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EXHIBIT 10.3
UNIDIGITAL INC.
1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Non-Qualified Stock Option Plan, to be known as the 1997
Non-Employee Director Stock Option Plan (the "Plan"), is intended to promote the
interests of Unidigital Inc. (the "Company") by providing an inducement to
obtain and retain the services of qualified persons who are not employees or
officers of the Company to serve as members of its Board of Directors (the
"Board"), each such person hereinafter referred to as a "Non-Employee Director."
2. Available Shares. The total number of shares of Common Stock, par value
$.01 per share, of the Company (the "Common Stock") for which options may be
granted under the Plan shall not exceed 75,000 shares, subject to adjustment in
accordance with Section 10 of the Plan. Shares subject to the Plan are
authorized but unissued shares, or shares that were once issued and subsequently
reacquired by the Company. If any options granted under the Plan are surrendered
before exercise or lapse without exercise, in whole or in part, the shares
reserved therefor shall continue to be available under the Plan.
3. Administration. The Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer the Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe the Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of the Plan, as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
4. Automatic Grant of Options. Subject to the availability of shares under
the Plan:
(a) each Non-Employee Director who was a member of the Board on the
effective date of the Company's initial public offering and remains a member of
the Board on the date the Plan is approved by the stockholders of the Company
(such date hereinafter referred to as the "Approval Date") shall be
automatically granted as of the Approval Date, without further action by the
Board, an option to purchase 2,500 shares of the Common Stock, which option
shall be fully vested in the optionee as of the Approval Date; and
(b) each Non-Employee Director shall be automatically granted (i) an
option to purchase 2,500 shares of the Common Stock if such Non-Employee
Director is a member of the Board on the Approval Date; (ii) an option to
purchase 2,500 shares of the Common Stock on the date such person first becomes
a member of the Board, if such person is not a member of the Board on the
Approval Date; and (iii) an option to purchase an additional 2,500 shares of
Common Stock on the first trading day of each year commencing 1998.
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The term "Grant Date" as used hereinafter shall mean, in the case of a
grant under Sections 4(a) and 4(b)(i), the Approval Date, or, in the case of a
grant under Section 4(b)(ii), the date the optionee first becomes a member of
the Board or, in the case of a grant under Section 4(b)(iii), the first trading
day of each year commencing 1998.
The options to be granted under this Section 4 shall be the only options
ever to be granted at any time to such member under the Plan.
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to the Plan shall be 100% of the fair market value of such
shares on the Grant Date. The option price will be subject to adjustment in
accordance with the provisions of Section 10 of the Plan. For purposes of the
Plan, "fair market value" shall be determined as of the last business day for
which the prices or quotes discussed in this sentence are available prior to the
date such option is granted and shall mean (i) the average (on that date) of the
high and low prices of the Common Stock on the principal national securities
exchange on which the Common Stock is traded, if the Common Stock is then traded
on a national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market, if the Common Stock is
not then traded on a national securities exchange; or (iii) the closing bid
price (or average of bid prices) last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on the Nasdaq National Market.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of Section 8 of the Plan, an option granted hereunder shall expire on
the date which is ten (10) years after the Grant Date.
7. (a) Vesting of Shares and Non-Transferability of Options. Options
granted under the Plan shall not be exercisable until they become vested.
Options granted under the Plan shall vest in the optionee and thus become
exercisable three months from the Grant Date unless a shorter period is provided
by the Committee or another section of this Plan, and provided further that the
optionee has continuously served as a member of the Board through such vesting
date, and subject also to Subsection (b) of this Section 7.
The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares it
shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in the Plan.
(b) Notwithstanding Subsection (a) of this Section 7, if an optionee
attends less than 80% of the Board meetings (whether regular or special) held in
any fiscal year (a "Default Year"), then either (i) the optionee shall forfeit
his exercise rights with respect to the option installment which vested on the
preceding annual vesting date, in proportion to the percentage of Board meetings
actually attended by such optionee during the Default Year; or (ii) in the event
that the optionee does not own a sufficient number of exercisable options to
satisfy the forfeiture obligation described above, the optionee shall forfeit
his right to receive the next succeeding annual installment of the option, in
proportion to the percentage of Board meetings which the optionee actually
attended in the Default Year. By way of illustration, if an optionee attends
only 50% of the actual meetings of the Board of Directors (whether regular or
special)
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held in any fiscal year, then the optionee shall forfeit the right to exercise
50% of the option installment which became exercisable on the preceding annual
vesting date. If, however, the optionee had already exercised 75% of the
preceding option installment, and did not own any additional unexercised options
available to satisfy the forfeiture obligation, the optionee would forfeit the
remaining 25% of the prior installment, and would also forfeit the right to
receive or exercise 25% of the next succeeding annual option installment.
Attendance at Board meetings may be in person or via teleconference, or any
manner consistent with the Bylaws of the Company.
(c) Non-transferability. Any option granted pursuant to the Plan shall
not be assignable or transferable other than by will or the laws of descent and
distribution or pursuant to a domestic relations order and shall be exercisable
during the optionee's lifetime only by him or her.
8. Termination of Option Rights.
(a) In the event that an optionee ceases to be a member of the Board by
reason of his or her death or permanent disability, any option granted to such
optionee shall be immediately and automatically accelerated and become fully
vested and all unexercised options shall be exercisable by the optionee (or by
the optionee's personal representative, heir or legatee, in the event of death)
at any time prior to the scheduled expiration date of the option.
(b) In the event any optionee: (i) ceases to be a member of the Board
of Directors at the request of the Company; (ii) is removed without cause; or
(iii) otherwise does not stand for nomination or re-election as a director of
the Company at the request of the Company, then any unexercised options, to the
extent not vested at the date of the applicable event, shall immediately
terminate and become void, and to the extent any such options are vested at such
date, they shall continue to be exercisable for a period of one year from the
date of the applicable event; provided, however, that no portion of any option,
vested or unvested, may be exercised if the optionee is removed from the Board
of Directors for any one of the following reasons: (i) disloyalty, gross
negligence, dishonesty or breach of fiduciary duty to the Company; (ii) the
commission of an act of embezzlement, fraud or deliberate disregard of the rules
or policies of the Company which results in loss, damage or injury to the
Company, whether directly or indirectly; (iii) the unauthorized disclosure of
any trade secret or confidential information of the Company; (iv) the commission
of an act which constitutes unfair competition with the Company or which induces
any customer of the Company to breach a contract with the Company; or (v)
engages in any conduct or activity on behalf of any organization or entity which
is a competitor of the Company (unless such conduct or activity is approved by a
majority of the members of the Board of Directors).
9. Exercise of Option. Subject to the terms and conditions of the Plan and
the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
Company by mail or in person addressed to Unidigital Inc., 20 West 20th Street,
New York, New York 10011, Attention: President, or at its then principal
executive offices, stating the number of shares with respect to which the option
is
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being exercised, accompanied by payment in full for such shares. Payment may be
(a) in United States dollars in cash or by check, (b) in whole or in part in
shares of Common Stock of the Company already owned by the person or persons
exercising the option or shares subject to the option being exercised (subject
to such restrictions and guidelines as the Board may adopt from time to time)
valued at fair market value determined in accordance with the provisions of
Section 5, or (c) consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise. There shall be no
such exercise at any one time as to fewer than one hundred (100) shares or all
of the remaining shares then purchasable by the person or persons exercising the
option, if fewer than one hundred (100) shares. The Company's transfer agent
shall, on behalf of the Company, prepare a certificate or certificates
representing such shares acquired pursuant to exercise of the option, shall
register the optionee as the owner of such shares on the books of the Company
and shall cause the fully executed certificate(s) representing such shares to be
delivered to the optionee as soon as practicable after payment of the option
price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Events.
Upon the occurrence of any of the following events, an optionee's rights with
respect to options granted to him or her hereunder shall be adjusted as
hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Recapitalization Adjustments. If the Company is to be consolidated
with or acquired by another entity in a merger, sale of all or substantially all
of the Company's assets or otherwise, each option granted under the Plan which
is outstanding but unvested as of the effective date of such event shall become
exercisable in full twenty (20) days prior to the effective date of such event.
In the event of a reorganization, recapitalization, merger, consolidation, or
any other change in the corporate structure or shares of the Company, to the
extent permitted by Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, adjustments shall be made in the number and kind of shares authorized
by the Plan and in the number of and kind of shares covered by, and the option
price of, outstanding options under the Plan, in each case, as necessary to
maintain the proportionate interest of the optionee and preserve, without
exceeding, the value of such option. Notwithstanding the foregoing, no such
adjustments shall be made which would, within the meaning of any applicable
provisions of the Internal Revenue Code of 1986, as amended, constitute a
modification, extension or renewal of any option or a grant of additional
benefits to the holder of an option.
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(c) Issuance of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing events,
the class and aggregate number of shares set forth in Section 2 of the Plan that
are subject to options which previously have been or subsequently may be granted
under the Plan shall also be appropriately adjusted to reflect such events. The
Board shall determine the specific adjustments to be made under this Section 10
and its determination shall be conclusive.
11. Restrictions on Issuances of Shares. Notwithstanding the provisions of
Sections 4 and 9 of the Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied:
(a) The issuance of shares with respect to which the option has been
exercised is at the time of the issue of such shares registered under applicable
Federal and state securities laws as now in force or hereafter amended; or
(b) Counsel for the Company shall have given an opinion that the
issuance of such shares is exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and that the Company has
complied with all applicable laws and regulations with respect thereto,
including without limitation, all regulations required by any stock exchange
upon which the Company's outstanding Common Stock is then listed.
12. Legend on Certificates. The certificate representing shares issued
pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933, as amended, or any state securities laws.
13. Representation of Optionee. If requested by the Company, the optionee
shall deliver to the Company written representations and warranties upon
exercise of the option that are necessary to show compliance with Federal and
state securities laws, including representations and warranties to the effect
that a purchase of shares under the option is made for investment and not with a
view to their distribution (as that term is used in the Securities Act of 1933,
as amended).
14. Option Agreement. Each option granted under the provisions of the Plan
shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with the Plan as may be determined by the officer
executing it.
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15. Termination and Amendment of Plan. The Plan shall terminate on the
earlier to occur of January 30, 2007 or at such time as all shares reserved for
issuance hereunder (including any amendments hereto) shall have been issued. The
Board may at any time terminate the Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board may not,
without approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and voting on such matter
at a meeting, (a) increase the maximum number of shares for which options may be
granted under the Plan (except by adjustment pursuant to Section 10), (b)
materially modify the requirements as to eligibility to participate in the Plan,
(c) materially increase benefits accruing to option holders under the Plan, or
(d) amend the Plan in any manner which would cause Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, to become inapplicable to the Plan;
and provided further that the provisions of the Plan specified in Rule
16b-3(c)(2)(ii)(A) (or any successor or amended provision thereto) under the
Securities Act of 1934, as amended (including without limitation, provisions as
to eligibility, amount, price and timing of awards) may not be amended more than
once every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder. Termination or any modification or amendment of the Plan shall not,
without consent of a participant, affect his or her rights under an option
previously granted to him or her.
16. Withholding of Income Taxes. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, as
amended, may require the optionee to pay withholding taxes in respect of amounts
considered to be compensation includible in the optionee's gross income.
17. Compliance with Regulations. It is the Company's intent that the Plan
comply in all respects with Rule 16b-3 under the Securities Exchange Act of
1934, as amended, and any applicable Securities and Exchange commission
interpretations thereof. If any provision of the Plan is deemed not to be in
compliance with Rule 16b-3, such provision of the Plan shall be null and void.
18. Governing Law. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of the State of New
York, without giving effect to the principles of conflicts of law thereof.
19. Acceleration and Vesting of Option for Business Combinations. Upon any
merger, consolidation, sale of all (or substantially all) of the assets of the
Company, or a business combination involving the sale or transfer of all (or
substantially all) of the capital stock or assets of the Company in which the
Company is not the surviving entity, or, if it is the surviving entity, does not
survive as an operating going concern in substantially the same line of
business, then the options granted under the Plan shall, immediately prior to
the consummation of any of the foregoing events, become fully vested and
immediately exercisable by the optionee.
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