VDI MULTIMEDIA
NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement"), is made as of
the 15th day of August, 2000 by and between VDI MultiMedia, a California
corporation (the "Company"), and Xxxx Bagerdjian ("Optionee").
R E C I T A L
Pursuant to the 2000 Nonqualified Stock Option Plan (the "Plan") of the
Company, the Board of Directors of the Company or a committee to which
administration of the Plan is delegated by the Board of Directors (in either
case, the "Administrator") has authorized the granting to Optionee as an
employee, director, consultant or adviser of the Company of a nonqualified stock
option to purchase the number of shares of Common Stock of the Company specified
in Paragraph 1 hereof, at the price specified therein, such option to be for the
term and upon the terms and conditions hereinafter stated.
A G R E E M E N T
NOW, THEREFORE, in consideration of the promises and of the
undertakings of the parties hereto contained herein, it is hereby agreed:
1. NUMBER OF SHARES; OPTION PRICE. Pursuant to said action of the
Administrator, the Company hereby grants to Optionee the option ("Option") to
purchase, upon and subject to the terms and conditions of the Plan, 15,000
shares of Common Stock of the Company ("Shares") at the price of $3.75 per
share.
2. TERM. This Option shall expire on the day before the 10th
anniversary of the date of grant of the Option (the "Expiration Date"), unless
such Option shall have been terminated prior to that date in accordance with the
provisions of the Plan or this Agreement. The term "Affiliate" as used herein
shall have the meaning as set forth in the Plan.
3. SHARES SUBJECT TO EXERCISE. This Option shall be exercisable as
follows: 5,000 shares after August 14, 2001; 10,000 shares after August 14,
2002; and 15,000 shares after August 14, 2003.
Once exercisable, the Option shall thereafter remain exercisable as to such
Shares for the term specified in Paragraph 2 hereof, unless Optionee's
employment is terminated pursuant to Paragraph 7 hereof or the Option is
terminated pursuant to a Corporate Transaction (as defined in Paragraph 16
hereof). The Administrator may condition the exercise of the Option on the
Optionee's entering into a shareholders agreement with the Company and/or the
other shareholders which will restrict the transferability of the Shares and
contain other customary provisions including rights of repurchase or first
refusal on the part of the Company and may include "drag along" rights.
4. METHOD AND TIME OF EXERCISE. The Option may be exercised by written
notice delivered to the Company at its principal executive office stating (i)
that Optionee is in compliance with the non-compete provisions of Section 17
hereof, (ii) that Optionee has no plan to violate Section 17 in the future,
(iii) that Optionee agrees to notify the Company within 10 days of a violation
of Section 17 hereof, and (iv) the number of shares with respect to which the
Option is being exercised together with:
(A) a check or money order made payable to the Company in the amount of
the exercise price and any withholding tax, as provided under Paragraph 5
hereof; or
(B) if expressly authorized in writing by the Administrator, in its
sole discretion, at the time of the Option exercise, the tender to the
Company of shares of the Company's Common Stock owned by Optionee having a
fair market value not less than the exercise price, plus the amount of
applicable federal, state and local withholding taxes; or
(C) if expressly authorized in writing by the Administrator, in its
sole discretion, at the time of the Option exercise, the Optionee's full
recourse promissory note in a form approved by the Company; or
(D) if any other method such as cashless exercise is expressly
authorized in writing by the Administrator, in its sole discretion, at the
time of the Option exercise, the tender of such consideration having a fair
market value not less than the exercise price, plus the amount of
applicable federal, state and local withholding taxes.
Only whole shares may be purchased.
5. LEGEND. All Shares received due to the exercise of an option granted
under this plan shall bear a legend stating the restrictions, if any, on
transfer provided for in any provision of this Agreement.
6. TAX WITHHOLDING. As a condition to exercise of this Option, the
Company may require Optionee to pay over to the Company all applicable federal,
state and local taxes which the Company is required to withhold with respect to
the exercise of this Option. At the discretion of the Administrator and upon the
request of Optionee, the minimum statutory withholding tax requirements may be
satisfied by the withholding of shares of Common Stock of the Company otherwise
issuable to Optionee upon the exercise of this Option.
7. EXERCISE ON TERMINATION OF EMPLOYMENT. If for any reason Optionee's
employment is terminated by the Company or any of its Affiliates (such event
being called a "Termination"), other than For Cause, as defined below, this
Option (to the extent then exercisable except in the case of a Corporate
Transaction which shall cause all Options to become exercisable) may be
exercised in whole or in part at any time within 90 days of such termination,
but in no event after the earlier of the Expiration Date or a Corporate
Transaction which terminates the Option pursuant to Paragraph 16 hereof. For
purposes of this Agreement, "employment" includes service as an employee,
director, consultant or adviser. For purposes of this Agreement, Optionee's
employment shall not be deemed to terminate by reason of a transfer to or from
the Company or an Affiliate or among such entities, 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 Optionee's right to
reemployment by the Company or any Affiliate is guaranteed either contractually
or by statute. For purposes of this Agreement, "For Cause" shall mean Optionee's
loss of employment by the Company or any of its Affiliates due to Optionee's (a)
willful breach or habitual neglect or continued incapacity to perform Optionee's
required duties; (b) commission of acts of dishonesty, fraud, misrepresentation
or other acts of moral turpitude as would prevent the effective performance of
Optionee's duties; or (c) the definition contained in Optionee's employment
agreement, if any, other agreement or in a communicated policy of the Company.
In the event Optionee's employment by the Company or any of its Affiliates is
Terminated For Cause, then the Option shall cease to be exercisable and shall
terminate as of the date of such Termination.
8. NONTRANSFERABILITY. Except with the express written approval of the
Administrator, this Option may not be assigned or transferred except by will or
by the laws of descent and distribution, and may be exercised only by Optionee
during the Optionee's lifetime and after the Optionee's death, by the Optionee's
personal representative or by the person entitled thereto under the Optionee's
will or the laws of intestate succession.
9. OPTIONEE NOT A STOCKHOLDER. Optionee shall have no rights as a
stockholder with respect to the Common Stock of the Company covered by this
Option until the date of issuance of a stock certificate or stock certificates
to the Optionee upon exercise of this Option. No adjustment will be made for
dividends or other rights for which the record date is prior to the date such
stock certificate or certificates are issued.
10. NO RIGHT TO EMPLOYMENT. Nothing in the Option granted hereby shall
interfere with or limit in any way the right of the Company or of any of its
Affiliates to terminate Optionee's employment, consulting or advising at any
time, nor confer upon Optionee any right to continue in the employ of, or
consult or advise with, the Company or any of its Affiliates.
11. MODIFICATION AND TERMINATION. The rights of Optionee are subject to
modification and termination in certain events as provided in Sections 6.1 and
6.2 of the Plan
12. RESTRICTIONS ON SALE OF SHARES. Optionee represents and agrees that
upon the Optionee's exercise of this Option, in whole or in part, unless there
is in effect at that time under the Securities Act of 1933 a registration
statement relating to the Shares issued to the Optionee, the Optionee will
acquire the Shares issuable upon exercise of this Option for the purpose of
investment and not with a view to their resale or further distribution, and that
upon such exercise thereof the Optionee will furnish to the Company a written
statement to such effect, satisfactory to the Company in form and substance.
Optionee agrees that any certificates issued upon exercise of this Option may
bear a legend indicating that their transferability is restricted in accordance
with applicable state and federal securities law. Any person or persons entitled
to exercise this Option under the provisions of this Agreement, upon each
exercise of this Option under circumstances in which Optionee would be required
to furnish such a written statement, also furnish to the Company a written
statement to the same effect, satisfactory to the Company in form and substance.
13. PLAN GOVERNS. This Agreement and the Option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan, as it may be construed
by the Administrator. Optionee hereby acknowledges receipt of a copy of the
Plan.
14. NOTICES. All notices to the Company shall be addressed to the
Corporate Secretary at the principal executive office of the Company at 0000
Xxxxxxxxx Xxxx. Xxxxx 000, X.X. Xxx 0000, Xxxxxxxxx, XX 00000, and all notices
to Optionee shall be addressed to Optionee at the address of Optionee on file
with the Company, or to such other address as either may designate to the other
in writing. A notice shall be deemed to be duly given if and when enclosed in a
properly addressed sealed envelope deposited, postage prepaid, with the United
States Postal Service. In lieu of giving notice by mail as aforesaid, written
notices under this Agreement may be given by personal delivery to Optionee or to
the Corporate Secretary (as the case may be).
15. SALE OR OTHER DISPOSITION. If Optionee at any time contemplates the
disposition (whether by sale, gift, exchange, or other form of transfer) of any
Shares acquired by exercise of this Option, the Optionee shall first notify the
Company in writing of such proposed disposition and cooperate with the Company
in complying with all applicable requirements of law, which, in the judgment of
the Company, must be satisfied prior to such disposition.
16. CORPORATE TRANSACTIONS. In the event of a Corporate Transaction (as
defined below), the Administrator shall notify Optionee at least 30 days prior
thereto or as soon as may be practicable. To the extent not previously
exercised, this Option 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, shall (i) permit
exercise of this Option prior to its termination, even if this Option would not
otherwise have been exercisable, and, in its sole discretion, may (ii) provide
that this Option 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
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended ("Exchange Act"); provided that, without
limitation, such a change in control shall be deemed to have occurred if (i) a
tender offer shall be made and consummated for the ownership of 35% or more of
the outstanding voting securities of the Company, (ii) the Company shall be
merged or consolidated with another corporation and as a result of such merger
or consolidation less than 65% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate by the former
shareholders of the Company, other than affiliates (within the meaning of the
Exchange Act) of any party to such merger or consolidation, as the same shall
have existed immediately prior to such merger or consolidation, (iii) the
Company shall sell, lease, exchange or transfer substantially all of its assets
to another corporation, entity or person which is not wholly-owned subsidiary,
(iv) a person (other than Employee), as defined in Sections 13(d) and 14(d) (as
in effect on the date hereof) of the Exchange Act, shall acquire 35% or more of
the outstanding voting securities of the Company (whether directly, indirectly,
beneficially or of record, in a single transaction or a series of related
transactions by one person or more than one person acting in concert), or (v)
the shareholders of the Company approve a plan or proposal for the liquidation
or dissolution of the Company.
17. NON-COMPETE AGREEMENT. Notwithstanding anything to the contrary
provided herein, as a condition to the receipt of Shares pursuant to the
exercise of this Option, at any time during which this Option is outstanding and
for six months after any exercise of this Option or the receipt of Shares
pursuant to the exercise of this Option, Optionee shall not directly or
indirectly, as agent, employee, consultant, stockholder, partner or in any other
capacity, own, operate, manage, control, engage in, invest in or participate in
any manner in, act as a consultant or advisor to, render services for, or
otherwise assist any person or entity that engages in or owns, invests in,
operates, manages or controls, any venture or enterprise that directly or
indirectly competes with the Company, provided, however, that nothing contained
herein shall be construed to prevent Optionee from investing in the stock of any
competing corporation listed on a national securities exchange or traded in the
over-the-counter market, but only if Optionee is not involved in the business of
said corporation and if Optionee (together with Optionee's spouse, parents,
siblings, and children) does not own more than an aggregate of 5% of the stock
of such corporation. Optionee agrees to notify the Company within 10 days of any
violation of this Section 17. Failure to comply with this Section 17 shall cause
such Option and the exercise or issuance of Shares hereunder to be rescinded and
the benefit of such exercise or issuance to be repaid to the Company. Optionee
agrees and understands that Optionee's failure to comply with this Section 17
will subject Optionee's benefit from the Option to be forfeited and repaid to
the Company, and Optionee agrees to do so within 10 days of notification by the
Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
VDI MULTIMEDIA
By:
/s/ Xxxx X. Steel
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Xxxx X. Steel
Its:
Executive Vice President
OPTIONEE:
/s/ Xxxx X. Bagerdjian
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Xxxx X. Bagerdjian
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Social Security Number
