EXHIBIT 4.2
IMAX CORPORATION
STOCK OPTION PLAN
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IMAX CORPORATION
STOCK OPTION PLAN
1. Purpose
The purposes of the Imax Stock Option Plan (the "Plan") are to
attract, retain and motivate directors, officers, key employees and consultants
of the Company and its Subsidiaries and to provide to such persons incentives
and awards for superior performance.
2. Definitions
As used in this Plan the following terms have the following
meanings:
(a) "Agreement" has the meaning set forth in Section 6 below.
(b) "Award" means an Option.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means a termination of the Participant's
employment with the Company or one of its Subsidiaries (a) for "cause" as
defined in an employment agreement applicable to the Participant, or (b) in the
case of a Participant who does not have an employment agreement that defines
"cause", because of: (i) any act or omission that constitutes a material breach
by the participant of any of his obligations under his employment agreement with
the Company or one of its Subsidiaries or the applicable Agreement; (ii) the
continued failure or refusal of the Participant to substantially perform the
duties reasonably required of him as an employee of the Company or one of its
Subsidiaries; (iii) any wilful and material violation by the Participant of any
law or regulation applicable to the business of the Company or one of its
Subsidiaries, or the Participant's conviction of a felony, or any wilful
perpetration by the Participant of a common law fraud; or (iv) any other wilful
misconduct by the Participant which is materially injurious to the financial
condition or business reputation of, or is otherwise materially injurious to,
the Company or any of its Subsidiaries.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means a committee of the Board comprised of at
least two directors selected by the Board to administer the Plan.
(g) "Common Share" means a share of common stock, no par
value, of the Company.
(h) "Company" means Imax Corporation, a corporation organized
under the laws of Canada.
(i) "Date of Grant" means the date specified by the Committee
on which an Award shall become effective (which date shall not be earlier than
the date on which the Committee takes action with respect thereto).
(j) "Fair Market Value" of a Common Share on a given date
means the higher of the closing price of a Common Share on such date (or the
most recent trading date if such date is not a trading date) on the
NASDAQ/National Market System, The Toronto Stock Exchange and such national
exchange, if any, as may be designated by the Board.
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(k) "Option Price" means the purchase price per Common Share
payable on exercise of an Option, as determined by the Committee in its sole
discretion (subject to the terms of the Plan) and as set forth in the applicable
Agreement.
(l) "Option" means the right to purchase a Common Share upon
exercise of a stock option granted pursuant to the Plan.
(m) "Participant" means a person to whom an Award is to be
made under the Plan and who is at the time of such Award an officer, employee or
consultant of the Company, or any of its Subsidiaries, or a person who is a
director of the Company or any of its Subsidiaries and who is not also an
employee of the Company or any of its Subsidiaries at the Date of Grant, or a
person who has agreed to commence serving in any such capacity within 90 days of
the Date of Grant, or any personal holding corporation controlled by any such
person, the shares of which are held directly or indirectly by such person or
such person's spouse, minor children or minor grandchildren, or any registered
retirement savings plan or registered educational savings plan for the sole
benefit of any such person.
(n) "Permanent Disability" means a physical or mental
disability or infirmity of the Participant that prevents the normal performance
of substantially all his duties as an employee of the Company or any Subsidiary,
which disability or infirmity shall exist for any continuous period of 180 days
within any twelve-month period.
(o) "Rule 16b-3" means Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(p) "Subsidiary" means any corporation or other entity in
which the Company owns or controls, directly or indirectly, not less than 50% of
the total combined voting power represented by all voting securities or other
voting interests in such entity.
(q) "Vested Options" means, as of any date, Options which by
their terms are exercisable on such date.
3. Administration of the Plan
(a) The Plan shall be administered, and Awards shall be
granted hereunder, by or under the authority of the Committee. A majority of the
Committee shall constitute a quorum, and the action of the members of the
Committee present at any meeting at which a quorum is present, or acts
unanimously approved in writing, shall be the acts of the Committee.
(b) The interpretation and construction by the Committee of
any provision of the Plan or of any Agreement, and any determination by the
Committee pursuant to any provision of this Plan or of any Agreement shall be
final and conclusive. No member of the Committee shall be liable for any such
action or determination made in good faith.
4. Shares Available Under Plan
The maximum number of Common Shares which may be issued upon
the exercise of Options granted under the Plan is 10,210,836 Shares, subject to
adjustment as provided in Paragraph 9. Such shares may be shares previously
issued or treasury shares or a combination of the foregoing. Any Common Shares
which are subject to Options which expire or which have been surrendered without
being exercised in full shall again be available for issuance under this Plan.
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5. Options
The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of
Options provided, however, that: (i) at no time shall the number of Common
Shares reserved for issuance to any one Participant under the Plan or any other
share compensation arrangement exceed 5% of the outstanding issue of Common
Shares; (ii) at no time shall the number of Common Shares reserved for issuance
pursuant to stock options granted to "insiders" (as that term is defined in
Section 627 of The Toronto Stock Exchange Company Manual) exceed 10% of the
outstanding issue of Common Shares; (iii) under no circumstances shall insiders
be issued in excess of 10% of the outstanding issue of Common shares within any
one-year period pursuant to the exercise of Options granted under the Plan or
any other share compensation arrangement; and (iv) under no circumstances shall
any one insider and that insider's associates be issued in excess of 5% of the
outstanding issue of Common Shares within any one-year period pursuant to the
exercise of Options granted under the Plan or any other share compensation
arrangement.
6. Agreement
The terms and conditions of each Option shall be embodied in a
written agreement (the "Agreement") in a form approved by the Committee which
shall contain terms and conditions not inconsistent with the Plan and which
shall incorporate the Plan by reference. Options granted under the Plan shall
comply with the following terms and conditions:
(i) Each Agreement shall specify the number of Common Shares
for which Options have been granted.
(ii) Each Agreement shall specify the Option Price, which
shall not be less than 100% of the Fair Market Value per Common Share on the
Date of Grant.
(iii) Each Agreement shall specify that the Option Price shall
be payable (a) in cash or by cheque acceptable to the Company, (b) by the
transfer to the Company of Common Shares having an aggregate Fair Market Value
per Common Share at the date of exercise equal to the aggregate Option Price or
(c) by a combination of such methods of payment.
(iv) Successive grants may be made to the same Participant
whether or not any Options previously granted to such Participant remain
unexercised.
(v) Each Agreement shall specify the applicable vesting
schedule and the effective term of the Option. In the event of a termination of
a Participant's employment by reason of death or Permanent Disability, 50% of
such Participant's Options shall become Vested Options if such Options were less
than 50% vested at the time of such termination.
(vi) Options granted under the Plan are not intended to
qualify as "incentive stock options" within the meaning of Section 422A of the
Code.
(vii) No Option shall be exercisable more than ten years from
the date of Grant.
(viii) Each Option granted under the Plan shall be subject to
such additional terms and conditions, not inconsistent with the Plan, which are
prescribed by the Committee and set forth in the applicable Agreement.
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(ix) As soon as practicable following the exercise of any
Options, a certificate evidencing the number of Common Shares issued in
connection with such exercise shall be issued in the name of the Participant or
as the Participant shall otherwise, in writing, direct.
7. Termination of Employment, Consulting Agreement or Term of Office
(a) In the event that a Participant's employment, consulting
arrangement or term of office with the Company or one of its Subsidiaries
terminates for any reason, unless the Committee or the Board determines
otherwise, any Options which have not become Vested Options shall terminate and
be cancelled without any consideration being paid therefor.
(b) In the event that a Participant's employment with the
Company or one of its Subsidiaries is terminated without Cause, or the
Participant's employment is terminated by reason of the Participant's voluntary
resignation (including by reason of retirement), death or Permanent Disability,
or upon the termination of a Participants' consulting arrangement or term of
office, the Participant (or the Participant's estate) shall be entitled to
exercise the Participant's Options which have become Vested Options as of the
date of termination for a period of 30 days, or such longer period as the
Committee or the Board determines, following the date of termination.
(c) In the event that a Participant's employment, consulting
arrangement or term of office with the Company or one of its Subsidiaries is
terminated for Cause, such Participant's Vested Options shall terminate and be
cancelled without any consideration being paid therefor.
8. Transferability
No Option shall be transferable by a Participant other than by
will or the laws of descent and distribution, provided, however, that Options
may be transferred if approved by the Committee or the Board and by any
regulatory authority having jurisdiction or stock exchange on which the common
shares subject to Options are listed. Options shall be exercisable during the
Participant's lifetime only by the Participant or by the Participant's guardian
or legal representative.
9. Adjustments
The Committee may make or provide for such adjustments in the
maximum number of Common Shares specified in Paragraph 4, in the number of
Common Shares covered by outstanding Options granted hereunder, and/or in the
Option Price applicable to such Options as the Committee in its sole discretion
may determine is equitably required to prevent dilution or enlargement of the
rights of Participants that otherwise would result from any stock dividend,
stock split, combination of shares, recapitalization or other change in the
capital structure of the Company, merger, consolidation, spin-off,
reorganization, partial or complete liquidation, issuance of rights or warrants
to purchase securities or any other corporate transaction or event having an
effect similar to any of the foregoing.
10. Fractional Shares
The Company shall not be required to issue any fractional
Common Shares pursuant to the Plan. The Committee may provide for the
elimination of fractions or for the settlement of fractions in cash.
11. Withholding Taxes
The Company and its Subsidiaries shall have the right to
require any individual entitled to receive Common Shares pursuant to an Option
to remit to the Company, prior to the delivery of any certificates evidencing
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such shares, any amount sufficient to satisfy any Canadian or United States
federal, state, provincial or local tax withholding requirements. Prior to the
Company's determination of such withholding liability, such individual may make
an irrevocable election to satisfy, in whole or in part, such obligation to
remit taxes by directing the Company to withhold Common Shares that would
otherwise be received by such individual. Such election may be denied by the
Committee in its discretion, or may be made subject to certain conditions
specified by the Committee, including, without limitation, conditions intended
to avoid the imposition of liability against the individual under Section 16(b)
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder.
12. Registration Restrictions
An Option shall not be exercisable unless and until (i) a
registration statement under the Securities Act of 1933, as amended, has been
duly filed and declared effective pertaining to the Common Shares subject to
such Option, such Common Shares shall have been qualified under applicable state
"blue sky" laws and the Company has been a "reporting issuer" for purposes of
the Ontario Securities Act in good standing for not less than twelve months, or
(ii) the Committee, in its sole discretion determines that such registration,
qualification and status is not required as a result of the availability of an
exemption from such registration, qualification, and status under such laws.
13. Shareholder Rights
A Participant shall have no rights as a shareholder with
respect to any Common Shares issuable upon exercise of an Option until a
certificate or certificates evidencing such shares shall have been issued to
such Participant, and no adjustment shall be made for dividends or distributions
or other rights in respect of any share for which the record date is prior to
the date upon which the Participant shall become the holder of record thereof.
14. Breach of Restrictive Covenants
If (i) a Participant is a party to an employment agreement
with the Company or any of its Subsidiaries or affiliates and (ii) such
Participant materially breaches any of the restrictive covenants set forth in
such employment agreement (including, without limitation, any restrictive
covenants relating to non-competition, non-solicitation or confidentiality),
then all of such Participant's Options (whether or not Vested Options) shall
terminate and be cancelled without consideration being paid therefor.
15. Amendments, Etc.
(a) The Board may at any time and from time to time alter,
amend, suspend or terminate the Plan in whole or in part, and the Committee may,
subject to applicable legal requirements at any time and from time to time waive
any provision of any Option or Agreement; provided, however, that no termination
or amendment of the Plan or any waiver of any provision of any Option or
Agreement may, without the consent of the Participant to whom any Award shall
previously have been granted, adversely affect the rights of such Participant in
such Award; provided further, however that amendments shall be subject to (x)
the approval of a majority of the Common Shares entitled to vote if the
Committee determines that such approval is necessary in order for the Company to
rely on the exemptive relief provided under Rule 16b-3 and (y) all other
approvals, whether regulatory, shareholder or otherwise, which are required by
law, The Toronto Stock Exchange or any other applicable securities exchange.
(b) The Plan shall not confer upon a Participant any right
with respect to continuance of employment or other service with the Company or
any Subsidiary, nor will it interfere in any way with any right the Company
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or any Subsidiary would otherwise have to terminate such Participant's
employment or other service at any time.
16. Effective Date
The Plan shall be effective as of June 7, 2000.
17. Governing Law
The Plan and all rights hereunder shall be construed in
accordance with and governed by the laws of the Province of Ontario and the laws
of Canada applicable therein.
