EXHIBIT 4.2
FOUR MEDIA COMPANY
AMENDED AND RESTATED 1997 DIRECTOR OPTION PLAN
Purposes of the Plan. The purposes of this Four Media Company Amended and
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Restated 1997 Director Option Plan are to attract the best available persons for
service as Outside Directors of the Company and to encourage their continued
service on the Board.
All options granted hereunder shall be nonstatutory stock options.
1. Definitions. As used herein, the following definitions shall apply:
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(a) "Board" means the Board of Directors of the Company.
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(b) "Code" means the Internal Revenue Code of 1986, as amended.
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(c) "Common Stock" means the Common Stock of the Company.
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(d) "Company" means FOUR MEDIA COMPANY, a Delaware corporation.
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(e) "Director" means a member of the Board.
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(f) "Employee" means any person, including officers and Directors,
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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 in and of itself to
constitute "employment" by the Company.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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(h) "Fair Market Value" means, as of any date, the value of Common Stock
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determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
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 (or the exchange with the
greatest volume of trading in Common Stock) on the date of determination, as
reported in The Wall Street Journal or such other source as the Board deems
reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the high bid and low asked prices for the
Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or;
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(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.
(i) "Inside Director" means a Director who is an Employee.
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(j) "Option" means a stock option granted pursuant to the Plan.
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(k) "Optioned Stock" means the Common Stock subject to an Option.
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(l) "Optionee" means a Director who holds an Option.
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(m) "Outside Director" means a Director who is not an Employee.
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(n) "Parent" means a "parent corporation," whether now or hereafter
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existing as defined in Section 424(e) of the Code.
(o) "Plan" means this Four Media Company Amended and Restated 1997
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Director Option Plan.
(p) "Share" means a share of the Common Stock, as adjusted in accordance
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with Section 10 of the Plan.
(q) "Subsidiary" means a "subsidiary corporation," whether now or
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hereafter existing, as defined in Section 424(f) of the Internal Revenue Code of
1986.
2. Stock Subject to the Plan. Subject to the provisions of Section 10 of the
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Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 700,000 Shares of Common Stock (the "Pool"). The Shares may
be authorized, but unissued, or reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.
3. Administration and Grants of Options under the Plan.
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(a) Procedure for Grants. All grants of Options to Outside Directors
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under this Plan shall be automatic and nondiscretionary and shall be made
strictly in accordance with the following provisions:
(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to be
covered by Options granted to Outside Directors.
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(ii) Each existing Outside Director and each nominee to become an
Outside Director who becomes an Outside Director prior to the day after the
closing of the Company's initial public offering ("IPO") shall be granted an
Option to purchase 100,000 Shares (the "Option") on the effective date of the
Registration Statement relating to the IPO. Such Option grant shall be null and
void ab initio and of no force or effect if the closing of the IPO has not
occurred within two weeks of the effective date of the Registration Statement
relating to the IPO. Each Outside Director who first becomes an Outside Director
after the closing date of the IPO, either through election by the stockholders
of the Company or appointment by the Board to fill a vacancy, shall be granted
an Option to purchase 100,000 Shares on the date on which such person becomes an
Outside Director. The previous two sentences notwithstanding, no Inside Director
who ceases to be an Inside Director but who remains a Director shall receive an
Option.
(iii) Notwithstanding the provisions of subsection (ii) hereof, any
exercise of an Option granted before the Company has obtained stockholder
approval of the Plan, if required, in accordance with Section 16 hereof shall be
conditioned upon obtaining such stockholder approval of the Plan, if required,
in accordance with Section 16 hereof.
(iv) The terms of any Option granted hereunder shall be as follows:
(A) The term of the Option shall be ten (10) years.
(B) The Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Sections 8
and 10 hereof.
(C) The exercise price per Share for all Options granted under
this Plan prior to the closing date of the IPO shall be the per Share price to
the public in the Company's IPO. The exercise price per Share for all other
grants shall be 100% of the Fair Market Value per Share on the date of grant of
the Option; provided however, that all Options granted during the twelve-month
period following the closing date of the IPO shall have an exercise price not
less than $10 per share. In the event that the date of grant of an Option is not
a trading day, the exercise price per Share shall be the Fair Market Value on
the next trading day immediately following the date of grant of the Option.
(D) Subject to Section 10 hereof, the Option shall become
exercisable as to one-quarter (1/4) of the Shares subject to the Option one year
after its date of grant, and as to an additional one-quarter( 1/4) at the end of
each year thereafter, provided that the Optionee continues to serve as a
Director on such dates.
(v) If any Option(s) to be granted under the Plan would cause the
number of Shares subject to outstanding Options plus the number of Shares
previously purchased under Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to Outside Directors
only to the extent then available, and if more than one Outside Director would
be so eligible, on a pro rata basis. No further grants shall be made until such
time, if any, as additional Shares become available for grant under the Plan
through action of
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the Board or the stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of Options
previously granted hereunder.
4. Eligibility. Options may be granted only to Outside Directors. All
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Options shall be automatically granted in accordance with the terms set forth in
Section 4 hereof.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate the Director's relationship with the Company at any time.
5. Term of Plan. The Plan shall become effective upon the earlier to occur
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of its adoption by the Board or its approval by the stockholders of the Company
as described in Section 16 hereof. It shall continue in effect for a term of
ten (10) years unless sooner terminated under Section 11.
6. Form of Consideration. The consideration to be paid for the Shares to be
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issued upon exercise of an Option, including the method of payment, shall
consist of (i) cash, (ii) check, (iii) other Shares which (x) in the case of
Shares acquired upon exercise of an Option, have been owned by the Optionee for
more than six (6) months on the date of surrender, 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) delivery of a properly
executed exercise notice together with such other documentation as the Company
and the broker, if applicable, shall require to effect an exercise of the Option
and delivery to the Company of the sale proceeds required to pay the exercise
price, or (v) any combination of the foregoing methods of payment.
7. Exercise of Option.
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(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
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hereunder shall be exercisable at such times as are set forth in Section 4
hereof; provided, however, that no Options shall be exercisable until, if
required, stockholder approval of the Plan in accordance with Section 16 hereof
has been obtained.
An Option may not 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 consist of any consideration and method of payment
allowable under Section 7 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 stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Optionee as soon as practicable after exercise of the Option. No adjustment
shall be made for a dividend or
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other right for which the record date is prior to the date the stock certificate
is issued, except as provided in Section 10 of the Plan.
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) Rule 16b-3. Options granted to Outside Directors must comply with
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the applicable provisions of Rule 16b-3 promulgated under the Exchange Act or
any successor statute thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify Plan transactions, and
other transactions by Outside Directors that otherwise could be matched with
Plan transactions, for the maximum exemption from Section 16 of the Exchange
Act.
(c) Termination of Continuous Status as a Director. Subject to Section
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10 hereof, in the event an Optionee's status as a Director terminates (other
than upon the Optionee's death or total and permanent disability [as defined in
Section 22(e)(3) of the Code]) the Optionee may exercise his or her Option, but
only within three (3) months following the date of such termination, and only to
the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.
(d) Disability of Optionee In the event Optionee's status as a Director
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terminates as a result of total and permanent disability (as defined in Section
422(e)(3) of the Code), the Optionee may exercise his or her Option, but only
within twelve (12) months following the date of such termination, and only to
the extent that the Optionee was entitled to exercise it on the date of such
termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on
the date of termination, or if he or she does not exercise such Option (to the
extent otherwise so entitled) within the time specified herein, the Option shall
terminate.
(e) Death of Optionee. In the event of an Optionee's death, the
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Optionee's estate or a person who acquired the right to exercise the Option by
bequest or inheritance may exercise the Option but only within twelve (12)
months following the date of death, and only to the extent that the Optionee was
entitled to exercise it on the date of death (but in no event later than the
expiration of its ten (10) year term). To the extent that the Optionee was not
entitled to exercise an Option on the date of death, and to the extent that the
Optionee's estate or a person who acquired the right to exercise such Option
does not exercise such Option (to the extent otherwise so entitled) within the
time specified herein, the Option shall terminate.
8. Non-Transferability of Options. The Option may not be sold, pledged,
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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.
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9. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
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Sale or Change of Control.
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(a) Changes in Capitalization. Subject to any required action by the
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stockholders of the Company, the number of Shares covered by each outstanding
Option, the number of Shares which have been authorized for issuance under the
Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per Share covered by each such outstanding Option, and the number of
Shares issuable pursuant to the automatic grant provisions of Section 4 hereof
shall be proportionately adjusted for any increase or decrease in the number of
issued and outstanding Shares 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 and outstanding Shares
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." 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 subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
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dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it shall terminate immediately prior to the
consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company with
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or into another corporation or the sale of substantially all of the assets of
the Company, outstanding Options may be assumed or equivalent options may be
substituted by the successor corporation or a Parent or Subsidiary thereof (the
"Successor Corporation"). If an Option is assumed or substituted for, the Option
or equivalent option shall continue to be exercisable as provided in Section 4
hereof for so long as the Optionee serves as a Director or a director of the
Successor Corporation. Following such assumption or substitution, if the
Optionee's status as a Director or director of the Successor Corporation, as
applicable, is terminated other than upon a voluntary resignation by the
Optionee, the Option or option shall become fully exercisable, including as to
Shares for which it would not otherwise be exercisable. Thereafter, the Option
or option shall remain exercisable in accordance with Sections 8(c) through (e)
above.
If the Successor Corporation does not assume an outstanding Option or
substitute for it an equivalent option, the Option shall become fully vested and
exercisable, including as to Shares for which it would not otherwise be
exercisable. In such event the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of thirty (30) days from the date of
such notice, and upon the expiration of such period the Option shall terminate.
For the purposes of this Section 10(c), an Option shall be considered
assumed if, following the merger or sale of assets, the Option confers the right
to purchase or receive, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
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assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares).
10. Amendment and Termination of the Plan.
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(a) Amendment and Termination. The Board may at any time amend, alter,
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suspend, or discontinue the Plan, but no amendment, alteration, suspension, or
discontinuation shall be made which would impair the rights of any Optionee
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 any other applicable law or regulation), the Company shall obtain
stockholder 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
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termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
11. Time of Granting Options. The date of grant of an Option shall, for all
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purposes, be the date determined in accordance with Section 4 hereof.
12. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
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to the exercise of an Option unless the exercise of such Option 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,
state securities laws, 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, the Company may require the
person exercising such Option 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 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.
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.
13. Reservation of Shares. The Company, during the term of this Plan, will
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at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
14. Option Agreement. Options shall be evidenced by written option
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agreements in
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such form as the Board shall approve.
15. Stockholder Approval. If required by any law or regulation (including
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Stock Exchange regulation) applicable to the Company, continuance of the Plan
shall be subject to approval by the stockholders of the Company at or prior to
the first annual meeting of stockholders held subsequent to the granting of an
Option hereunder. If required by law or regulation, such stockholder approval
shall be obtained in the degree and manner required under applicable state and
federal law.
16. Restatement of Prior Plan. This Plan amends, restates and supersedes in
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its entirety that certain 1997 Director Option Plan approved by the Company's
Board of Directors as of November 19, 1996.
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FOUR MEDIA COMPANY
1997 AMENDED AND RESTATED DIRECTOR STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
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[Optionee's Name and Address]
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_______________
_______________
_______________
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number: _______________
Date of Grant: _______________
Vesting Commencement Date: _______________
Exercise Price per Share: $_______________
Total Number of Shares for which
Option is Granted: _______________
Total Exercise Price: $_______________
Term/Expiration Date: _______________
Vesting Schedule:
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This Option may be exercised, in whole or in part, in four equal cumulative
installments on or after each successive annual anniversary of the Date of Grant
in accordance with the following schedule:
Number of Shares Exercise
Becoming Exercisable Date
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First Anniversary ___________________ _______
Second Anniversary ___________________ _______
Third Anniversary ___________________ _______
Fourth Anniversary ___________________ _______
Termination Period:
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This Option, to the extent vested, may be exercised for three (3) months
after termination of your status as a Director, or such longer period as may be
applicable upon death or Disability of
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Optionee as provided in the Plan. In no event shall this Option be exercised
later than the Term/Expiration Date as provided above.
II. AGREEMENT
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1. Grant of Option. FOUR MEDIA COMPANY, a Delaware corporation (the
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"Company"), hereby grants to the Optionee named in the Notice of Grant (the
"Optionee"), an option (the "Option") to purchase the total number of shares of
Common Stock (the "Shares") set forth in the above Notice of Stock Option Grant,
at the exercise price per share set forth in the Notice of Stock Option Grant
(the "Exercise Price") subject to the terms, definitions and provisions of the
Amended and Restated 1997 Director Option Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Option Agreement.
2. Exercise of Option,
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(a) Right to Exercise. This Option shall be exercisable during its
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term in accordance with the Vesting Schedule set out in the Notice of Stock
Option Grant and with the applicable provisions of the Plan and this Option
Agreement. In the event of Optionee's death, disability or cessation of service
as a Director, this Option shall be exercisable in accordance with the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by written
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notice (in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder's investment intent with respect to such shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan. Such written
notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price. This Option shall be deemed to be
exercised upon receipt by the Company of such written notice accompanied by the
Exercise Price.
No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares may then be
listed. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Optionee's Representations. If the Shares purchasable pursuant to the
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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 or her Investment Representation
Statement in the form attached hereto as Exhibit B.
4. Method of Payment. Payment of the Exercise Price shall be by any of
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the following,
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or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) surrender of other shares of Common Stock of the Company which (A)
in the case of Shares acquired pursuant to the exercise of an Option, have been
owned by the Optionee for more than six (6) months on the date of surrender, and
(B) have a Fair Market Value on the date of surrender equal to the Exercise
Price of the Shares as to which the Option is being exercised; or
(d) delivery of a properly executed exercise notice together with such
other documentation as the Administrator and the broker, if applicable, shall
require to effect an exercise of the Option and delivery to the Company of the
sale proceeds required to pay the Exercise Price.
5. Restrictions on Exercise. This Option may not be exercised until such
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time as the Plan has been approved by the stockholders of the Company if the
Company determines that stockholder approval is required by law or any
regulations applicable to 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.
6. Termination of Continuous Status as a Director. In the event an
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Optionee's status as a Director terminates (other than upon the Optionee's death
or total and permanent disability), 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 Stock Option
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. In the event of termination of an Optionee's
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status as a Director as a result of his or her disability (as defined in Section
422(e)(3) of the Code), Optionee may, but only within twelve (12) months from
the date of such termination (and 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. 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, and the Shares covered by such Option shall revert to the Plan.
8. Death of Optionee. In the event of termination of Optionee's status
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as a Director as a result 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
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the Option at the date of death.
9. Non-Transferability of Option. This Option may not be transferred in
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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 Optionee. 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
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out in the Notice of Stock Option Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Option.
11. Tax Consequences. Set forth below is a brief summary as of the date
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of this Option of some of the federal and California tax consequences of
exercise of this Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING
OF THE SHARES.
(a) Grant of Options. The Optionee will not recognize any income
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for either federal or California income tax purposes upon grant of an Option
under the Plan.
(b) Exercise of Options. There may be a regular federal income tax
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liability and California income tax liability upon the exercise of an Option.
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 Shares on the date of exercise over the Exercise Price.
(c) Disposition of Shares. If Shares received pursuant to exercise
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of the Option are held for more than one year, any gain or loss realized on
disposition of the Shares will be treated as long-term capital gain or loss for
federal and California income tax purposes; and if Shares are held for one year
or less, any such profit or loss will be treated as short-term capital gain or
loss. However, if such Shares are held for more than one year but less than 18
months, any gain will be treated as a mid-term gain.
12. Entire Agreement; Governing Law. The Plan is incorporated herein by
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reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This Option Agreement is governed by California law except for that
body of law pertaining to conflict of laws.
FOUR MEDIA COMPANY,
a Delaware corporation
By:___________________________
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OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION IS EARNED ONLY BY CONTINUING SERVICE AS A DIRECTOR OF THE COMPANY (NOT
THROUGH THE ACT OF BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN
THE COMPANY'S 1997 AMENDED AND RESTATED DIRECTOR STOCK OPTION PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF SERVICE AS A DIRECTOR OR NOMINATION TO SERVE AS A
DIRECTOR, NOR SHALL IT INTERFERE IN ANY WAY WITH ANY RIGHTS WHICH THE DIRECTOR
OR THE COMPANY MAY HAVE TO TERMINATE THE DIRECTOR'S RELATIONSHIP WITH THE
COMPANY AT ANY TIME.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Stock Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Stock Option
Agreement and fully understands all provisions of the Option. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Company's Board of Directors or Compensation Committee
administering the Plan upon any questions arising under the Plan or this Option.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
Dated:__________________ _______________________
Optionee
Residence Address:
______________________
______________________
______________________
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EXHIBIT A
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1997 AMENDED AND RESTATED DIRECTOR OPTION PLAN
EXERCISE NOTICE
FOUR MEDIA COMPANY
2813 W. ALAMEDA AVENUE
BURBANK, CA 91505
Attention: Secretary
Exercise of Option. Effective as of today, _________, 19__, the
------------------
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
________ shares of the Common Stock (the "Shares") of FOUR MEDIA COMPANY (the
"Company") under and pursuant to the Amended and Restated 1997 Director Option
Plan (the "Plan") and the Stock Option Agreement dated _______, 19__ (the
"Option Agreement"). Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Exercise Notice.
1. Representations of Optionee. Optionee acknowledges that Optionee has
---------------------------
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
2. Rights as Stockholder. Until the stock certificate evidencing such Shares
---------------------
is issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder 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 after the Option
is exercised. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued,
except as provided in Section 12.
Optionee shall enjoy rights as a stockholder until such time as Optionee
disposes of the Shares.
3. Tax Consultation. Optionee understands that Optionee may suffer adverse
----------------
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
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4. Restrictive Legends and Stop-Transfer Orders.
--------------------------------------------
(a) Legends. Optionee understands and agrees that the Company may cause
-------
the legend set forth below or legends similar thereto, to be placed upon any
certificate(s) evidencing ownership of the Shares together with any other
legends that may be required by the Company or by state or federal securities
laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS
IN COMPLIANCE THEREWITH.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
---------------------
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
-------------------
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been transferred.
5. Successors and Assigns. The Company may assign any of its rights under
----------------------
this Exercise Notice to single or multiple assignees, and this Exercise Notice
shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise Notice
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
6. Interpretation. Any dispute regarding the interpretation of this Exercise
--------------
Notice shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the Compensation Committee thereof that
administers the Plan, which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Board or Compensation
Committee shall be final and binding on the Company and on Optionee.
7. Governing Law; Severability. This Exercise Notice 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
Exercise Notice be determined by a court of law to be illegal or unenforceable,
the other provisions shall nevertheless remain effective and shall remain
enforceable.
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8. Notices. Any notice required or permitted hereunder shall be given in
-------
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
9. Further Instruments. The parties agree to execute such further
-------------------
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Notice.
10. Delivery of Payment. Optionee herewith delivers to the Company the full
-------------------
Exercise Price for the Shares.
11. Entire Agreement. The Plan and Notice of Grant/Option Agreement are
----------------
incorporated herein by reference. This Exercise Notice, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee.
Submitted by: Accepted by:
OPTIONEE: FOUR MEDIA COMPANY
By:______________________________
Its:_____________________________
_________________________
(Signature)
Address: Address:
- ------- -------
_________________________ 2813 W. ALAMEDA AVENUE
BURBANK, CA 91505
_________________________
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EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : FOUR MEDIA COMPANY
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Shares, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Shares. Optionee is acquiring
these Shares for investment for Optionee's own account only and not with a view
to, or for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
(b) Optionee acknowledges and understands that the Shares constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act or qualified under any state securities laws in
reliance upon a specific exemption therefrom, which exemption may depend upon,
among other things, the bona fide nature of Optionee's investment intent as
expressed herein. In this connection, Optionee understands that, in the view of
the Securities and Exchange Commission, the statutory basis for such exemption
may be unavailable if Optionee's representation was predicated solely upon a
present intention to hold these Shares for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Shares, or for a period of one year or any
other fixed period in the future. Optionee further understands that the Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act and qualified under applicable state securities laws or an
exemption from such registration and/or qualification is available. Optionee
further acknowledges and understands that the Company is under no obligation to
register the Shares. Optionee understands that the certificate evidencing the
Shares will be imprinted with a legend which prohibits the transfer of the
Shares unless they are so registered and qualified or such registration or
qualification is not required in the opinion of counsel satisfactory to the
Company.
(c) Optionee is familiar with the provisions of Rule 144 promulgated under
the Securities Act, which, in substance, permit limited public resale of
"restricted securities" acquired,
-1-
directly or indirectly from the issuer thereof, in a non-public offering subject
to the satisfaction of certain conditions, including: (1) the resale being made
not less than one year after the Shares were acquired; (2) the resale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934); (3) the availability of certain public information about
the Company, (4) the amount of Shares being sold during any three month period
not exceeding the limitations specified in Rule 144(e), and (5) the timely
filing of a Form 144, if applicable.
(d) Optionee further understands that in the event all of the applicable
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the Securities and Exchange Commission has expressed its opinion that
persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rule 144 will have a
substantial burden of proof in establishing that an exemption from registration
is available for such offers or sales, and that such persons and their
respective brokers who participate in such transactions do so at their own risk.
Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.
Signature of Optionee:
___________________________
Date: ___________, 19__
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