EXHIBIT 10.8
VISUAL EDGE SYSTEMS INC.
1996 STOCK OPTION PLAN
Section 1. Purpose
The Plan (i) authorizes the Committee to provide to Employees and
Consultants of the Corporation and its Subsidiaries, who are in a position to
contribute materially to the long-term success of the Corporation, with options
to acquire Stock of the Corporation, and (ii) provides for the automatic grant
of options to Non-Employee Directors of the Corporation in accordance with the
terms specified herein. The Corporation believes that this incentive program
will cause those persons to increase their interest in the Corporation's
welfare, and aid in attracting and retaining Employees, Consultants and
Directors of outstanding ability.
Section 2. Definitions
Unless the context clearly indicates otherwise, the following terms,
when used in this Plan, shall have the meanings set forth in this Section:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) A "Change in Control" shall be deemed to have occurred if:
(i) any person (as defined in Sections 3(a)(9) and 13(d)(3) of
the Exchange Act), other than the Corporation or an employee benefit
plan of the Corporation, acquires directly or indirectly the Beneficial
Ownership (within the meaning of Rule 13d-3 promulgated pursuant to the
Exchange Act) of any voting security of the Corporation and immediately
after such acquisition such Person is, directly or indirectly, the
Beneficial Owner of voting securities representing 30% or more of the
total voting power of all of the then-outstanding voting securities of
the Corporation;
(ii) the individuals (A) who, as of the closing date of the
Initial Public Offering, constitute the Board (the "Original
Directors") or (B) who thereafter are elected to the Board and whose
election, or nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election) or (C) who are elected to the
Board and whose election, or nomination for election, to the Board was
approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election) (such individuals being the "Continuing
Directors"), cease for any reason to constitute a majority of the
members of the Board;
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(iii) the stockholders of the Corporation shall approve a
merger, consolidation, recapitalization, or reorganization of the
Corporation, a reverse stock split of outstanding voting securities, or
consummation of any such transaction if stockholder approval is not
sought or obtained, other than any such transaction which would result
in at least 75% of the total voting power represented by the voting
securities of the surviving entity outstanding immediately after such
transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of the Corporation immediately prior to
the transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction; or
(iv) the stockholders of the Corporation shall approve a plan
of complete liquidation of the Corporation or an agreement for the sale
or disposition by the Corporation of all or a substantial portion of
the Corporation's assets (i.e., 50% or more of the total assets of the
Corporation).
(c) "Code" shall mean the Internal Revenue Code of 1986 as it may
be amended from time to time.
(d) "Committee" shall mean the Board, or any Committee of two or
more Directors that may be designated by the Board to administer the Plan.
(e) "Consultant" shall mean (i) any person who is engaged to
perform services for the Corporation or its Subsidiaries, other than as an
Employee or Director, or (ii) any person who has agreed to become a consultant
within the meaning of clause (i).
(f) "Control Person" shall mean any person who, as of the date of
grant of an Option, owns (within the meaning of Section 422(b)(6) of the Code)
stock possessing more than ten percent (10%) of the total combined voting power
or value of all classes of stock of the Corporation or of any parent or
Subsidiary.
(g) "Corporation" shall mean Visual Edge Systems Inc., a Delaware
corporation.
(h) "Director" shall mean any member of the Board.
(i) "Employee" shall mean (i) any full-time employee of the Corporation
or its Subsidiaries (including Directors who are otherwise employed on a
full-time basis by the Corporation or its Subsidiaries), or (ii) any person who
has agreed to become an employee within the meaning of clause (i).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as it may be amended from time to time.
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(k) "Fair Market Value" of the Stock on a given date shall be
based upon: (i) if the Stock is listed on a national securities exchange or
quoted in an interdealer quotation system, the last sales price or, if
unavailable, the average of the closing bid and asked prices per share of the
Stock on such date (or, if there was no trading or quotation in the Stock on
such date, on the next preceding date on which there was trading or quotation)
as provided by one of such organizations; or (ii) if the Stock is not listed on
a national securities exchange or quoted in an interdealer quotation system, as
determined by the Board in good faith in its sole discretion; provided, however,
that the "fair market value" of Stock on the date on which shares of Stock are
first issued and sold pursuant to a registration statement filed with and
declared effective by the Securities and Exchange Commission shall be the
Initial Public Offering price of the shares so issued and sold, as set forth in
the first final prospectus used in such offering.
(l) "Grantee" shall mean a person granted an Option under the
Plan.
(m) "Initial Public Offering" shall mean an initial public
offering of shares of Stock in a firm commitment underwriting registered with
the Securities and Exchange Commission in compliance with the provisions of
the 1933 Act.
(n) "ISO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock and intended to qualify as an incentive stock
option under Section 422 of the Code, as now or hereafter constituted.
(o) "1933 Act" shall mean the Securities Act of 1933, as amended.
(p) "Non-Employee Director" shall mean a Director of the
Corporation who is not an Employee, nor has been an Employee at any time during
the prior one year period.
(q) "NQSO" shall mean an Option granted pursuant to the Plan to
purchase shares of the Stock that is not an ISO.
(r) "Options" shall refer collectively to NQSOs and ISOs issued
under and subject to the Plan.
(s) "Parent" shall mean any parent corporation as defined in
Section 424 of the Code.
(t) "Plan" shall mean this 1996 Stock Option Plan as set forth
herein and as amended from time to time.
(u) "Stock" shall mean shares of the Common Stock of the
Corporation, par value $0.01 per share.
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(v) "Stock Option Agreement" shall mean a written agreement
between the Corporation and the Grantee, or a certificate accepted by the
Grantee, evidencing the grant of an Option hereunder and containing such terms
and conditions, not inconsistent with the Plan, as the Committee shall approve.
(w) "Subsidiary" shall mean (i) any corporation with respect to
which the Corporation owns, directly or indirectly, 50% or more of the total
combined voting power of all classes of stock of such corporation, or (ii) any
entity which the Committee reasonably expects to become a subsidiary within the
meaning of clause (i).
Section 3. Shares of Stock Subject to the Plan
The total amount of Stock that may be subject to outstanding Options,
determined immediately after the grant of any Option, shall not exceed the
greater of 900,000 shares (reduced by 500,000 less the number of shares subject
to performance-based Options granted pursuant to employment agreements,
effective January 1, 1996, with Messrs. Earl Takefman and Alan Lubell that
remain outstanding at such time), or 12% percent of the total number of shares
of Stock outstanding. Notwithstanding the foregoing, the number of shares that
may be delivered upon exercise of ISOs shall not exceed 300,000, provided,
however, that shares subject to ISOs shall not be deemed delivered if such
Options are forfeited, expire or otherwise terminate without delivery of shares
to the Grantee. Any shares of Stock delivered pursuant to an Option may consist,
in whole or in part, of authorized and unissued shares or treasury shares.
Section 4. Administration of the Plan
The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have the authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of Stock Option Agreements
thereunder and to make all other determinations necessary or advisable for the
administration of the Plan. Any controversy or claim arising out of or related
to this Plan or the Options granted thereunder shall be determined unilaterally
by, and at the sole discretion of, the Committee. Any action of the Committee
with respect to the Plan shall be final, conclusive, and binding on all persons,
including the Corporation, subsidiaries of the Corporation, Grantees, any person
claiming any rights under the Plan from or through any Grantee, and
stockholders. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. To the extent necessary to comply with Rule
16b-3 under the Exchange Act, determinations concerning Options granted to any
person who is subject to Section 16(b) of the Exchange Act shall be made by the
Committee, all of whose members shall be "disinterested persons" within the
meaning of Rule 16b-3 under the Exchange Act. The Committee may delegate to
officers or managers of the Corporation or any Subsidiary the authority, subject
to such terms as the Committee shall determine, to perform administrative
functions and, with respect to persons not subject to Section 16 of the
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Exchange Act, to perform such other functions as the Committee may determine,
to the extent permitted under Rule 16b-3, if applicable, and other applicable
law.
Section 5. Types of Options
Options granted under the Plan may be of two types: ISOs or NQSOs. The
Committee shall have the authority and discretion to grant to an eligible
Employee either ISOs, NQSOs or both, but shall clearly designate the nature of
each Option at the time of grant in the Stock Option Agreement. Grantees who are
not Employees (determined with reference to Section 2(i)(i) only) of the
Corporation or a Subsidiary (determined with reference to Section 2(w)(i) only)
on the date an Option is granted shall only receive NQSOs.
Section 6. Grant of Options to Employees and Consultants
(a) Employees and Consultants of the Corporation and its
Subsidiaries shall be eligible to receive Options under the Plan.
(b) The exercise price per share of Stock subject to an Option
granted to an Employee or Consultant shall be determined by the Committee and
specified in the Stock Option Agreement, provided, however, that the exercise
price of each share subject to an ISO shall be not less than 100%, or, in the
case of an ISO granted to a Control Person, 110%, of the Fair Market Value of a
share of the Stock on the date such Option is granted.
(c) The term of each Option granted to an Employee or Consultant
shall be determined by the Committee and specified in a Stock Option Agreement,
provided that no Option shall be exercisable more than ten years from the date
such Option is granted, and provided further that no ISO granted to a Control
Person shall be exercisable more than five years from the date of Option grant.
(d) The Committee shall determine and designate from time to time
Employees or Consultants who are to be granted Options, and shall specify in the
Stock Option Agreement the nature of each Option granted and the number of
shares of Stock subject to each such Option, provided, however, that in any
calendar year, no Employee or Consultant may be granted an Option to purchase
more than 250,000 shares of Stock (determined without regard to when such Option
is exercisable), subject to adjustment pursuant to Section 10.
(e) Notwithstanding any other provisions hereof, the aggregate
Fair Market Value (determined at the time the ISO is granted) of the Stock with
respect to which ISOs are exercisable for the first time by any Employee during
any calendar year under all plans of the Corporation and any Parent or
Subsidiary corporation shall not exceed $100,000. To the extent the limitation
set forth in the preceding sentence is exceeded, the Options with respect to
such excess shall be treated as NQSOs.
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(f) The Committee shall determine whether any Option granted to an
Employee or Consultant shall become exercisable in one or more installments and
specify the installment dates in the Stock Option Agreement. The Committee may
also specify in the Stock Option Agreement such other provisions, not
inconsistent with the terms of this Plan, as it may deem desirable, including
such provisions as it may deem necessary to qualify any ISO under the provisions
of Section 422 of the Code. Unless otherwise determined by the Committee and
specified in the Stock Option Agreement, all Options shall immediately become
exercisable upon a Change in Control.
(g) The Committee may, at any time, grant new or additional
options to any eligible Employee or Consultant who has previously received
Options under this Plan, or options under other plans, whether such prior
Options or other options are still outstanding, have been exercised previously
in whole or in part, or have been cancelled. The exercise price of such new or
additional Options may be established by the Committee, subject to Section 6(b)
hereof, without regard to such previously granted Options or other options.
Section 7. Grants of Options to Non-Employee Directors
(a) Non-Employee Directors of the Corporation who serve on the
Committee shall be eligible to receive Options under the Plan only pursuant to
the provisions of this Section 7. Each individual who agrees to become a
Non-Employee Director prior to the consummation of the Corporation's Initial
Public Offering shall receive, without the exercise of the discretion of any
person, an NQSO under the Plan relating to the purchase of 5,000 shares of Stock
at an exercise price per share equal to the Initial Public Offering price per
share. Such option grant shall be conditional upon, and for all purposes
hereunder, deemed granted upon, the Initial Public Offering. Each individual who
becomes a Non-Employee Director thereafter shall, on the date such individual
becomes a Non-Employee Director, receive, without the exercise of the discretion
of any person, an NQSO under the Plan relating to the purchase of 5,000 shares
of Stock. In addition, on the day of the annual meeting of stockholders next
following the date of an Initial Public Offering, and the day of each subsequent
annual meeting, each individual who is a continuing Non-Employee Director on any
such date (other than a Non-Employee Director who was granted an Option pursuant
to the preceding sentence within 30 days of the date of any such annual meeting)
shall receive, without the exercise of the discretion of any person, an NQSO
under the Plan relating to the purchase of 2,500 shares of Stock. In the event
that there are not sufficient shares available under this Plan to allow for the
grant to each Non-Employee Director of an NQSO for the number of shares provided
herein, each Non-Employee Director shall receive an NQSO for his pro rata share
of the total number of shares of Stock available under the Plan.
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(b) The exercise price of each share of Stock subject to an Option
granted to a Non-Employee Director shall equal the Fair Market Value of a share
of Stock on the date such Option is granted. Payment of the exercise price for
the shares being purchased shall be made in cash.
(c) Each Option granted to a Non-Employee Director shall become
exercisable in three equal annual installments on the date of grant and on each
of the first two anniversaries of the date of grant, and shall have a term of
five years from the date of grant. Notwithstanding the exercise period of any
Option granted to a Non-Employee Director, all such Options shall immediately
become exercisable upon a Change in Control.
Section 8. Exercise of Options
(a) A Grantee shall exercise an Option by delivery of written
notice to the Corporation setting forth the number of shares with respect to
which the Option is to be exercised, together with cash, certified check, bank
draft, wire transfer, or postal or express money order payable to the order of
the Corporation for an amount equal to the Option price of such shares and any
income tax required to be withheld. The Committee may, in its sole discretion,
permit a Grantee to pay all or a portion of the exercise price by delivery of
Stock or other property (including notes or other contractual obligations of
Grantees to make payment on a deferred basis, such as through "cashless
exercise" arrangements, to the extent permitted by applicable law), and the
methods by which Stock will be delivered or deemed to be delivered to Grantees.
(b) Except as provided pursuant to Section 9(a), no Option
granted to an Employee or Consultant shall be exercised unless at the time of
such exercise the Grantee is then an Employee (determined with reference to
Section 2(i)(i) only) or Consultant (determined with reference to Section
2(e)(i) only) of the Corporation or a Subsidiary (determined with reference to
Section 2(w)(i) only).
(c) Except as provided in Section 9(a), no Option granted to a
Non-Employee Director shall be exercised unless at the time of such exercise the
Grantee is then a Non-Employee Director.
Section 9. Exercise of Options upon Termination
(a) Unless otherwise determined by the Committee, upon termination
of a Grantee's employment with the Corporation and its Subsidiaries, such
Grantee may exercise any Options during the three month period following such
termination of employment, but only to the extent such Option was exercisable
immediately prior to such termination of employment. Notwithstanding the
foregoing, if the Committee determines that such termination is for cause, all
Options held by the Grantee shall immediately terminate. In addition, all
Options granted on the basis of clause (ii) of Section 2(e), (i) or (w) shall
immediately terminate if the Committee determines, in its sole discretion,
that the Consultant, Employee or Subsidiary, as the case may be, will not
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become a Consultant, Employee or Subsidiary within the meaning of clause
(i) of such Sections.
(b) Unless otherwise determined by the Committee and specified in
the Stock Option Agreement, in no event shall any Option be exercisable for more
than the maximum number of shares that the Grantee was entitled to purchase at
the date of termination of the relationship with the Corporation and its
Subsidiaries.
(c) The sale of any Subsidiary shall be treated as a termination
of employment with respect to any Grantee employed by such Subsidiary.
(d) Subject to the foregoing, in the event of death, Options may
be exercised by a Grantee's legal representative.
Section 10. Adjustment Upon Changes in Capitalization
In the event of any dividend or other distribution (whether in the form
of cash, Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Stock such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Grantees under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number and
kind of shares of Stock deemed to be available thereafter for grants of Options
under Section 3, (ii) the number and kind of shares of Stock that may be
delivered or deliverable in respect of outstanding Options, (iii) the number of
shares with respect to which Options may be granted to a given Grantee in the
specified period as set forth in Section 6(d), and (iv) the exercise price (or,
if deemed appropriate, the Committee may make provision for a cash payment with
respect to any outstanding Option). In addition, the Committee is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Options (including, without limitation, cash payments in exchange for an Option
or substitution of Options using stock of a successor or other entity) in
recognition of unusual or nonrecurring events (including, without limitation,
events described in the preceding sentence) affecting the Corporation or any
Subsidiary or the financial statements of the Corporation or any Subsidiary, or
in response to changes in applicable laws, regulations, or accounting
principles.
Section 11. Restrictions on Issuing Shares
The Corporation shall not be obligated to deliver Stock upon the
exercise or settlement of any Option or take other actions under the Plan until
the Corporation shall have determined that applicable federal and state laws,
rules, and regulations have been complied with and such approvals of any
regulatory or governmental agency have been obtained and contractual obligations
to which the Option may be subject have been satisfied. The Corporation, in its
discretion, may postpone the issuance or delivery of Stock under any
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Option until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any federal or state
law, rule, or regulation as the Corporation may consider appropriate, and may
require any Grantee to make such representations and furnish such information as
it may consider appropriate in connection with the issuance or delivery of Stock
under the Plan.
Section 12. Tax Withholding
The Corporation shall have the right to require that the Grantee make
such provision, or furnish the Corporation such authorization, necessary or
desirable so that the Corporation may satisfy its obligation, under applicable
laws, to withhold or otherwise pay for income or other taxes of the Grantee
attributable to the grant or exercise of Options granted under the Plan or the
sale of Stock issued with respect to Options. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Grantee's tax obligations.
Section 13. Transferability
No Option shall be subject to anticipation, sale, assignment, pledge,
encumbrance, charge or transfer except by will or the laws of descent and
distribution, and an Option shall be exercisable during the Grantee's lifetime
only by the Grantee, provided, however, that the Committee may permit a Grantee
to transfer an Option to a family member or a trust created for the benefit of
family members. In the case of such a transfer, the transferee's rights and
obligations with respect to the Option shall be determined by reference to the
Grantee and the Grantee's rights and obligations with respect to the Option had
no transfer been made. Notwithstanding such transfer, the Grantee shall remain
obligated pursuant to Section 11 if required by applicable law.
Section 14. General Provisions
(a) Each Option shall be evidenced by a Stock Option Agreement.
The terms and provisions of such Stock Option Agreements may vary among Grantees
and among different Options granted to the same Grantee.
(b) The grant of an Option in any year shall not give the Grantee
any right to similar grants in future years, any right to continue such
Grantee's employment relationship with the Corporation or its Subsidiaries, or,
until such Option is exercised and share certificates are issued, any rights as
a Stockholder of the Corporation. All Grantees shall remain subject to discharge
to the same extent as if the Plan were not in effect.
(c) No Grantee, and no beneficiary or other persons claiming under
or through the Grantee shall have any right, title or interest by reason of any
Option to any particular assets of the Corporation or its Subsidiaries, or any
shares of Stock allocated or reserved for the purposes of the Plan or subject
to any Option except as set forth herein. The Corporation shall not be
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required to establish any fund or make any other segregation of assets to
assure the payment of any Option.
(d) The issuance of shares of Stock to Grantees or to their legal
representatives shall be subject to any applicable taxes and other laws or
regulations of the United States or of any state having jurisdiction thereof.
Section 15. Amendment or Termination
The Board may, at any time, alter, amend, suspend, discontinue or
terminate this Plan; provided, however, that no such action shall adversely
affect the rights of Grantees to Options previously granted hereunder and,
provided further, however, that any shareholder approval necessary or desirable
in order to comply with Rule 16b-3 under the Exchange Act or with Section 422 of
the Code (or other applicable law or regulation) shall be obtained in the manner
required therein. In addition, no plan provision, within the meaning of Rule
16b-3(c)(2)(i)(D), shall be amended more than once every six months, other than
to comport with changes in the Code or rules thereunder. The Committee may waive
any conditions or rights under, or amend, alter, suspend, discontinue, or
terminate, any Option theretofore granted and any Stock Option Agreement
relating thereto; provided, however, that, without the consent of an affected
Grantee, no such action may materially impair the rights of such Grantee under
such Option.
Section 16. Effective Date of Plan
This Plan is effective upon its adoption by the Board and shall
continue in effect until terminated by the Board. No ISO may be granted more
than ten years after such date.
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