EXHIBIT 4.1
VAUGHN COMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
(Amended as of June 20, 1995 and April 28, 1997)
1. PURPOSE
The Plan is intended to provide a means for Vaughn Communications, Inc.
(the Company), by offering incentives to selected management and other key
employees of the Company, and of any majority owned direct or indirect
subsidiaries of the Company, to attract and retain persons of ability and
motivate them to advance the interests of the Company.
It is intended that some of the options granted under the Plan will be
designated and constitute "incentive stock options" within the meaning of
Section 422 or other similar provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and the other options granted under the Plan will be
designated and constitute "nonstatutory options," i.e., options not qualifying
under Section 422 or other similar provisions of the Code. Unless otherwise
indicated, the terms and conditions of the Plan shall apply equally to all
options granted hereunder, whether incentive stock options or nonstatutory
options. It is also intended that the Plan be administered so as to comply with
Rule 16b-3 under the Securities Exchange Act of 1934.
2. SHARES SUBJECT TO THE PLAN
A total of 200,000 shares of authorized but unissued or reacquired $.10 par
value Common Stock of the Company is reserved for issuance upon exercise of
options under the Plan. If any option expires or terminates without having been
exercised in full, the unacquired shares shall be available for the grant of
future options under the Plan.
3. ADMINISTRATION
The Plan shall be administered by the Compensation Committee of the Board
of Directors of the Company (the Committee). Each of the members of the
Committee shall be a "Non-Employee Director" within the meaning of Rule 16b-3,
as then in effect, of the General Rules and Regulations under the Securities
Exchange Act of 1934. A "Non-Employee Director" under Rule 16b-3 means a
director of the Company who is not (1) currently an officer of the Company or
its parent or subsidiary or otherwise currently employed by the Company or its
parent or subsidiary, (2) does not receive compensation, either directly or
indirectly, from the Company or its parent or subsidiary for services rendered
as a consultant or in any capacity other than as a director, except for an
amount that does not exceed the dollar amount for which disclosure would be
required pursuant to Item 404(a) of Regulation S-K, (3) does not possess an
interest in any other transaction for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K, and (4) is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K.
4. ELIGIBILITY AND AMOUNT OF GRANT
The Committee shall determine the grantees to whom (Optionees), and the
number of shares for which, incentive stock options and/or nonstatutory options
shall be granted under the Plan. Optionees shall be management or other key
employees of the Company, including officers, or of any of the Company's
aforesaid subsidiaries, who the Committee determines have contributed materially
to the success of the Company or are in a position to contribute materially to
the future success of the Company. Except as hereinafter limited, an eligible
Optionee may be granted one or more options hereunder which may be incentive
stock options and/or nonstatutory options. No
eligible Optionee may receive options hereunder in any fiscal year of the
Company, including for purposes of such calculation only all options received by
the Optionee in such fiscal year under any other stock option plans of the
Company, totaling more than Fifty Thousand (50,000) shares.
Notwithstanding the foregoing and except as hereafter provided, an
individual shall not be eligible to receive incentive stock options under the
Plan, if before the incentive stock option is granted the individual owns
(directly and through application of the constructive stock ownership
attribution rules of Section 425(d) of the Code) more than Ten Percent (10%) of
the total combined voting power of all classes of stock of the Company or any
subsidiary. This stock ownership provision shall not apply, and the individual
shall be eligible to receive an incentive stock option, if at the time such
option is granted the option exercise price is at least One Hundred Ten Percent
(110%) of the fair market value of the stock subject to the option and the
incentive stock option is not exercisable after the expiration of five years
from the date the option is granted.
Notwithstanding any other provision in this Plan, the aggregate fair market
value (determined at the time an option is granted) of shares with respect to
which incentive stock options are exercisable for the first time by an Optionee
during any calendar year (under this Plan and all other such plans of the
Company and its subsidiaries pursuant to Section 422 or other similar provisions
of the Code) shall not exceed $100,000. To the extent necessary to avoid such
limitation, the shares granted to any Optionee under this Plan shall be deemed
to be nonstatutory options.
5. OPTION PRICE
The option exercise price for all incentive stock options granted under the
Plan (except as otherwise herein provided) shall equal One Hundred Percent
(100%) of the fair market value of the
Company's Common Stock on the date of grant. The option exercise price for the
nonstatutory options granted under the Plan shall not be less than 85% of the
fair market value of the Common Stock on the date of grant. Fair market value
shall be determined by the Committee based upon the last sale price of the
Common Stock in the National Association of Securities Dealers Automated
Quotations System (NASDAQ) for National Market Issues or, as applicable, for
Small-Cap Issues, as reported by the National Association of Securities Dealers
for the last business trading day preceding the date of grant, or through such
other measure or means as the Committee may in good faith determine to be
appropriate to determine such fair market value. The Committee may authorize the
Chief Executive Officer or Secretary of the Company to make any determinations
required in this Section 5.
6. OPTION TERMS
Options granted hereunder shall be evidenced by an Option Agreement
executed as of the date of grant by the Company and the Optionee, on such terms
as may be determined by the Committee, including the following:
(a) The Option Agreement shall specify whether the option is an
incentive stock option or a nonstatutory option and shall set forth the
number of shares and the option exercise price to which the option
pertains. It shall also specify that the option shall vest on a
year-to-year cumulative basis as to the number of shares covered by the
option as follows: ten percent (10%) on the date of grant; plus fifteen
percent (15%) on the first anniversary date of the date of grant; plus
twenty-five percent (25%) on the second anniversary date of the date of
grant; plus twenty-five percent (25%) on the third anniversary date of the
date of grant; plus twenty-five percent (25%) on the fourth anniversary
date of the date of grant. The option shall be exercisable in whole or in
part as to any vested portion during the option
term which shall be up to ten (10) years as specified by the Compensation
Committee in the Option Agreement (except as otherwise provided in Section
4, this subsection and subsection (e) below and/or in the Option
Agreement), except that the option shall first become exercisable six
months after the date of grant and shall not be exercisable prior thereto.
Provided, further, however, that the option shall not be exercisable until,
and shall be subject to, approval of the amendments to the Plan, adopted by
the Board of Directors of the Company as of June 20, 1995, by the
shareholders of the Company at a meeting duly called and held for such
purpose not later than the Company's 1996 Annual Meeting of Shareholders.
Approval shall require a quorum and affirmative majority vote of the shares
owned by those shareholders present, or represented by proxy, and entitled
to vote at the meeting. If the Company's shareholders do not approve such
amendments to the Plan as aforesaid, the option shall be deemed to have
been granted under the Plan without regard to such amendments for the
maximum term provided by the Plan prior to amendment. In such event, the
parties may execute and deliver a replacement Option Agreement as of the
original date of grant to conform the option to the Plan without regard to
such amendments.
(b) The option exercise price shall be paid at the time of exercise
which shall be in writing and, at the election of the Optionee, may be paid
in cash and/or by the sale and delivery of certificates(s) duly endorsed
for transfer, in shares of the Company's Common Stock already owned by the
Optionee. Any shares so sold to the Company in payment of the option
exercise price shall be valued at fair market value on the exercise date as
determined by the Committee, or by the Chief Executive Officer or the
Secretary of the Company as the Committee's designee (as provided in
Section 5). Fair market value shall be deemed to be the last sale price of
the Common Stock an NASDAQ for National Market
Issues or, as applicable, for Small-Cap Issues, as reported by the National
Association of Securities Dealers for the last business trading day
preceding the date of exercise. Any fractional share not required for
payment of the option exercise price shall be paid for by the Company in
cash on the basis of the same value utilized for such exercise.
(c) If available, the Committee may also permit the Optionee to
utilize any so-called "cashless exercise" procedures; to exercise the
option through a national bank or trust company or brokerage firm which is
a member of the National Association of Securities Dealers, pursuant to
which upon presentation of written exercise to such bank, trust company or
broker and to the Company, and upon authorization therefor by the
Committee, any or all of the shares an Optionee is entitled to receive on
exercise is sold by such bank, trust company or broker, or an agent
therefor, and the option exercise price for the shares purchased by the
Optionee is credited to a designated account of the Company on either the
trade date or the customary settlement date, provided only that if the
Company is not to receive credit of the option exercise price to its
account until such settlement date, on or before the trade date the selling
bank, trust company or broker confirm to the Company its obligation to pay
the same to the Company as of the settlement date. The balance of the
proceeds for any shares sold in a cashless exercise of an option, less
customary brokerage commissions, handling fees, other related brokerage
charges and interest expense pending settlement and delivery of
certificate(s), if applicable, shall be credited to the Optionee's account.
If the sale proceeds are insufficient therefor, such costs of sale shall be
paid directly by the exercising Optionee. The Company shall instruct the
Company's Transfer Agent and Registrar, in accordance with the request of
the selling bank, trust company or broker and/or Optionee, to issue
certificate(s) for the portion of the shares acquired on
exercise which are sold in the cashless exercise to the selling bank, trust
company or broker or its designee, and to issue certificate(s) for such
shares acquired on exercise which are not sold in the cashless exercise, if
any, to the Optionee or the Optionee's designee.
The Committee, however, shall be free to alter the above or establish
any rules appropriate to the use of any cashless exercise procedure, but
shall not permit the same, unless or until exercise and sale of the shares
are registered under the Securities Act of 1933 and in compliance with any
applicable registration requirements of state securities law, and, in the
case of officers of the Company or other persons subject to Section 16 of
the Securities Exchange Act of 1934, in absence of an opinion of counsel
for the Company that such cashless exercise transaction will not result in
such person's violation of the rule against realization of short-swing
profits pursuant to Section 16(b) thereof.
(d) Unless the issuance of the shares upon the exercise of an option
hereunder is registered under federal and state securities laws, the
Optionee upon exercise shall be required to sign. deliver to the Company
and be bound by a customary "investment letter", setting forth the
Optionee's investment representation and securities law transfer
restrictions consistent with federal and state securities law exemptions
from registration for issuance of the shares on exercise and consistent
with Rule 144 under the Securities Act of 1933, and requisite legends and
stop transfer orders shall be placed upon or against the certificates for
the shares by the Company's Transfer Agent and Registrar. Without regard
to registration or exemption therefrom on exercise, if the Optionee is then
an officer or other "affiliate" of the Company with the meaning of said
Rule 144, securities law transfer restrictions consistent with said Rule
144 shall in any event be applicable and requisite legends and stop
transfer orders shall be placed upon or against the certificates for the
shares by the
Company's Transfer Agent and Registrar. The Company shall not be obligated
for but does currently anticipate registration of the shares issued under
the Plan under federal and certain state securities laws.
(e) If the Optionee, until such time continuously employed by the
Company or its subsidiaries, is terminated by reason of death or disability
or retires at or after age 65, the option, to the extent not previously
exercised, may be exercised in whole or in part during the balance of the
stated term of the option without regard to the annual exercise vesting
provisions of subsection (a) above, except that no option shall be
exercisable for a period of six (6) months after the date of grant, and
except that an incentive stock option may be exercised only within three
(3) months after termination of employment by reason of such event and
shall thereupon expire, unless the Optionee shall die during such period or
while employed in which case the option may be exercised within twelve (12)
months after the death of the Optionee. The Committee may by prior approval
also permit an Optionee to retire to the same effect or on any less
favorable basis prior to age 65. The Committee may grant, withhold or
condition its approval for any reason it deems to be in the best interests
of the Company. In the event of the Optionee's death, the option may be
exercised by the personal representative of the Optionee's estate and/or by
the Optionee's heirs, as the case may be. If the Optionee's employment
terminates for any other reason, the option shall expire on the date the
Optionee's employment terminates. Notwithstanding anything herein to the
contrary, unless expiring earlier in accordance with another express
provision of this Plan or the Option Agreement, all granted under the Plan
shall terminate and expire ten (10) years after the date of grant.
(f) The incentive stock options hereunder shall not be transferable,
in whole or in part, by the Optionee except by will or the laws of descent
and distribution. During the Optionee's lifetime, the incentive stock
options granted hereunder shall be exercisable only by the Optionee, and
only while and if continuously employed by the Company or a subsidiary of
the Company, except as provided in Section 6(e) above. The nonstatutory
stock options granted hereunder shall be subject to such restrictions on
transfer (if any) imposed by the Committee.
(g) An incentive stock option hereunder shall not contain terms
pursuant to which the exercise of the option would affect the Optionee's
right to exercise a nonstatutory option hereunder, or vice versa, such that
the incentive stock option would be deemed a prohibited "tandem stock
option" within the meaning of Section 422 of the Code and the regulations
thereunder.
(h) If the Optionee sells, exchanges or otherwise disposes of shares
acquired upon exercise of an incentive stock option within two (2) years of
the date of grant, or one (1) year after the date of exercise, the Optionee
shall be required to notify the Company promptly in writing and disclose
the amount of gain or loss resulting from the sale, exchange or other
disposition of his or her shares.
7. TERMINATION
Unless extended or sooner terminated by action of the Company's Board of
Directors, the Plan shall terminate ten (10) years from its effective date.
Options outstanding under the Plan at the time of termination shall remain in
effect until exercise or expiration.
8. EFFECTIVE DATE
The effective date of the Plan shall be April 18, 1995, the date of
adoption by the Company's Board of Directors.
9. ADJUSTMENT OF SHARES
In the event of a recapitalization, merger, consolidation, reorganization,
stock dividend, stock split or other change in capitalization affecting the
Common Stock of the Company, appropriate equitable share and per share option
exercise price adjustments in outstanding options, and appropriate equitable
share adjustments in the shares then reserved for issuance under the Plan, shall
be made by the Company's Board of Directors or by the President or Secretary of
the Company acting as the Board's designated representative to prevent dilution
or enlargement of rights.
10. AMENDMENT
The Company's Board of Directors may amend the Plan at any time as
determined to be in the best interests of the Company, including any amendment
to extend or terminate the Plan. The Board shall not, however, without
shareholder approval, increase the maximum number of shares subject to the Plan
or restrict the class of persons eligible to be granted options under the Plan.