POINT.360 NON-QUALIFIED STOCK OPTION AGREEMENT
Ex 4.2
Exhibit C
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”), is made as of the day
of
, 200___ by and between Point.360, a Californian corporation (the “Company”), and
(“Optionee”).
RECITAL
Pursuant to the 2007 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.
AGREEMENT
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
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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
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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 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, 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% ore more of the outstanding
voting securities of the Company; (iv) a sale of all or substantially all of the assets of the
Company; or (v) a purchase or other acquisition of more than 50% of the outstanding capital stock
of the Company by one person or 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
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(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 |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| OPTIONEE: |
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| By: | ||||
| Address: | ||||
| Social Security Number |
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