IMAGE ENTERTAINMENT,
INC.
2008 STOCK AWARDS AND INCENTIVE
PLAN
(Amended and Restated Effective May 1, 2009)
The purpose of the IMAGE ENTERTAINMENT, INC.
2008 STOCK AWARDS AND INCENTIVE PLAN (the “Plan”
) is to provide a means through which Image Entertainment, Inc., a
Delaware corporation (the “Company” ), and its
Affiliates, may attract able persons to enter the employ of the
Company and its Affiliates and to provide a means whereby those
employees, directors and consultants, upon whom the
responsibilities of the successful administration and management of
the Company and its Affiliates rest, and whose present and
potential contributions to the welfare of the Company and its
Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of
the Company and its Affiliates and their desire to remain in the
Company’s and its Affiliates’ employ. A further purpose
of the Plan is to provide such employees, directors and consultants
with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, the Plan
provides for granting Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards,
Performance Awards, Phantom Stock Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular
employee, director or consultant as provided herein.
The following definitions shall be applicable
throughout the Plan unless specifically modified by any
paragraph:
(a)
“Affiliate” means any Parent Corporation and any
Subsidiary Corporation.
(b) “Award” means, individually
or collectively, any Option, Restricted Stock Award, Phantom Stock
Award, Performance Award, Stock Appreciation Right or Stock
Unit.
(c)
“Board” means the Board of Directors of the
Company.
(d) “Change of Control” means
the occurrence of any of the following events: (i) the Company
shall not be the surviving entity in any merger, consolidation or
other reorganization (or survives only as a subsidiary of an entity
other than a previously wholly-owned subsidiary of the Company),
(ii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity
(other than a wholly-owned subsidiary of the Company),
(iii) the Company is to be dissolved and liquidated,
(iv) any person or entity, including a “group” as
contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains
ownership or control (including, without limitation, power to vote)
of more than 50% of the outstanding shares of the Company’s
voting stock (based upon voting power), or (v) as a result of
or in connection with a contested election of directors, the
persons who were directors of the Company before such election
shall cease to constitute a majority of the Board. Notwithstanding
anything herein to the contrary, and only to the extent that an
Award is subject to Code Section 409A and would not otherwise
comply with Code Section 409A, a “Change of
Control” shall occur only to the extent that the definition
of “Change of Control” set forth above may be
interpreted to be consistent with Code Section 409A and the
applicable Internal Revenue Service and Treasury Department
regulations thereunder.
(e) “Change of Control Value”
shall mean with respect to a Change of Control (i) the per
share price offered to shareholders of the Company in any merger,
consolidation, reorganization, sale of assets or dissolution
transaction, (ii) the price per share offered to shareholders
of the Company in any tender offer, exchange offer or sale or other
disposition of outstanding voting stock of the Company, or
(iii) if such Change of Control occurs other than as described
in clause (i) or clause (ii), the Fair Market Value per share
of the shares into which Awards are exercisable, as determined by
the Committee, whichever is applicable. In the event that the
consideration offered to shareholders of the Company consists of
anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consideration offered which
is other than cash.
(f) “Code” means the Internal
Revenue Code of 1986, as amended. Reference in the Plan to any
section of the Code shall be deemed to include any amendments or
successor provisions to any section and any regulations under such
section.
(g) “Committee” as used in the
Plan means the Board and/or the Compensation Committee of the Board
which shall be constituted entirely of not less than two
(2) non-employee directors (within the meaning of
Rule 16b-3), each of whom shall be an “outside
director,” within the meaning of Section 162(m) of the Code
and applicable interpretive authority thereunder.
(h)
“Company” means Image Entertainment, Inc.
(i) A “consultant” means an
individual (other than a director) who performs services for the
Employer as an independent contractor.
(j) A
“covered employee” means an individual described in
Code Section 162(m)(3).
(k) A “director” means an
individual who is serving on the Board or on the board of directors
of an Affiliate on the date the Plan is adopted by the Board or who
is elected to the Board or the board of directors of an Affiliate
after such date.
(l) An “employee” means any
person (including an officer or a director) in an employment
relationship with the Company or any Affiliate.
(m) “Employer” means the
Company or an Affiliate.
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(n) “Fair Market Value” means,
as of any specified date, the closing sales price of the Stock
(i) reported by any interdealer quotation system on which the
Stock is quoted on that date or (ii) if the Stock is listed on a
national stock exchange, reported on the stock exchange composite
tape on that date; or, in either case, if no price is reported on
that date, on the last preceding date on which such price of the
Stock is so reported, unless the Committee determines otherwise
using such methods or procedures as it may establish. If the Stock
is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market
value shall be deemed to be equal to the average between the
reported high and low or closing bid and asked prices of Stock on
the most recent date on which Stock was publicly traded, unless the
Committee determines otherwise using such methods or procedures as
it may establish. In the event Stock is not publicly traded at the
time a determination of its value is required to be made hereunder,
the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate, consistent with
Treasury regulations and other formal Internal Revenue Service
guidance under Code Section 409A, with the intent that Options
and Stock Appreciation Rights granted under this Plan shall not
constitute deferred compensation subject to Code Section
409A.
(o)
“Holder” means an individual who has been granted an
Award.
(p) “Incentive Stock Option”
means an incentive stock option within the meaning of section
422(b) of the Code.
(q) “1934
Act” means the Securities Exchange Act of 1934, as
amended.
(r) “Nonqualified Stock Option”
means an option granted under Paragraph VII of the Plan to
purchase Stock which does not constitute an Incentive Stock
Option.
(s) “Option” means an Award
granted under Paragraph VII of the Plan and includes both
Incentive Stock Options to purchase Stock and Nonqualified Stock
Options to purchase Stock.
(t) “Option Agreement” means a
written agreement between the Company and a Holder with respect to
an Option.
(u) “Parent Corporation” means
a “parent corporation” of the Company within the
meaning of Code Section 424(e).
(v)
“Performance Award” means an Award granted under
Paragraph X of the Plan.
(w) “Performance Award
Agreement” means a written agreement between the Company and
a Holder with respect to a Performance Award.
(x)
“Phantom Stock Award” means an Award granted under
Paragraph XI of the Plan.
(y) “Phantom Stock Award
Agreement” means a written agreement between the Company and
a Holder with respect to a Phantom Stock Award.
(z) “Plan” means the Image
Entertainment, Inc. 2008 Stock Awards and Incentive Plan, as
amended from time to time.
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(aa) “Restricted Stock
Agreement” means a written agreement between the Company and
a Holder with respect to a Restricted Stock Award.
(bb)
“Restricted Stock Award” means an Award granted under
Paragraph IX of the Plan.
(cc) “Rule 16b-3” means
SEC Rule 16b-3 promulgated under the 1934 Act, as such may be
amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.
(dd) “Spread” means, in the
case of a Stock Appreciation Right, an amount equal to the excess,
if any, of the Fair Market Value of a share of Stock on the date
such right is exercised over the exercise price of such Stock
Appreciation Right.
(ee)
“Stock” means the common stock, $0.0001 par value of
the Company.
(ff)
“Stock Appreciation Right” means an Award granted under
Paragraph VIII of the Plan.
(gg) “Stock Appreciation Rights
Agreement” means a written agreement between the Company and
a Holder with respect to an Award of Stock Appreciation
Rights.
(hh) “Stock Unit” means a
right, granted to a Holder under Paragraph XII hereof, to
receive Stock, cash or a combination thereof at the end of a
specified period of time.
(ii) “Stock Unit Agreement”
means a written agreement between the Company and a Holder with
respect to a Stock Unit Award.
(jj) “Subsidiary Corporation”
means a “subsidiary corporation” of the Company within
the meaning of Code Section 424(f).
III. EFFECTIVE DATE AND DURATION
OF THE PLAN
This Plan shall be effective on July 30,
2008 which is the date of its adoption by the Board (the
“Effective Date”), subject to the approval of the Plan
by the Company’s shareholders within twelve months after the
Effective Date. If the Plan is not so approved by the
Company’s shareholders, (a) the Plan shall not be
effective, and (b) any grants of Awards under the Plan shall
immediately expire and be of no force and effect. No Awards may be
granted under the Plan after the tenth anniversary of the Effective
Date. The Plan shall remain in effect until all Awards granted
under the Plan have been satisfied or expired.
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(a) Committee. The Plan shall be
administered by the Committee. The Committee shall hold its
meetings at such times and places as it may determine. A majority
of its members shall constitute a quorum, and all determinations of
the Committee shall be made by not less than a majority of its
members. Any decision or determination reduced to writing and
signed by a majority of the members shall be fully effective as if
it had been made by a majority vote of its members at a meeting
duly called and held. The Committee may designate the Secretary of
the Company or other Company employees to assist the Committee in
the administration of this Plan, and may grant authority to such
persons to execute Award agreements or other documents on behalf of
the Committee and the Company.
(b) Powers. Subject to the
provisions of the Plan, the Committee shall have sole authority, in
its discretion, to determine which employees, directors or
consultants shall receive an Award, the time or times when such
Award shall be made, whether an Incentive Stock Option,
Nonqualified Option, Stock Unit or Stock Appreciation Right shall
be granted, the number of shares of Stock which may be issued under
each Option, Stock Appreciation Right or Restricted Stock Award,
and the value of each Performance Award and Phantom Stock Award. In
making such determinations the Committee may take into account the
nature of the services rendered by the respective employees, their
present and potential contributions to the Employer’s success
and such other factors as the Committee in its discretion shall
deem relevant. The Committee, in its sole discretion, and subject
to Code Section 409A and other applicable laws, may waive
compliance with any provision of any Award, or any related
agreement, may extend the date through which any Award is
exercisable, and/or may accelerate the earliest date on which such
Award becomes exercisable, vested, free from restrictions or
payable, provided in each case such action does not adversely
affect the rights of the Holder.
(c) Additional Powers. The
Committee shall have such additional powers as are delegated to it
by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the
Plan and the respective agreements executed thereunder, to
prescribe such rules and regulations relating to the Plan as it may
deem advisable to carry out the Plan, and to determine the terms,
restrictions and provisions of each Award, including such terms,
restrictions and provisions as shall be requisite in the judgment
of the Committee to cause designated Options to qualify as
Incentive Stock Options, and to make all other determinations
necessary or advisable for administering the Plan. The Committee
may correct any defect or supply any omission or reconcile any
inconsistency in any agreement relating to an Award in the manner
and to the extent it shall deem expedient to carry it into effect.
The determinations of the Committee on the matters referred to in
this Article IV shall be conclusive.
(d) Expenses. All expenses and
liabilities incurred by the Committee in the administration of this
Plan shall be borne by the Company. The Committee may employ
attorneys, consultants, accountants or other persons to assist the
Committee in the carrying out of its duties hereunder.
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V. STOCK SUBJECT TO THE
PLAN
(a) Stock Grant and Award Limits.
The Committee may from time to time grant Awards to one or more
employees, directors or consultants determined by it to be eligible
for participation in the Plan in accordance with the provisions of
Paragraph VI. Subject to Paragraph XIII, the maximum
aggregate number of shares of Stock that may be issued under the
Plan is 1,000,000, any or all of which may be issued through
Incentive Stock Options. Shares of Stock shall be deemed to have
been issued under the Plan only to the extent actually issued and
delivered pursuant to an Award. To the extent that an Award (other
than an Award of Restricted Stock) lapses or is canceled or the
rights of its Holder terminate or the Award is settled in cash, any
Stock subject to such Award shall again be available for grant
under an Award. Should any shares of Restricted Stock be forfeited,
such shares may not again be subject to an Award under the Plan.
Any shares of Stock which may remain unissued and which are not
subject to outstanding Awards at the termination of this Plan shall
cease to be reserved for the purpose of this Plan, but until
termination of this Plan or the termination of the last of the
Awards granted under this Plan, whichever last occurs, the Company
shall at all times reserve a sufficient number of shares to meet
the requirements of this Plan.
Notwithstanding any provision in the Plan to the
contrary, no shares of Stock may be subject to Options granted
under the Plan to any one individual during any one year period, no
shares of Stock may be subject to Stock Appreciation Rights granted
under the Plan to any one individual during any one year period,
and no shares of Stock may be granted under the Plan as a
Restricted Stock Award to any one individual during any one year
period that would exceed the limit of Section 162(m) of the Code.
The number of shares of Stock that may be issued to individuals as
set forth in the preceding sentence shall be subject to adjustment
in the same manner as provided in Section XIII hereof with respect
to shares of Stock subject to Options, Stock Appreciation Rights or
Restricted Stock Awards then outstanding. The limitations set forth
in this paragraph shall be applied in a manner which will permit
compensation generated under the Plan with respect to
“covered employees” to constitute
“performance-based” compensation for purposes of
Section 162(m) of the Code, including, without limitation, counting
against such maximum number of shares of Stock, to the extent
required under Section 162(m) of the Code and applicable
interpretive authority thereunder, any shares of Stock subject to
Options or Stock Appreciation Rights that expire, are canceled or
repriced or Restricted Stock Awards that are forfeited.
(b) Stock Offered. The stock to be
offered pursuant to the grant of an Award may be authorized but
unissued Stock or Stock previously issued and outstanding and
reacquired by the Company.
The Committee, in its sole discretion, shall
determine who shall receive Awards under the Plan. Awards other
than Incentive Stock Options may be granted to all employees,
directors and consultants of the Company or its Affiliates,
including Affiliates that become such after adoption of the Plan.
Incentive Stock Options may be granted to all employees of the
Company or its Affiliates, including Affiliates that become such
after adoption of the Plan. A recipient of an Award must be an
employee, director or consultant at the time the Award is granted.
An Award may be granted on more than one occasion to the same
person, and, subject to the limitations set forth in the Plan, such
Award may include an Incentive Stock Option or a Nonqualified Stock
Option, a Stock Appreciation Right, a Restricted Stock Award, a
Performance Award, a Phantom Stock Award or any combination
thereof.
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(a) Option Period. The term of each
Option shall be as specified by the Committee at the date of
grant.
(b) Limitations on Exercise of
Option. An Option shall be exercisable in whole or in such
installments and at such times as determined by the
Committee.
(c) Special Limitations on Incentive
Stock Options. Except as otherwise provided under the Code or
applicable regulations, to the extent that the aggregate Fair
Market Value (determined at the time the option is granted) of the
Stock with respect to which Incentive Stock Options (determined
without regard to this sentence) are exercisable for the first time
by any Holder during any calendar year under all plans of the
Company and its Parent Corporation or Subsidiary Corporations
exceeds $100,000, such options shall be treated as Nonqualified
Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of a Holder’s Incentive
Stock Options will not constitute Incentive Stock Options because
of such limitation and shall notify the Holder of such
determination as soon as practicable after such determination. No
Incentive Stock Option shall be granted to an individual if, at the
time the Option is granted, such individual 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, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the exercise
price is at least 110% of the Fair Market Value of the Stock
subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of
grant.
(d) Option Agreement. Each Option
shall be evidenced by an Option Agreement in such form and
containing such provisions not inconsistent with the provisions of
the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify an Incentive
Stock Option under section 422 of the Code. An Option Agreement may
provide for the payment of the exercise price, in whole or in part,
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) subject to the approval by the Committee,
tendering shares of Stock theretofore owned by the Holder duly
endorsed for transfer to the Company, (iii) subject to the
approval by the Committee, the Company’s withholding of
shares of Stock that would otherwise be issued on exercise of the
Option, (iv) so long as the Stock is registered under Section
12(b) or 12(g) of the 1934 Act, and to the extent permitted by law,
delivery of a properly executed exercise agreement or notice,
together with irrevocable instructions to a brokerage firm
designated or approved by the Company to deliver promptly to the
Company the aggregate amount of proceeds to pay the Option exercise
price and any withholding tax obligations that may arise in
connection with the exercise, 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 full amount of
the exercise price. Each Option shall specify the effect of
termination of employment or service as a director or consultant
(by retirement, disability, death or otherwise) on the
exercisability of the Option. An Option Agreement may also include,
without limitation, provisions relating to (i) vesting of
Options, subject to the provisions hereof accelerating such vesting
on a Change of Control, (ii) tax matters (including provisions
(y) permitting the delivery of additional shares of Stock or
the withholding of shares of Stock from those acquired upon
exercise to satisfy federal or state income tax withholding
requirements and (z) dealing with any other applicable
employee wage withholding requirements), and (iii) any other
matters not inconsistent with the terms and provisions of this Plan
that the Committee shall in its sole discretion determine. The
terms and conditions of the respective Option Agreements need not
be identical.
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(e) Exercise Price and Payment. The
price at which a share of Stock may be purchased upon exercise of
an Option shall be determined by the Committee, but (i) such
exercise price shall never be less than the Fair Market Value of
Stock on the date the Option is granted and (ii) such exercise
price shall be subject to adjustment as provided in
Paragraph XIII. The Option or portion thereof may be exercised
by delivery of an irrevocable notice of exercise to the Company.
The exercise price of the Option or portion thereof shall be paid
in full in the manner prescribed by the Committee.
(f) Shareholder Rights and
Privileges. The Holder shall be entitled to all the privileges
and rights of a shareholder only with respect to such shares of
Stock as have been purchased under the Option and for which
certificates of stock have been registered in the Holder’s
name.
(g) Options and Rights in Substitution
for Stock Options Granted by Other Corporations. Options and
Stock Appreciation Rights may be granted under the Plan from time
to time in substitution for stock options held by individuals
employed by corpora
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