FORM OF IMAGE ENTERTAINMENT, INC. INCENTIVE STOCK OPTION AGREEMENT
Exhibit 10.15
FORM OF
IMAGE ENTERTAINMENT, INC.
This Incentive Stock Option Agreement (“Option Agreement”) is between Image Entertainment,
Inc., a Delaware corporation (the “Company”), and (“Optionee”), who agree as follows:
Section 1. Introduction. The Company has heretofore adopted the Image Entertainment,
Inc. 2008 Stock Awards and Incentive Plan (the “Plan”). The Company, acting through the Committee
(as defined in the Plan), has determined that its interests will be advanced by the issuance to
Optionee of an Incentive Stock Option under the Plan. This Incentive Stock Option is subject to all
of the terms and conditions as set forth herein and in the Plan.
Section 2. Option. Subject to the terms and conditions contained herein, the Company
hereby grants to Optionee the right and option (“Option”) to purchase from the Company shares of
the Company’s common stock, $0.0001 par value (“Stock”), at a price of $ per
share, which is not less than the fair market value of the Stock at the date of grant of this
Option; provided, however, that if Optionee owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its Parent Corporation or
Subsidiary Corporation (as defined in the Plan), such price is not less than 110% of the fair
market value of the Stock at the date of grant of this Option. Though the Option is granted as an
Incentive Stock Option, the Company does not represent or warrant that the Option qualifies as
such.
Section 3. Option Period. Beginning on (the “Date of
Grant”), the Option herein granted may be exercised by Optionee in whole or in part at any time
during a ten-year period (a five-year period if Optionee owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or of its Parent Corporation or
Subsidiary Corporation) (the “Option Period”), subject to earlier termination in accordance with
the terms of the Plan and the Option Agreement, in accordance with the following vesting schedule:
| Number of Shares Purchasable | ||
| Vesting Date | (cumulative to the extent more than one Vesting Date is specified) | |
Notwithstanding anything in this Option Agreement to the contrary, the Committee, in its sole
discretion, may waive the foregoing schedule of vesting and upon written notice to
Optionee, accelerate the earliest date or dates on which any portion of the Option granted
hereunder is exercisable.
Except as otherwise provided under the Internal Revenue Code of 1986 or applicable
regulations, to the extent that the aggregate fair market value (determined at the time an option
is granted) of the Stock with respect to which the Option and any other incentive stock option
(determined without regard to this sentence) issued to Optionee under all plans of the Company and
its Parent Corporation or Subsidiary Corporations becomes exercisable for the first time during any
calendar year exceeds $100,000, such portions of options in excess of $100,000 shall be treated as
Nonqualified Stock Options. A portion of the Option also may be treated as a Nonqualified Stock
Option if certain events cause exercisability of the Option to accelerate.
Section 4. Procedure for Exercise. The Option herein granted may be exercised by the
delivery by Optionee of written notice to the Secretary of the Company setting forth the number of
shares of Stock with respect to which the Option is being exercised. The notice shall be
accompanied by (i) cash, cashier’s check, bank draft, or postal or express money order payable to
the order of the Company, or wire transfer, (ii) if permitted by the Committee, shares of Stock
theretofore owned by Optionee duly endorsed for transfer to the Company, (iii) if the Stock is
registered under the Securities Exchange Act of 1934, as amended, and to the extent permitted by
law, instructions to a broker to deliver to the Company the total payment required, all in
accordance with the regulations of the Federal Reserve Board, (iv) such other consideration as the
Committee may permit, or (v) any combination of the preceding, equal in value to the aggregate
exercise price. Notice may be delivered by facsimile. The notice shall specify the address to which
the certificates for such shares are to be mailed. The Option shall be deemed to have been
exercised immediately prior to the close of business on the date (i) written notice of such
exercise and (ii) payment in full of the exercise price for the number of shares for which the
Option is being exercised are both received by the Company and Optionee shall be treated for all
purposes as the record holder of such shares of Stock as of such date.
As promptly as practicable after receipt of such written notice and payment, the Company shall
deliver to Optionee certificates for the number of shares with respect to which such Option has
been so exercised, issued in Optionee’s name or such other name as Optionee directs; provided,
however, that such delivery shall be deemed effected for all purposes when a stock transfer agent
of the Company shall have deposited such certificates in the United States mail, addressed to
Optionee at the address specified pursuant to this Section 4.
Section 5. Termination of Employment or Service. If, for any reason other than
retirement, death or disability, Optionee ceases to be employed by the Company or its Affiliates or
ceases to serve as a director or consultant, the Option may be exercised (to the extent Optionee
would have been entitled to do so at the date of termination of employment or cessation of serving
as a director or consultant) during a three-month period after such date (after which period the
Option shall expire), but in no event may the Option be exercised after the expiration of the
Option Period; provided, however, that if Optionee’s employment or service as a director or
consultant is terminated because of the Optionee’s (a) theft or embezzlement from the Company or
its Affiliates, (b) disclosure of trade secrets of the Company or its Affiliates, (c) failure to
perform his/her job duties and services resulting in a material adverse effect on the Company or
its Affiliates or (d) the commission of a willful, felonious act while in the
employment or service of the Company or its Affiliates (such reasons shall hereinafter be
collectively referred to as “for cause”), then the Option or unexercised portion thereof shall
expire upon such termination of employment or cessation of serving as a director or consultant.
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In the event that Optionee dies or Optionee’s employment or service ceases because Optionee is
determined to be disabled, the Option may be exercised (to the extent Optionee would have been
entitled to do so at the date of death or termination of employment or service) at any time and
from time to time, within a one year period after such death or termination of employment or
service, by Optionee or his guardian or legal representative or, in the case of death, the executor
or administrator of Optionee’s estate or by the person or persons to whom Optionee’s rights under
this Option Agreement shall pass by will or the laws of descent and distribution (after which
period the Option will expire), but in no event may the Option be exercised after the expiration of
the Option Period. Optionee shall be deemed to be disabled if, in the opinion of a physician
selected by the Committee, Optionee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous period of not less than 12
months.
Subject to the discretion of the Committee, if Optionee ceases to be an employee of the
Company (including as an officer of the Company) as a result of Retirement, Optionee need not
exercise the Option within three (3) months of termination of employment but will be entitled to
exercise the Option within the maximum term of the Option to the extent the Option was otherwise
exercisable at the date of Retirement. However, if Optionee does not exercise within three (3)
months of termination of employment, the Option will not qualify as an Incentive Stock Option if it
otherwise so qualified. The term “Retirement” as used herein means such termination of employment
in accordance with the retirement policies of the Company and its Affiliates then in effect.
The Option must be exercised within three months after termination of employment for reasons
other than death or disability and one year after termination of employment due to disability (as
such term is defined for purposes of Incentive Stock Options) to qualify for the beneficial tax
treatment afforded Incentive Stock Options.
It is Optionee’s responsibility to be aware of the date on which the Option terminates.
Section 6. Leave of Absence. The Committee shall have the discretion to determine
whether and to what extent the vesting of the Option shall be tolled during any unpaid leave of
absence; provided, however, that in the absence of such determination, vesting of the Option shall
be tolled during any such unpaid leave (unless otherwise required by any applicable law, rule or
regulation). In the event of military leave, vesting shall toll during any unpaid portion of such
leave, provided that, upon Optionee’s returning from military leave (under conditions that would
entitle him or her to protection upon such return under the Uniform Services Employment and
Reemployment Rights Act), he or she shall be given vesting credit with respect to the Option to the
same extent as would have applied had the Optionee continued to provide services to the Company
throughout the leave on the same terms as he or she was providing services
immediately prior to such leave. Notwithstanding the foregoing, certain leaves of absence may
result in a loss of the status of the Option as an Incentive Stock Option under the rules and
regulations applicable to incentive stock options. In such event, the Option will be treated for
tax purposes as a Nonqualified Stock Option.
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Section 7. Transferability. The Option shall not be transferable by Optionee otherwise
than by Optionee’s will or by the laws of descent and distribution. During the lifetime of
Optionee, the Option shall be exercisable only by Optionee or his authorized legal representative.
Any heir or legatee of Optionee shall take rights herein granted subject to the terms and
conditions hereof. No such transfer of this Option Agreement to heirs or legatees of Optionee shall
be effective to bind the Company unless the Company shall have been furnished with written notice
thereof and a copy of such evidence as the Committee may deem necessary to establish the validity
of the transfer and the acceptance by the transferee or transferees of the terms and conditions
hereof.
Section 8. No Rights as Shareholder. Optionee shall have no rights as a shareholder
with respect to any shares of Stock covered by this Option Agreement until the Option is exercised
by written notice and accompanied by payment as provided in Section 4 of this Option Agreement.
Section 9. Extraordinary Corporate Transactions. The existence of outstanding Options
shall not affect in any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, exchanges or other changes in
the Company’s capital structure or its business, or any merger or consolidation of the Company, or
any issuance of Stock or other securities or subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceedings, whether of a similar
character or otherwise. If the Company undergoes a “Change of Control” (as defined in the Plan) or
other corporate reorganization described in Section XIII of the Plan, the Option granted hereunder
shall be governed by Section XIII of the Plan.
Section 10. Changes in Capital Structure. If the outstanding shares of Stock or other
securities of the Company, or both, for which the Option is then exercisable shall at any time be
changed or exchanged by declaration of a stock dividend, stock split or combination of shares, the
number and kind of shares of Stock or other securities subject to the Plan or subject to the
Option, and the exercise price, shall be appropriately and equitably adjusted so as to maintain the
proportionate number of shares or other securities without changing the aggregate exercise price.
Section 11. Compliance with Securities Laws. Upon the acquisition of any shares
pursuant to the exercise of the Option herein granted, Optionee (or any person acting under Section
7) will enter into such written representations, warranties and agreements as the Company may
reasonably request in order to comply with applicable securities laws or with this Option
Agreement.
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Section 12. Compliance with Laws. Notwithstanding any of the other provisions hereof,
Optionee agrees that he or she will not exercise the Option granted hereby, and that the Company
will not be obligated to issue any shares pursuant to this Option Agreement, if the exercise
of the Option or the issuance of such shares of Stock would constitute a violation by Optionee or
by the Company of any provision of any law or regulation of any governmental authority.
Section 13. Tax Provisions.
(a) Effect of Failure to Qualify for Incentive Stock Option Treatment. If Optionee
disposes of any shares of Stock acquired pursuant to the exercise of the Option prior to the later
of (i) two years from the Date of Grant or (ii) one year from the date the shares of Stock are
acquired, Optionee shall notify the Company of such disposition within ten days of its occurrence.
In the event of any such disposition, or if any other event occurs such that Optionee recognizes
compensation income with respect to this option, Optionee shall deliver to the Company any amount
of federal or state income tax withholding required by law. If Optionee fails to pay the
withholding tax, the Company is authorized to withhold from any cash remuneration then or
thereafter payable to Optionee any tax required to be withheld by reason of any disposition or
other event described in this Section.
(b) Tax Consequences. Optionee has reviewed, or has had the opportunity to review but
chose not to do so, with Optionee’s own tax or legal advisors the federal, state, local and foreign
tax consequences that may arise upon the grant, vesting or exercise of the Option and the
disposition of any shares of Stock subject to the Option. Optionee understands that Optionee (and
not the Company) shall be responsible for any tax liability that may arise with respect to the
Option and the disposition of any shares subject thereto.
Section 14. No Right to Employment. Optionee shall be considered to be in the
employment of the Company or its Affiliates so long as he or she remains an employee of the Company
or its Affiliates. Any questions as to whether and when there has been a termination of such
employment and the cause of such termination shall be determined by the Committee, and its
determination shall be final. Nothing contained herein shall be construed as conferring upon
Optionee the right to continue in the employ of the Company or its Affiliates, nor shall anything
contained herein be construed or interpreted to limit the “employment at will” relationship between
Optionee and the Company or its Affiliates.
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Section 15. Resolution of Disputes. As a condition of the granting of the Option
hereby, Optionee and Optionee’s heirs, personal representatives and successors agree that any
dispute or disagreement which may arise hereunder shall be determined by the Committee in its sole
discretion and judgment, and that any such determination and any interpretation by the Committee of
the terms of this Option Agreement shall be final and shall be binding and conclusive, for all
purposes, upon the Company, Optionee, and Optionee’s heirs, personal representatives and
successors.
Section 16. Legends on Certificate. The certificates representing the shares of Stock
purchased by exercise of the Option will be stamped or otherwise imprinted with legends in such
form as the Company or its counsel may require with respect to any applicable restrictions on sale
or transfer and the stock transfer records of the Company will reflect stop-transfer instructions
with respect to such shares.
Section 17. Notices. Except as expressly provided otherwise in this Option Agreement,
every notice hereunder shall be in writing and shall be given by registered or certified mail. All
notices of the exercise of any Option hereunder shall be directed to Image Entertainment, Inc.,
00000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxx 00000, Attention: Corporate Secretary. Any
notice given by the Company to Optionee directed to Optionee at the address on file with the
Company shall be effective to bind Optionee and any other person who shall acquire rights
hereunder. The Company shall be under no obligation whatsoever to advise Optionee of the existence,
maturity or termination of any of Optionee’s rights hereunder and Optionee shall be deemed to have
familiarized himself or herself with all matters contained herein and in the Plan which may affect
any of Optionee’s rights or privileges hereunder.
Section 18. Construction and Interpretation. Whenever the term “Optionee” is used
herein under circumstances applicable to any other person or persons to whom this award, in
accordance with the provisions of Section 7 hereof, may be transferred, the word “Optionee” shall
be deemed to include such person or persons.
Section 19. Agreement Subject to Plan. This Option Agreement is subject to the Plan.
The terms and provisions of the Plan (including any subsequent amendments thereto) are hereby
incorporated herein by reference thereto. In the event of a conflict between any term or provision
contained herein and a term or provision of the Plan, the applicable terms and provisions of the
Plan will govern and prevail. All definitions of words and terms contained in the Plan shall be
applicable to this Option Agreement.
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Section 20. Binding Effect. This Option Agreement shall be binding upon and inure to
the benefit of any successors to the Company and all persons lawfully claiming under Optionee as
provided herein.
Section 21. Entire Agreement; Amendment. This Option Agreement and any other
agreements and instruments contemplated by this Option Agreement contain the entire agreement of
the parties, and this Option Agreement may be amended only in writing signed by both parties.
IN WITNESS WHEREOF, this Incentive Stock Option Agreement has been executed as of the
day of
, 20 .
| Image Entertainment, Inc. | ||||||||
| By: | ||||||||
| Title: | ||||||||
| OPTIONEE | ||||||||
| Address: | ||||||||
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NOTICE OF EXERCISE
To: Image Entertainment, Inc.
Date: ____________________
The undersigned, pursuant to the provisions set forth in the attached Incentive Stock Option
Agreement, hereby irrevocably elects to purchase:
Shares covered by such Option.
The undersigned herewith makes payment of the full Exercise Price for such Shares at the price per
Share provided for in such Incentive Stock Option Agreement, which is an aggregate of $ .
In exercising the Option, the undersigned hereby confirms and acknowledges that the Shares are
being acquired solely for the account of the undersigned and not a nominee for any other party, and
for investment, and that the undersigned will not offer, sell or otherwise dispose of any such
Shares except under circumstances that will not result in a violation of the Securities Act of
1993, as amended, or any applicable state securities laws.
Please issue a certificate representing said Shares in the name of the undersigned.
| OPTIONEE: | ||||
