FORM OF IMAGE ENTERTAINMENT, INC. NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.14
FORM OF
IMAGE ENTERTAINMENT, INC.
This Nonqualified 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 a Nonqualified Stock Option under the Plan. This Nonqualified 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.
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 (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.
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 permitted by the
Committee, the Company’s withholding of shares of Stock that would otherwise be issued on exercise
of the Option, (iv) 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, (v)
such other consideration as the Committee may permit, or (vi) 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.
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 shall 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.
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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. 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.
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.
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.
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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.
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) Withholding of Tax. To the extent that the exercise of the Option or the
disposition of shares of Stock acquired by exercise of the Option results in compensation income to
Optionee for federal or state income tax purposes, Optionee shall pay to the Company at the time of
such exercise or disposition such amount of money as the Company may require to meet its obligation
under applicable tax laws or regulations and, if Optionee fails to do so, 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 such resulting compensation income or Company may otherwise refuse to
issue or transfer any shares otherwise required to be issued or transferred pursuant to the terms
hereof.
(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.
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Section 14. No Right to Employment or Service. Optionee shall be considered to be in
the employment of the Company or its Affiliates or in service as a director or consultant so long
as he or she remains an employee, director or consultant of the Company or its Affiliates. Any
questions as to whether and when there has been a termination of such employment or service as a
director or consultant 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 or to continue
service as a director or consultant, nor shall anything contained herein be construed or
interpreted to limit the “employment at will” relationship between Optionee and the Company or its
Affiliates.
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.,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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.
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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.
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 Nonqualified 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 Nonqualified 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 Nonqualified Stock Option Agreement, which is an aggregate of
$ , and makes payment of $ for required tax withholding.
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: | ||||