Exhibit 10.3
PRODUCTION GROUP INTERNATIONAL, INC.
1997 DIRECTORS' STOCK OPTION PLAN
1. Purpose.
The purpose of this 1997 Directors' Option Plan (the "Plan") of
Production Group International, Inc. (the "Company") is to promote the
recruiting and retention of highly qualified outside Directors and to strengthen
the commonality of interest between Directors and stockholders.
2. Administration.
The Plan will be administered by the Board of Directors of the Company,
whose construction and interpretation of the terms and provisions of the Plan
shall be final and conclusive. Grants of stock options under the Plan and the
amount and nature of the awards to be granted shall be automatic and non-
discretionary in accordance with Section 5. However, all questions of
interpretation of the Plan or of any options issued under it shall be determined
by the Board of Directors and such determination shall be final and binding upon
all persons having an interest in the Plan. No Director shall be liable for any
action or determination under the Plan made in good faith.
3. Participation in the Plan.
Directors of the Company who are not employees of the Company or any
subsidiary of the Company ("Eligible Directors") are eligible to receive options
under the Plan.
4. Stock Subject to the Plan.
(a) The maximum number of shares which may be issued under the Plan
shall be 100,000 shares of the Company's Common Stock, $0.01 par value per share
("Common Stock"), subject to adjustment as provided in Section 9.
(b) If any outstanding option under the Plan for any reason expires or
is terminated without having been exercised in full, the shares allocable to the
unexercised portion of such option shall again become available for grant
pursuant to the Plan.
(c) All options granted under the Plan shall be non-statutory options
which are not intended to meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
5. Terms, Conditions and Form of Options.
Each option granted under the Plan shall be evidenced by a written
agreement in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the following
terms and conditions:
(a) Option Grant Dates. Following approval of the Plan by the holders
of a majority of the shares of Common Stock present or represented at a meeting
of the Company's stockholders duly called and held in accordance with the
Company's by-laws and applicable law, options shall be granted automatically to
all eligible Directors as follows: (i) each person who becomes an Eligible
Director before the date of the Company's initial public offering of shares of
its Common Stock (the "Initial Public Offering") shall be granted an option to
purchase 10,000 shares of Common Stock on the close of business on the date of
his or her initial election or appointment to the Board of Directors or such
later date as may be determined by the Board of Directors prior to the Initial
Public Offering; and (ii) commencing with the 1997 annual stockholders' meeting,
each Eligible Director shall be granted an additional option to purchase 2,500
shares of Common Stock (an "Annual Grant") on the date of each annual
stockholders' meeting, including the meeting at which such Director is initially
elected, provided he or she is serving as a Director immediately after such
meeting.
(b) Option Exercise Price. The option exercise price per share for
each option granted under the Plan shall equal the closing price per share of
the Company's Common Stock on NASDAQ, or the principal exchange on which the
Common Stock is then listed, on the date of grant, and if no such price is
reported on such date, such price as reported on the nearest preceding date on
which such price is reported; if any options are granted on or prior to the date
that the Company's Common Stock is listed on an exchange, the option exercise
price per share shall be the fair market value of the Common Stock determined by
the Board of Directors.
(c) Options Non-Transferable. Each option granted under the Plan by
its terms shall not be transferable by the optionee otherwise than by will or by
the laws of descent and distribution. Notwithstanding the foregoing, options
may be transferred by Directors to family members, to trusts established for the
benefit of family members or to partnerships or corporations owned by family
members or to partnerships affiliated with Directors.
(d) Exercise Period. Each option to purchase 10,000 or 2,500 shares
(as applicable) of Common Stock on the date of the Director's election to the
Board of Directors shall become vested and exercisable with respect to one-third
of the shares upon each of the first, second, and third anniversaries of his or
her initial election or appointment to the Board of Directors (or the date of
the annual meeting of stockholders in such year, if earlier), and may be
exercised thereafter from time to time, in whole or in part, prior to the
earlier of (i) 60 days after an optionee ceases to serve as a Director (180 days
if the optionee ceased to serve because of his or her death or permanent
disability) or (ii) the fifth anniversary of the date of grant. Each Annual
Grant shall become fully vested upon the earlier of (a) the next annual
stockholders' meeting or (b) the first anniversary of the date of grant and may
be exercised thereafter from time to time, in whole or in part, prior to the
earlier of (i) 60 days after an optionee ceases to serve as a Director (180 days
if the optionee ceased to serve because of his or her death or permanent
disability) or (ii) the fifth anniversary of the date of grant.
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(e) Exercise Procedure. Options may be exercised only by written
notice (in a form provided by or acceptable to the Company) to the Company at
its principal office accompanied by payment of the full consideration for the
shares as to which they are exercised.
(f) Payment of Purchase Price. Payment of the exercise price may be
made, at the election of the optionee, (i) by delivery of cash or check to the
order of the Company in an amount equal to the exercise price, (ii) by delivery
to the Company of shares of Common Stock of the Company already owned and held
by the optionee for at least twelve months and having a fair market value equal
in amount to the exercise price of the options being exercised, or (iii) by any
combination of such methods of payment. The fair market value of any shares of
Common Stock which may be delivered upon exercise of an option shall be
determined by the Company as of the date that such shares are delivered.
6. Assignments.
The rights and benefits under the Plan may not be assigned except as
provided in Section 5.
7. Time for Granting Options.
All options for shares subject to the Plan shall be granted, if at all,
not later than ten years after the date of the Board's adoption of the Plan.
8. Limitation of Rights.
(a) No Right to Continue as a Director. Neither the Plan, nor the
granting of an option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a Director for any period of time.
(b) No Stockholder Rights for Options. The holder of an option shall
have no rights as a stockholder with respect to the shares covered by the option
until the date that the holder delivers all materials to exercise such option to
the Company in proper form with payment of the exercise price, and no adjustment
will be made for dividends or other rights for which the record date is prior to
the date on which such materials and payment are delivered.
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9. Adjustment Provisions.
(a) Recapitalizations. If, through or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (x) the
maximum number and kind of shares reserved for issuance under the Plan, (y) the
number and kind of shares or other securities subject to then outstanding
options under the Plan, and (z) the price for each share subject to any then
outstanding options under the Plan, without changing the aggregate purchase
price as to which such options remain exercisable.
(b) Mergers. In the event of a consolidation or merger or sale of all
or substantially all of the assets of the Company in which outstanding shares of
Common Stock are exchanged for securities, cash or other property of any other
corporation or business entity or in the event of a liquidation of the Company,
the Board of Directors of the Company, or the board of Directors of any
corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding options: (i)
provide that such options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), (ii) upon written notice to the optionees, provide that all
unexercised options will terminate immediately prior to the consummation of such
transaction unless exercised by the optionee within a specified period following
the date of such notice, and (iii) in the event of a merger under the terms of
which holders of the Common Stock of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the "Merger
Price"), make or provide for a cash payment to the optionees equal to the
difference between (a) the Merger Price times the number of shares of Common
Stock subject to such outstanding options (to the extent then exercisable at
prices not in excess of the Merger Price) and (b) the aggregate exercise price
of all such outstanding options in exchange for the termination of such options.
10. Change in Control.
Notwithstanding any other provision of the Plan, in the event of a
"Change in Control of the Company" (as defined below), any outstanding options
issued pursuant to the Plan prior to the date of such Change in Control of the
Company shall vest and be exercisable as to 50% of the number of shares that
remain unvested on the date of such Change in Control of the Company. For
purposes of the Plan, a "Change in Control of the Company" shall occur or be
deemed to have occurred only if :
(a) any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any corporation
owned directly or indirectly by the stockholders of the Company in substantially
the same proportion as their ownership of stock of the Company), is or
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becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities;
(b) during any period of two consecutive years ending during the term
of the Plan (not including any period prior to the adoption of the Plan),
individuals who at the beginning of such period constitute the Board of
Directors of the Company, and any new director (other than a director designated
by a person who has entered into an agreement with the Company to effect any
transaction described in clause (a), (c) or (d) of this Section 10) whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were either directors at the beginning of the period or
whose election or whose nomination for election was previously so approved
(collectively, the "Disinterested Directors"), cease for any reason to
constitute a majority of the Board of Directors;
(c) the stockholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete
liquidation of the Company or the sale of all or substantially all of the
Company's assets which, in either case, has not previously been approved by a
majority of the Disinterested Directors.
11. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect.
(b) The termination or any modification or amendment of the Plan
shall not, without the consent of an optionee, affect his or her rights under an
option previously granted to him or her. With the consent of the optionees
affected (if so required hereby), the Board of Directors may amend outstanding
option agreements in a manner not inconsistent with the Plan.
12. Notice.
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Chief Financial Officer of the Company and
shall become effective when it is received.
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13. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by
the Board of Directors, but no option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by the Company's
stockholders.
(b) Termination. Unless earlier terminated pursuant to Section 9,
the Plan shall terminate upon the earlier of (i) Ocotber 8, 2006, or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise of options granted under the Plan. If the date
of termination is determined under (i) above, then options outstanding on such
date shall continue to have force and effect in accordance with the provisions
of the instruments evidencing such options.
14. General Restrictions.
(a) Investment Representations. The Company may require any person
to whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws.
(b) Compliance With Securities Laws. Each option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject to such
option upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with, the issuance or purchase
of shares thereunder, such option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval, or
satisfaction of such conditions is effected in a manner acceptable to the Board
of Directors. Nothing herein shall be deemed to require the Company to apply
for or to obtain such listing, registration or qualification, or to satisfy such
condition.
15. Governing Law.
The Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Delaware.
Adopted by the Board of Directors,
on October 18, 1996.
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