EXHIBIT 10.6
ILLUMINATED MEDIA INC.
CORPORATE STOCK OPTION PLAN
PURPOSE; EFFECTIVENESS OF THE PLAN
The purpose of the ILLUMINATED MEDIA INC. CORPORATE
STOCK OPTION PLAN (the "Plan") is to advance the interests of
Illuminated Media Inc. (the "Company") and its stockholders by helping
the Company obtain and retain the services of directors, officers and key
employees upon whose judgment, initiative and efforts the Company is
substantially dependent, and to provide those persons with further
incentives to advance the interests of the Company.
This Plan will become effective as of 1996, the date of its
adoption by the Board.
This Plan will remain in effect until it is terminated by the Board or the
Committee (as defined hereafter) under Section VIII hereof, or December
31, 2005.
I. Certain Definitions
Unless the context otherwise requires, the following defined terms
(together with other capitalized terms defined elsewhere in this Plan) will
govern the construction of this Plan, and of any stock option agreements
entered into pursuant to this Plan:
A. "1933 Act" means the Securities Act of 1933, as amended;
B. "1934 Act" means the Securities Exchange Act of 1934, as
amended;
C. "Board" means the Board of Directors of the Company;
D. "Called for under an Option," or words to similar effect, means
issuable pursuant to the exercise of an Option;
E. "Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to refer to Sections
of the Code as enacted at the time of this Plan's adoption by the Board and
as subsequently amended, or to any substantially similar successor
provisions of the Code resulting from recodification, renumbering or
otherwise);
F. "Committee" means a committee of two or more individuals,
appointed by the Board, to administer and interpret this Plan; provided that
the term "Committee" will refer to the Board during such times as no
Committee is appointed by the Board;
G. "Company" means Illuminated Media Inc., a Minnesota
corporation, and/or any successor thereto;
H. "Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code;
I. "Eligible Participants" means persons who, at a particular time, are
directors, officers or key employees of the Company or its subsidiaries;
J. "Fair Market Value" means, with respect to the Common Stock, the
following:
1. If the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or
admitted but transactions in the Common Stock are reported on the
NASDAQ National Market System (NMS) or NASDAQ Small
Capitalization Market System (Small-Cap), the last sale price of the
Common Stock on such exchange or reported by the NASDAQ NMS or
Small Cap as of such date (or, if no shares were traded on such day, as of
the next preceding day on which there was such a trade); or
2. If the Common Stock is not so listed or admitted to unlisted
trading privileges, or reported on the NASDAQ NMS or Small-Cap, and
such bid and asked prices are not so reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.
K. "NSO" means any option granted under this Plan whether
designated by the Committee as a "non-qualified stock option," a
"non-statutory stock option" or otherwise;
L. "Option" means an option granted pursuant to this Plan entitling
the option holder to acquire shares of Stock issued by the Company
pursuant to the valid exercise of the option;
M. "Option Agreement" means an agreement between the Company
and an Optionee, in form and substance satisfactory to the Committee in
its sole discretion, consistent with this Plan;
N. "Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of the Option
Stock called for under such Option;
O. "Option Stock" means Common Stock issued or issuable by the
Company pursuant to the valid exercise of an Option;
P. "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a Transfer
authorized under this Plan;
Q. "Plan" means this Corporate Stock Option Plan of the Company;
R. "Previously Acquired Shares" means shares of Company Common
Stock that are already owned by the Eligible Participant;
S. "Stock" means shares of the Company's Common Stock, $.01 par
value;
T. "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code;
U. "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift,
attachment or levy of such Option Stock, including without limitation an
assignment for the benefit of creditors of the Optionee, a transfer by
operation of law, such as a transfer by will or under the laws of descent
and distribution, an execution of judgment against the Option Stock or the
acquisition of record or beneficial ownership thereof by a lender or
creditor, a transfer pursuant to a QDRO, or to any decree of divorce,
dissolution or separate maintenance, any property settlement, any
separation agreement or any other agreement with a spouse (except for
estate planning purposes) under which a part or all of the shares of Option
Stock are transferred or awarded to the spouse of the Optionee or are
required to be sold; or a transfer resulting from the filing by the
Optionee of a petition for relief, or the filing of an involuntary petition
against such Optionee, under the bankruptcy laws of the United States or
of any other nation.
II. Eligibility
Participants in the Plan shall be those Eligible Participants who, in the
judgment of the Committee, are performing, or during the term of an
option will perform, services as a director, officer, or key employee with
respect to the management, operation and development of the Company or
any Subsidiary, and significantly contributed, are significantly
contributing or are expected to significantly contribute to the achievement
of corporate objectives. Eligible Participants may be granted from time to
time one or more Options, as may be determined by the Committee in its
sole discretion. The number, type, terms and conditions of the Options
granted to various Eligible Participants need not be uniform, consistent or
in accordance with any plan, regardless of whether such Eligible
Participants are similarly situated. Upon determination by the Committee
that an Option is to be granted to an Eligible Participant, written notice
shall be given such person, specifying the terms, conditions, rights and
duties related thereto. Each Eligible Participant to whom an Option is to
be granted shall enter into an agreement with the Company, in such form
as the Committee shall determine and which is consistent with the
provisions of the Plan, specifying such terms, conditions, rights and duties.
Options shall be deemed to be granted as of the date specified in the grant
resolution of the Committee, and the related option agreements shall be
dated as of such date.
III. Administration
A. Committee. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does not appoint such a
Committee, the Board itself will administer this Plan and take such other
actions as the Committee is authorized to take hereunder; provided that the
Board may take such actions hereunder in the same manner as the Board
may take other actions under the Company's articles of incorporation and
by-laws generally.
A majority of the Committee shall constitute a quorum. Action of
such Committee may be taken without a meeting if unanimous written
consent is given. Such Committee shall act by majority approval of the
members, shall keep minutes of its meetings and written action, and shall
provide copies of such minutes to the Board. Copies of the minutes and
written action shall be kept with the written records of the Company.
From and after the date on which the Company first registers a class
of its equity securities under Section 12 of the 1934 Act, the Plan shall be
administered by the Board, all of whom shall be "disinterested persons"
within the meaning of Rule 16b-3 under the 1934 Act, or a committee
consisting solely of not fewer than two members of the Board who are
such "disinterested persons."
B. Authority and Discretion of Committee. The Committee will have
full and final authority in its discretion, at any time and from time to time,
subject only to the express terms, conditions and other provisions of the
Company's articles of incorporation, by-laws and this Plan, and the
specific limitations on such discretion set forth herein:
1. to select and approve the persons who will be granted Options
under this Plan from among the Eligible Participants, and to grant to any
person so selected one or more Options to purchase such number of shares
of Option Stock as the Committee may determine;
2. to determine the period or periods of time during which Options
may be exercised, the Option Price and the duration of such Options, and
other matters to be determined by the Committee in connection with
specific Option grants and Option Agreements as specified under this
Plan;
3. to interpret this Plan, to prescribe, amend and rescind rules and
regulations relating to this Plan, and to make all other determinations
necessary or advisable for the operation and administration of this Plan;
and
4. to delegate all or a portion of its authority under subsections
1, 2 and 3 of this Section III to one or more directors of the Company who are
executive officers of the Company, but only in connection with Options
granted to Eligible Participants who are not subject to the reporting and
liability provisions of Section 16 of the 1934 Act, and the rules and
regulations thereunder, and subject to such restrictions and limitations
(such as the aggregate number of shares of Option Stock called for by
such Options that may be granted) as the Committee may decide to impose
on such delegate directors.
C. Limitation on Authority. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no authority:
1. to grant Options to any of its members, whether or not approved
by the Board; and
2. to determine any matters, or exercise any discretion, in
connection with the Options, to the extent that the power to make such
determinations or to exercise such discretion would cause one or more
members of the Committee no longer to be "disinterested persons" within
the meaning of Section III. A. above.
D. Designation of Options. Except as otherwise provided herein, the
Committee will designate any Option granted hereunder as an NSO.
E. Option Agreements. Options will be deemed granted hereunder
only upon the execution and delivery of an Option Agreement by the
Optionee and a duly authorized executive officer of the Company.
Options will not be deemed granted hereunder merely upon the
authorization of such grant by the Committee.
IV. Shares Reserved for Options
A. Option Pool. The aggregate number of shares of Option Stock that
may be issued pursuant to the exercise of Options granted under this Plan
shall be Two HundredThousand (200,000) (the "Option Pool"), provided
that such number will be increased by the number of shares of Option
Stock that the Company subsequently may reacquire through repurchase
or otherwise. Shares of Option Stock that would have been issuable
pursuant to Options, but that are no longer issuable because all or part of
those Options have terminated or expired, will be deemed not to have been
issued for purposes of computing the number of shares of Option Stock
remaining in the Option Pool and available for issuance.
The maximum number of shares authorized may also be increased
from time to time by approval of the Board and, if required pursuant to
Rule 16b-3 under the 1934 Act, Section 422 of the Code, or the applicable
rules of any securities exchange or NASDAQ and/or NASD, the
shareholders of the Company.
B. Adjustments Upon Changes in Stock. In the event of any change
in the outstanding Stock of the Company as a result of a stock split,
reverse stock split, stock dividend, recapitalization, combination or
reclassification, reorganization, merger, consolidation, liquidation, rights
offering, extraordinary dividend or divesture (including a spin-off) or any
other change in the corporate structure or shares of the Company,
appropriate proportionate adjustments will be made (in order to prevent
dilution or enlargement of Eligible Participants) in: (1) the aggregate
number of shares of Option Stock in the Option Pool that may be issued
pursuant to the exercise of Options granted hereunder; (2) the Option Price
and the number of shares of Option Stock called for in each outstanding
Option granted hereunder; and (3) other rights and matters determined on
a per share basis under this Plan or any Option Agreement hereunder. Any
such adjustments will be made only by the Board (or, if the Company is
not the surviving corporation in any such transaction, the board of
directors of the surviving corporation), and when so made will be
effective, conclusive and binding for all purposes with respect to this Plan
and all Options then outstanding. No such adjustments will be required by
reason of the issuance or sale by the Company for cash or other
consideration of additional shares of its Stock or securities convertible into
or exchangeable for shares of its Stock.
V. Terms of Stock Option Agreements
Each Option granted pursuant to this Plan will be evidenced by an
agreement (an "Option Agreement") between the Company and the person
to whom such Option is granted, in form and substance satisfactory to the
Committee in its sole discretion, consistent with this Plan. Without
limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
A. Covenants of Optionee. At the discretion of the Committee, the
person to whom an Option is granted hereunder, as a condition to the
granting of the Option, must execute and deliver to the Company a
confidential information agreement approved by the Committee. Nothing
contained in this Plan, any Option Agreement or in any other agreement
executed in connection with the granting of an Option under this Plan will
confer upon any Optionee any right with respect to the continuation of his
or her status as an employee of, officer of, or director of, the Company or
its subsidiaries.
B. Vesting. An Option shall become exercisable at such times and in
such installments (which may be cumulative) as shall be determined by the
Committee in its sole discretion at the time the Option is granted. Upon
the completion of its exercise period, an Option, to the extent not then
exercised, shall expire.
C. Exercise of the Option.
1. Mechanics and Notice. An Option may be exercised to the
extent exercisable (a) by giving written notice of exercise to the
Company, specifying the number of full shares of Option Stock to be
purchased and accompanied byfull payment of the Option Price thereof
and the amount of withholding taxes pursuant to subsection V.C.2 below;
and (b) by giving assurances satisfactory to the Company that the shares of
Option Stock to be purchased upon such exercise are being purchased for
investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act; provided,
however, that in the event the Option Stock called for under the
Option is registered under the 1933 Act, or in the event resale of such
Option Stock without such registration would otherwise be permissible,
this second condition will be inoperative if, in the opinion of counsel for
the Company, such condition is not required under the 1933 Act, or any
other applicable law, regulation or rule of any governmental agency.
2. Withholding Taxes. As a condition to the issuance of the shares
of Option Stock upon full or partial exercise of an Option granted under
this Plan, the Optionee will pay to the Company in cash, or in such other
form as the Committee may determine in its discretion, the amount of the
Company's tax withholding liability, if any, required in connection with
such exercise. For purposes of this subsection V.C.2, "tax withholding
liability" will mean all federal and state income taxes, social security tax,
and any other taxes applicable to the compensation income arising from
the transaction required by applicable law to be withheld by the Company.
3. Payment of Option Price. Each Option Agreement will specify
the Option Price with respect to the exercise of Option Stock thereunder,
to be fixed by the Committee in its discretion, but in no event will the
Option Price for an NSO granted hereunder be less than Fair Market
Value. The Option Price will be payable to the Company in United States
dollars in cash or by check or, such other form of consideration as may be
approved by the Committee, in its discretion.
In determining whether or upon what terms and conditions an
Eligible Participant will be permitted to pay the purchase price of an
Option in a form other than cash, the Committee may consider all relevant
facts and circumstances, including, without limitation, the tax and
securities law consequences to the Company. In the event the Eligible
Participant is permitted to pay the purchase price of an Option in whole or
in part with Previously Acquired Shares and/or the surrender of Options,
the value of such Previously Acquired Shares and/or the shares covered by
such Options shall be equal to their Fair Market Value on the date of
exercise of the Option.
D. Termination of the Option. Except as otherwise provided herein,
each Option Agreement will specify the period of time, to be fixed by the
Committee in its discretion, during which the Option granted therein will
be exercisable, not to exceed ten years from the date of grant in the case of
an NSO (the "Option Period"). To the extent not previously exercised,
each Option will terminate upon the expiration of the Option Period
specified in the Option Agreement; provided, however, that each such
Option will terminate, if earlier: (i) twelve months after the date that the
Optionee ceases to be an Eligible Participant by reason of such person
termination of service as an officer, director or employee; or (ii) six
months after the date that the Optionee ceases to be an Eligible Participant
by reason of such person's death or disability. In the event of a sale of all
or substantially all of the assets of the Company, or a merger or
consolidation or other reorganization in which the Company is not the
surviving corporation, or in which the Company becomes a subsidiary of
another corporation (any of the foregoing events, a "Corporate
Transaction"), then notwithstanding anything else herein, the successor
corporation must agree to assume the outstanding Options or substitute
therefor comparable options of such successor corporation or a parent or
subsidiary of such successor corporation.
Unless the committee shall otherwise determine in its sole
discretion, an Eligible Participant's service shall, for purposes of the Plan,
be deemed to have terminated on the date such Eligible Participant ceases
to perform services for the Company and all Subsidiaries, as determined in
good faith by the Committee.
E. Limited Transferability. Unless otherwise directed by the Board,
no Option will be transferable by the Optionee otherwise than by (i) will
or the laws of descent and distribution, (ii) pursuant to a qualified
domestic relations order (as defined by the Code), or (iii) if the Optionee is
a corporation, limited liability company, or partnership, distribution to the
shareholders or partners thereof. During the lifetime of the Optionee, the
Option will be exercisable only by him/her/it, or the transferee if it was
transferred pursuant to this subpart.
F. Qualification of Stock. The right to exercise an Option will be
further subject to the requirement that if at any time the Board determines,
in its discretion, that the listing, registration or qualification of the shares
of Option Stock called for thereunder upon any securities exchange or
under any state or federal law, or the consent or approval of any
governmental regulatory authority, is necessary or desirable as a condition
of or in connection with the granting of such Option or the purchase of
shares of Option Stock thereunder, the Option may not be exercised, in
whole or in part, unless and until such listing, registration, qualification,
consent or approval is effected or obtained free of any conditions not
acceptable to the Board, in its discretion.
G. Additional Restrictions on Transfer. By accepting Options and/or
Option Stock under this Plan, the Optionee will be deemed to represent,
warrant and agree as follows:
1. Securities Act of 1933. The Optionee understands that the
shares of Option Stock have not been registered under the 1933 Act, and
that such shares are not freely tradeable and must be held indefinitely
unless such shares are either registered under the 1933 Act or an
exemption from such registration is available. The Optionee understands
that the Company is under no obligation to register the shares of Option
Stock.
2. Other Applicable Laws. The Optionee further understands that
Transfer of the Option Stock requires full compliance with the provisions
of all applicable laws.
3. Investment Intent. Unless a registration statement is in effect
with respect to the sale of Option Stock obtained through exercise of
Options granted hereunder: (a) upon exercise of any Option, the Optionee
will purchase the Option Stock for his/her/its own account and not with a
view to distribution within the meaning of the 1933 Act, other than as may
be effected in compliance with the 1933 Act and the rules and regulations
promulgated thereunder; (b) no one else will have any beneficial interest
in the Option Stock; and (c) he/ she/it has no present intention of disposing
of the Option Stock at any particular time.
H. Compliance with Law. Notwithstanding any other provision of
this Plan, Options may be granted pursuant to this Plan, and Option Stock
may be issued pursuant to the exercise thereof by an Optionee, only after
there has been compliance with all applicable federal and state securities
laws, and all of the same will be subject to this overriding condition. The
Company will not be required to register or qualify Option Stock with the
Securities and Exchange Commission ("SEC") or any State agency, except
that the Company will register with, or as required by local law, file for
and secure an exemption from such registration requirements from, the
applicable securities administrator and other officials of each jurisdiction
in which an Eligible Participant would be granted an Option hereunder
prior to such grant.
I. Stock Certificates. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all legends required by
law and necessary to effectuate this Plan's provisions. The Company may
place a "stop transfer" order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan have been complied with.
Unless a registration statement under the 1933 Act and applicable
state securities laws is in effect with respect to the issuance or transfer of
the shares of Stock under the Plan, each certificate representing any such
shares shall be endorsed with a legend in substantially the following form,
unless counsel for the Company is of the opinion as to any such certificate
that such legend is unnecessary:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"), OR UNDER APPLICABLE
STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR
SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, OR
ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE 1933 ACT AND SUCH STATE LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT AND SUCH STATE LAWS, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
J. Notices. Any notice to be given to the Company under the terms of
an Option Agreement will be addressed to the Company at its principal
executive office, Attention: Corporate Secretary, or at such other address
as the Company may designate in writing. Any notice to be given to an
Optionee will be addressed to the Optionee at the address provided to the
Company by the Optionee. Any such notice will be deemed to have been
duly given if and when enclosed in a properly sealed envelope, addressed
as aforesaid, registered and deposited, postage and registry fee prepaid, in
a post office or branch post office regularly maintained by the United
States Government.
K. Other Provisions. The Option Agreement may contain such other
terms, provisions and conditions, including such special forfeiture
conditions, rights of repurchase, rights of first refusal and other
restrictions on Transfer of Option Stock issued upon exercise of any
Options granted hereunder, not inconsistent with this Plan, as may
be determined by the Committee in its sole discretion.
L. Rights as a Shareholder. The Eligible Participant shall have no
rights as a shareholder with respect to any shares of Company Common
Stock covered by an Option until the Optionee shall have become the
holder of record of such shares.
M. Employment of Service. Nothing in this Plan shall interfere with
or limit in any way the right of the Company or any Subsidiary to
terminate the service of any Eligible Participant at any time, nor confer
upon any Eligible Participant any right to continue in the service of the
Company or any Subsidiary.
N. Non-Exclusivity of the Plan. Nothing contained in the Plan is
intended to amend, modify or rescind any previously approved
compensation plans or programs entered into by the Company. The Plan
will be construed to be in addition to any and all other plans or programs.
Neither the adoption of the plan nor the submission of the Plan to the
shareholders of the Company for approval will be construed as creating
any limitations on the power or authority of the Board to adopt such
additional or other compensation arrangements as the Board may deem
necessary or desirable.
VI. Proceeds from Sale of Stock
Cash proceeds from the sale of shares of Option Stock issued from time
to time upon the exercise of Options granted pursuant to this Plan will be
added to the general funds of the Company and as such will be used from
time to time for general corporate purposes.
VII. Modification, Extension and Renewal of Options
Subject to the terms and conditions and within the limitations of this
Plan, the Committee may modify, extend or renew outstanding Options
granted under this Plan, or accept the surrender of outstanding Options (to
the extent not theretofore exercised) and authorize the granting of new
Options in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, however, no modification of any Option
will, without the consent of the holder of the Option, alter or impair any
rights or obligations under any Option theretofore granted under this Plan.
VIII. Amendment and Discontinuance
The Board may amend, suspend or discontinue this Plan at any time or
from time to time; provided further that no such action may, without the
approval of the stockholders of the Company, materially increase (other
than by reason of an adjustment pursuant to Section IV.B hereof) the
maximum aggregate number of shares of Option Stock in the Option Pool
that may be issued under Options granted pursuant to this Plan or
materially increase the benefits accruing to Plan participants or materially
modify eligibility requirements for the participants. Moreover, no such
action may alter or impair any Option previously granted under this Plan
without the consent of the holder of such Option.
IX. Plan Compliance with Rule 16b-3
With respect to persons subject to Section 16 of the 1934 Act,
transactions under this plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the
extent any provision of the Plan or action by the Plan administrators fails
so to comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Plan administrators.
X. Miscellaneous
A. Construction and Headings. The use of the masculine gender shall
also include within its meaning the feminine, and the singular may include
the plural and the plural may include the singular, unless the context
clearly indicates to the contrary, The headings of the Sections and subparts
of the Plan are for convenience of reading only and are not meant to be of
substantive significance and shall not add or detract from the meaning of
such Section or subpart.
B. Governing Law. The place of administration of the Plan shall be
conclusively deemed to be within the State of Minnesota, and the rights
and obligations of any and all persons having or claiming to have had an
interest under the Plan or under any agreements evidencing Options shall
be governed by and construed exclusively and solely in accordance with
the laws of the State of Minnesota without regard to the conflict of laws
provisions of any jurisdiction. All parties agree to submit to the
jurisdiction of the state and federal courts of Minnesota with respect to
matters relating to the Plan and agree not to raise or assert the defense that
such forum is not convenient for such party.
C. Successors and Assigns. This Plan shall be binding upon and inure
to the benefit of the successors and permitted assigns of the Company,
including without limitation, whether by way of merger, consolidation,
operation of law, assignment, purchase or other acquisition of substantially
all of the assets or business of the Company, and any and all such
successors and assigns shall absolutely and unconditionally assume all of
the Company's obligations under the Plan.
D. Survival of Provisions. The rights, remedies, agreements,
obligations and covenants contained in or made pursuant to the plan, any
agreement evidencing an Option and any other notices or agreements in
connection therewith, including, without limitation, any notice of exercise
of an Option, shall survive the execution and delivery of such notices and
agreements and the delivery and receipt of shares of Common stock and
shall remain in full force and effect.
XI. Copies of Plan
A copy of this Plan will be delivered to each Optionee at or before the
time he or she executes an Option Agreement.
________________
[SPECIMEN FORM]
ILLUMINATED MEDIA INC.
1996 CORPORATE STOCK OPTION PLAN
Stock Option Agreement
Form CASH
THIS AGREEMENT is made as of __________, 199_, between
ILLUMINATED MEDIA INC., a Minnesota corporation (the
"Company"), and ___________________________ (the "Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Option Grant. The Company hereby grants to the Optionee an
option (the "Option") to purchase the number of shares of the Company's
Common Stock (the "Shares"), for an exercise price per share (the "Option
Price") and based upon a Grant Date, all as set forth below:
Shares under option: ___________
Option Price per Share: $ ______
Grant Date: ___________, 199_
The Option will be subject to all of the terms and conditions set forth
herein and in the Company's 1996 Corporate Stock Option Plan (the
"Option Plan"), a copy of which is attached hereto and incorporated by
reference. The Option granted hereunder will be a nonstatutory or
nonqualified option for tax purposes.
2. Stockholder Rights. No rights or privileges of a stockholder in the
Company are conferred by reason of the granting of the Option. Optionee
will not become a stockholder in the Company with respect to the Shares
unless and until the Option has been properly exercised and the Option
Price fully paid as to the portion of the Option exercised.
3. Termination. Subject to earlier termination as provided in the
Option Plan, this Option will expire, unless previously exercised in full, on
December __, 199_.
4. Terms of the Option Plan. The Optionee understands that the Option
Plan includes important terms and conditions that apply to this Option.
Those terms include (without limitation): important conditions to the right
of the Optionee to exercise the Option; important restrictions on the ability
of the Optionee to transfer the Option or to transfer Shares received upon
exercise of the Option; and early termination of the Option following the
occurrence of certain events, including the Optionee no longer being an
advisor or consultant to or of the Company or its subsidiaries. The
Optionee acknowledges that he/she/it has read the Option Plan, agrees to
be bound by its terms, and makes each of the representations required to
be made by the Optionee under it.
5. Miscellaneous. This Agreement (together with the Option Plan) sets
forth the complete agreement of the parties concerning the subject matter
hereof, superseding all prior agreements, negotiations and understandings.
This Agreement will be governed by the substantive law of the State of
Minnesota, and may be executed in counterparts.
The parties hereby have entered into this Agreement as of the date set
forth above.
ILLUMINATED MEDIA INC.
By ______________________
An Authorized Officer
OPTIONEE
_________________________
Address:
_________________________
_________________________
_________________________
Attachments: (1) Spousal Consent
(2) 1996 Corporate Stock Option Plan
SPOUSAL CONSENT
The undersigned is the spouse of the Optionee referred to in the
attached Illuminated Media Inc.1996 Corporate Stock Option Plan
Agreement (the "Agreement"). The undersigned acknowledges that he or
she:
1. has received, reviewed and understands the terms of the Agreement
(including its attachments);
2. consents to the Agreement, and agrees to be bound by its terms to the
extent that he or she now has or may obtain any interest in the Option or
Shares covered by the Agreement; and
3. understands that the Company is relying upon this consent in
entering into the Agreement and in not taking further steps to protect its
interests.
Date: ________, 199_
________________________
________________________
Print Name
[SPECIMEN FORM]
ILLUMINATED MEDIA INC.
1996 CORPORATE STOCK OPTION PLAN
Stock Option Agreement
Form NOCASH
THIS AGREEMENT is made as of ________, 199_, between
Illuminated Media Inc., a Minnesota corporation (the "Company"), and
__________________________ (the "Optionee").
THE PARTIES AGREE AS FOLLOWS:
1. Option Grant. The Company hereby grants to the Optionee an
option (the "Option") to purchase the number of shares of the Company's
Common Stock (the "Shares"), for an exercise price per share (the "Option
Price") and based upon a Grant Date, all as set forth below:
Shares under option: ___________
Option Price per Share: $ ______
Grant Date: ___________, 199_
The Option will be subject to all of the terms and conditions set forth
herein and in the Company's 1996 Corporate Stock Option Plan (the
"Option Plan"), a copy of which is attached hereto and incorporated by
reference. The Option granted hereunder will be a nonstatutory or
nonqualified option for tax purposes.
2. Exercise Price. The Optionee may pay the Option Price for Shares, in
his or her sole discretion, by either:
(a) paying the Option Price in cash; or
(b) paying with Previously Acquired Shares; or
(c) paying the Option Price through surrendering that number of
Options covering the number of underlying shares of Common Stock the
fair market value of which shares equal the Option Price.
3. Stockholder Rights. No rights or privileges of a stockholder in the
Company are conferred by reason of the granting of the Option. Optionee
will not become a stockholder in the Company with respect to the Shares
unless and until the Option has been properly exercised and the Option
Price fully paid as to the portion of the Option exercised.
4. Termination. Subject to earlier termination as provided in the
Option Plan, this Option will expire, unless previously exercised in full, on
December __, 199_.
5. Terms of the Option Plan. The Optionee understands that the Option
Plan includes important terms and conditions that apply to this Option.
Those terms include (without limitation): important conditions to the right
of the Optionee to exercise the Option; important restrictions on the ability
of the Optionee to transfer the Option or to transfer Shares received upon
exercise of the Option; and early termination of the Option following the
occurrence of certain events, including the Optionee no longer being an
advisor or consultant to or of the Company or its subsidiaries. The
Optionee acknowledges that he/she/it has read the Option Plan, agrees to
be bound by its terms, and makes each of the representations required to
be made by the Optionee under it.
6. Miscellaneous. This Agreement (together with the Option Plan) sets
forth the complete agreement of the parties concerning the subject matter
hereof, superseding all prior agreements, negotiations and understandings.
This Agreement will be governed by the substantive law of the State of
Minnesota, and may be executed in counterparts.
The parties hereby have entered into this Agreement as of the date set
forth above.
ILLUMINATED MEDIA INC.
By ______________________
An Authorized Officer
OPTIONEE
_________________________
Address:
_________________________
_________________________
_________________________
Attachments: (1) Spousal Consent
(2) 1996 Corporate Stock Option Plan
SPOUSAL CONSENT
The undersigned is the spouse of the Optionee referred to in the
attached Illuminated Media Inc. 1996 Corporate Stock Option Plan
Agreement (the "Agreement"). The undersigned acknowledges that he or
she:
1. has received, reviewed and understands the terms of the Agreement
(including its attachments);
2. consents to the Agreement, and agrees to be bound by its terms to the
extent that he or she now has or may obtain any interest in the Option or
Shares covered by the Agreement; and
3. understands that the Company is relying upon this consent in
entering into the Agreement and in not taking further steps to protect its
interests.
Date: ________, 199_
________________________
________________________
Print Name
[Sample Form of Notice to Optionee]
MEMORANDUM
Date:___________
To: ________________
From: Robert H. Blank
Chief Executive Officer
Illuminated Media Inc.
Subject: 1996 CORPORATE STOCK OPTION PLAN
I am pleased to inform you that the Board of Directors recently
awarded you a non-statutory stock option to purchase ___________ shares
of the Company's Common Stock at an exercise price of $_____ per share.
This option was granted on _________, 199_ under the 1996 Corporate
Stock Option Plan and vests as of the grant date.
Please enter your address on the enclosed Stock Option Agreement,
sign the original copy of the Agreement and return it to me as soon as
practicable. Attached to the Agreement is a Spousal Consent which your
spouse should sign and date. A duplicate copy of the Agreement is
included for your files. Attached to your copy of the agreement as Exhibit
A is a copy of the 1996 Corporate Stock Option Plan.
If you desire to exercise a vested portion of your option, I will assist
you in arranging for the execution of the necessary papers. If you have
any questions regarding your option, please contact me.
CONGRATULATIONS!
Enclosure
NOTICE OF EXERCISE OF OPTION
To: Illuminated Media Inc.
Office of the Corporate Secretary
From: ______________________
(Optionee)
Address:
___________________
___________________
___________________
Social Security Number: _____________
1. Exercise of Option. I am the holder of an option or options granted
under the 1996 Corporate Stock Option Plan (the "Plan") and that certain
Stock Option Agreement dated _______, 199_. I hereby irrevocably elect
to exercise the purchase rights represented by such option, and to purchase
thereunder __________________ (_______) shares of Common Stock of
Illuminated Media Inc. (the "Company") at $_____ per share, for an
aggregate exercise price of $________, to be paid by me in one or more of
the following forms (indicate the amount for each form that applies):
[ ] $_________ by delivering herewith cash or a check made payable
to Illuminated Media Inc.; or
[ ] $_________ by the delivery herewith of
certificate(s) numbered _______ representing shares of Common
Stock of the Company with a fair market value on the date hereof equal to
$_____ per share (and, if such certificate represents shares in excess
of the number required to achieve the amount indicated in the left margin,
requesting that the Company or its transfer agent deliver to me a certificate
or certificates for the balance of the shares represented thereby), together
with a stock power executed in blank; or
[ ] $_________ by delivering to __________________________
("Broker") an irrevocable direction (two copies of which I have completed,
executed and attached hereto), to sell that number of shares of the stock to
be acquired hereby and to deliver the proceeds thereof to the Company in
the amount indicated in the left margin; or
[ ] $_________ by the delivery herewith of the Stock Option
Agreement dated _______, 199_, representing Options to purchase ____
shares of Common Stock of the Company with the shares having a fair
market value on the date hereof equal to $_____ per share
(and, if such Stock Option Agreement represents shares in excess of the
number required to achieve the amount indicated in the left margin,
requesting that the Company or its transfer agent deliver to me a Stock
Option Agreement for the balance of the Options represented
thereby).
I request that certificate(s) for such shares be registered and issued in the
name set forth above. The certificate(s) issued upon exercise of the
aforesaid option should be mailed to my address indicated above via first
class mail. I acknowledge that the Option Exercise Date is the date upon
which this notice and the required payment are received in the Office of
the Secretary of the Company.
2. Other Acknowledgements.
(a) I acknowledge receipt of copies of the Company's most
recent 10K and/or Annual Report to Shareholders, and 10Q.
(b) I am aware that the Securities Act of 1933, as amended, and the
regulations and requirements of the Securities and Exchange Commission
thereunder, may impose limitations on the resale of Company stock
acquired pursuant to this option exercise. I hereby certify that any resale
of such stock will be made incompliance with the Act and those
regulations and requirements
(c) I hereby appoint ________________ as my agent to accept delivery
of the shares of Company stock being purchased on my behalf pursuant to
this option exercise, and request ________________ to forward the
certificates representing those shares to me at the address shown above.
Dated:_________, 199_
_______________________
Optionee