SHARE OPTION AGREEMENT dated as of the 1st day of March, 1994;
B E T W E E N:
WGIM ACQUISITION CORPORATION, a
corporation incorporated under the laws of
Canada
(hereinafter called the "Corporation")
- and -
XXXXXXX XXXXXXXX, of the Town of
Lenox in the Commonwealth of Massachusetts
(hereinafter called the "Optionee").
WHEREAS the Optionee and the Corporation have agreed that the
Optionee shall be granted an option to purchase common shares of the Corporation
on the terms and conditions set forth in this agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration
of the premises and the mutual covenants and agreements hereinafter contained
the parties hereto agree as follows:
1. Share Option
(a) The Corporation hereby grants to the Optionee an irrevocable option
(the "Option") to purchase, in accordance with the exercise rights outlined in
Subsection 1(c) hereof, and subject to adjustment as provided herein, all or any
part of 207,186 Common Shares ("Common Shares" means the fully paid and
non-assessable common shares in the capital of the Corporation on the date
hereof and as the same shall be constituted at any time or times hereafter, such
Common Shares being hereinafter referred to as the "Optioned Shares") in the
capital of the Corporation at a price of Cdn. $1.29 per share (the "Exercise
Price"). The number of Common Shares subject to the Option and the exercise
price therefor have been calculated in accordance with Appendix B to Exhibit 12
to the agreement as of December 3, 1993 among the Corporation, Gelfco Inc. and
The Trumbull Company, Inc.
(b) Subject to Subsections 1(c), 1(d), 2(a) and 2(b) hereof, the Option
may be exercised during the eight and one-half year period commencing on the
date hereof and ending on the date which is eight and one-half years after the
date hereof, or the immediately following business day if such date is not a
business day in the city where the chief executive office of the Corporation is
located on that day (such date being hereinafter referred to as the "Expiration
Date") for any number of Optioned Shares up to the maximum number specified in
Section 1(a) above. At the close of
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business in the city where the chief executive office of the Corporation is
located on that day on the Expiration Date, the Option shall expire and be of no
further force whatsoever as to such of the Optioned Shares in respect of which
the Option has not been fully exercised, and, thereafter, the Option may not be
exercised.
(c) Subject to Subsection 1(d), 2(a) and 2(b) hereof the Option shall
only be exercisable by the Optionee in the following manner:
(i) if the employment agreement between the Optionee and Ridefilm
Theaters Corporation, a Delaware corporation and a wholly
owned subsidiary of the Corporation, dated the date hereof
(the "Trumbull Employment Agreement") has not been terminated
pursuant to either of paragraphs 1(a)(i) or 1(a)(ii) thereof
prior to the first anniversary of the date hereof, then the
Option may be exercised as to 38,847 of the Optioned Shares in
whole at any time or in part from time to time on or after
such first anniversary;
(ii) if the Trumbull Employment Agreement is terminated pursuant to
either of paragraphs 1(a)(i) or 1(a)(ii) thereof prior to the
first anniversary of the date hereof, but prior to such first
anniversary the Optionee has not resigned as Chairman and
Chief Executive Officer of The Ridefilm Theaters Corporation
or the Optionee has been willing to remain in such positions
but has been asked to resign therefrom, then the Option may be
exercised as to 12,949 Optioned Shares in whole at any time or
in part from time to time on or after such first anniversary;
(iii) if the Trumbull Employment Agreement has not been terminated
pursuant to either of paragraphs 1(a)(i) or 1(a)(ii) thereof
prior to the second anniversary of the date hereof, then the
Option may be exercised as to an additional 38,847 of the
Optioned Shares in whole at any time or in part from time to
time on or after such second anniversary;
(iv) if the Trumbull Employment Agreement is terminated pursuant to
either of paragraphs 1(a)(i) or 1(a)(ii) thereof prior to the
second anniversary of the date hereof, but prior to such
second anniversary the Optionee has not resigned as Chairman
and Chief Executive Officer of The Ridefilm Theaters
Corporation or the Optionee has been willing to remain in such
positions but has been asked to resign therefrom, then the
Option may be exercised as to an additional 12,949 Optioned
Shares in whole at any time or in part from time to time on or
after such second anniversary;
(v) if the Trumbull Employment Agreement has not been terminated
pursuant to either of paragraphs 1(a)(i) or 1(a)(ii) thereof
prior to the third anniversary of the date
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hereof, then the Option may be exercised as to the balance of
the Optioned Shares in whole at any time or in part from time
to time on or after such third anniversary; and
(vi) if the Trumbull Employment Agreement is terminated pursuant to
either of paragraphs 1(a)(i) or 1(a)(ii) thereof prior to the
third anniversary of the date hereof, but prior to such third
anniversary the Optionee has not resigned as Chairman and
Chief Executive Officer of The Ridefilm Theaters Corporation
or the Optionee has been willing to remain in such positions
but has been asked to resign therefrom, then the Option may be
exercised as to an additional 12,949 Optioned Shares in whole
at any time or in part from time to time on or after such
third anniversary.
Options for any Optioned Shares which have not become exercisable as provided
above in this paragraph 1(c) on or prior to the third anniversary of the date
hereof shall expire and be of no further force whatsoever as to such of the
Optioned Shares in respect of which the Option has not become exercisable.
(d) Notwithstanding any other provisions contained in this agreement,
the Option may be exercised as to all of the Optioned Shares in whole at any
time or in part from time to time on or after the date upon which either (i) the
Corporation issues Common Shares or (ii) the Corporation consolidates,
amalgamates or merges with or into any other corporation or other entity, and as
a result of either of such events at least 51% of the Common Shares of the
Corporation outstanding immediately after such event are held by or for the
benefit of any person or group of persons acting in concert who, immediately
prior to such event, held less than 5% of the total number of Common Shares
outstanding of the Corporation, calculated on a fully diluted basis.
2. Death of Optionee
(a) In the event of the death of the Optionee on or prior to the
Expiration Date and at a time when the Optionee has not fully exercised the
Option, the Option shall be exercisable, to the same extent that the Option was
exercisable at the date of the death of the Optionee, by the Optionee's
executors or legal personal representatives at any time up to and including a
date six months following the date of death of the Optionee or the Expiration
Date, whichever is earlier. In the event the Option is not exercised within the
foregoing time period, the Option shall expire.
(b) Except as provided in paragraph (a) above, the Option shall not be
transferable or assignable and is exercisable only by the Optionee.
3. Share Capital Adjustments
(a) If at any time after the date hereof the Class D Conversion Rate
(the "Class D Conversion Rate"), as such term is defined in the Articles of
Incorporation of the Corporation as the same are in effect on the date hereof,
is adjusted pursuant to paragraph 6.I.(h)(v) of such Articles,
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then the number of Optioned Shares shall be adjusted by multiplying the number
of Optioned Shares in effect on the date of such adjustment to the Class D
Conversion Rate by a fraction: (A) the numerator of which will be the Class D
Conversion Rate in effect immediately after giving effect to the adjustment
thereto, and (B) the denominator of which will be the Class D Conversion Rate in
effect immediately before giving effect to the adjustment thereto.
(b) If at any time after the date hereof there is a reclassification or
redesignation of the Common Shares at any time outstanding or a change of the
Common Shares into other shares or into other securities or other capital
reorganization (other than a capital reorganization which results in an
adjustment to the Class D Conversion Rate), or a consolidation, amalgamation or
merger of the Corporation with or into any other Corporation or other entity
(other than a consolidation, amalgamation or merger which does not result in any
reclassification of the outstanding Common Shares or a change of the Common
Shares into other shares), or a transfer of the undertaking or assets of the
Corporation as an entirety or substantially as an entirety to another
corporation or entity (any of such events being called a "Capital
Reorganization"), the Optionee shall be entitled upon the future exercise of the
Option to receive, and will accept, upon the exercise of the Option at any time
thereafter in lieu of the number of Optioned Shares to which the Optionee was
previously entitled, the aggregate number of shares, other securities or other
property which the Optionee would have been entitled to receive as a result of
such Capital Reorganization if, on the record date thereof, the Optionee had
been the registered holder of the number of Common Shares which the Optionee was
entitled to receive upon the exercise of the Option to the extent that the
Optionee had exercised the Option prior to the Capital Reorganization. The
Corporation will take all steps necessary to ensure that, on the exercise of the
Option after a Capital Reorganization, the Optionee will receive the aggregate
number of shares, other securities or other property to which he is entitled as
a result of the Capital Reorganization. If determined appropriate by the
directors of the Corporation, appropriate adjustments will be made as a result
of any such Capital Reorganization to the provisions of this paragraph 3(b) such
that such provisions will thereafter correspond as nearly as is reasonably
possible in relation to any shares, other securities or other property
thereafter deliverable upon the exercise of the option. Any such adjustment will
be made by a resolution of the directors of the Corporation and set forth in a
notice sent to the Optionee.
(c) The following rules shall apply regarding the adjustment to the
number of Optioned Shares:
(i) any adjustments made as a result of the provisions of this
paragraph 3 are cumulative and will be computed to the nearest
whole Optioned Share;
(ii) if any question arises at any time with respect to the number
of Optioned Shares or any adjustment to such number or the
amount of any cash payment made in lieu of issuing a
fractional share, such question shall be conclusively
determined by the auditors of the Corporation or, if they are
unwilling or unable to act, by such other firm of independent
internationally recognized chartered accountants as may be
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selected by the directors and such determination shall be
binding upon the Corporation and the Optionee. If any such
determination is made, the Corporation shall deliver a notice
to the Optionee setting forth the determination made; and
(iii) if a fraction of a Common Share would otherwise be issuable
upon any exercise of the Option, the Corporation shall not
issue such fractional share but shall pay to the Optionee an
amount equal to the then current fair market value of such
fractional share as such fair market value may be determined
by the directors of the Corporation.
(d) As long as the Option has not been exercised in full and is
exercisable, the Corporation shall reserve, out of its unissued Common Shares, a
sufficient number of common Shares to enable the Option to be exercised into all
of the Optioned Shares in respect of which the Option may be exercised. Nothing
set forth in this paragraph 3(d) or otherwise in this agreement shall affect or
restrict the right of the Corporation to issue Common Shares from time to time.
4. Rights of Optionee Before Exercise of Option
The Optionee shall not have any rights whatsoever as a
shareholder in respect of the Optioned Shares covered by the Option until the
Option is exercised, in whole or in part, and payment for the Optioned Shares
thereby purchased has been made.
5. Exercise of Option
(a) The Option may be exercised from time to time by delivery to the
Corporation at its registered office of a written notice of exercise specifying
the number of Optioned Shares with respect to which the Option is being
exercised and accompanied by payment in full of the purchase price for the
Optioned Shares then being purchased. All Optioned Shares subscribed for
hereunder shall be paid for in full in cash at the time of purchase and when
issued and delivered to or at the direction of the Optionee shall be issued as
fully paid and non-assessable Common Shares.
(b) As soon as practicable following the receipt of a written notice of
exercise and payment in full of the purchase price for the Optioned Shares then
being purchased, the Corporation shall cause to be delivered to the Optionee a
certificate for the shares so purchased and shall cause to be recorded in the
appropriate registers of shareholders of the Corporation the Optionee as a
holder of the number of Optioned Shares so issued.
6. Restrictions on Exercise and Transfer
(a) The exercise of the Option granted hereunder shall be subject to
the condition that if at any time the Corporation shall determine in its sole
discretion that it is necessary or desirable to comply with any legal
requirements or the requirements of any stock exchange or other regulatory
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authority or to obtain any approval or consent from any such stock exchange or
other regulatory authority as a condition of, or in connection with, such
exercise or the issue of Common Shares as a result thereof, then in any such
event such exercise shall not be effective unless such compliance shall have
been effected or such approval or consent obtained on conditions satisfactory to
the Corporation. The Optionee further acknowledges that Common Shares obtained
pursuant to the exercise of the Option granted hereunder may be subject to hold
period requirements imposed by applicable securities legislation.
(b) The Options may not be transferred. Neither Common Shares issued
upon the exercise of Options nor any of the preferred shares referred to in
Section 7, below, which may be issued pursuant to such Section, may be
transferred, sold, assigned, pledged or otherwise hypothecated, or otherwise
disposed of (each, a "Transfer") by the Optionee prior to the second anniversary
of the date hereof, other than transfers for tax and estate planning purposes,
or pursuant to laws of descent and distribution.
7. Put Right
The Optionee may, at any date after the date hereof and on or
prior to the date which is eight and one-half years after the date hereof, or if
such date is not a business day, then the next business day, upon notice in
writing to the Corporation exchange all Options which may be exercised on such
date of exchange for preferred shares of the Corporation which shall have
rights, privileges, restrictions and conditions identical to those of the Class
D Shares of the Corporation, except that such preferred shares shall have no
right to be converted into Common Shares of the Corporation. The number of such
preferred shares for which the Options may be exchanged shall be calculated at
the date of notice of exchange on the basis that if all of the Options were then
exercisable, they would be exchanged into such number of preferred shares as
would have a liquidation preference equal to the aggregate of Cdn.$4,000,000
plus, if Options for all of the Optioned Shares are exchanged, an amount equal
to 7% per annum for the period from the date hereof to the date of the notice of
exchange, and if less than all of the Options are exercisable at the date of
exchange, a proportionately smaller number of preferred shares would be issued
to the Optionee upon such exchange. Notwithstanding the foregoing, the Optionee
shall have no right to exchange any of the Options on or after the date upon
which the Class D Shares of the Corporation become mandatorily convertible into
Common Shares in accordance with the terms of the Class D Shares.
8. Intentionally Deleted
9. Withholding
Upon the exercise of the Option, the Optionee shall make
arrangements satisfactory to the Corporation regarding payment of any taxes of
any kind required by law to be withheld with respect to the exercise of the
Option. In addition, the Corporation shall, to the extent permitted by
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law, have the right to deduct from any payment of any kind due to the Optionee
any taxes of any kind required by law to be withheld with respect to the
exercise of the Option.
10. Successors
This Agreement and the Option shall be binding upon the
Corporation and its successors, including upon the corporation continuing
following the amalgamation of the Corporation and Imax Corporation on the date
hereof.
IN WITNESS WHEREOF the parties have executed this Agreement as
of the day and year first above written.
WGIM ACQUISITION CORPORATION
Per:
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Per:
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Witness Xxxxxxx Xxxxxxxx
