Exhibit 10(b)
DONNELLEY SHARES STOCK OPTION PLAN
(as amended on July 28, 1994, January 25, 1996, November 21, 1996)
1. Plan. The purpose of this Donnelley Shares Stock Option Plan (the "Plan")
is to provide incentives to employees through rewards based upon the ownership
and performance of the common stock of R. R. Donnelley & Sons Company (the
"Company"). The Committee hereinafter designated shall grant options to
purchase shares of common stock, par value $1.25 per share, of the Company (the
"Common Stock") to eligible employees on the terms and subject to the conditions
stated in the Plan.
2. Eligibility. All employees (other than officers) of the Company and all of
its direct or indirect wholly-owned subsidiaries (the "Employers") shall be
eligible, upon selection by the Committee, to receive options under the Plan;
provided, however, that an otherwise eligible employee whose terms and
conditions of employment are covered by a collective bargaining agreement shall
be eligible to receive options under the Plan only if expressly provided for in
the collective bargaining agreement or supplemental letter of understanding
signed by such employee's Employer and the recognized representative of the
collective bargaining unit in which the employee is a member; provided further,
that the preceding proviso shall not apply to employees who are not subject to
the United States labor laws. An employee granted an option pursuant to the
Plan shall be referred to herein from time to time as an "Optionee".
3. Limitation on Shares Available. Subject to adjustment as provided in
Section 5 of the Plan, the maximum number of shares of Common Stock available
for all grants made under the Plan shall be 6,000,000. Shares of Common Stock
subject to grants made hereunder which, by reason of the expiration,
cancellation, forfeiture or other termination of such grants prior to purchase,
are not purchased shall again be available for future grants.
Shares of Common Stock to be delivered may be authorized and unissued
shares of stock, treasury stock or a combination thereof. The Company reserves
the right to purchase shares of Common Stock for the Plan in the open market.
4. Administration of the Plan. The Plan shall be administered by a committee
(the "Committee") designated by the Board of Directors of the Company (the
"Board"). Except as otherwise set forth in the Plan, the Committee shall,
subject to the terms of the Plan, select groups of eligible employees for
participation in the Plan and, with respect to such groups of eligible
employees, shall determine the number of shares of Common Stock subject to each
option granted hereunder, the terms and conditions of exercise of such option
and all other terms and conditions of such option. The Committee shall, subject
to the terms of the Plan, have the authority to interpret the
Plan, establish rules and regulations for the administration of the Plan and
impose, incidental to the grant of an option, conditions with respect to the
grant. All such rules, regulations and interpretations adopted by the Committee
shall be conclusive and binding on all parties. The Committee may delegate its
authority to interpret all or part of the Plan to designated officers of the
Company.
5. Adjustments for Changes in Capitalization. The Committee shall make
appropriate adjustments to the number of shares available under the Plan, the
option exercise price and the number of shares subject to any option granted
hereunder in order to give effect to any stock split, stock dividend, merger,
consolidation, reorganization, spin-off, liquidation or other similar change in
capitalization or event that occurs after the effective date of the Plan, such
adjustments to be made in the case of outstanding options without a change in
the aggregate purchase price. If any adjustment would result in a fractional
security being available under the Plan or subject to a grant under the Plan,
such fractional security shall be disregarded.
6. Effective Date and Term of Plan. The Plan shall become effective on January
27, 1994 (the "Effective Date"). The Plan shall terminate five (5) years after
the Effective Date unless terminated prior thereto by action of the Board. No
further grants shall be made under the Plan after termination, but termination
shall not affect the rights of any Optionee under any grants made prior to
termination.
7. Amendments. The Plan may be amended or terminated by the Board in any
respect and at any time, provided that such action shall not adversely affect
any rights or obligations with respect to any outstanding grants under the Plan.
8. Grants. (a) Options to purchase 100 shares of Common Stock shall be granted
on March 24, 1994 to eligible employees employed on such date who had completed
at least two (2) years of continuous service with any one or more of the
Employers as of December 31, 1993; provided, however, that employees who, as of
March 24, 1994, are members of a collective bargaining unit shall be deemed
eligible employees for purposes of this paragraph 8(a) only if a collective
bargaining agreement or supplemental letter of understanding providing for the
receipt of such options by such employees was fully executed by such employee's
Employer and the recognized representative of the collective bargaining unit
prior to March 1, 1994; and provided further, that eligible employees who are
not employed in the United States of America as of March 24, 1994 shall not
receive such options. All options granted on March 24, 1994 shall become
exercisable in full on December 31, 1996.
(b) Additional options may be granted, in the sole and absolute discretion
of the Committee, to groups of eligible employees at any time.
(c) The option price per share of Common Stock purchasable upon the
exercise of any option granted pursuant to the Plan shall be the fair market
value of a share of Common Stock on the date of grant of such option. For
purposes of the Plan, the fair market value shall be
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determined by reference to the average of the high and low transaction prices in
trading of the Common Stock as reported in the New York Stock Exchange-Composite
Transactions on the date of grant.
(d) All options granted hereunder shall be evidenced by a certificate
substantially in the form of Exhibit A hereto. Each certificate shall be dated
and signed by an officer of the Company as of the date of the grant.
9. Terms of Options. (a) No option shall be exercisable earlier than one (1)
year, nor more than ten (10) years, after the date of grant. Each option
granted hereunder shall become exercisable in full on the third anniversary of
the date of the grant, unless otherwise determined by the Committee and except
as otherwise set forth in Section 8(a). Notwithstanding the foregoing, if an
Optionee is no longer employed by at least one of the Employers for any reason
(including due to death or long-term disability but excluding due to termination
of employment upon retirement at normal retirement age or early retirement at or
after age 55 with the consent of the Company), each option held by such Optionee
which is not exercisable on the date of termination of employment shall
terminate automatically on such date. Options held by an Optionee who retires
at normal retirement age or who takes early retirement at or after age 55 with
the consent of the Company, regardless of whether or not such options are
exercisable at the date of retirement, shall not terminate as a result of such
retirement but shall continue to remain outstanding and subject to the terms and
conditions of the Plan; provided, however, that in the event that such an
Optionee dies, each option held by such Optionee which is not exercisable on the
date of death of such Optionee shall terminate automatically upon the death of
such Optionee. Additionally, after an option held by an Optionee has become
exercisable, if such Optionee is no longer employed by at least one of the
Employers for any reason (other than retirement at normal retirement age or
early retirement at or after age 55 with the consent of the Company or for any
of the reasons specified in Section 9(c)) and/or such Optionee dies, then such
Optionee (or in the case of death, such Optionee's executor, administrator,
personal representative, beneficiary or similar person) may exercise such
exercisable option until ninety (90) days from the date of such termination of
employment and/or the date of death, as the case may be, or until the expiration
of the term of such option, whichever is earlier.
(b) No option hereunder shall be transferable other than by will, the laws
of descent and distribution or pursuant to the beneficiary designation
procedures approved by the Committee. Each option shall be exercisable during
the Optionee's lifetime only by the Optionee or the Optionee's guardian, legal
representative or similar person, provided that evidence of such person's
identity and rights with respect to such exercise are acceptable to the
Committee. Except as permitted by the first sentence of Section 9(b) of the
Plan, no option hereunder shall be sold, transferred, assigned, pledged,
hypothecated, encumbered or otherwise disposed of (whether by operation of law
or otherwise) or be subject to execution, attachment or similar process. Any
such attempt to so sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option hereunder shall be null and void and no person
shall be entitled to any rights hereunder by virtue of any attempted execution,
attachment or similar process. In the event of the death of
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an Optionee, any unexercised portion of an option that, but for the death of the
Optionee, would have been exercisable on the date of such Optionee's death by
such Optionee may be exercised by the executor, administrator, personal
representative, beneficiary or similar person of such deceased Optionee within
ninety (90) days of the death of such Optionee, but not after the expiration of
the term of the option; provided that evidence of such person's identity and
rights with respect to such exercise are acceptable to the Committee.
(c) Notwithstanding anything contained herein to the contrary, in the
event the Committee shall determine that an Optionee's employment was terminated
by the Optionee's Employer on account of (i) an unauthorized disclosure of
confidential information or trade secrets of any Employer, (ii) unlawful trading
in the securities of the Company or any customers of any of the Employers, or
(iii) fraud, theft or embezzlement with respect to any of the Employers or any
breach of the Optionee's duties to the Optionee's Employer or any of the other
Employers, then such Optionee shall forfeit all rights to the unexercised
portion of any option held by the Optionee under the Plan, and all such options
shall automatically terminate.
(d) Options must be exercised in full. No partial exercise is permitted.
No shares of Common Stock may be purchased under any option granted under the
Plan unless prior to or simultaneously with the purchase, the Optionee shall
have delivered by such means as have been identified by the Committee notice to
the Company, accompanied by payment therefor in full of the option price, any
brokerage fees associated with the exercise of the options (the "Brokerage
Fees"), and any local, state, federal or other taxes required to be withheld and
paid over to governmental taxing authorities by the Company due to such exercise
("Taxes") (or arrangement made for such payment to the satisfaction of the
Company). Upon exercise, the option price, the Brokerage Fees and the Taxes may
be paid according to procedures established by the Committee as follows: (i) in
cash or (ii) by electing to sell, through an agent or broker designated by the
Company, whole shares of Common Stock issuable upon exercise of the option
having a fair market value determined on the date of exercise as close as is
practicable to the sum of (A) the option price for shares of Common Stock
subject to such exercise, (B) the Brokerage Fees associated with such exercise
and (C) the Taxes associated with such exercise, provided that the number of
whole shares sold shall be sufficient to pay in full the option price, the
Brokerage Fees and the Taxes. No option may be exercised by an Optionee through
any agent or broker other than an agent or broker designated by the Company.
Notwithstanding the foregoing, in the event that an Optionee has notified the
Company through the Company's electronic system that such Optionee is exercising
an option and is paying cash for the option price and the Taxes and such cash is
not received within 30 calendar days following such notice, then the Company may
automatically order the sale, through the designated agent or broker, of whole
shares of Common Stock to pay in full the option price, the Brokerage Fees and
the Taxes and deliver any whole shares of Common Stock not so applied to the
Optionee, plus any cash owed in lieu of fractional shares. The Committee shall
have sole discretion to disapprove of an election pursuant to clause (ii). No
shares of Common Stock shall be delivered to the Optionee until the full option
price, the Brokerage Fees and the Taxes have been paid. Optionees shall be
required to receive all shares acquired under an option in the form of stock
certificates (or other evidence of stock ownership);
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cash shall not be paid to an Optionee in lieu of the delivery of stock
certificates (or other evidence of stock ownership) upon the exercise of any
option, except to the extent necessary to compensate for fractional shares.
(e) Optionees shall be entitled to the privilege of ownership with respect
to shares of Common Stock subject to options granted hereunder only as to shares
of Common Stock purchased and delivered to an Optionee upon exercise of an
option.
10. Miscellaneous.
(a) Effect of Leaves of Absence. Leaves of absence for periods and
purposes conforming to the personnel policies of the Company and approved by the
Employer shall not be deemed terminations of employment or interruptions of
continuous service.
(b) Restrictions on Shares. Notwithstanding any provision of the Plan to
the contrary, unless a registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), is in effect as to the shares purchasable
under any option granted under the Plan, no shares of Common Stock may be
purchased under such option. In addition, notwithstanding any provision of this
Plan to the contrary, any option granted under the Plan is subject to the
condition that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, the consent or approval of
any regulatory body, or the taking of any other actions necessary or desirable
as a condition of, or in connection with, the delivery of the shares thereunder,
such shares shall not be delivered unless such listing, registration,
qualification, consent, approval or other action shall have been effected or
obtained, free of any conditions not acceptable to the Company.
(c) No Right to Employment. Neither the Plan nor the grant of options
hereunder shall be construed as giving any employee any right to be retained in
the employ of any Employer.
(d) Governing Law. The Plan shall be governed by and interpreted in
accordance with the laws of the State of Delaware.
(e) Nature of Option. The options granted under the Plan shall not be
treated as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
11. Acceleration of Options Upon a Change in Control. If while any option
remains unexercised and outstanding under the Plan:
(a) any "person", as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
modified and used in Section 13(d) and 14(d) thereof (but not including (i)
the Company or any of its subsidiaries, (ii) a
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trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its subsidiaries, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities,
or (iv) a corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their ownership of
stock of the Company) (hereinafter a "Person") is or becomes the beneficial
owner, as defined in Rule 13d-3 of the Exchange Act, directly or
indirectly, of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Company or its affiliates) representing 50% or more of the combined voting
power of the Company's then outstanding securities; or
(b) during any period of two (2) consecutive years, individuals who
at the beginning of such period constitute the Board and any new director
(other than a director designated by a Person who has entered into any
agreement with the Company to effect a transaction described in clause (a),
(c) or (d) of this Section) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
a majority thereof; or
(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), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, at least 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 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 an agreement for the sale or disposition by
the Company of all or substantially all the Company's assets;
(any of such events being hereinafter referred to as a "Change in Control"),
then from and after the date on which public announcement of the acquisition of
such percentage shall have been made, or the date on which the change in
composition of the Board set forth above shall have occurred, or the date of any
such stockholder approval of a merger, consolidation, plan of complete
liquidation or an agreement for the sale of the Company's assets as described
above occurs (the applicable date being hereinafter referred to as the
"Acceleration Date"), all such outstanding and unexercised options, whether or
not then exercisable, shall be fully and immediately exercisable.
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Exhibit A
Donnelley Shares
STOCK OPTION PLAN
This is to certify that
(OPTIONEE NAME)
was granted on (DATE), an option to purchase
(NUMBER)
SHARES
of R. R. Donnelley & Sons Company common stock at a fixed
option price of (PRICE) per share. This option is subject to the
terms and conditions of the Donnelley Shares
Stock Option Plan.
[logo] RR Donnelley This certificate has been
& Sons Company executed as of (DATE),
on behalf of R. R. Donnelley
& Sons Company by
(FACSIMILE SIGNATURE)
John R. Walter
Chairman and
Chief Executive Officer
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DONNELLEY SHARES STOCK OPTION PLAN
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FOR UK EMPLOYEES
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(as adopted July 28, 1994 and amended September 6, 1994 and July 24, 1997)
1. Introduction. R. R. Donnelley & Sons Company ("the Company") has
established its Donnelley Shares Stock Option Plan ("the US Plan") for the
benefit of employees of it and its subsidiaries under which it may grant stock
options to such employees. The Company intends to grant Options to employees in
the United Kingdom under a UK sub-plan of the US Plan to be known as the
Donnelley Shares Stock Option Plan for UK Employees ("the UK Plan"). The UK
Plan shall be governed by these Rules ("the Rules"). The UK Plan is intended to
qualify as an approved share option plan under Schedule 9 to the Income and
Corporation Taxes Act 1988.
2. The Appendix. The US Plan attached as an Appendix to these Rules shall
apply to the UK Plan subject to the additional restrictions and amendments
specified below. References to Schedule 9 are to Schedule 9 to the Income and
Corporation Taxes Act 1988.
3. Exclusion. Section 8(a) of the US Plan relating to Option Grants on 24
March 1994 will not apply to the UK Plan.
4. Subsidiaries. The direct and indirect wholly-owned subsidiaries of the
Company referred to in Section 2 of the US Plan shall include, for purposes of
the UK Plan, only those companies of which the Company has control within the
meaning of Section 840 of the Income and Corporation Taxes Act 1988.
5. Shares. The shares of common stock of the Company in respect of which
Options may be granted under the UK Plan must satisfy the conditions specified
in paragraphs 10 to 14 inclusive of Schedule 9.
6. Eligibility.
6.1. For the avoidance of doubt, it is hereby clarified that directors of the
Company and its subsidiaries are not eligible to receive Options under the UK or
US Plans. The description of eligible employees in Section 2 of the US Plan
shall also be subject to the additional requirement that an employee must, in
order to be eligible to receive Options, be an employee of the Company or a
subsidiary of the Company who is required to devote to his duties not less than
20 hours per week excluding meal breaks and who is not precluded by paragraph 8
of Schedule 9 from participating in the UK Plan.
6.2. The proviso in Section 2 of the US Plan relating to eligible employees
covered by collective bargaining agreements will not apply to the UK Plan.
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6.3. Persons who are not eligible employees, as described in Section 2 of the
US Plan and qualified by Rules 6.1 and 6.2 above, shall not be eligible to
receive Options under the UK Plan.
6.4. Any Option granted to an eligible employee shall be limited and take
effect so that the aggregate Fair Market Value of Common Stock subject to that
Option, when aggregated with the Fair Market Value of Common Stock subject to
subsisting Options, shall not exceed the greater of :
6.4.1. (Pounds)100,000; and
6.4.2. four times the amount of the individual's Relevant Emoluments for the
current or preceding Year of Assessment (whichever of those years gives the
greater amount) or, if there were no Relevant Emoluments for the preceding Year
of Assessment, four times the amount of the Relevant Emoluments for the period
of twelve months beginning with the first day during the current Year of
Assessment in respect of which there are Relevant Emoluments./(1)/
For the purposes of this restriction:
(i) "Options" includes all Options granted under the UK Plan and all
options granted under any other plan approved under Schedule 9 (not being a
savings-related share option scheme) and established by the Company or any
associated company thereof (within the meaning of Section 416 of the Income
and Corporation Taxes Act 1988);
(ii) "Relevant Emoluments" means such of the emoluments of the office or
employment by virtue of which an individual is eligible to receive Options
under the UK Plan as are liable to be paid in that year under deduction of
tax pursuant to Section 203 of the Income and Corporation Taxes Act 1988
("Pay As You Earn") after deducting therefrom amounts included by virtue of
Chapter II of Part V of the Income and Corporation Taxes Act 1988 (benefits
derived by directors and others from their employment);
(iii) "Year of Assessment" means a year beginning on any 6 April and ending
on the following 5 April; and (iv) The "Fair Market Value" of the Common
Stock shall be calculated in accordance with Section 8(c) of the US Plan as
at the dates when the Options in relation to the Common Stock were granted
or such earlier time as may have been agreed in writing with the Board of
Inland Revenue./(1)/
7. Exercise of Options.
7.1 The provisions of Section 9(a) to (d) of the US Plan relating to the
exercise of Options shall be subject to the additional restriction that no
Option may be exercised by an Optionee at any time when he is precluded by
paragraph 8 of Schedule 9 from participating in the UK Plan.
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7.2 The provision in Section 9(d) (ii) of the US Plan for Optionees to pay the
option price by electing to sell whole shares of Common Stock through an agent
or broker designated by the Company will not apply for purposes of the UK Plan.
Instead, an Optionee may, upon exercise, pay the option price, the Brokerage
Fees and the Taxes in accordance with procedures established by the Committee as
follows: (i) by payment in full in the form of cash, cheque or credit transfer
or (ii) by providing, if permitted by the Committee at its sole discretion,
irrevocable written instructions to an agent or broker designated by the Company
to effect the immediate sale of purchased whole shares of Common Stock and remit
to the Company, out of the proceeds from such sale, sufficient funds to cover
(A) the aggregate option price payable for the shares subject to the exercise
and (B) the taxes if any associated with such exercise, and to pay to the
Optionee the balance (if any after payment of any brokerage fees) remaining
after the remission of such funds to the Company.
7.3 No cash payments may be made to Optionees pursuant to the final sentence of
Section 9(d) of the US Plan.
7.4 Shares must be allotted within 30 days after the date of exercise.
8. Conditions. No conditions may be imposed by the Committee pursuant to the
third sentence in Section 4 of the US Plan to the extent that they affect the UK
Plan without the prior approval of the Board of Inland Revenue. If such
conditions involve the satisfaction of performance criteria, those criteria must
be of an objective nature.
9. Adjustments Upon Changes in Capitalisation. The provisions of Section 5 of
the US Plan concerning the adjustment of Options shall be subject to the
requirement that all such adjustments must be certified in writing by the
Auditors as being fair and reasonable and that no adjustment in respect of
subsisting Options and of Options to be granted under the UK Plan shall take
effect without the prior approval of the Board of Inland Revenue. Also, no
adjustment may be made under the UK Plan in relation to a spin-off.
For the purposes of this restriction, "Auditors" means the auditors for the time
being of the Company (acting as experts and not as arbitrators).
10. Amendment of the Plan. Any amendment of the US or UK Plans which is made
under the provisions of Section 7 of the US Plan and which affects the UK Plan
shall only take effect in respect of the UK Plan with the prior approval of the
Board of Inland Revenue.
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/(1)/Note: Options granted on or after 29 April 1996 are subject to the new
(Pounds)30,000 limit set out in Rule 6.4. For purposes of calculating whether
this limit would be exceeded by a new Option grant, it is necessary to include
the value of shares subject to subsisting (unexercised) Options granted in the
past (whether or not they were granted before 29 April 1996) as well as the
value of the shares which would be subject to the proposed new Option. This
would include subsisting Options granted under the UK Sub-Plans of the 1991
Stock Incentive Plan and the 1995 Stock Incentive Plan. The value of shares
subject to subsisting Options should be worked out on the basis of their value
at the original dates of grant, converted into pounds Sterling at the exchange
rates in effect on such dates.
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