EXHIBIT B
2000 NONQUALIFIED STOCK OPTION PLAN
OF
VDI MULTIMEDIA
1. PURPOSES OF THE PLAN
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The purpose of the 2000 Nonqualified Stock Option Plan ("Plan") of VDI
MultiMedia, a California corporation (the "Company"), is solely to attract
people who have not previously been employed by the Company through the granting
of options to them as a substantial inducement to join the Company. Options
granted under this Plan ("Options") may only be "nonqualified stock options"
("NQOs").
2. ELIGIBLE PERSONS
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Every person who at the date of an agreement to become employed by the
Company, or at the date to grant of an Option, is not yet employed by the
Company or any Affiliate (as defined below) of the Company is eligible to
receive NQOs under this Plan. Every person who at the date of grant is a
consultant or adviser to, or non-employee director of, the Company or any
Affiliate (as defined below) of the Company is eligible to receive NQOs under
this Plan. The term "Affiliate" as used in this Plan means a parent or
subsidiary corporation as defined in the applicable provisions (currently
Sections 424(e) and (f), respectively) of the Internal Revenue Code of 1986, as
amended (the "Code").
3. STOCK SUBJECT TO THIS PLAN; MAXIMUM NUMBER OF GRANTS
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Subject to the provisions of Section 6.1.1 of this Plan, the total
number of shares of stock which may be issued under Options granted pursuant to
this Plan shall not exceed 2,000,000 shares of Common Stock. The shares covered
by the portion of any grant under this Plan which expires, terminates or is
cancelled unexercised shall become available again for grants under this Plan.
Where the exercise price of an Option is paid by means of the optionee's
surrender of previously owned shares of Common Stock or the Company's
withholding of shares otherwise issuable upon exercise of the Option as
permitted herein, only the net number of shares issued and which remain
outstanding in connection with such exercise shall be deemed "issued" and no
longer available for issuance under this Plan.
4. ADMINISTRATION
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(a) This Plan shall be administered by the Board of Directors of the
Company (the "Board") or by a committee (the "Committee") to which
administration of this Plan, or of part of this Plan, is delegated by the Board
(in either case, the "Administrator"). The Board shall appoint and remove
members of the Committee in its discretion in accordance with applicable laws.
If necessary in order to comply with Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or Section 162(m) of the Code, the
Committee shall, in the Board's discretion, be comprised solely of "non-employee
directors" within the meaning of said Rule 16b-3 or "outside directors" within
the meaning of Section 162(m) of the Code. The foregoing notwithstanding, the
Administrator may delegate nondiscretionary administrative duties to such
employees of the Company as it deems proper and the Board, in its absolute
discretion, may at any time and from time to time exercise any and all rights
and duties of the Administrator under this Plan.
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(b) Subject to the other provisions of this Plan, the Administrator
shall have the authority, in its discretion: (i) to grant Options; (ii) to
determine the fair market value of the Common Stock subject to Options; (iii) to
determine the exercise price of Options granted; (iv) to determine the persons
to whom, and the time or times at which, Options shall be granted, and the
number of shares subject to each Option; (v) to construe and interpret the terms
and provisions of this Plan and of any option agreement and all Options granted
under this Plan; (vi) to prescribe, amend, and rescind rules and regulations
relating to this Plan; (vii) to determine the terms and provisions of each
Option granted (which need not be identical), including but not limited to, the
time or times at which Options shall be exercisable; (viii) with the consent of
the optionee, to modify or amend any Option; (ix) to reduce the exercise price
of any Option; (x) to accelerate or defer (with the consent of the optionee) the
exercise date of any Option; (xi) to authorize any person to execute on behalf
of the Company any instrument evidencing the grant of an Option; and (xii) to
make all other determinations deemed necessary or advisable for the
administration of this Plan or any option agreement or Option. The Administrator
may delegate nondiscretionary administrative duties to such employees of the
Company as it deems proper.
(c) All questions of interpretation, implementation, and application of
this Plan or any option agreement or Option shall be determined by the
Administrator, which determination shall be final and binding on all persons.
5. GRANTING OF OPTIONS; OPTION AGREEMENT
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(a) No Options shall be granted under this Plan after 10 years from the
date of adoption of this Plan by the Board.
(b) Each Option shall be evidenced by a written stock option agreement,
in form satisfactory to the Administrator, executed by the Company and the
person to whom such Option is granted. In the event of a conflict between the
terms or conditions of an option agreement and the terms and conditions of this
Plan, the terms and conditions of this Plan shall govern.
6. TERMS AND CONDITIONS OF OPTIONS
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Each Option granted under this Plan shall be subject to the terms and
conditions set forth in Section 6.1.
6.1 TERMS AND CONDITIONS TO WHICH ALL OPTIONS ARE SUBJECT. All Options
granted under this Plan shall be subject to the following terms and conditions:
6.1.1 CHANGES IN CAPITAL STRUCTURE. Subject to Section 6.1.2, if the
stock of the Company is changed by reason of a stock split, reverse stock split,
stock dividend, recapitalization, combination or reclassification, or if the
Company effects a spin-off of the Company's subsidiary, appropriate adjustments
shall be made by the Administrator, in its sole discretion, in (a) the number
and class of shares of stock subject to this Plan and each Option outstanding
under this Plan, and (b) the exercise price of each outstanding Option;
provided, however, that the Company shall not be required to issue fractional
shares as a result of any such adjustments.
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6.1.2 CORPORATE TRANSACTIONS. Except as otherwise provided in the stock
option agreement, in the event of a Corporate Transaction (as defined below),
the Administrator shall notify each optionee at least 30 days prior thereto or
as soon as may be practicable. To the extent not previously exercised, all
Options shall terminate immediately prior to the consummation of such Corporate
Transaction unless the Administrator determines otherwise in its sole
discretion; provided, however, that the Administrator, in its sole discretion,
may (i) permit exercise of any Options prior to their termination, even if such
Options would not otherwise have been exercisable, and (ii) provide that all
outstanding Options shall be assumed or an equivalent option substituted by an
applicable successor corporation or any Affiliate of the successor corporation
in the event of a Corporate Transaction. A "Corporate Transaction" means a
liquidation or dissolution of the Company, a merger or consolidation of the
Company with or into another corporation or entity, a sale of all or
substantially all of the assets of the Company, or a purchase or other
acquisition of more than 50 percent of the outstanding capital stock of the
Company in a single transaction or a series of related transactions by one
person or more than one person acting in concert.
6.1.3. TIME OF OPTION EXERCISE. Subject to Section 5, an Option granted
under this Plan shall be exercisable (a) immediately as of the effective date of
the stock option agreement granting the Option, or (b) in accordance with a
schedule or performance criteria as may be set by the Administrator and
specified in the written stock option agreement relating to such Option. In any
case, no Option shall be exercisable until a written stock option agreement in
form satisfactory to the Company is executed by the Company and the optionee.
6.1.4 OPTION GRANT DATE. The date of grant of an Option under this Plan
shall be the effective date of the stock option agreement granting the Option.
6.1.5 NONTRANSFERABILITY OF OPTION RIGHTS. Except with the express
written approval of the Administrator which approval the Administrator is
authorized to give only with respect to NQOs, no Option granted under this Plan
shall be assignable or otherwise transferable by the optionee except by will or
by the laws of descent and distribution. During the life of the optionee, an
Option shall be exercisable only by the optionee.
6.1.6 PAYMENT. Except as provided below, payment in full, in cash,
shall be made for all stock purchased at the time written notice of exercise of
an Option is given to the Company, and proceeds of any payment shall constitute
general funds of the Company. The Administrator, in the exercise of its absolute
discretion after considering any tax, accounting and financial consequences, may
authorize any one or more of the following additional methods of payment:
(a) Acceptance of the optionee's full recourse promissory note
for all or part of the Option price, payable on such terms and bearing such
interest rate as determined by the Administrator (but in no event less than the
minimum interest rate specified under the Code at which no additional interest
or original issue discount would be imputed), which promissory note may be
either secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of the
Company);
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(b) Subject to the discretion of the Administrator and the terms
of the stock option agreement granting the Option, delivery by the optionee of
shares of Common Stock already owned by the optionee for all or part of the
Option price, provided the fair market value (determined as set forth in Section
6.1.9) of such shares of Common Stock is equal on the date of exercise to the
Option price, or such portion thereof as the optionee is authorized to pay by
delivery of such stock;
(c) Subject to the discretion of the Administrator, through the
surrender of shares of Common Stock then issuable upon exercise of the Option,
provided the fair market value (determined as set forth in Section 6.1.9) of
such shares of Common Stock is equal on the date of exercise to the Option
price, or such portion thereof as the optionee is authorized to pay by surrender
of such stock; and
(d) By means of so-called cashless exercises as permitted under
applicable rules and regulations of the Securities and Exchange Commission and
the Federal Reserve Board.
6.1.7 WITHHOLDING AND EMPLOYMENT TAXES. At the time of exercise and as
a condition thereto, or at such other time as the amount of such obligation
becomes determinable, the optionee shall remit to the Company in cash all
applicable federal and state withholding and employment taxes. Such obligation
to remit may be satisfied, if authorized by the Administrator in its sole
discretion, after considering any tax, accounting and financial consequences, by
the optionee's (i) delivery of a promissory note in the required amount on such
terms as the Administrator deems appropriate, (ii) tendering to the Company
previously owned shares of Common Stock or other securities of the Company with
a fair market value equal to the required amount, or (iii) agreeing to have
shares of Common Stock (with a fair market value equal to the required amount)
which are acquired upon exercise of the Option withheld by the Company.
6.1.8 OTHER PROVISIONS. Each Option granted under this Plan may contain
such other terms, provisions, and conditions not inconsistent with this Plan as
may be determined by the Administrator notwithstanding anything to the contrary
in this Plan or any agreement signed in connection with this Plan.
6.1.9 DETERMINATION OF VALUE. For purposes of this Plan, the fair
market value of Common Stock or other securities of the Company shall be
determined as follows:
(a) If the stock of the Company is listed on a securities
exchange or is regularly quoted by a recognized securities dealer, and selling
prices are reported, its fair market value shall be the closing price of such
stock on the date the value is to be determined, but if selling prices are not
reported, its fair market value shall be the mean between the high bid and low
asked prices for such stock on the date the value is to be determined (or if
there are no quoted prices for the date of grant, then for the last preceding
business day on which there were quoted prices).
(b) In the absence of an established market for the stock, the
fair market value thereof shall be determined in good faith by the
Administrator, with reference to the Company's net worth, prospective earning
power, dividend-paying capacity, and other relevant factors, including the
goodwill of the Company, the economic outlook in the Company's industry, the
Company's position in the industry, the Company's management, and the values of
stock of other corporations in the same or a similar line of business.
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6.1.10 OPTION TERM. No Option shall be exercisable more than 10 years
after the date of grant, or such lesser period of time as is set forth in the
stock option agreement (the end of the maximum exercise period stated in the
stock option agreement is referred to in this Plan as the "Expiration Date").
6.1.11 EXERCISE FOR RESTRICTED STOCK. At the discretion of the
Administrator, an option granted under this plan may be exercised prior to
vesting in exchange for stock bearing the same forfeiture and nontransferability
restrictions (the "Restrictions") as the unvested portion of the option
exercised (the "Restricted Stock") or such other or additional restrictions and
conditions as the Administrator shall prescribe. The Restricted Stock shall
vest, and the Restrictions shall lapse, upon the same terms and conditions as
the exercised options. The Restricted Stock shall bear a legend stating the
Restrictions; and when, and under what circumstances, the Restrictions shall
lapse, and the stock shall vest.
6.2 TERMS AND CONDITIONS TO WHICH OPTIONS ARE SUBJECT. Options granted
under this Plan, which are designated as NQOs, shall be subject to the following
terms and conditions:
6.2.1.EXERCISE PRICE.
(a) The exercise price of an NQO shall be the amount determined
by the Administrator as specified in the option agreement.
(b) To the extent required by applicable laws, rules and
regulations, the exercise price of an NQO granted to any person who owns,
directly or by attribution under the Code (currently Section 424(d)), stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or of any Affiliate (a "Ten Percent
Stockholder") shall in no event be less than 110% of the fair market value
(determined in accordance with Section 6.1.9) of the stock covered by the Option
at the time the Option is granted.
6.2.2 TERMINATION OF EMPLOYMENT. Except as otherwise provided in the
stock option agreement, if for any reason an optionee ceases to be employed by
the Company or any of its Affiliates, Options that are NQOs held at the date of
termination (to the extent then exercisable) may be exercised in whole or in
part at any time within 90 days of the date of such termination (but in no event
after the Expiration Date). For purposes of this Section 6.2.2, "employment"
includes service as a director, consultant or adviser. For purposes of this
Section 6.2.2, an optionee's employment shall not be deemed to terminate by
reason of the optionee's transfer from the Company to an Affiliate, or vice
versa, or sick leave, military leave or other leave of absence approved by the
Administrator, if the period of any such leave does not exceed 90 days or, if
longer, if the optionee's right to reemployment by the Company or any Affiliate
is guaranteed either contractually or by statute.
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7. MANNER OF EXERCISE
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(a) An optionee wishing to exercise an Option shall give written notice
to the Company at its principal executive office, to the attention of the
officer of the Company designated by the Administrator, accompanied by payment
of the exercise price and withholding taxes as provided in Sections 6.1.6 and
6.1.7. The date the Company receives written notice of an exercise hereunder
accompanied by payment of the exercise price will be considered as the date such
Option was exercised.
(b) Promptly after receipt of written notice of exercise of an Option
and the payments called for by Section 7(a), the Company shall, without stock
issue or transfer taxes to the optionee or other person entitled to exercise the
Option, deliver to the optionee or such other person a certificate or
certificates for the requisite number of shares of stock. An optionee or
permitted transferee of the Option shall not have any privileges as a
stockholder with respect to any shares of stock covered by the Option until the
date of issuance (as evidenced by the appropriate entry on the books of the
Company or a duly authorized transfer agent) of such shares.
8. EMPLOYMENT OR CONSULTING RELATIONSHIP
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Nothing in this Plan or any Option granted hereunder shall interfere
with or limit in any way the right of the Company or of any of its Affiliates to
terminate any optionee's employment, consulting or advising at any time, nor
confer upon any optionee any right to continue in the employ of, or consult or
advise with, the Company or any of its Affiliates.
9. CONDITIONS UPON ISSUANCE OF SHARES
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9.1 SECURITIES ACT. Shares of Common Stock shall not be issued pursuant
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 "Securities Act").
9.2 NON-COMPETE AGREEMENT. As a further condition to the receipt of
Common Stock pursuant to the exercise of an Option, an optionee may be required
not to render services for any organization, or engage directly or indirectly in
any business, competitive with the Company at any time during which an Option is
outstanding to such Optionee and for six months after any exercise of an Option
or the receipt of Common Stock pursuant to the exercise of an Option. Failure to
comply with this condition shall cause such Option and the exercise or issuance
of shares thereunder to be rescinded and the benefit of such exercise or
issuance to be repaid to the Company.
10. NONEXCLUSIVITY OF THIS PLAN
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The adoption of this Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options other than under this Plan.
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11. MARKET STANDOFF
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Each optionee, if so requested by the Company or any representative of
the underwriters in connection with any registration of the offering of any
securities of the Company under the Securities Act, shall not sell or otherwise
transfer any shares of Common Stock acquired upon exercise of Options during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act; provided, however, that such restriction
shall apply only to the first registration statement of the Company to become
effective under the Securities Act after the date of adoption of this Plan which
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restriction until the end of such 180-day period.
12. AMENDMENTS TO PLAN
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The Board may at any time amend, alter, suspend or discontinue this
Plan. Without the consent of an optionee, no amendment, alteration, suspension
or discontinuance may adversely affect outstanding Options except to conform
this Plan and NQOs granted under this Plan to the requirements of federal or
other tax laws relating to stock options. No amendment, alteration, suspension
or discontinuance shall require stockholder approval unless the Board otherwise
concludes that stockholder approval is advisable.
13. EFFECTIVE DATE OF PLAN; TERMINATION
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This Plan shall become effective upon adoption by the Board. Options
may be granted and exercised under this Plan only after there has been
compliance with all applicable federal and state securities laws. This Plan (but
not Options previously granted under this Plan) shall terminate within ten years
from the date of its adoption by the Board. Such termination shall not affect
any outstanding Options.
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