EXHIBIT 10.5
CADMUS COMMUNICATIONS CORPORATION
1997 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
ARTICLE I
DEFINITIONS
1.01. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying
the terms and conditions of an Award granted to such Participant.
1.02. Award means an award of Options as provided for hereunder.
1.03. Board means the Board of Directors of the Company.
1.04. Change in Control means a "change in control" as defined in the Company's
1990 Long Term Incentive Stock Plan, as amended from time to time.
or any successor plan thereto.
1.05. Code means the Internal Revenue Code of 1986, as amended.
1.06. Common Stock means the common stock of the Company.
1.07. Company means Cadmus Communications Corporation.
1.08. Date of Grant means each November 15 beginning November 15, 1998, and
ending November 15, 2002.
1.09. Fair Market Value means the average closing sales price of the
Common Stock on the NASDAQ over the counter market for the twenty
trading days immediately preceding an Option's Date of Grant.
1.10. Option means a stock option granted pursuant to Article IV that
entitles the holder to purchase from the Company a stated number of
shares of Common Stock at the shares' Fair Market Value.
1.11. Participant means a member of the Board who is not an employee of
the Company on the applicable Date of Grant.
1.12. Plan means the Cadmus Communications Corporation 1997 Non-Employee
Director Stock Compensation Plan.
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ARTICLE II
PURPOSE
The Plan is intended to promote a greater identity of interest between
Participants and the Company's shareholders by increasing the Participants'
proprietary interest in the Company through the receipt of Awards in the form of
Options in lieu of cash payments for a portion of each Participant's annual
director's fees.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the employee directors of the Board
("Employee Directors"), who shall have complete authority to interpret all
provisions of this Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other determinations necessary or advisable for the
administration of this Plan. Any decision made, or action taken, by the Employee
Directors in connection with the administration of this Plan shall be final and
conclusive. All expenses of administering this Plan shall be borne by the
Company.
ARTICLE IV
GRANT OF OPTIONS
On each Date of Grant during the term of the Plan, each Participant
automatically will receive an Option for shares of Common Stock determined in
accordance with the following schedule:
Number of Shares
Date of Grant Subject to Option
------------ ------------------
November 15, 1998 1,000
November 15, 1999 1,000
November 15, 2000 1,000
November 15, 2001 1,000
November 15, 2002 1,000
All Options shall be evidenced by Agreements which shall be subject to the
applicable provisions of this Plan and to such other provisions as the Employee
Directors may adopt.
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ARTICLE V
STOCK SUBJECT TO OPTIONS
Upon the exercise of any Option, the Company may deliver to the
Participant (or the Participant's broker if the Participant so directs)
authorized but unissued Common Stock. The maximum aggregate number of shares of
Common Stock that may be issued pursuant to the exercise of Options under this
Plan is 60,000, subject to adjustment as provided in Article X. If an Option is
terminated, in whole or in part, for any reason other than its exercise, the
number of shares of Common Stock allocated to the Option or portion thereof may
be reallocated to other Options to be granted under this Plan.
ARTICLE VI
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an
Option shall be the share's Fair Market Value.
ARTICLE VII
EXERCISE OF OPTIONS
7.01. Maximum Option Period. No Option shall be exercisable after the
expiration of ten years from its Date of Grant.
7.02. Nontransferability. Options granted under this Plan shall be
nontransferable except by will or by the laws of descent and distribution.
During the lifetime of the Participant to whom the Option is granted, the Option
may be exercised only by the Participant. No right or interest of a Participant
in any Option shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.
ARTICLE VIII
METHOD OF EXERCISE OF OPTIONS
8.01. Exercisability of Options. Subject to the provisions of Articles VII
and XI, an Option becomes exercisable six months after its Date of Grant.
However, an Option granted to a Participant shall be immediately exercisable if
the Participant's membership on the Board terminates as a result of the
Participant's retirement in accordance with Company policy, death or permanent
and total disability (as such term is defined in Section 22(e)(3) of the Code)
or in the event of a Change in Control. An Option shall be forfeited if, as of
the termination of the Participant's membership on the Board, the Option is not
then exercisable and such termination occurs for any reason other than the
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Participant's retirement in accordance with Company policy, death or disability
(as defined above) or a Change in Control. Options that are exercisable or that
become exercisable upon the Participant's termination of membership on the Board
will remain exercisable until the tenth anniversary of the Option's Date of
Grant. An Option may be exercised with respect to any number of whole shares
less than the full number for which the Option could be exercised. A partial
exercise of an Option shall not affect the right to exercise the Option from
time to time in accordance with this Plan and the applicable Agreement with
respect to the shares remaining subject to the Option.
8.02. Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to the Board.
In addition, all or part of the Option price may be made by surrendering shares
of Common Stock to the Company, including shares acquired upon the exercise of
the Option, or through a broker-assisted cashless exercise. If Common Stock is
used to pay all or part of the Option price, the shares surrendered to the
Company must have a fair market value (determined as of the day before the date
of exercise and based on the closing sales price recorded by the NASDAQ over the
counter market on such date) that is not less than such price or part thereof.
8.03. Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option until the date of
exercise of such Option.
ARTICLE IX
INCREASES IN COMPENSATION AFTER JUNE 30, 1998
In the event the Company determines, for fiscal years beginning after June
30, 1998, to increase annual retainer fees or meeting fees for attendance at
Board meetings or meetings of Committees thereof, or otherwise to increase the
compensation payable to Participants, the Company shall have the right, but not
the obligation, to pay such increased compensation in the form of Awards under
this Plan, provided, however, that in such event any Options granted hereunder
shall be valued for such purposes at $3.00 per share of Common Stock for which
an Option is granted, and provided, further, that in no event may Awards be made
for a number of shares of Common Stock exceeding the maximum number of shares of
Common Stock authorized under this Plan.
ARTICLE X
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares for which Awards may be granted under this
Plan shall be proportionately adjusted, and the terms of outstanding Awards
shall be adjusted, as the Employee Directors shall determine to be equitably
required in the event that the Company (a) effects one or more stock dividends,
stock split-ups, subdivisions or
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consolidations of shares or (b) engages in a transaction to which Section 424 of
the Code applies. Any determination made under this Article X by the Board shall
be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of right or
warrants to subscribe therefor, or upon conversion of shares of obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, outstanding
Awards.
ARTICLE XI
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option shall be exercisable, no Common Stock shall be delivered, and no
payment shall be made under this Plan except in compliance with all applicable
federal and state laws and regulations (including, without limitation,
withholding tax requirements), and applicable requirements of any exchange or
other market having authority over the trading of the Company's shares.
ARTICLE XII
GENERAL PROVISIONS
12.01. Effect on Service. Neither the adoption of this Plan, its
operation, documents describing or referring to this Plan (or any part thereof)
shall confer on any Participant any right to continue service as a member of the
Board.
12.02. Unfunded Plan. The Plan, insofar as it provides for grants, shall
be unfunded and the Company shall not be required to segregate any assets that
may be represented at any time by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that are created pursuant to this Plan.
No such obligation of the Company shall be deemed to be secured by any pledge
of, or other encumbrance on, any property of the Company.
12.03. Rules of Construction. Headings are given to the articles and
sections of the Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or provision of law shall be construed to
refer to any amendment to or successor of such provision of law.
ARTICLE XIII
AMENDMENT
The Board may amend this Plan from time to time; provided that no
amendment may become effective until shareholder approval is obtained if the
amendment (i) materially increases the aggregate number of shares of Common
Stock that may be issued under the Plan, (ii) materially changes the class of
individuals eligible to become Participants or
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(iii) materially increases the benefits that may accrue to Participants under
the Plan, and provided further that the Board may not amend the Plan more than
once in any six month period unless such amendment is required to comply with
the Code or the Employee Retirement Income Security Act of 1974. No amendment
shall, without a Participant's consent, adversely affect any rights of such
Participant under any Option outstanding at the time such amendment is made.
ARTICLE XIV
TERMINATION
The Board may terminate this Plan at any time. This Plan will terminate
automatically, without any action of the Board, if, on any Date of Grant, there
are insufficient shares available for the grant of Awards in accordance with the
terms of the Plan. The termination of this Plan shall not affect any rights of a
Participant under any Option outstanding at the time of such termination.
ARTICLE XV
DURATION OF PLAN
No Award may be granted under this Plan after November 15, 2002. Options
granted on or before November 15, 2002 shall remain valid in accordance with
their terms.
ARTICLE XVI
EFFECTIVE DATE OF PLAN
No Award will be granted under this Plan before this Plan is approved by a
majority of the votes cast by the Company's shareholders, voting either in
person or by proxy, at a duly held shareholders' meeting.
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