EXHIBIT 4.2
POINT.360
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement"), is made
as of the ________ day of ___________, 2005 by and between Point.360, a
Californian corporation (the "Company"), and _______________ ("Optionee").
R E C I T A L
Pursuant to the 2005 Equity Incentive 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 non-qualified stock option
to purchase the number of shares of common stock of the Company specified in
Section 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, ________
shares of common stock of the Company ("Shares") at the price of $________ per
Share (which price shall be no less than the fair market value of a Share on the
date of grant of this Option).
2. Term. This Option shall expire on the day before the ________
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 in
installments as to ___ percent (__%) of the Shares on and after each of the
first ____ anniversaries of the date hereof provided, however, that an
installment shall not become exercisable if the Optionee is not employed as an
employee, director, consultant or adviser of the Company, or its Affiliate, as
of such anniversary date. Once exercisable, the Option shall thereafter remain
exercisable as to such Shares for the term specified in Section 2 hereof, unless
Optionee's employment is terminated pursuant to Section 6 hereof or the Option
is terminated pursuant to a Corporate Transaction (as defined in Section 15
hereof). The Administrator may condition the exercise of the Option on the
Optionee's entering into a shareholders agreement with the Company and/or 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 16
hereof, (ii) that Optionee has no plan to violate Section 16 in the future,
(iii) that Optionee agrees to notify the Company within ten (10) days of a
violation of Section 16 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 Section 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, subject to
Sarbanes Oxley, 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. 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 otherwise issuable to Optionee upon the
exercise of this Option.
6. Exercise on Termination of Employment. If for any reason Optionee
ceases to be employed 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) may be exercised in whole or in part at any time
within 90 days of the date of such Termination, but in no event after the
earlier of the Expiration Date or a Corporate Transaction which terminates the
Option pursuant to Section 15 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
ninety (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) termination for cause under any employment agreement between the Company
and Optionee (as defined therein). 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 as of the date of such Termination.
7. Non-Transferability. 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.
8. Optionee Not a Stockholder. Optionee shall have no rights as a
stockholder with respect to the Shares 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.
9. 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, consult
with, or advise the Company or any of its Affiliates.
10. 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.
11. 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 Sections 6 and 7 hereof shall,
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.
12. 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.
13. Notices. All notices to the Company shall be addressed to the
Corporate Secretary at the principal executive office of the Company at 0000 X.
Xxxxxxx Xxxxxx, Xxxxxxx, 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).
14. 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.
15. Corporate Transactions. In the event of a Corporate Transaction (as
defined below), the Administrator shall notify Optionee at least thirty (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, in
its sole discretion, may (i) permit exercise of this Option prior to its
termination, even if this Option would not otherwise have been exercisable, and
(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. A "Corporate Transaction" means (i) a liquidation or
dissolution of the Company; (ii) a merger or consolidation of the Company with
or into another corporation or entity (other than a merger with a wholly-owned
subsidiary); (iii) a tender offer shall be made and consummated for the
ownership of 35% or more of the outstanding voting securities of the Company;
(iv) a sale of all or substantially all of the assets of the Company; (v) a
purchase or other acquisition of more than 50% of the outstanding stock of the
Company by one person or by more than one person acting in concert.
16. 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 (6) 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 five percent (5%)
of the stock of such corporation. Optionee agrees to notify the Company within
ten (10) days of any violation of this Section 16. Failure to comply with this
Section 16 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 16 will subject Optionee's benefit from the Option
to be forfeited and repaid to the Company, and Optionee agrees to do so within
ten (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.
POINT.360
By:
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Name:
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Title:
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OPTIONEE:
By:
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Address:
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Social Security Number