Exhibit 4.2


RIMAGE CORPORATION

STOCK OPTION AGREEMENT


          THIS
STOCK OPTION AGREEMENT (this “Agreement”) is made as
of the Grant Date set forth below, by and between Rimage Corporation, a
Minnesota corporation (the “Company”), and the optionee named below
(“Optionee”), and is not issued pursuant to the Company’s 2007 Amended and
Restated Stock Incentive Plan or any other equity incentive plan of the
Company.


	
  

 
	 
 





	
  

 	
  

 
	
 OPTIONEE:

 	
 Peter Shutte

 
	
  

 	
  

 
	
 GRANT DATE:

 	
 January 7, 2013

 
	
  

 	
  

 
	
 NUMBER OF OPTION SHARES:

 	
 50,000 shares of common stock

 
	
  

 	
  

 
	
 OPTION PRICE PER SHARE:

 	
 $6.70 per Share

 
	
  

 	
  

 
	
 EXPIRATION DATE:

 	
 January 7, 2020

 





	
  

 
	 
 




          1. Grant of Option. The Company
hereby grants to Optionee the right and option (the “Option”) to purchase all
or any part of the aggregate number of shares of common stock of the Company
set forth above (the “Option Shares”), at the Option Price per Share set forth
above, on the terms and conditions set forth in this Agreement. The Option is
not intended to be an “incentive stock option” within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the “Code”).


          2. Administration of Option. The
Option will be administered by the Compensation Committee (the “Committee”) of
the Board of Directors of the Company (the “Board”). Any or all functions of
the Committee specified in this Agreement may be exercised by the Board unless
this Agreement specifically states otherwise. The Committee has the authority
to adopt, alter and repeal such administrative rules, guidelines and practices
governing the Option as it may, from time-to-time, deem advisable, to interpret
the terms and provisions of this Agreement and to otherwise supervise the
administration of the Option. The Committee may not take any action that would
be treated as a “repricing” of the Option and may not amend or alter the Option
without the written consent of Optionee. All decisions made by the Committee
pursuant to this Agreement will be final, conclusive and binding on all
persons, including the Company, its shareholders, members of the Board,
Optionee and their respective estates and beneficiaries. 


          3. Term and Exercise of Option. 


          (a)     Installment
Exercise Provisions. The term of the Option shall commence on the Grant
Date set forth above and shall continue until the Expiration Date set forth
above, unless earlier terminated as provided herein. Except as otherwise
provided herein, the Option will be exercisable in cumulative installments as
follows:


	
  

 	
  

 
	
  

 	
           (i)     Up
 to 25% of the Option Shares may be purchased at any time after the one-year
 anniversary of the Grant Date and prior to termination of the Option;

 













	
  

 	
  

 
	
  

 	
           (ii)     Up
 to 50% of the Option Shares (less any shares previously purchased pursuant to
 the Option) may be purchased at any time on or after the second-year
 anniversary of the Grant Date and prior to termination of the Option; 

 
	
  

 	
  

 
	
  

 	
           (iii)     Up
 to 75% of the Option Shares (less any shares previously purchased pursuant to
 the Option) may be purchased at any time on or after the third-year
 anniversary of the Grant Date and prior to termination of the Option; and

 
	
  

 	
  

 
	
  

 	
           (iv)     Up
 to 100% of the Option Shares (less any shares previously purchased pursuant
 to the Option) may be purchased at any time on or after the fourth-year
 anniversary of the Grant Date and prior to termination of the Option.

 
	
  

 	
  

 
	
  

 	
 Neither Optionee nor Optionee’s legal representatives, legatees or
 distributees, as the case may be, will be, or will be deemed to be, a holder
 of any Option Shares for any purpose unless and until certificates for such
 shares are issued to Optionee or Optionee’s legal representatives, legatees
 or distributees, under the terms of this Agreement.

 


          (b)     Method of Exercise.     The
Option is exercisable by delivery of an exercise notice, in the form attached
as Exhibit A (the “Exercise Notice”), which shall state the election to
exercise the Option, the number of Option Shares in respect of which the Option
is being exercised (the “Exercised Shares”) and such other representations and
agreements as may be required by the Company. The Exercise Notice shall be
signed by Optionee and shall be delivered in person or by certified mail to the
principal financial officer of the Company in accordance with Section 11 of
this Agreement. The Exercise Notice shall be accompanied by payment of the
aggregate Option Price per Share. The Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by such aggregate Option Price per Share.


          (c)     Method of
Payment.     Payment of the aggregate
Option Price per Share shall be made by certified bank check, by delivery of
other Shares owned by Optionee, pursuant to a “same day sale” program exercised
through a brokerage transaction as permitted under the provisions of Regulation
T applicable to cashless exercises (so long as the Company’s Shares are
registered under Section 12 of the Exchange Act), or by a “net exercise” arrangement
pursuant to which the Company will reduce the number of Shares issued upon
exercise by the largest whole number of Shares with a Fair Market Value that
does not exceed the aggregate Option Price per Share (together with payment in
cash or other payment from Optionee to the extent of any remaining balance)
provided that any such Shares used to pay the aggregate Option Price per Share
shall no longer be outstanding and exercisable under this Option. Any same day
sale or cashless exercise shall comply with regulations promulgated under the
Securities Exchange Act and the Federal Reserve Board. No shares of common
stock of the Company and no certificates for such shares shall be issued until
full payment therefore has been made. 


          4. Change in Control.


          (a)     “Change
in Control” of the Company shall mean a change in control which would be
required to be reported in response to Item 5.01 of Form 8-K promulgated under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether
or not the Company is then subject to such reporting requirement, including
without limitation, if:


	
  

 	
  

 
	
  

 	
           (i)     any
 “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange
 Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under the
 Exchange Act), directly or indirectly of securities of the Company
 representing 20% or more of the combined voting power of the Company’s then
 outstanding securities (other than an entity owned 50% or greater by the
 Company or an employee pension plan for the benefit of the employees of the
 Company); 

 













	
  

 	
  

 
	
  

 	
           (ii)     there
 ceases to be a majority of the Board comprised of (i) individuals who, on the
 date of this Agreement, constituted the Board of the Company; and (ii) any
 new director who subsequently was elected or nominated for election by a
 majority of the directors who held such office prior to a Change in Control;
 or

 
	
  

 	
  

 
	
  

 	
           (iii)     the
 Company disposes of at least 75% of its assets, other than (i) to an entity
 owned 50% or greater by the Company or any of its subsidiaries, or to an
 entity in which at least 50% of the voting equity securities are owned by the
 shareholders of the Company immediately prior to the disposition in
 substantially the same percentage or (ii) as a result of a bankruptcy
 proceeding, dissolution or liquidation of the Company. 

 


          (b)     Except
as otherwise provided in this Agreement, if a Change in Control occurs, all
previously unexercised Option Shares shall be exercisable in full, without
regard to any installment exercise provisions; provided, however, that the Committee, in its sole and
absolute discretion, may, with respect to any or all of such Option Shares,
take any or all of the following actions to be effective as of the date of the
Change in Control (or as of any other date fixed by the Committee occurring
within the thirty (30) day period immediately preceding the date of the Change
in Control, but only if such action remains contingent upon the effectuation of
the Change in Control) (such date referred to as the “Action Effective Date”):


	
  

 	
  

 
	
  

 	
           (i)     Unilaterally
 cancel such Option Shares in exchange for whole and/or fractional shares of
 the common stock of the Company (or whole shares of common stock and cash in
 lieu of any fractional share of common stock) or whole and/or fractional
 shares of a successor (or whole shares of a successor and cash in lieu of any
 fractional share) that, in the aggregate, are equal in value to the product
 of (1) the excess, if any, of the Fair Market Value per share on the Action
 Effective Date over the Exercise Price or specified price per share,
 multiplied by (2) the number of Option Shares.

 
	
  

 	
  

 
	
  

 	
           (ii)     Unilaterally
 cancel such Option Shares in exchange for cash or other property equal in
 value to the product of (1) the excess, if any, of the Fair Market Value per
 share on the Action Effective Date over the Exercise Price or specified price
 per share, multiplied by (2) the number of Option Shares.

 
	
  

 	
  

 
	
  

 	
           (iii)     Unilaterally
 cancel such Option Shares after providing the holder of such Option Shares
 with (i) an opportunity to exercise such Option Shares to the extent vested
 within a specified period prior to the date of the Change in Control, and
 (ii) notice of such opportunity to exercise prior to the commencement of such
 specified period. The Committee may modify or waive any condition limiting
 the exercise of the Option to permit a cashless exercise of the Option.

 
	
  

 	
  

 
	
  

 	
           (iv)     Provide
 for the assumption or substitution of the Option in accordance with Section
 11 below.

 









          (c)     Notwithstanding
the foregoing, payment of cash in lieu of whole or fractional shares of common
stock of the Company or shares of a successor may only be made to the extent
that such payment (i) has met the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act, or (ii) is a subsequent transaction the
terms of which were provided for in a transaction initially meeting the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange
Act. The payment of cash in lieu of whole or fractional shares of common stock
of the Company or in lieu of whole or fractional shares of a successor shall be
considered a subsequent transaction approved by the original grant of the
Option.


          (d)     For
the purposes of this Agreement, “Fair Market Value” of a share of the common
stock of the Company shall be determined by the Committee as follows: (i) if
the common stock of the Company is listed for trading on one of more national
securities exchanges, the last reported sales price on such principal exchange
on the date in question, or if such common stock shall not have been traded on
such principal exchange on such date, the last reported sales price on such
principal exchange on the first day prior thereto on which such common stock
was so traded; or (b) if the common stock of the Company is not listed for
trading on a national securities exchange, but is traded in the over-the-counter
market, the closing bid price for such common stock on the date in question, or
if there is no such bid price for such common stock on such date, the closing
bid price on the first day prior thereto on which such price existed; or (c) if
neither (a) or (b) is applicable, a value determined by the reasonable
application of a reasonable valuation method as defined in regulations
promulgated under Section 409A of Code, which determination shall be final and
binding on all parties.


          5. Termination of Employment.


          (a)     If
Optionee ceases to be employed by the Company or a subsidiary of the Company as
a result of retirement for age or disability, or voluntary or involuntary separation
from employment, other than a termination for Cause (as defined below), the
Option may be exercised to the extent Optionee shall have been entitled to do
so at the date of termination of employment, within a period of 90 days after
such termination of employment, but in no case later than the Expiration Date
set forth above.


          (b)     If
Optionee’s employment is terminated for Cause, the right of Optionee to
exercise the Option shall terminate immediately upon such termination of
employment. For purposes of this Agreement, “Cause” shall have the same meaning
as in any employment or severance agreement between Optionee and the Company
governing Optionee’s termination of employment prior to a Change in Control.


          (c)     The
Option will not confer upon Optionee any right with respect to continuance of employment
by the Company, nor will it interfere in any way with the right of the Company
or a subsidiary of the Company to terminate Optionee’s employment at any
time.


          6. Death of Optionee. In the event
of the death of Optionee while in the employ of the Company, the Option may be
exercised to the extent Optionee shall have been entitled to do so at the date
of death, within a period of one year after the date of death, but in no case
later than the Expiration Date set forth above. In such event, the Option shall
be exercisable only by the executors or administrators of Optionee or by the
person or persons to whom Optionee’s rights under the Option shall pass by
Optionee’s will or the laws of descent and distribution.


          7. Limitations
on Exercise of Option.


          (a)     Except
as provided in paragraph 5 and 6 above, the Option may not be exercised unless
Optionee is, at the time of such exercise, in the employ of the Company, and
shall have been continuously so employed since the Grant Date of the Option.





          (b)     The
issuance of Option Shares upon the exercise of the Option shall be subject to
all applicable laws, rules and regulations, and shares shall not be issued except
upon the approval of proper government agencies or stock exchanges as may be
required. Assuming compliance with such laws, rules and regulations, for income
tax purposes the Option Shares shall be considered transferred to Optionee on
the date the Option is exercised with respect to such Option Shares.


          8.
Nontransferability of Option. The Option shall not be
transferable by Optionee, other than by will or the laws of descent and
distribution. During the lifetime of Optionee, the Option shall be exercisable
only by Optionee. 


          9. Registration.
If any law or regulation of the Securities and Exchange Commission or of any
other body having jurisdiction shall require the Company or Optionee to take
any action in connection with the exercise of the Option, then, notwithstanding
any contrary provision of this Agreement, the date for exercise of the Option
and the delivery of the Option Shares shall be deferred until the completion of
the necessary action. In the event that the Company shall deem it necessary,
the Company may condition the grant or exercise of the Option upon the receipt
of a satisfactory certificate that Optionee is acquiring the Option Shares for
investment purposes and not with the view or intent to resell or otherwise
distribute the Option or Option Shares. In such event, the stock certificate
evidencing such Option Shares shall bear a legend referring to applicable laws
restricting transfer of such shares. In the event that the Company deems it
necessary to register under the Securities Act of 1933, as amended, or any
other applicable statute, the Options or any Option Shares, then Optionee shall
cooperate with the Company and take such action as is necessary to permit
registration or qualification of such Option or Option Shares. It is the
Company’s intent, but not its obligation, to register or qualify the offering
or sale of Shares under the Securities Act of 1933 of any other applicable
state, federal or foreign law.


          10.
Disgorgement. 


          (a)     If
the Company’s financial statements for the year or years in which this Option
is issued or outstanding are required to be restated resulting from errors,
omissions or fraud, the Committee may (in its sole discretion, but acting in
good faith) direct that the Company recover all or a portion of this Option
with respect to such fiscal year of the Company the financial results of which
are negatively affected by such restatement. The operation of this Section
10(a) shall be in accordance with the provisions of Section 302 of
Sarbanes-Oxley Act of 2002 and any applicable guidance.


          (b)     Upon
demand of the Company, Optionee shall disgorge all or any portion of this
Option or other compensation paid or payable pursuant to this Option received
within 36-month period prior to the public release of the restatement of
financial information due to material noncompliance with the financial
reporting requirements under the federal securities laws. The operation of this
Section 10(b) shall be in accordance with the provisions of Section 954 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable
guidance.


          (c)     The
amount to be recovered from Optionee under this Section shall be the amount by
which the Option exceeded the amount that would have been paid or payable to the
Optionee had the financial statements been initially filed as restated, or any
greater or lesser amount (including, but not limited to, the entire Option)
that the Committee shall determine. In no event shall the amount to be
recovered by the Company be less than the amount required to be repaid or
recovered as a matter of law.





          11.
Forfeiture and Recoupment.
Without limiting in any way the foregoing, Optionee’s rights, payments, and
benefits with respect to this Option shall be subject to reduction,
cancellation, forfeiture, or recoupment by the Company upon the occurrence of
any of the following events, in addition to any otherwise applicable vesting
conditions: (a) failure to accept the terms of this Option, (b) termination of
Optionee’s employment for Cause, (c) violation of material Company policies,
(d) breach of any agreement between the Company and Optionee, or (e) other
conduct by Optionee that the Committee determines is detrimental to the
business or reputation of the Company or its subsidiaries.


          12.
Tax Withholding. Upon
notification of the amount due and prior to, or concurrently with, the delivery
to Optionee of a certificate representing any Option Shares purchased pursuant
to the exercise of the Option, Optionee shall promptly pay to the Company any
amount necessary to satisfy applicable federal, state and local withholding
requirements.


          13.
Adjustment.
In the event of a stock dividend, stock split, spin-off, rights offering,
recapitalization through a large, nonrecurring cash dividend, or a similar
equity restructuring of the Company, the Committee will adjust: (a) the number
of Shares subject to the Option, rounding all fractions downward, and (d) the
Exercise Price of the Option, or any combination thereof, in an equitable
manner that will equalize the fair value of the Option before and after the
equity restructuring. Furthermore, in the event of any corporate transaction
described in Code Section 424(a) that provides for the substitution or
assumption of this Option, the Committee will adjust the Option in a manner
that satisfies the requirements of Code Section 424(a) as to: (x) the number of
Shares subject to the Option, rounding all fractions downward, and (y) the
Exercise Price of the Option, or any combination thereof. An adjustment made under
this Section by the Committee shall be conclusive and binding on all affected
persons.


          14.
Notices.
Notices required hereunder shall be given in person or by first class mail to
the address of Optionee shown on the records of the Company, and to the Company
at its principal executive office.


          15.
Successors and Assigns. This Agreement shall apply to and bind
Optionee and the Company and their respective permitted assignees and
transferees, heirs, legatees, executors, administrators and legal successors.


          16.
Miscellaneous. This Agreement, together with Exhibit A, constitutes the entire
agreement of the parties with respect to the subject matter of this Agreement
and supersedes in its entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
amended or altered except by means of a writing signed by the Company and
Optionee. This Agreement is governed by the internal substantive laws of but
not the choice of law rules of the State of Minnesota. 


* * * * *





          IN
WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by its duly authorized officer, and Optionee has
executed this Agreement, as of the Grant Date set forth above.


	
  

 	
  

 	
  

 	
  

 	
  

 
	
 COMPANY:

 	
 RIMAGE CORPORATION

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
  

 	
 By:

 	
      /s/ Sherman L. Black



 	
  

 
	
  

 	
  

 	
  

 	
         Sherman L. Black

 	
  

 
	
  

 	
  

 	
  

 	
         Chief Executive Officer

 	
  

 
	
  

 	
  

 	
  

 	
  

 	
  

 
	
 OPTIONEE:

 	
  

 	
      /s/ Peter Shutte



 	
  

 
	
  

 	
  

 	
  

 	
         Peter Shutte