IMAX Corporation
Exhibit 10.1
IMAX CORPORATION
STOCK OPTION PLAN
June 2008
IMAX CORPORATION
AMENDED & RESTATED STOCK OPTION PLAN
1. Purpose
The purposes of the IMAX Stock Option Plan (the “Plan”) are to attract, retain and motivate directors, officers, key employees and consultants of the Company and its Subsidiaries and to provide to such persons incentives and awards for superior performance.
2. Definitions
As used in thisPlanthe following terms have the following meanings:
“Agreement” has the meaning set forth in Section 6 below.
“Award” means an Option.
“Blackout Period” means any period during which a policy of theCompanyprevents anInsiderfrom trading in theCommon Shares.
“Board” means the Board of Directors of theCompany.
“Cause” means a termination of theParticipant’semployment with theCompanyor one of itsSubsidiaries(a) for “cause” as defined in an employment agreement applicable to theParticipant,or (b) in the case of aParticipantwho does not have an employment agreement that defines “cause”, because of: (i) any act or omission that constitutes a material breach by theParticipantof any of his obligations under his employment agreement with theCompanyor one of itsSubsidiariesor the applicableAgreement;(ii) the continued failure or refusal of theParticipantto substantially perform the duties reasonably required of him as an employee of theCompanyor one of itsSubsidiaries;(iii) any wilful and material violation by theParticipantof any law or regulation applicable to the business of theCompanyor one of itsSubsidiaries,or theParticipant’sconviction of a felony, or any wilful perpetration by theParticipantof a common law fraud; or (iv) any other wilful misconduct by theParticipantwhich is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, theCompanyor any of itsSubsidiaries.
“Change of Control” means an event or series of events where any person, or group of persons acting in concert, not including Bradley J. Wechsler and Richard L. Gelfond, acquire greater than fifty percent (50%) of the outstandingCommon Sharesof theCompanywhether by direct or indirect acquisition or as a result of a merger, reorganization or sale of substantially all of the assets of theCompany.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Committee” means a committee of theBoardcomprised of at least two directors selected by theBoardto administer thePlan.
“Common Share” means a share of common stock, no par value, of theCompany.
“Company” means IMAX Corporation, a corporation organized under the laws of Canada.
“Date of Grant” means the date specified by theBoardor theCommitteeon which anAwardshall become effective (which date shall not be earlier than the date on which theBoardor theCommitteetakes action with respect thereto).
The“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.
“Fair Market Value” of aCommon Shareon a given date means the higher of the closing price of aCommon Shareon such date (or the most recent trading date if such date is not a trading date) onStock Exchanges.
“Insider” means any person who is a director or an officer of theCompanyor anySubsidiary,or who is directly or indirectly the beneficial owner of, or who exercises control or direction, more than 10% of totalCommon Sharesissued by theCompany.
“Option” means the right to purchase aCommon Shareupon exercise of a stock option granted pursuant to thePlan.
“Option Price” means the purchase price perCommon Sharepayable on exercise of anOption,as determined by theCommitteein its sole discretion (subject to the terms of thePlan) and as set forth in the applicableAgreement.
“Participant” means a person to whom anAwardis to be made under thePlanand who is at the time of suchAwardan employee or consultant of theCompany,or any of itsSubsidiaries,or a person who is a director of theCompanyor any of itsSubsidiaries and who is not also an employee of theCompanyor any of itsSubsidiariesat theDate of Grant,or a person who has agreed to commence serving in any such capacity within 90 days of theDate of Grant,or any personal holding corporation controlled by any such person, the shares of which are held directly or indirectly by such person or such person’s spouse, minor children or minor grandchildren, or any registered retirement savings plan or registered educational savings plan for the sole benefit of any such person.
“Permanent Disability” means a physical or mental disability or infirmity of theParticipantthat prevents the normal performance of substantially all his duties as an employee of theCompanyor anySubsidiary,which disability or infirmity shall exist for any continuous period of 180 days within any twelve-month period.
“Stock Exchanges” means one or more, as the context requires, of the New York Stock Exchange, the Toronto Stock Exchange and such securities exchange, if any, as may be designated by theBoard,from time to time.
“Subsidiary” means any corporation or other entity in which theCompanyowns or controls, directly or indirectly, not less than 50% of the total combined voting power represented by all voting securities or other voting interests in such entity.
“Vested Options” means, as of any date,Optionswhich by their terms are exercisable on such date.
3. Administration of the Plan
| (a) | ThePlanshall be administered, andAwardsshall be granted hereunder, by theBoardor by or under the authority of theCommittee.A majority of theCommitteeshall constitute a quorum, and the action of the members of theCommittee present at any meeting at which a quorum is present, or acts unanimously approved in writing, shall be the acts of theCommittee. |
| (b) | The interpretation and construction by theCommitteeof any provision of thePlanor of anyAgreement,and any determination by theCommitteepursuant to any provision of thisPlanor of anyAgreementshall be final and conclusive. No member of theCommitteeshall be liable for any such action or determination made in good faith. |
4. Shares Available Under Plan
The maximum number ofCommon Shareswhich may be issued upon the exercise ofOptions granted under thePlanis 20% of the issued and outstandingCommon Shares,subject to adjustment as provided in Section 10. SuchCommon Sharesmay be shares previously issued or treasury shares or a combination of the foregoing. AnyCommon Shareswhich are subject toOptionswhich have been exercised, have expired or which have been surrendered without being exercised in full shall again be available for issuance under thisPlan,resulting in a “reloading” of thePlanup to this maximum percentage of issued and outstandingCommon Shares.
5. Limitations on Certain Grants
Section 162(m) of theCoderequires that thePlaninclude a limitation on the number ofOptionswhich may be granted to certainParticipants. TheBoardorCommitteemay, from time to time and upon such terms and conditions as it may determine, grantOptionstoParticipantsprovided, however, the maximum number ofOptionsintended to qualify for exemption under Section 162(m) of theCodethat may be awarded to anyParticipantin any calendar year shall not exceed 4,000,000.
6. Agreement
The terms and conditions of eachOptionshall be embodied in a written agreement (the“Agreement”) in a form approved by theCommitteewhich shall contain terms and conditions not inconsistent with thePlanand which shall incorporate thePlanby reference.Optionsgranted under thePlanshall comply with the following terms and conditions:
| (a) | EachAgreementshall specify the number ofCommon Sharesfor whichOptionshave been granted. |
| (b) | EachAgreementshall specify theOption Price,which shall not be less than 100% of theFair Market ValueperCommon Shareon theDate of Grant. |
| (c) | EachAgreementshall specify that theOption Priceshall be payable in cash or by cheque acceptable to theCompanyor by a combination of such methods of payment. |
| (d) | Successive grants may be made to the sameParticipant whether or not anyOptionspreviously granted to suchParticipantremain unexercised. |
| (e) | EachAgreementshall specify the applicable vesting schedule and the effective term of theOption. In the event of a termination of aParticipant’semployment by reason of death orPermanent Disability,50% of suchParticipant’s Options shall becomeVested Optionsif suchOptionswere less than 50% vested at the time of such termination. |
| (f) | Optionsgranted under thePlanare not intended to qualify as “incentive stock options” within the meaning of Section 422A of theCode. |
| (g) | NoOptionissued prior to June 18, 2008 shall be exercisable more than ten years from theDate of Grant.NoOptionsissued on or after June 18, 2008, subject to earlier cancellation, shall be exercisable for the later of ten years from theDate of Grant,or in the event the 10 year anniversary of theDate of Grantfalls within aBlackout Period,the date which is ten days after the date on which theBlackout Periodhas ended. |
| (h) | EachOptiongranted under thePlanshall be subject to such additional terms and conditions, not inconsistent with thePlan,which are prescribed by theBoardor theCommitteeand set forth in the applicableAgreement. |
| (i) | As soon as practicable following the exercise of anyOptions,theCommon Shares subject to the exercisedOptions shall be issued in the name of theParticipantor as theParticipantshall otherwise, in writing, direct. |
7. Termination of Employment, Consulting Agreement or Term of Office
| (a) | In the event that aParticipant’semployment, consulting arrangement or term of office with theCompanyor one of itsSubsidiariesterminates for any reason, unless theBoardor theCommitteedetermines otherwise, anyOptionswhich have not becomeVested Optionsshall terminate and be cancelled without any consideration being paid therefor. |
| (b) | In the event that aParticipant’semployment with theCompanyor one of itsSubsidiariesis terminated withoutCause,or theParticipant’semployment is terminated by reason of theParticipant’svoluntary resignation (including by reason of retirement), death orPermanent Disability,or upon the termination of aParticipant’sconsulting arrangement or term of office, theParticipant(or theParticipant’sestate) shall be entitled to exercise theParticipant’s Optionswhich have becomeVested Optionsas of the date of termination for a period of 30 days, or such longer period as theBoardor theCommitteedetermines, following the date of termination. |
| (c) | In the event that aParticipant’semployment, consulting arrangement or term of office with theCompanyor one of itsSubsidiariesis terminated forCause,suchParticipant’s Vested Optionsshall terminate and be cancelled without any consideration being paid therefor. |
8. Transferability
NoOptionshall be transferable by aParticipantother than by will or the laws of descent and distribution, provided, however, thatOptionsmay be transferred if approved by theBoardor theCommitteeand by any regulatory authority having jurisdiction or stock exchange on which theCommon Sharessubject toOptionsare listed.Optionsshall be exercisable during theParticipant’slifetime only by theParticipantor by theParticipant’sguardian or legal representative.
9. Change of Control
AllOptionsgranted under thePlan(or any predecessor of thePlan) shall immediately vest and become fully exercisable upon the occurrence of (a) aChange of Control;and (b) the occurrence of one or more of the following: (i) theParticipant’semployment or term of office with theCompany,or one of itsSubsidiaries,is terminated withoutCause; (ii) the diminution of theParticipant’stitle and/or responsibilities; and (iii) theParticipantis asked to relocate more than twenty-five (25) miles from his/her existing office.
10. Adjustments
TheCommitteeshall make or provide for such adjustments in the maximum number ofCommon Sharesspecified in Section 4, in the number ofCommon Sharesor other securities or consideration covered by outstandingOptionsgranted hereunder, and/or in theOption Priceapplicable to suchOptionsas theBoardor theCommitteein their sole discretion may determine is equitably required to prevent dilution or enlargement of the rights ofParticipantsthat otherwise would result from any stock dividend, stock split, combination of shares, recapitalization or other change in the capital structure of theCompany,merger, consolidation, spin-off, reorganization, partial or complete liquidation, issuance of rights or warrants to purchase securities or any other corporate transaction or event having an effect similar to any of the foregoing.
11. Fractional Shares
TheCompanyshall not be required to issue any fractionalCommon Sharespursuant to thePlan. TheCommitteemay provide for the elimination of fractions or for the settlement of fractions in cash.
12. Withholding Taxes
TheCompanyand itsSubsidiariesshall have the right to require any individual entitled to receiveCommon Sharespursuant to anOptionto remit to theCompany, prior to the issuance of anyCommon Sharefollowing the exercise of anyOptions,any amount sufficient to satisfy any Canadian or United States federal, state, provincial or local tax withholding requirements. Prior to theCompany’sdetermination of such withholding liability, such individual may make an irrevocable election to satisfy, in whole or in part, such obligation to remit taxes by directing theCompanyto withholdCommon Sharesthat would otherwise be received by such individual. Such election may be denied by theCompanyin its discretion, or may be made subject to certain conditions specified by the Company, including, without limitation, conditions intended to avoid accounting charges and the imposition of liability against the individual under Section 16(b) of theExchange Act,as amended, and the rules and regulations thereunder.
13. Registration Restrictions
AnOptionshall not be exercisable unless and until (i) a registration statement under the Securities Act of 1933, as amended, has been duly filed and declared effective pertaining to theCommon Sharessubject to suchOption,or (ii) theCommittee,in its sole discretion determines that such registration, qualification and status is not required as a result of the availability of an exemption from such registration, qualification, and status under such laws.
14. Shareholder Rights
AParticipantshall have no rights as a shareholder with respect to anyCommon Shares issuable upon exercise of anOptionuntil theParticipanthas duly exercised theOptionin accordance with its terms and thisPlan,and theCommon Shareshave been paid for in full and issued to theParticipant.
15. Breach of Restrictive Covenants
If (i) aParticipantis a party to an employment agreement with theCompanyor any of itsSubsidiariesor affiliates and (ii) suchParticipantmaterially breaches any of the restrictive covenants set forth in such employment agreement (including, without limitation, any restrictive covenants relating to non-competition, non-solicitation or confidentiality), then all of suchParticipant’s Options(whether or notVested Options) shall terminate and be cancelled without consideration being paid therefor.
16. Section 409A of the Code
If any provision of thePlanor anyAgreementcontravenes any regulations or Treasury guidance promulgated under Section 409A of theCodeor would cause theAwardsto be subject to the interest and penalties under Section 409A of theCode,such provision of thePlanor anyAgreementshall be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section 409A of theCode.
17. Amendments
TheBoardor theCommitteereserves the right, in its sole discretion, to amend, suspend or terminate thePlanor any portion thereof at any time, and outstandingOptionsorAgreementsthereunder, in accordance with applicable legislation, without obtaining the approval of shareholders; provided, however, that no termination or amendment of thePlanor any waiver of any provision of anyOptionorAgreementmay, without the consent of theParticipantto whom anyAwardshall have been granted, adversely affect the rights of suchParticipantin suchAward;provided further, however that amendments shall be subject to (i) the approval of a majority of theCommon Sharesentitled to vote if the Committee determines that such approval is necessary in order for theCompanyto rely on the exemptive relief provided under Rule 16b-3 under theExchange Actand (ii) all other approvals, whether regulatory, shareholder or otherwise, which are required by regulatory authority having jurisdiction or a Stock Exchange. Notwithstanding the foregoing, the Company will be required to obtain the approval of the shareholders of theCompanyfor any amendment related to:
| a) | reduces theOption Priceof anAwardheld by anInsider; |
| b) | extends the term of anAwardheld by anInsider,except as otherwise provided in Section 19; or |
| c) | increases the number ofCommon Sharesreserved under thePlan. |
18. Miscellaneous
ThePlanshall not confer upon aParticipantany right with respect to continuance of employment or other service with theCompanyor anySubsidiary,nor will it interfere in any way with any right theCompanyor anySubsidiarywould otherwise have to terminate suchParticipant’semployment or other service at any time.
19. Black Out Periods
Except as otherwise provided in Section 6(g) or in anyOption Agreement,if the date on which anOptionexpires occurs during or within 10 days after the last day of aBlackout Period,the expiry date for theOptionwill be 10 days after the date on which theBlackout Periodhas ended.
20. Effective Date
ThePlan,as amended, shall be effective as of June 18, 2008.
21. Governing Law
ThePlanand all rights hereunder shall be construed in accordance with and governed by the laws of the Province of Ontario and the laws of Canada applicable therein.
June 2008