9(b) above, in the event of termination of an Optionee's Consulting relationship
or Continuous Status as an Employee as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within twelve (12) months from the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. Notwithstanding the provisions of
Section 9(b) above and the preceding sentence, in the event of termination of an
Optionee's Consulting relationship or Continuous Status as an Employee as a
result of his disability, Optionee may, but only within six (6) months from the
date of such termination (but in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement), exercise the Option
to the extent otherwise so entitled at the date of such termination; provided,
however, that if any Incentive Stock Option is exercised after 90 days of such
termination, such option will be treated as a Nonstatutory Stock Option. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised, at any time within twelve (12) months following the
date of death (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the
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<PAGE> 10
extent the Optionee was entitled to exercise the Option at the date of death. To
the extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
10. Non-Transferability of Options. The Option may not 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 may be exercised,
during the lifetime of the Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase Restricted Stock. Stock Purchase Rights may
be issued either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under the
Plan, it shall advise the offeree in writing of the terms, conditions and
restrictions related to the offer, including the number of Shares that such
person shall be entitled to purchase, the price to be paid (if any), and the
time within which such person must accept such offer, which shall in no event
exceed one-hundred twenty (120) days from the date of grant of the Stock
Purchase Right. The offer shall be accepted by execution of a Restricted Stock
agreement in the form determined by the Administrator. Shares purchased pursuant
to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock agreement shall grant the Company a repurchase
option exercisable upon the voluntary or involuntary termination of the
purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock agreement shall be the original price paid by the purchaser and
may be paid by cancellation of any indebtedness of the purchaser to the Company.
The repurchase option with respect to the Restricted Stock shall lapse at such
rate as the Committee may determine, but in no event as to less than 20% of the
total shares granted annually and must be exercised within 90 days of
termination of employment.
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<PAGE> 11
(c) Other Provisions. The Restricted Stock agreement shall contain
such other terms, provisions and conditions not inconsistent with the Plan as
may be determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock agreements need not be the same with respect to
each purchaser.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the Purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees or Purchasers may satisfy withholding
obligations as provided in this paragraph. When an Optionee or Purchaser incurs
tax liability in connection with an Option or Stock Purchase Right, which tax
liability is subject to tax withholding under applicable tax laws, and the
Optionee or Purchaser is obligated to pay the Company an amount required to be
withheld under applicable tax laws, the Optionee or Purchaser may satisfy the
withholding tax obligation by electing to have the Company withhold from the
Shares to be issued upon exercise of the Option, or the Shares to be issued in
connection with the Stock Purchase Right, if any, that number of Shares having a
Fair Market Value equal to the amount required to be withheld. The Fair Market
Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee or Purchaser to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option or Right as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
(d) if the Optionee is subject to Rule 16b-3, the election must comply
with the applicable provisions of Rule 16b-3 and shall be subject to such
additional
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<PAGE> 12
conditions or restrictions as may be required thereunder to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
In the event the election to have Shares withheld is made by an Optionee
or Purchaser and the Tax Date is deferred under Section 83 of the Code because
no election is filed under Section 83(b) of the Code, the Optionee or Purchaser
shall receive the full number of Shares with respect to which the Option or
Stock Purchase Right is exercised but such Optionee or Purchaser shall be
unconditionally obligated to tender back to the Company the proper number of
Shares on the Tax Date.
13. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option or Stock Purchase Right, and
the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option or Stock Purchase Right, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Purchase
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option or Stock Purchase Right.
In the event of the proposed dissolution or liquidation of the Company, or
of a merger in which the successor corporation does not agree to assume the
Option or Stock Purchase Right or substitute an equivalent Option or Stock
Purchase Right, the Board shall terminate the Plan and, at its discretion,
permit Optionees to exercise their Options to the extent already vested or make
a determination to accelerate vesting of any outstanding Options or Stock
Purchase Rights. The Board shall notify Optionees and Purchasers at least
fifteen (15) days prior to such proposed action and give such Optionees and
Purchasers to exercise their rights to the extent so permitted. To the extent
it has not been previously
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<PAGE> 13
exercised, any Option or Stock Purchase Right will terminate immediately prior
to the consummation of such proposed action.
14. Time of Granting Options. The date of grant of an Option shall,
for all purposes, be the date on which the Administrator makes the
determination granting such Option, or such other date as is determined by the
Board. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee or Purchaser under any grant theretofore made, without his or her
consent. In addition, to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act or with Section 422 of the Code (or any other
applicable law or regulation, including the requirements of the NASD or an
established stock exchange), the Company shall obtain shareholder approval of
any Plan amendment in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options and Stock Purchase Rights
already granted and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee or Purchaser and the Board,
which agreement must be in writing and signed by the Optionee or Purchaser and
the Company.
16. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery
of such Shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the exercise of an Option or Stock Purchase Right,
the Company may require the person exercising such Option or Stock Purchase
Right to represent and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any present intention to
sell or
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<PAGE> 14
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
17. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
18. Agreements. Options and Stock Purchase Rights shall be evidenced
by written agreements in such form as the Board shall approve from time to time.
19. Shareholder Approval. Continuance of the Plan shall be subject
to approval by the shareholders of the Company within twelve (12) months before
or after the date the Plan is adopted. Such shareholder approval shall be
obtained in the degree and manner required under applicable state and federal
law.
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<PAGE> 1
EXHIBIT 4.5
PACIFIC COAST POWER & LIGHT COMPANY
EMPLOYEE STOCK PLAN
NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
- -----------------------------
- -----------------------------
You have been granted an option, consisting of the Stock Option Agreement
attached hereto as Exhibit A and this Notice of Stock Option Grant (together,
the "Option") to purchase Common Stock of PACIFIC COAST POWER & LIGHT COMPANY
(the "Company") as follows:
Date of Grant __________________________
Vesting Date __________________________
Option Price Per Share $_________________________
Total Number of Shares Granted __________________________
Total Price of Shares Granted __________________________
Type of Option __ Incentive Stock Option
__ Nonqualified Stock
Option
Term/Expiration Date 10 years/_________________
Exercise Schedule:
This Option may be exercised, in whole or in part, in accordance with the
Vesting Schedule set out below;
Vesting Schedule:
Date of Vesting Number of Shares
First Annual Anniversary
of Vesting Date 25%
<PAGE> 2
Each Monthly Anniversary of
Vesting Date After First Annual
Anniversary of Vesting Date 1/48th of the total
Shares until fully vested
Termination Period:
Option may be exercised for 90 days after termination of employment or
consulting relationship except as set out in Sections 7 and 8 of the Stock
Option Agreement (but in no event later than the Expiration Date).
Additional Forms of Consideration:
In addition to the forms of consideration set out in Section 3 of the
Stock Option Agreement, this Option may be exercised using the following forms
of consideration:
___ No Additional Forms
___ Additional Forms as
noted: Promissory Note at
the discretion of the
Company. _____________________________
________________________________________________________________________________
________________________________________________________________________________
Exercise of this Option shall be on a form of Exercise Notice provided by the
Company.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THIS OPTION IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S EMPLOYEE STOCK PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL
IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE
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<PAGE> 3
COMPANY'S RIGHT TO TERMINATE HIS EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related to it and represents that he or she is familiar with the
terms and provisions of the Plan and this Option. Optionee accepts this Option
subject to all such terms and provisions. Optionee has reviewed the Plan and
this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Employee Stock Plan and the [Incentive/Nonstatutory]
Stock Option Agreement, all of which are attached and made a part of this
document.
OPTIONEE: PACIFIC COAST POWER & LIGHT COMPANY, a
California company
________________________________ By ________________________________
Signature
________________________________ Title _____________________________
Print Name
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<PAGE> 4
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Stock Option. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set forth
in the Plan and this Stock Option, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Stock Option
and further agrees that any community property interest shall be similarly
bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Stock Option.
--------------------------------
Spouse of Purchaser
<PAGE> 5
PACIFIC COAST POWER & LIGHT COMPANY
EMPLOYEE STOCK PLAN
EXHIBIT A TO NOTICE OF GRANT
STOCK OPTION AGREEMENT
1. Grant of Option. Pacific Coast Power & Light Company, a California
corporation (the "Company"), hereby grants to the Optionee (the "Optionee")
named in the Notice of Grant, an option (the "Option") to purchase a number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms,
conditions and definitions of the Employee Stock Plan (the "Plan") adopted by
the Company, which is incorporated herein by reference. In the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall
prevail. 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 of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option under Section 422 of
the Code.
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form provided by the Company (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as to the holder's investment intent
with respect to the Exercised Shares as may be required by the Company pursuant
to the provisions of the Plan. The Exercise Notice shall be signed by the
Optionee and, if
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<PAGE> 6
the Optionee is married, by the Optionee's spouse, and shall be delivered in
person or by certified mail to the Secretary of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to
all Exercised Shares. This Option shall be deemed to be exercised upon receipt
by the Company of such fully executed Exercise Notice accompanied by such
aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless
such issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange upon which the Shares are then listed.
Assuming such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) such other consideration as is indicated on the Notice of Grant.
4. Optionee's Representations. In the event the Shares purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his Investment
Representation Statement in the form attached hereto as Exhibit B, and shall
read the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.
5. Restrictions on Exercise. This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board. As a condition to the exercise of
this Option, the Company may require Optionee to make any representation and
warranty to the Company as may be required by any applicable law or regulation.
-2-
<PAGE> 7
6. Termination of Relationship. In the event of termination of Optionee's
consulting relationship or Continuous Status as an Employee, Optionee may, to
the extent otherwise so entitled at the date of such termination (the
"Termination Date"), exercise this Option during the Termination Period set out
in the Notice of Grant. To the extent that Optionee was not entitled to
exercise this Option at the date of such termination, or if Optionee does not
exercise this Option within the time specified herein, the Option shall
terminate.
7. Disability of Optionee. Notwithstanding the provisions of Section 6
above, in the event of termination of Optionee's Continuous Status as an
Employee as a result of disability (as determined by the Board in accordance
with the policies of the Company), Optionee may, but only within six (6) months
from the date of termination of employment (but in no event later than the date
of expiration of the term of this Option as set forth in Section 10 below),
exercise the Option to the extent otherwise so entitled at the date of such
termination. To the extent that Optionee was not entitled to exercise the
Option at the date of termination, or if Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option shall terminate.
8. Death of Optionee. In the event of the death of Optionee, the Option
may be exercised at any time within twelve (12) months following the date of
death (but in no event later than the date of expiration of the term of this
Option as set forth in Section 10 below), by Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent the Optionee could exercise the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
10. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Section 7 of the Plan regarding Option terms and Options granted to more
than ten percent (10%) shareholders shall apply to this Option.
11. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement
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<PAGE> 8
be determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
12. Tax Consequences. Some of the federal and California tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonqualified Stock Option ("NSO"). If this Option does not qualify as
an ISO, the Optionee may incur regular federal income tax and California income
tax liability upon exercise. The Optionee 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 Exercised Shares on the date of exercise
over their aggregate Exercise Price. If the Optionee is an employee, the Company
will be required to withhold from his or her compensation or collect from
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(ii) Incentive Stock Option ("ISO"). If this Option qualifies as an ISO,
the Optionee will have no regular federal income tax or California income tax
liability upon its exercise, although the excess, if any, of the fair market
value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject the Optionee to alternative minimum tax
in the year of exercise.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year, any gain
realized on disposition of the Shares will be treated as long-term capital gain
for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least one year after
exercise and two years after the grant date, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. If the Optionee disposes of ISO Shares within one year after exercise
or two years after the grant date, any gain realized on such disposition will be
treated as compensation income (taxable at ordinary income rates) to the extent
of the excess, if any, of the lesser of (A) the difference between the fair
market value of the Shares acquired on the date of exercise and the aggregate
Exercise Price, or (B)
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<PAGE> 9
the difference between the sale price of such Shares and the aggregate Exercise
Price.
(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee
sells or otherwise disposes of any of the Shares acquired pursuant to an ISO on
or before the later of (i) the date two years after the grant date, or (ii) the
date one year after the exercise date, the Optionee agrees that he or she may
be subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
<PAGE> 1
[SIDLEY & AUSTIN LETTERHEAD]
EXHIBIT 5
July 26, 1999
THQ Inc.
5016 North Parkway Calabasas
Calabasas, California 91302
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-8 (the
"Registration Statement") being filed by THQ Inc., a Delaware corporation (the
"Company"), with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act"), relating to the registration of
130,000 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of the Company which may be issued upon the exercise of options
granted pursuant to the Pacific Coast Power & Light Company Employee Stock Plan
(the "Plan").
We have acted as counsel to the Company in connection with the
Registration Statement and have examined such records, documents and questions
of law, and satisfied ourselves as to such matters of fact, as we have
considered relevant and necessary as a basis for this opinion. In addition, we
have examined the originals, or photocopies, of such other corporate records of
the Company, certificates of public officials and of officers of the Company and
such agreements, instruments and other documents as we have deemed necessary as
a basis for the opinions expressed below. As to the questions of fact material
to such opinions, we have, when relevant facts were not independently
established by us, relied upon a certificate of the Company or its officers or
of public officials.
Based on the foregoing, we are of the opinion that the Shares are
duly authorized, legally issued, fully paid and nonassessable.
We do not find it necessary for purposes of this opinion to
cover, and accordingly we express no opinion as to, the application of the
securities or "Blue Sky" laws of the various states to the sale of the Shares.
This opinion is limited to the General Corporation Law of the State of Delaware.
<PAGE> 2
[SIDLEY & AUSTIN LETTERHEAD]
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to all references to our firm in the Registration
Statement.
Very truly yours,
/s/ Sidley & Austin
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
THQ Inc. on Form S-8 of our report dated February 24, 1999 appearing in the
Annual Report on Form 10-K of THQ Inc. for the year ended December 31, 1998.
/s/ DELOITTE & TOUCHE LLP
- ------------------------------------
Los Angeles, California
July 20, 1999
