<PAGE>
As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333 -
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
MASTER GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
Tennessee 62-1694322
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6075 Poplar Avenue, Suite 401
Memphis, Tennessee 38119
(901) 685-2020
(Address, including zip code, and telephone number,
including area code of principal executive office)
Master Graphics, Inc. 1998 Non-employee Director Stock Option Plan
Master Graphics, Inc. 1998 Equity Compensation Plan
Master Graphics, Inc. Employee Stock Purchase Plan
(Full title of plan)
John P. Miller
Chief Executive Officer
6075 Poplar Avenue, Suite 401
Memphis, Tennessee 38119
(901) 685-2020
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Robert J. Delpriore, Esq.
Bass, Berry & Sims PLC
119 South Main Street
Memphis, Tennessee 38103
(901) 312-5570 Telephone
(901) 312-9101 Facsimile
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
Amount to be Proposed Proposed
Title of Securities to be Registered(1) Maximum Maximum Amount of
Registered Offering Price Aggregate Registration
Per Share (2) Offering Price (2) Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value per 2,050,000 $10.00 $14,652,501.88 $4,073.40
share
=============================================================================================================================
</TABLE>
(1) In addition, this Registration Statement also covers any additional shares
of Common Stock which become issuable under the employee benefit plans described
above by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which results
in an increase in the number of Registrant's outstanding shares of Common Stock.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) and (h)(1) under the Securities Act of
1933, as amended. The offering price per share and aggregate offering price for
the Common Stock underlying unissued stock options are based upon the average of
the high and low prices of the Registrant's Common Stock as reported on the
Nasdaq National Market System on June 7, 1999. The offering price per share and
aggregate offering price for the Common Stock underlying outstanding stock
options are based upon the exercise prices of such options. The following chart
illustrates the calculation of the proposed maximum aggregate offering price
fee:
<TABLE>
<CAPTION>
=============================================================================================================================
Title of Shares Number of Shares Offering Price Per Share Aggregate Offering Price
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares issuable pursuant to
outstanding stock options pursuant to
1998 Equity Compensation Plan............ 711,429 $10.00 $7,114,290
- -----------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to unissued
awards pursuant to 1998 Equity
Compensation Plan........................ 788,571 $ 5.625 $4,435,711.88
- -----------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to
outstanding stock options pursuant to
1998 Non-Employee Director Option 2,000 $10.00 $ 20,000
Plan.....................................
-----------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to unissued
options pursuant to 1998 Non-
Employee Director Option Plan............ 48,000 $ 5.625 $ 270,000
- ------------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to Employee
Stock Purchase Plan...................... 500,000 $ 5.625 $2,812,500
==============================================================================================================================
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
<PAGE>
PART I
INFORMATION REQUIRED IN SECTION 10(A) PROSPECTUS
The information required by Items 1 and 2 of Part I of Form S-8 is omitted
from this Registration Statement in accordance with the Note to Part I of Form
S-8 and Rule 428 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). The documents containing the information specified in Part I
will be delivered to the participants in the plans covered by this Registration
Statement as required by Rule 428(b).
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Master Graphics, Inc. (the "Company") hereby incorporates by reference the
documents listed below and any future filings made with the Securities and
Exchange Commission (the "SEC") under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), until such
time as this Registration Statement is no longer in effect:
1. the Company's Annual Report on Form 10-K, as amended on April 14,
1999 and April 20, 1999, for the year ended December 31, 1998;
2. the Company's Current Report on Form 8-K filed with the SEC on
March 29, 1999, as amended on May 28, 1999;
3. the Company's Proxy Statement for the 1999 Annual Meeting of
Shareholders filed with the SEC on April 20, 1999;
4. the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999; and
5. the description of Common Stock contained in the Company's
Registration Statement on Form 8-A filed June 8, 1998, including any
amendment or reports filed for the purpose of updating such description.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained in any other subsequent filed
document which is also incorporated by reference herein modifies or supersedes
such statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Tennessee Business Corporation Act
The Tennessee Business Corporation Act ("TBCA") provides that a corporation
may indemnify any director or officer against liability incurred in connection
with a proceeding if (i) the director or officer acted in good faith, (ii) the
director or officer reasonably believed, in the case of conduct in his or her
official capacity with the corporation, that such conduct was in the
corporation's best interests, and, in all other cases, that his or her conduct
was not opposed to the best interests of the corporation, and (iii) the director
or officer in connection with any criminal proceeding had no reasonable cause to
believe that his or her conduct was unlawful. In actions brought by or in the
right of the corporation,
<PAGE>
however, the TBCA provides that no indemnification may be made if the director
or officer is adjudged liable to the corporation. Similarly, the TBCA prohibits
indemnification in connection with any proceeding charging improper personal
benefit to a director or officer, if such director or officer is adjudged liable
on the basis that a personal benefit was improperly received. In cases where the
director or officer is wholly successful, on the merits or otherwise, in the
defense of any proceeding instigated because of his or her status as an director
or officer of a corporation, the TBCA mandates that the corporation indemnify
the director or officer against reasonable expenses incurred in the proceeding.
Notwithstanding the foregoing, the TBCA provides that a court of competent
jurisdiction, upon application, may order that a director or officer be
indemnified for reasonable expense if, in consideration of all relevant
circumstances, the court determines that such individual is fairly and
reasonably entitled to indemnification, whether or not the standard of conduct
set forth above was met.
The Company's Charter and Bylaws provide that it will indemnify from
liability, and advance expenses to, any present or former director or officer to
the fullest extent allowed by the TBCA, as amended from time to time, or any
subsequent law, rule, or regulation adopted in lieu thereof.
Additionally, the Company's Charter provides that no director will be
personally liable to the Company or its shareholders for monetary damages for
breach of any fiduciary duty except for liability arising from (i) any breach of
a director's duty of loyalty to the Company or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) any unlawful distributions, or (iv) receiving any
improper personal benefit.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
4.1* Specimen form of certificate for Common Stock (Exhibit 4.1 to
the Company's Registration Statement on Form S-1, Registration
No. 333-49861)
4.2* Charter of the Company, as amended (Exhibit 3.1 to the Company's
Registration Statement on Form S-1, Registration No. 333-49861)
4.3* Bylaws of the Company (Exhibit 3.3 to the Company's Registration
Statement on Form S-1, Registration No. 333-49861)
4.4 Master Graphics, Inc. 1998 Non-Employee Director Stock Option
Plan
4.5 Master Graphics, Inc. 1998 Equity Compensation Plan
4.6 Amendment No. 1 to the Master Graphics, Inc. 1998 Equity
Compensation Plan
4.7 Master Graphics, Inc. Employee Stock Purchase Plan
5.1 Opinion of Bass, Berry & Sims PLC
23.1 Consent of KPMG LLP
23.2 Consent of Miller, Cooper & Co., Ltd.
23.3 Consent of Bass, Berry & Sims PLC. (contained in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
*Incorporated by reference
<PAGE>
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement or amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Memphis, State of Tennessee, on the 8th day of
June, 1999.
MASTER GRAPHICS, INC.
By: /s/ John P. Miller
-----------------------------------
John P. Miller
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John P. Miller and Lance T. Fair, and each or either of them, with full power to
act without the other, his true and lawful attorney-in-fact with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities (until revoked in writing), to sign any and all
amendments to this Registration Statement (including post-effective amendments
and amendments thereto) and any registration statement relating to the same
offering as this Registration Statement that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting to said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing whatsoever requisite or desirable to be done, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all acts and things that said attorneys-in-fact
and agents, or either of them, or their substitutes or substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John P. Miller Chief Executive Officer, President and June 8, 1999
- -------------------------------------------------------
John P. Miller Chairman of the Board of Directors
/s/ Lance T. Fair Senior Vice President - Acquisitions; June 8, 1999
- -------------------------------------------------------
Lance T. Fair Chief Financial Officer
/s/ P. Melvin Henson, Jr. Senior Vice President - Finance and June 8, 1999
- -------------------------------------------------------
P. Melvin Henson, Jr. Administration; Chief Accounting Officer
/s/ H. Henry (Hap) Hederman Director, President Hederman Brothers June 8, 1999
- -------------------------------------------------------
H. Henry (Hap) Hederman Division
/s/ Cary Rosenthal Director, President Phoenix Division June 8, 1999
- -------------------------------------------------------
Cary Rosenthal
/s/ Frederick F. Avery Director June 8, 1999
- -------------------------------------------------------
Frederick F. Avery
/s/ Donald L. Hutson Director June 8, 1999
- -------------------------------------------------------
Donald L. Hutson
</TABLE>
<PAGE>
INDEX TO EXHIBITS
4.1* Specimen form of certificate for Common Stock (Exhibit 4.1 to the
Company's Registration Statement on Form S-1, Registration No. 333-
49861)
4.2* Charter of the Company, as amended (Exhibit 3.1 to the Company's
Registration Statement on Form S-1, Registration No. 333-49861)
4.3* Bylaws of the Company (Exhibit 3.3 to the Company's Registration
Statement on Form S-1, Registration No. 333-49861)
4.4 Master Graphics, Inc. 1998 Non-Employee Director Stock Option Plan
4.5 Master Graphics, Inc. 1998 Equity Compensation Plan
4.6 Amendment No. 1 to the Master Graphics, Inc. 1998 Equity Compensation
Plan
4.7 Master Graphics, Inc. Employee Stock Purchase Plan
5.1 Opinion of Bass, Berry & Sims PLC
23.1 Consent of KPMG LLP
23.2 Consent of Miller, Cooper & Co., Ltd.
23.3 Consent of Bass, Berry & Sims PLC
(Contained in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
*Incorporated by reference
<PAGE>
EXHIBIT 4.4
MASTER GRAPHICS, INC.
1998 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
-----------------------------
1. Name and Purpose. This plan shall be called the Master Graphics, Inc.
1998 Non-Employee Director Stock Option Plan (the "Plan"). The Plan is intended
to encourage stock ownership by Non-Employee Directors (as such term is defined
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of Master Graphics, Inc., a Tennessee corporation (the
"Company"), to provide such directors with an additional incentive to manage the
Company effectively and to contribute to its success, and to provide a form of
compensation which will attract and retain highly qualified individuals as
members of the Board of Directors of the Company.
2. Effective Date and Term of the Plan. The Plan shall become effective
on the date of the adoption of the Plan by the Board of Directors; however, the
Plan shall be approved by the vote of the holders of a majority of the
outstanding shares of the Company's common stock within twelve (12) months of
the adoption of the Plan by the Board. Options may not be granted under the Plan
after the tenth (10th) anniversary of the Effective Date (the "Term"); provided,
however, that all options outstanding as of that date shall remain or become
exercisable pursuant to their terms and the terms of the Plan.
3. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). Each non-employee member of the Board
shall be eligible to participate in the Plan; however, grants made to a non-
employee member of the Board must be approved by a majority of the full Board
with such member abstaining. Subject to the express provisions of the Plan, the
Board shall have discretionary authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations relating to it, to determine the details
and provisions of each stock option agreement, and to make all the
determinations necessary or advisable in the administration of the Plan. The
interpretation and construction by the Board of any provisions of the Plan or of
any option granted pursuant to the Plan shall be final and binding upon the
Company and any optionee. No member of the Board shall be liable for any action
or determination made in good faith with respect to the Plan or any option
granted pursuant thereto.
4. Stock Available for Options. Subject to the adjustments as provided in
Subsection 7(f), the aggregate number of shares of Common Stock, $.001 par value
per share, of the Company (the "Common Stock") reserved for purposes of the Plan
shall be 50,000 shares of authorized and unissued shares or issued shares
reacquired by the Company.
Determinations as to the number of shares that remain available for
issuance under the Plan shall be made in accordance with such rules and
procedures as the Board shall determine from time to time. If any outstanding
option under the Plan expires or is terminated for any reason before the end of
the Term of the Plan, the shares allocable to the unexercised portion of such
option shall become available for the grant of other options under the Plan. No
shares delivered to the Company in full or partial payment upon exercise of an
option pursuant to
<PAGE>
Subsection 7(c) or in full or partial payment of any withholding tax liability
permitted under Section 10 shall become available for the grant of other options
under the Plan.
5. Participation. Subject to the limitations contained in this Section 5,
any director of the Company who is not a contractual nor common law employee of
the Company or any of its subsidiaries (a "Non-Employee Director") will be
eligible to be granted options to purchase shares of the issued or issuable
Common Stock in accordance and consistent with the terms and conditions of the
Plan. An optionee may hold more than one option, but only on the terms and
subject to the restrictions hereafter set forth. Except as provided herein,
terms and conditions of options granted to a director at any given time need not
be the same for any other grant of options.
6. Option Grants.
(a) Discretionary Grants. The Board shall determine from time to time
the Non-Employee Directors to be granted options, the number of shares of Common
Stock subject to such options, and the terms and conditions of the options to be
granted.
(b) Non-Statutory Stock Options. All options granted under the Plan
shall be non-statutory options not intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). Each option granted
under the Plan shall provide that such option will not be treated as an
"incentive stock option," as that term is defined in Section 422(b)of the Code.
7. Terms and Conditions of Options of the Plan. Options granted under
this Plan shall be evidenced by agreements in such form as the Board shall from
time to time approve, which agreements shall comply with and be subject to the
following conditions:
(a) Term of Options. The term of each option shall be for a period of
not greater than ten (10) years from the date of grant of the option.
(b) Option Price. The exercise price of each option shall be equal to
100% of the Fair Market Value (defined below) of the shares of Common Stock on
the date of the grant of the option. If the shares are traded in the over-the-
counter market, the Fair Market Value per share shall be the closing price on
the Nasdaq National Market ("Nasdaq") on the day the option is granted or if no
sale of shares is reflected on Nasdaq on that day, on the next preceding day on
which there was a sale of shares reflected on Nasdaq. If the shares are not
traded in the over-the-counter market but are listed upon an established stock
exchange or exchanges, such Fair Market Value shall be deemed to be the closing
price of the shares on such stock exchange or exchanges on the day the option is
granted or if no sale of the shares shall have been made on any stock exchange
on that day, on the next preceding day on which there was a sale of the shares.
(c) Medium of Payment. The option price shall be payable to the
Company either (i) in United States dollars in cash or by check, bank draft, or
money order payable to the order of the
2
<PAGE>
Company or (ii) if permitted by the Board, through the delivery of shares of the
Common Stock with a Fair Market Value on the date of the exercise equal to the
option price, provided such shares are utilized as payment to acquire at least
100 shares of Common Stock, or (iii) by a combination of (i) and (ii) above.
Fair Market Value will be determined in the manner specified in Subsection 7(b)
except as to the date of determination.
(d) Exercise of Options. Except as provided herein, the Board shall
have the authority to determine, at the time of grant of each option pursuant to
Subsection 6(a), the times at which an option may be exercised and any
conditions precedent to the exercise of an option. An option shall be
exercisable upon written notice to the Secretary or Assistant Secretary of the
Company, as to any or all shares covered by the option, until its termination or
expiration in accordance with its terms or the provisions of the Plan.
Notwithstanding the foregoing, an option shall not at any time be exercisable
with respect to less than 100 shares unless the remaining shares covered by an
option are less than 100 shares. The purchase price of the shares purchased
pursuant to an option shall be paid in full upon delivery to the optionee of
certificates for such shares. Exercise by an optionee's heir, personal
representative or permitted transferee shall be accompanied by evidence of his
or her authority to act, in a form reasonably satisfactory to the Company.
(e) Termination of Service as Director.
(i) Termination of Service for any Reason Other than Death or
---------------------------------------------------------
Permanent Disability. In the event an optionee shall cease to serve
--------------------
the Company as a director for any reason other than such optionee's
death or Permanent Disability (defined below), each option held by
such optionee shall, to the extent rights to purchase shares under the
option have become vested at the time such optionee ceases to serve as
a director, remain exercisable, in whole or in part, by the optionee,
subject to prior expiration according to its terms and other
limitations imposed by the Plan, for a period of one (1) year
following the optionee's cessation of service as a director of the
Company. If the optionee dies after such cessation of service, the
optionee's options shall be exercisable in accordance with Subsection
7(e)(ii) hereof.
(ii) Termination of Service for Death or Permanent Disability.
--------------------------------------------------------
If an optionee ceases to be a director by reason of death or Permanent
Disability, each option held by such optionee shall immediately become
exercisable and shall remain exercisable, in whole or in part, by (in
the case of Permanent Disability) the optionee or the optionee's
guardian or attorney-in-fact or (in the case of death) the personal
representative of the optionee's estate or by any person or persons
who have acquired the option directly from the optionee during the
shorter of the following periods: (i) the term of the option, or (ii)
a period of two (2) years from the death or Permanent Disability of
such optionee. If an optionee dies or a Permanent Disability occurs
during the extended exercise period following cessation of service
specified in Subsection 7(e)(i) above, such option may be exercised
any time within the longer of such extended period or one (1) year
after death or Permanent Disability, subject to the prior expiration
of the term of the option. For purposes of this Subsection 7(e)(ii),
"Permanent Disability" shall mean a determination
3
<PAGE>
by the Social Security Administration or any similar successor agency
that an optionee is "permanently disabled," and the date on which a
Permanent Disability is deemed to have occurred shall be the date on
which such determination by such agency shall have been made.
(f) Adjustment in Shares Covered by Option. The number of shares
covered by each outstanding option, and the purchase price per share thereof,
shall be proportionately adjusted for any increase or decrease in the number of
issued and outstanding shares resulting from a split in or combination of shares
or the payment of a stock dividend on the shares or any other increase or
decrease in the number of such shares effected without receipt of consideration
by the Company.
If the Company shall be the surviving corporation in any merger or
consolidation or if the Company is merged into a wholly-owned subsidiary solely
for purposes of changing the Company's state of incorporation, each outstanding
option shall pertain to and apply to the securities to which a holder of the
number of shares subject to the option would have been entitled to receive in
such transaction.
In the event of a Change in Control, only if provided in the option
agreement, any option awarded under this Plan to the extent not previously
exercisable shall immediately become fully exercisable. The Board in its sole
discretion may direct the Company to cash out all outstanding options on the
basis of the Change in Control Price as of the date a Change in Control occurs
or such other date as the Committee may determine prior to the Change in
Control. For purposes of this Plan, a "Change in Control" shall be deemed to
have occurred if: (i) after the effective date of the Plan, any "person" as
defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d) and
14(d) thereof, including any "group" as defined in Section 13(d) of the Exchange
Act, but excluding the Company and any Subsidiary, any of the Company's existing
shareholders prior to the effective date of the Plan and any employee benefit
plan sponsored or maintained by the Company or any subsidiary (including any
trustee of such plan acting as trustee), directly or indirectly, becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
securities of the Company representing 20% or more of the voting power of the
then outstanding securities of the Company, except where the acquisition is
approved by the Board; (ii) the shareholders of the Company approve (or, if
shareholder approval is not required, the Board approves) an agreement providing
for (A) the merger or consolidation of the Company with another corporation
where the shareholders of the Company, immediately prior to the merger or
consolidation, will not beneficially own, immediately after the merger or
consolidation, shares entitling such shareholders to a majority of all votes to
which all shareholders of the surviving corporation would be entitled in the
election of directors, or where the members of the Board, immediately prior to
the merger or consolidation, would not, immediately after the merger or
consolidation, constitute a majority of the board of directors of the surviving
corporation, (B) a sale or other disposition of all or substantially all of the
assets of the Company, or (C) a liquidation or dissolution of the Company;
(iii) any person has commenced a tender offer or exchange offer for 35% or more
of the voting power of the then outstanding shares of the Company; or (iv)
after this Plan is approved by the shareholders of the Company, directors are
elected such that a majority of the members of the Board shall have been
4
<PAGE>
members of the Board for less than two years, unless the election or nomination
for election of each new director who was not a director at the beginning of
such two-year period was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of such
period. For purposes of this Plan, "Change in Control Price" means the highest
price per share of Common Stock paid in any transaction reported on Nasdaq or
paid or offered in any bona fide transaction related to a Change in Control at
any time during the 60-day period immediately preceding the occurrence of the
Change in Control, in each case as determined by the Board.
In the event of a change in the shares as presently constituted, which is
limited to a change of all of its authorized shares with par value into the same
number of shares with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the shares within the
meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Any such adjustment may
provide for the elimination of any fractional share which might otherwise become
subject to an option.
Except as expressly provided in this Subsection 7(f), the optionee shall
have no rights by reason of any split or combination of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or spinoff of assets or stock of another
corporation, and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number or
price of shares of stock subject to the option.
The grant of an option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure, or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets.
(g) Rights of a Shareholder. An optionee shall have no rights as a
shareholder with respect to any shares covered by his or her option until the
date on which the optionee becomes the holder of record of such shares. No
adjustment shall be made for dividends, distributions, or other rights for which
the record date is prior to the date on which he or she shall have become the
holder of record thereof, except as provided in Subsection 7(f).
(h) Postponement of Delivery of Shares and Representations. The Company,
in its discretion, may postpone the issuance and/or delivery of shares upon any
exercise of an option until completion of the registration or other
qualification of such shares under any state and/or federal law, rule or
regulation as the Company may consider appropriate, and may require any person
exercising an option to make such representations, including a representation
that it is the optionee's intention to acquire shares for investment and not
with a view to distribution thereof, and furnish such information as it may
consider appropriate in connection with the issuance or
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<PAGE>
delivery of the shares in compliance with applicable laws, rules, and
regulations. In such event no shares shall be issued to such holder unless and
until the Company is satisfied with the accuracy of any such representations.
(i) Transferability. All options shall be nontransferable except (i) upon
the optionee's death, by the optionee's will or the laws of descent and
distribution or (ii) on a case-by-case basis as may be approved by the Board in
its discretion, in accordance with the terms provided below. Each option
agreement shall provide the optionee may, during his or her lifetime and subject
to the prior approval of the Board at the time of proposed transfer, transfer
all or part of the option to a Permitted Transferee (as defined below), provided
that such transfer is made by the optionee for estate and tax planning purposes
or donative purposes and no consideration (other than nominal consideration) is
received by the optionee therefor. The transfer of an option shall be subject to
such other terms and conditions as the Board may in its discretion impose from
time to time, including a condition that the portion of the option to be
transferred be vested and exercisable by the optionee at the time of the
transfer. Subsequent transfer of an option transferred under this Subsection
7(i) shall be prohibited other than by will or the laws of descent and
distribution upon the date of the transferee.
For purposes hereof, a "Permitted Transferee" shall be any member of the
optionee's immediate family or a charitable institution (each defined below), or
a trust for the exclusive benefit of such immediate family members and/or
charitable institution, or a partnership or limited liability company the equity
interests of which are owned exclusively by the optionee and/or one or more
members of his or her immediate family. For purposes of the preceding
definition, (i) the "immediate family" of the optionee shall mean and include
the optionee's spouse, any descendant of the optionee or his or her spouse
(including descendants by adoption), and any descendant of either parent of the
optionee (including descendants by adoption), and (ii) "charitable institution"
shall mean and include any organization described in each of section
170(b)(1)(A), 170(c), 2055(a) and 2522(a) of the Code, as well as any charitable
remainder trust created under section 664 of the Code, the income beneficiary of
which is a member of the optionee's immediate family or a trust or other entity
described above in this Subsection 7(i).
No transfer of an option by the optionee by will or by laws of descent and
distribution shall be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and an authenticated copy of the
will and/or such other evidence as the Board may deem necessary to establish the
validity of the transfer. During the lifetime of an optionee, the option shall
be exercisable only by him, except that, in the case of an optionee who is
legally incapacitated, the option shall be exercisable by his guardian or legal
representative.
(j) Other Provisions. The option agreements authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the option, as the Board shall deem advisable.
8. Adjustments in Shares Available for Options. The adjustments in number
and kind of shares and the substitution of shares, affecting outstanding options
in accordance with Subsection 7(f) hereof, shall also apply to the number and
kind of shares issuable upon the exercise of
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<PAGE>
options to be granted pursuant to Section 6 and the number and kind of shares
reserved for issuance pursuant to the Plan, but not yet covered by options.
9. Amendment of the Plan. The Board, insofar as permitted by law, shall
have the right from time to time, with respect to any shares at the time not
subject to options, to suspend or discontinue the Plan or revise or amend it in
any respect whatsoever. So long as the Common Stock is eligible for trading on
Nasdaq, the Board shall obtain shareholder approval for those revisions or
amendments of the Plan required to be so approved pursuant to the By-laws of the
National Association of Securities Dealers. If the Plan is amended so that the
exemption provided by Rule 16b-3 as a result of the Plan being approved by the
shareholders of the Company is no longer available for options granted under
Section 6 hereof, all options subsequently granted thereunder must be approved
by the Board prior to such grant.
10. Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to this Plan, or to otherwise require, prior to
the issuance or delivery of any shares of Common Stock, payment by the optionee
of any federal, state, or local taxes required by law to be withheld. Unless
otherwise prohibited by the Board, an optionee may satisfy any such withholding
tax obligation by any of the following means or by a combination of such means:
(a) tendering a cash payment;
(b) authorizing the Company to withhold from the shares otherwise
issuable to the optionee a number of shares having a Fair Market Value
as of the "Tax Date," less than or equal to the amount of withholding
tax obligation; or
(c) delivering to the Company unencumbered shares owned by the
optionee having a Fair Market Value, as of the Tax Date, less than or
equal to the amount of the withholding tax obligation.
The "Tax Date" shall be the date that the amount of tax to be withheld
is determined. Fair Market Value shall be determined in the manner
specified in Subsection 7(b), except as to the date of determination.
An optionee's election to pay the withholding tax obligation by either
of (b) or (c) above shall be irrevocable, may be disapproved by the
Board, and must be made either six (6) months prior to the Tax Date or
during the period beginning on the third business day following the
date of release of the Company's quarterly or annual summary statement
of sales and earnings and ending on the twelfth business day following
such date.
11. Right of Board of Directors or Shareholders to Terminate Director's
Service. Nothing in this Plan or in the grant of any option hereunder shall
in any way limit or affect the right of the Board of Directors or the
shareholders of the Company to remove any director or otherwise terminate his or
her service as a director, pursuant to the law, the Second Amended and Restated
Charter, or Amended and Restated By-laws of the Company.
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<PAGE>
12. Application of Funds. The proceeds received by the Company from the
sale of stock pursuant to options will be used for general corporate purposes.
13. No Obligation to Exercise Option. The granting of an option shall
impose no obligation on the optionee to exercise such option.
14. Construction. This Plan shall be construed under the laws of the State
of Tennessee.
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EXHIBIT 4.5
MASTER GRAPHICS, INC.
1998 EQUITY COMPENSATION PLAN
1. Purpose of Plan and Effective Date.
----------------------------------
(a) Purpose. The purpose of the Master Graphics, Inc. 1998 Equity
Compensation Plan (the "Plan") is to further the success and advance the
interests of Master Graphics, Inc. and its subsidiaries (collectively, the
"Company") by making Awards (as defined below) available to (i) designated
employees (including employees who are also officers or directors) of the
Company; and (ii) certain consultants and advisors to the Company. The Company
believes that the Plan will encourage the Participants to contribute materially
to the growth of the Company, thereby benefitting the Company's shareholders,
and will align the economic interests of the Participants with those of the
shareholders.
(b) Awards. The Company intends this Plan to enable the Company to issue
pursuant hereto (i) incentive stock options ("Incentive Stock Options"), as such
term is defined in Section 422 of the Internal Revenue Code of 1986, as amended
from time to time (the "Code"), to purchase shares of common stock of Master
Graphics, Inc. (the "Common Stock"); (ii) similar options to purchase Common
Stock which will not, however, be qualified as Incentive Stock Options ("Non-
Qualified Options"); (iii) shares of Common Stock that are subject to
limitations and restrictions as to encumbrance and transfer ("Restricted
Stock"); and (iv) stock appreciation rights ("SAR") pursuant to which a
recipient may recognize in cash the benefit from appreciation in the price of
Common Stock.
(c) Effective Date. The Plan shall become effective on the date of
approval by the Board of Directors of the Company, which date is April 1, 1998;
provided, however, that the Plan shall be subject to approval and ratification
by shareholders of the Company holding a majority of its voting stock, voting in
person or by proxy, at a meeting of shareholders to be held within twelve months
after April 1, 1998.
2. Definitions.
-----------
(a) As used in this Plan, the following terms have the following
respective meanings:
"Award" means any grant of an Option or SAR, and any award of
Restricted Stock under the Plan, whether singly, in combination, or in
tandem, to an Eligible Person by the Committee pursuant to such terms,
conditions, restrictions, and/or limitations, if any, as the Committee
may establish.
"Award Agreement" means a written agreement setting forth the terms of
an Award.
"Board" means the Board of Directors of the Company.
<PAGE>
"Change in Control" shall be deemed to have occurred if: (i) after
the effective date of the Plan, any "person" as defined in Section
3(a)(9) of the Exchange Act and as used in Sections 13(d) and 14(d)
thereof, including any "group" as defined in Section 13(d) of the
Exchange Act, but excluding the Company and any Subsidiary, any of the
Company's existing shareholders prior to the effective date of the
Plan and any employee benefit plan sponsored or maintained by the
Company or any subsidiary (including any trustee of such plan acting
as trustee), directly or indirectly, becomes a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of securities of the
Company representing 20% or more of the voting power of the then
outstanding securities of the Company, except where the acquisition is
approved by the Board; (ii) the shareholders of the Company approve
(or, if shareholder approval is not required, the Board approves) an
agreement providing for (A) the merger or consolidation of the Company
with another corporation where the shareholders of the Company,
immediately prior to the merger or consolidation, will not
beneficially own, immediately after the merger or consolidation,
shares entitling such shareholders to a majority of all votes to which
all shareholders of the surviving corporation would be entitled in the
election of directors, or where the members of the Board, immediately
prior to the merger or consolidation, would not, immediately after the
merger or consolidation, constitute a majority of the board of
directors of the surviving corporation, (B) a sale or other
disposition of all or substantially all of the assets of the Company,
or (C) a liquidation or dissolution of the Company; (iii) any person
has commenced a tender offer or exchange offer for 35% or more of the
voting power of the then outstanding shares of the Company; or (iv)
after this Plan is approved by the shareholders of the Company,
directors are elected such that a majority of the members of the Board
shall have been members of the Board for less than two years, unless
the election or nomination for election of each new director who was
not a director at the beginning of such two-year period was approved
by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period.
"Code" means the Internal Revenue Code of 1986, as amended.
References to any provisions of the Code shall be deemed to include
successor provisions.
"Committee" shall mean a group of two (2) or more Non-Employee
Directors appointed by the Board to administer the Plan, which
Committee shall be composed in the manner set forth in Section 3(a)
------------
hereof.
"Common Stock" has the meaning set forth in Section 1(b) hereof.
------------
"Company" means Master Graphics, Inc., and, where the context so
requires, such term shall include Subsidiaries of Master Graphics,
Inc.
"Disability" shall have the meaning set forth in Section 22(e)(3) of
the Code.
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"Eligible Persons" means all persons described in Section 5 hereof who
---------
are eligible to receive Awards pursuant to this Plan.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act
shall be deemed to include successor provisions thereto and rules and
regulations thereunder.
"Exercise Price" means the price per share at which Common Stock may
be purchased upon the exercise of an Option.
"Fair Market Value" unless otherwise required by an applicable
provision of the Code, as of any date, means the mean between the high
and low sales price of the Common Stock on any exchange upon which the
Common Stock is traded or on the National Market of the Nasdaq Stock
Market on the date of an Award or, if there are no sales on said date,
then on the next prior business day on which there was a sale. If no
such sales price is available, then the price per share shall be
determined by the Committee. If the Committee, in its discretion,
shall determine that the average high and low sales price for a
particular day is not, due to low trading volume or other factors
which the Committee deems appropriate, indicative of Fair Market
Value, then the Committee may use an average of the high and low sales
prices of the Common Stock over a period not to exceed thirty (30)
trading days immediately preceding the date of the Award in
determining Fair Market Value.
"Incentive Stock Option" means any Incentive Stock Option granted
pursuant to this Plan which is intended to be, and designated and
qualifying as, an "incentive stock option" within the meaning of
Section 422 of the Code.
"Modification" means any change in the terms of an Option which would
constitute a "modification" as defined in Section 424(h)(3) of the
Code, including, without limitation, such a modification to an Option
as effected by a change in the Plan and any other change in the Plan
which would increase the number of shares reserved for Options under
the Plan, materially change the administration of the Plan or that
would otherwise materially increase the benefits accruing to, or
available for, participants in the Plan; provided, however, that
registration of Option Stock under the 1933 Act, as amended, shall not
be deemed a Modification.
"Non-Employee Director" shall have the meaning set forth in Rule 16b-
3, promulgated under the Exchange Act.
"Non-Qualified Stock Option" means any option granted under this Plan
other than an Incentive Stock Option.
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<PAGE>
"Option" means a right granted pursuant to the Plan to purchase shares
of Common Stock, and includes the terms Incentive Stock Option and
Non-Qualified Stock Option.
"Participant" means any individual to whom an Award has been granted
by the Committee under the Plan.
"Restricted Stock" means Common Stock issued to a Participant that is
subject to restrictions on transfer or alienation, vesting and
forfeitability provisions and such other terms and conditions as the
Committee may determine and as may be set forth in an Award Agreement
in respect thereof.
"Retirement" means retirement from active employment under a
retirement plan of the Company, or pursuant to an employment agreement
with the Company, or termination of employment at or after age 65
under circumstances which the Committee, in its sole discretion, deems
equivalent to retirement.
"SAR" means a right to surrender to the Company all or a portion of a
Stock Option and to be paid therefor an amount, in cash or shares of
Common Stock (which may be Restricted Stock), as determined by the
Committee, provided that the amount of cash or the Fair Market Value
of any Common Stock, as the case may be, shall be no greater than the
excess, if any, of (i) the Fair Market Value of the Common Stock to
which the Option or portion thereof relates, determined on the date
such right is exercised, over (ii) the aggregate Exercise Price of the
Common Stock.
"Securities Act" means the Securities Act of 1933, as amended from
time to time. References to any provision of the 1933 Act shall be
deemed to include successor provisions thereto and rules and
regulations thereunder.
"Subsidiary" or "Subsidiaries" means any corporation which is a
"subsidiary corporation" as defined in Section 424(f) of the Code, and
the regulations thereto.
"Tax Date" means the date on which the amount of tax to be withheld
with respect to any Award is determined.
"Termination for Cause" shall have the same meaning as in any
employment agreement between any Participant and the Company, or, in
the absence of such employment agreement, shall mean the termination
of employment of a Participant due to (i) any illegal or dishonest
conduct which adversely affects or may adversely affect the
reputation, good will, or business position of the Company or which
involves Company funds or assets; (ii) any intentional or material
damage to property or business of the Company; (iii) theft,
embezzlement or misappropriation of the Company's property; or (iv)
the willful failure of the Participant to carry out his or her duties
as an employee of the Company.
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<PAGE>
"10% Shareholder" means a person who owns stock possessing more than
10% of the total combined voting power of all classes of stock of
Company or of any parent or subsidiary of the Company after giving
effect to the attribution of stock ownership provisions of Section
424(d) of the Code.
(b) References in these definitions to provisions of the Code shall, when
appropriate to effectuate the purpose of this Plan, be deemed to be references
to such provisions of the Code and regulations promulgated thereunder as the
same may be from time to time amended or to successor provisions to such
provisions. Terms defined elsewhere in this Plan shall have the meanings set
forth in such respective definitions.
3. Administration.
--------------
(a) Composition of Committee. The Plan may be administered by the Board
or by the Committee, which shall be appointed by the Board. If the Committee is
not appointed, all references in the Plan to the "Committee" shall be deemed to
refer to the Board.
(b) Authority of Committee. The Committee shall have the sole authority to
(i) select the persons to receive Awards under the Plan; (ii) determine the form
of an Award and whether, if such Award is an Option, such Option is to operate
on a tandem basis and/or in conjunction with or apart from other Awards made by
the Company, either within or outside of this Plan; (iii) determine the number
of shares of Common Stock to be covered by each Award hereunder; (iv) determine
the terms and conditions, not inconsistent with the terms of this Plan, of any
Award hereunder (including, but not limited to, any restriction or limitation on
transfer, any vesting schedule or acceleration thereof, any forfeiture provision
or waiver thereof and any "reload" upon exercise of any Option granted),
regarding any Award and the shares of Common Stock relating thereto, based on
such factors as the Committee shall determine, in its sole and absolute
discretion; and (v) make any other determination or take any action that the
Committee deems necessary or desirable for the administration of the Plan.
(c) Power of Committee. The Committee shall have full power and authority
to administer and interpret the Plan, to make factual determinations and to
adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
4. Shares of Common Stock Subject to the Plan.
------------------------------------------
(a) Number of Shares. Subject to the adjustment specified in Section 4(d)
------------
below, the aggregate number of shares of Common Stock that may be issued under
the Plan is 750,000 shares.
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<PAGE>
(b) Sources of Shares. The shares may be authorized but unissued shares
of Common Stock or reacquired shares of Common Stock, including shares purchased
by the Company on the open market for purposes of the Plan.
(c) Excess Shares. If and to the extent Awards granted under the Plan
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised, the shares subject to such Awards shall again be
available for purposes of the Plan beginning in the calendar year in which they
expire or otherwise become available.
(d) Adjustment. If there is any change in the number or kind of shares of
Common Stock outstanding (i) by reason of a stock dividend, spin off,
recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization or consolidation in which the Company is the
surviving corporation, (iii) by reason of a reclassification or change in par
value, or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Common Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Common Stock is
substantially reduced as a result of a spinoff or the Company's payment of an
extraordinary dividend or distribution, the maximum number of shares of Common
Stock available for Awards, the maximum number of shares of Common Stock for
which any individual participating in the Plan may receive Awards in any year,
the number of shares covered by outstanding Awards, the kind of shares issued
under the Plan, and the price per share of such Awards may be appropriately
adjusted at the discretion of the Committee to reflect any increase or decrease
in the number of, or change in the kind or value of, issued shares of Common
Stock to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Awards; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated. Any adjustments
determined by the Committee shall be final, binding and conclusive.
(e) Accelerated Vesting. The Committee shall at all times have the power
to accelerate the exercise date of Options and SARs and the vesting date of
Restricted Stock previously granted under the Plan.
5. Eligibility for Participation.
-----------------------------
(a) Incentive Stock Options. Incentive Stock Options under this Plan may
be granted only to officers (who are employees) and to other employees of the
Company, as determined by the Committee. A director of the Company may receive
an Incentive Stock Option under this Plan only if such person is otherwise an
employee of the Company.
(b) Other Awards. Employees, directors or officers of the Company,
consultants, and advisors who the Committee determines are providing bona fide
services to the Company, whether or not otherwise compensated, may receive any
form of Award except an Incentive Stock Option at the discretion of the
Committee.
(c) Qualification. In determining the persons to whom Awards shall be
made and the number of shares to be covered by each Award, the Committee may
take into account the nature of
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<PAGE>
the services rendered by, and the responsibilities borne by, such eligible
persons, their present and potential contributions to the Company's success and
such other factors as the Committee in its discretion shall deem relevant.
Subject to the provisions of Section 6(g) hereof, Awards may be made to persons
------------
who hold or have held options, restricted stock and/or stock appreciation rights
under previous plans, and a person who has received an Award under the Plan may
receive additional Awards under the Plan or under any future stock or option
plan if the Committee shall so determine.
(d) Non-Employee Directors shall not be eligible to receive an Award under
the Plan.
6. Granting of Options.
-------------------
(a) Number of Shares. The Committee shall determine the number of shares
of Common Stock that will be subject to each grant of Options to Eligible
Persons.
(b) Type of Option and Price.
(i) The Committee may grant Incentive Stock Options that are
intended to qualify as "incentive stock options" within the
meaning of section 422 of the Code, or Nonqualified Stock
Options that are not intended so to qualify, or any combination
of Incentive Stock Options and Nonqualified Stock Options, all
in accordance with the terms and conditions set forth herein.
Incentive Stock Options may be granted only to employees of the
Company. Nonqualified Stock Options may be granted to any
Eligible Person.
(ii) The Exercise Price of Common Stock subject to an Option shall be
determined by the Committee and may be equal to, greater than,
or less than the Fair Market Value of a share of such Stock on
the date the Option is granted; provided, however, that (1) the
Exercise Price of an Incentive Stock Option shall be equal to,
or greater than, the Fair Market Value of a share of Common
Stock on the date the Incentive Stock Option is granted and (2)
an Incentive Stock Option may not be granted to an employee who,
at the time of grant, is a 10% Shareholder, unless the Exercise
Price per share is not less than 110% of the Fair Market Value
of Common Stock on the date of grant.
(iii) If Common Stock is publicly traded, then the Fair Market Value
per share shall be determined as follows: (x) if the principal
trading market for the Common Stock is a national securities
exchange or the Nasdaq National Market, the last reported sale
price thereof on the relevant date or, if there were no trades
on that date, the latest preceding date upon which a sale was
reported, or (y) if the Common Stock is not principally traded
on such exchange or market, the mean between the last reported
"bid" and "asked" prices of Common Stock on the relevant date,
as reported on Nasdaq or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as
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<PAGE>
reported in a customary financial reporting service, as
applicable and as the Committee determines. If the Common Stock
is not publicly traded or, if publicly traded, not subject to
reported transactions or "bid" or "asked" quotations as set forth
above, the Fair Market Value per share shall be as determined by
the Committee.
(c) Option Term. The Committee shall determine the term of each Option.
The term of any Option shall not exceed ten years from the date of grant.
However, an Incentive Stock Option that is granted to an Employee who, at the
time of grant, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company, or any parent or subsidiary of the
Company, may not have a term that exceeds five years from the date of grant.
(d) Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee and specified in the Award Agreement or an amendment
to the Award Agreement. The Committee may accelerate the exercisability of any
or all outstanding Options at any time for any reason.
(f) Exercise of Options. A Participant may exercise an Option that has
become exercisable, in whole or in part, by delivering a notice of exercise to
the Company with payment of the Exercise Price. The Participant shall pay the
Exercise Price for an Option (i) in cash, (ii) by delivering shares of Common
Stock owned by the Participant (including Common Stock acquired in connection
with the exercise of an Option, subject to such restrictions as the Committee
deems appropriate) and having a Fair Market Value on the date of exercise equal
to the Exercise Price; (iii) the Committee, in its sole discretion, may form
time to time permit the method of exercising Options known as pyramiding or
"cashless exercise" (that is, the automatic application of shares received upon
the exercise of a portion of an Option to satisfy the exercise price for
additional portions of the Option); or (iv) by such other method as the
Committee may approve, including payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board. Shares of
Common Stock used to exercise an Option shall have been held by the Participant
for the requisite period of time to avoid adverse accounting consequences to the
Company with respect to the Option. The Participant shall pay the Exercise Price
and the amount of any withholding tax due (pursuant to Section 10) at the time
----------
of exercise. Shares of Common Stock shall not be issued upon exercise of an
Option until the Exercise Price is fully paid and any required withholding is
made.
(g) Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the stock on the date of the
grant with respect to which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year, under the Plan or any
other stock option plan of the Company or a parent or subsidiary, exceeds
$100,000, then the option, as to the excess, shall be treated as a Nonqualified
Stock Option. An Incentive Stock Option shall not be granted to any person who
is not an employee of the Company or a parent or subsidiary (within the meaning
of section 424(f) of the Code). If and to the extent that an Option designated
as an Incentive Stock Option fails so to qualify under the Code, the Option
shall remain outstanding according to its terms as a Nonqualified Stock Option.
-8-
<PAGE>
7. Stock Appreciation Rights (SARs).
--------------------------------
(a) Grant of SARs. The Committee may, in its discretion, grant a SAR to
the holder of an Option either at the time the Option is granted or by amending
the instrument evidencing the grant of the Option at any time after the Option
is granted, so long as the grant is made during the period in which grants of
SARs may be made under the Plan and, if made to a person subject to Section
16(b) of the Exchange Act, is made more than six months before the end of the
term of the Option.
(b) Terms and Conditions of SARs. Each SAR shall be for such term and
shall be subject to such other terms and conditions as the Committee shall
impose and as may be set forth in an Award Agreement. The terms and conditions
may include Committee approval of the exercise of the SAR, limitations on the
amount of appreciation which may be recognized with regard to such SAR, and
specification of what portion, if any, of the amount payable to the Participant
upon his exercise of a SAR shall be paid in cash and what portion, if any, shall
be payable in Common Stock or additional Options. If and to the extent that
shares of Common Stock are issued in satisfaction of amounts payable on exercise
of a SAR, the shares of Common Stock so issued shall be valued at their Fair
Market Value on the date of exercise. Upon exercise of a SAR, the Option or
portion thereof with respect to which such right is exercised shall be
surrendered and shall not thereafter be exercisable. Upon exercise of any
Option, any SAR or portion thereof granted with respect to such Option shall
expire and shall not thereafter be exercisable.
8. Restricted Stock Awards.
-----------------------
(a) Restricted Stock Awards. The Committee may grant Restricted Stock
Awards to such Eligible Persons, in such amounts and subject to such terms and
conditions, as the Committee may determine in its sole discretion, including
such restrictions on transferability and other restrictions as the Committee may
impose, which restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments, or otherwise, as the Committee
shall determine.
(b) Issuance of Restricted Stock. Restricted Stock awarded under the
Plan shall be evidenced by certificates registered in the name of the
Participant and bearing an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock. The Company
shall retain physical possession of any such certificates, and each Participant
awarded Restricted Stock shall have delivered a stock power to the Company,
endorsed in blank, relating to the Restricted Stock for so long as the
Restricted Stock is subject to a risk of forfeiture.
(c) Voting Rights of Restricted Stock. Unless otherwise determined by
the Committee at the time of an Award, the holder of Restricted Stock shall have
the right to vote the Restricted Stock and to receive dividends, if any,
thereon, unless and until such shares are forfeited.
(d) Refund of Cash Paid for Restricted Stock. In the event all or any of
the shares of Restricted Stock awarded to a Participant are forfeited due to
failure to meet or comply with
-9-
<PAGE>
restrictions imposed by the Committee at the time of the award prior to the
lapse of such restrictions, the Company shall repay to the Participant (or the
Participant's estate) any cash amount paid by the Participant for such forfeited
shares.
9. Termination of Employment, Disability or Death.
----------------------------------------------
(a) Termination for Cause or Voluntary Termination. In the event of the
Termination for Cause or the voluntary termination of employment of any
Participant to whom an Incentive Stock Option has been granted under the Plan,
such Incentive Stock Options held by him under the Plan, to the extent vested
and not theretofore exercised, shall be null and void. Incentive Stock Options
granted under the Plan shall not be affected by any change of employment so long
as the holder continues in the employ of the Company or any Subsidiary. Nothing
in the Plan or in any Award pursuant to the Plan shall confer on any individual
any right to continue in the employ of or continue any other legal or
contractual relationship with the Company or interfere in any way with the right
of the Company to terminate his or her employment or occupancy of any corporate
office or any other legal or contractual relationship at any time.
(b) Death of Participant. In the event of the death of a Participant, any
Incentive Stock Options granted to such Participant may be exercised by the
person or persons to whom the Participant's rights under any such Incentive
Stock Options pass by will or by the laws of descent and distribution (including
the Participant's estate during the period of administration) at any time prior
to the earlier of (i) the respective expiration dates of any such Incentive
Stock Options or (ii) the date which is one (1) year after the date of death of
such Participant.
(c) Disability of Participant. In the event that any Participant's
employment with the Company shall terminate as a result of the Disability of
such Participant, such Participant may exercise any Inventive Stock Options
granted to him pursuant to the Plan at any time prior to the earlier of (i) the
respective expiration dates of any such Incentive Stock Options or (ii) the date
which is one (1) year after the date of such termination of employment.
(d) Termination without Cause. In the event of termination without cause
of the employment of a person to whom an Incentive Stock Option has been granted
under the Plan, any Incentive Stock Options held by him under the Plan, shall
immediately vest and shall be exercisable for a period of three (3) months
following the date of termination.
(e) Non-Qualified Options, Restricted Stock and SARs. The terms and
conditions of Non-Qualified Stock Options, Restricted Stock and SARs relating to
the effect of the termination of a Participant's employment, or association with
the Company, Disability of a Participant or his death shall be such terms and
conditions as the Committee shall, in its sole and absolute discretion,
determine at the time of termination, as specifically provided for in the Award
Agreement executed by the Participant at the time of an Award.
10. Withholding of Taxes
--------------------
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<PAGE>
(a) The Common Stock to be purchased upon exercise of any Option shall be
paid for in full, in cash or as hereinafter provided at the time of such
exercise. In addition, in its sole discretion the Committee may determine that
it is an appropriate method of payment for Participants to pay for any shares
subject to an option by delivering (i) certificates for shares of Common Stock
having a value equal to the Exercise Price of the Options being exercised, or
(ii) a properly executed exercise notice together with a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of
proceeds for the sale of shares of Common Stock or margin credit extended on
shares of Common Stock (including the Common Stock to be acquired pursuant to
the exercise of Options) to pay the purchase price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms. The value of Common Stock surrendered in payment
of the exercise price shall be its Fair Market Value, determined pursuant to
Section 2(a), on the date of exercise. Upon receipt of a notice of exercise of
- ------------
an Option and upon payment of the Exercise Price, the Company shall promptly
deliver to the Participant a certificate or certificates for the shares of
Common Stock purchased, without charge to him or her for issue or transfer tax.
The Committee in its sole discretion may from time to time permit the method of
exercising Options known as pyramiding (that is, the automatic application of
shares received upon the exercise of a portion of an Option to satisfy the
exercise price for additional portions of the Option). With respect to Non-
Qualified Stock Options or any Incentive Stock Options which fail to qualify as
such for any reason, any required federal income tax or other withholding amount
shall be paid (in full) by the Participant to the Company in cash or by
certified check at the time of such exercise. The Company shall not be required
to deliver certificates for such shares until all such payments have been made,
and until the Company has had an opportunity (at its sole option) to obtain
verification from the Participant that all federal income tax or other
withholding amounts have been properly calculated and paid.
11. Non-Transferability of Rights.
-----------------------------
(a) No Award and no right under any Award shall be assignable or
transferable otherwise than by will or the laws of descent and distribution, and
the rights and benefits of any such Award may be exercised and received,
respectively, during the lifetime of the Participant only by him or by his
guardian or legal representative.
12. Consequences of a Change of Control.
-----------------------------------
(a) Upon a Change of Control, unless the Committee determines otherwise,
(i) the Company shall provide each Participant with outstanding Awards written
notice of such Change of Control and (ii) all outstanding Awards shall
automatically accelerate and become fully exercisable.
(b) In addition, upon a Change of Control where the Company is not (or
will not be) the surviving corporation (or survives only as a subsidiary of
another corporation), unless the Committee determines otherwise, all outstanding
Awards that are not exercised shall be assumed by, or replaced with comparable
options by, the surviving corporation. Any replacement options shall entitle the
Participant to receive the same amount and type of securities as the Participant
would have received
-11-
<PAGE>
as a result of the Change of Control had the Participant exercised the Award
immediately prior to the Change of Control.
(c) Notwithstanding the foregoing, subject to subsection (d) below, in the
event of a Change of Control, the Committee may require that Participants
surrender their outstanding Awards in exchange for a payment by the Company, in
cash or Common Stock as determined by the Committee, in an amount equal to the
amount by which the then Fair Market Value of the shares of Common Stock subject
to the Participant's outstanding Awards exceeds the Exercise Price of the
Awards.
(d) Notwithstanding the foregoing, the Committee making the determinations
under this Section 12 following a Change of Control must be comprised of the
----------
same members as those on the Committee immediately before the Change of Control.
If the Committee members do not meet this requirement, the automatic provisions
of Subsections (a) and (b) shall apply, and the Committee shall not have
discretion to vary them.
(e) Notwithstanding anything in the Plan to the contrary, in the event of
a Change of Control, the Committee shall not have the right to take any actions
described in the Plan (including without limitation actions described in
Subsection (c) above) that would make the Change of Control ineligible for
pooling of interest accounting treatment or that would make the Change of
Control ineligible for desired tax treatment if, in the absence of such right,
the Change of Control would qualify for such treatment and the Company intends
to use such treatment with respect to the Change of Control.
13. Amendment and Termination of the Plan.
-------------------------------------
(a) Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that if the Common Stock becomes publicly traded, the Board
shall not amend the Plan without shareholder approval if such approval is
required by Section 162(m) of the Code and if Section 162(m) is applicable to
the Plan.
(b) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date unless terminated earlier
by the Board or unless extended by the Board with the approval of the
shareholders.
(c) Termination and Amendment of Outstanding Awards. A termination or
amendment of the Plan that occurs after an Award is granted shall not materially
impair the rights of a Participant unless the Participant consents or unless the
Committee acts under Section 19(b). The termination of the Plan shall not impair
-------------
the power and authority of the Committee with respect to an outstanding Award.
No termination, Modification, or amendment of the Plan, may, without the consent
of the Participant to whom any Award shall theretofore have been made, adversely
affect the rights of such Participant under such Award; nor shall any such
Modification or amendment be deemed to effect a Modification, extension or
renewal of any such Award previously made except pursuant to an express written
agreement to such effect, executed by the Company and the Participant.
-12-
<PAGE>
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
14. Funding of the Plan.
-------------------
This Plan shall be unfunded. The Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment of any Options under this Plan. In no event shall interest be
paid or accrued on any Options.
15. Rights of Participants.
----------------------
Nothing in this Plan shall entitle any Employee, Key Advisor or other
person to any claim or right to be granted an Option under this Plan. Neither
this Plan nor any action taken hereunder shall be construed as giving any
individual any rights to be retained by or in the employ of the Company or any
other employment rights.
16. No Fractional Shares.
--------------------
No fractional shares of Common Stock shall be issued or delivered pursuant
to the Plan or any Option. The Committee shall determine whether cash, other
awards or other property shall be issued or paid in lieu of such fractional
shares or whether such fractional shares or any rights thereto shall be
forfeited or otherwise eliminated.
17. Requirements for Issuance of Shares.
-----------------------------------
No Common Stock shall be issued or transferred in connection with any
Option hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Common Stock have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Option granted to any Participant hereunder on such Participant's
undertaking in writing to comply with such restrictions on his or her subsequent
disposition of such shares of Common Stock as the Committee shall deem necessary
or advisable as a result of any applicable law, regulation or official
interpretation thereof and certificates representing such shares may be legended
to reflect any such restrictions. Certificates representing shares of Common
Stock issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations and
interpretations, including any requirement that a legend or legends be placed
thereon.
18. Headings
--------
Section headings are for reference only. In the event of a conflict between
a title and the content of a Section, the content of the Section shall control.
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<PAGE>
19. Miscellaneous.
-------------
(a) Options in Connection with Corporate Transactions and Otherwise.
Nothing contained in this Plan shall be construed to (i) limit the right of the
Committee to grant Options under this Plan in connection with the acquisition,
by purchase, lease, merger, consolidation or otherwise, of the business or
assets of any corporation, firm or association, including options granted to
employees thereof who become employees of the Company, or for other proper
corporate purpose, or (ii) limit the right of the Company to grant stock options
or make other awards outside of this Plan. Without limiting the foregoing, the
Committee may grant Options to an employee of another corporation who becomes an
employee of the Company by reason of a corporate merger, consolidation,
acquisition of stock or property, reorganization or liquidation involving the
Company or any of its subsidiaries in substitution for a stock option or
restricted stock grant made by such corporation. The Committee shall prescribe
the provisions of the substitute Options.
(b) Compliance with Law. The Plan, the grant and exercise of Options, and
the obligations of the Company to issue or transfer shares of Common Stock under
Options shall be subject to all applicable laws and to approvals by any
governmental or regulatory agency as may be required. The Committee may revoke
any Grant if it is contrary to law or modify a Grant to bring it into compliance
with any valid and mandatory government regulation. The Committee may also adopt
rules regarding the withholding of taxes on payments to Participants. The
Committee may, in its sole discretion, agree to limit its authority under this
Section.
(c) Ownership of Stock. A Participant or Successor Participant shall have
no rights as a shareholder with respect to any shares of Common Stock covered by
an Option until the shares are issued or transferred to the Participant or
Successor Participant on the stock transfer records of the Company.
(d) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Instruments issued under the Plan shall exclusively be
governed by and determined in accordance with the law of the State of Delaware.
(e) Time of Awards. Nothing contained in the Plan shall constitute an
Award hereunder. Any Award pursuant to the Plan shall take place only upon
approval by the Committee of a resolution recommending an Award under this Plan.
Notice of the determination shall be given to each person to whom an Award is so
made within a reasonable time after the date of such Award. After the making of
an Award under this Plan, a written Award Agreement shall be duly executed by or
on behalf of the Company and the Participant.
(f) Form and Terms of Award Agreement. Award Agreements evidencing Awards
pursuant to the Plan shall be in such form and shall contain such terms not
inconsistent with the Plan as the Committee may approve. Award Agreements may
contain such terms, conditions, restrictions and limitations in respect of
Options, SARs and/or Restricted Stock (and such provisions for the enforcement
of compliance with the Securities Act of 1933, as amended, and/or with state
"Blue
-14-
<PAGE>
Sky" laws) as the Committee, in its sole discretion, may determine. To the
extent any term in any Award Agreement shall be inconsistent with any term of
this Plan, the term in this Plan shall govern.
(g) Partial Invalidity. The invalidity or unenforceability of any
particular provision of this Plan or any Award Agreement shall not effect the
other provisions of this Plan or such Award Agreement nor affect the validity or
enforceability of the other provisions of Award Agreements under this Plan, and
this Plan and Awards hereunder shall be construed in all respects as if such
invalid or unenforceable provision were omitted.
(h) Special Provisions with Respect to Incentive Stock Options under this
Plan and Non-qualified Stock Options. The Committee in making any Award of an
Option shall indicate whether it intends the Option to be an Incentive Stock
Option under this Plan or a Non-Qualified Stock Option and shall cause the Award
Agreement with respect thereto to indicate such intention. Should a person hold
both one or more Incentive Stock Options under this Plan and one or more Non-
Qualified Stock Options, all of such Options shall be exercisable in accordance
with their respective terms and limitations, and nothing in this Plan shall be
construed as causing the exercise of any such Option to preclude the exercise of
any such other Option in accordance with its terms.
(i) Rule 16b-3 Savings Provision. It is the intent of the Company that
this Plan comply in all respects with applicable provisions of Rule 16b-3 and
Rule 16a-1(c)(3) under the Exchange Act in connection with any grant of Awards
to or other transaction by a Participant who is subject to Section 16 of the
Exchange Act (except for transactions exempted under alternative Exchange Act
Rules or acknowledged in writing to be non-exempt by such Participant).
Accordingly, if any provision of this Plan or any Award Agreement does not
comply with the requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then
applicable to any such transaction, such provision will be construed or deemed
amended to the extent necessary to conform to the applicable requirements of
Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall avoid liability
under Section 16(b).
-15-
<PAGE>
EXHIBIT 4.6
AMENDMENT NO. 1 TO
MASTER GRAPHICS, INC.
1998 EQUITY COMPENSATION PLAN
The following amendment to the Master Graphics, Inc. 1998 Equity
Compensation Plan (the "Plan") is adopted by the Board of Directors of Master
Graphics, Inc. (the "Company") effective February 10, 1999, subject to approval
by the shareholders of the Company at the Annual Meeting of Shareholders to be
held on May 19, 1999.
Section 4(a) of the Plan is amended by substituting the number 1,500,000
for the number 750,000 in the second line of that section.
In all other respects, the Plan shall remain in full force and effect as
originally adopted.
AS ADOPTED BY THE BOARD OF DIRECTORS ON FEBRUARY 10, 1999, SUBJECT TO APPROVAL
BY THE SHAREHOLDERS OF MASTER GRAPHICS, INC.
<PAGE>
EXHIBIT 4.7
MASTER GRAPHICS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following sets forth the terms and conditions of an employee stock
purchase plan to be called The Master Graphics, Inc. Employee Stock Purchase
Plan (the "Plan").
ARTICLE 1
DEFINITIONS
The following terms when used in this plan shall have the following
meanings:
"Account" shall mean, with respect to a Participant, the cumulative total
of Payroll Deductions set aside from time to time pursuant to the Plan for the
purpose of acquiring Options Shares.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean the Options and Benefits Committee of the Board of
Directors of the Company.
"Common Stock" shall mean shares of the $.001 par value per share common
stock of the Company.
"Company" shall mean Master Graphics, Inc., a Tennessee corporation.
"Compensation" shall mean with respect to a Participant (a) the total
annual compensation paid to such Participant during a Plan Period by the Company
and each Subsidiary Corporation to the extent such compensation would be subject
to F.I.C.A. tax withholding but for the maximum dollar amount of the F.I.C.A.
wage base established by federal law; less (b) the amount of such compensation
that consists of contest awards, reimbursement of moving expenses, life
insurance premiums, payments characterized as deferred compensation for purposes
of Section 404 of the Code, and compensation reportable to the Participant on
account of his/her participation in any Restricted Stock or Incentive Stock
Option plans of the Company or any of its subsidiaries.
"Eligible Employee" shall mean an Employee meeting the requirements of
Article 3.
- ---------
"Employee" shall mean each and every employee of the Company and each
Subsidiary Corporation.
"Entry Date" shall mean January 1, 1999, July 1, 1999, and January 1 and
July 1 of each succeeding calendar year during which this Plan is effective.
"Exercise" shall mean the purchase of Common Stock pursuant to the Plan for
a Participant in the manner set forth in Article 7 below.
---------
"Exercise Date" shall mean June 30 and December 31 in each Plan Period
during which Options shall have been granted pursuant to the Plan.
"Option" shall mean the right of an Eligible Employee to purchase Common
Stock pursuant to the Plan.
"Option Price" shall mean the price per share of Common Stock determined in
the manner set forth in Section 6.2 below.
-----------
"Option Share" shall mean each share of Common Stock purchased by a
Participant upon Exercise of an Option granted hereunder.
"Participant" shall mean each Eligible Employee who Participates in the
Plan.
<PAGE>
"Participate" shall mean with respect to each Eligible Employee the act of
having Payroll Deductions made for the purpose of acquiring Option Shares.
Payroll Deduction" shall mean money periodically deducted from the
Compensation of an Eligible Employee for the purpose of acquiring Option Shares.
"Plan" shall have the meaning set forth in the preface above.
"Plan Period" shall mean each 6 month period beginning January 1 and
ending on June 30 and beginning on July 1 and ending December 31 of each
calendar year during which this Plan is in effect, the first such Plan Period
being the period January 1, 1999 through December 31, 1999.
"Registration Statement" shall mean any registration statement filed with
the Securities and Exchange Commission pursuant to the Securities Act.
"Reorganization" shall mean any reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, share
exchange, offering of rights, reclassification, conversion, or any other change
in the capital structure of the Company which would affect the number of shares
of Common Stock purchasable, or the Option Price payable therefor, or both, with
respect to the Options then in effect.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Subsidiary Corporation" shall mean any present or future corporation which
(a) would be a "subsidiary corporation" of the Company as that term is defined
in Section 424 of the Code and (b) is designated as a participant in the Plan by
the Committee.
"Termination of Employment" shall mean with respect to a Participant the
termination of his or her employment by the Company or any subsidiary thereof
for any reason whatsoever, including death, disability, retirement, dismissal,
resignation or otherwise.
ARTICLE 2
PLAN PURPOSE
2.1 Purpose. The Plan is intended to provide a method whereby Employees
of the Company and its Subsidiary Corporations will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares of
the Common Stock of the Company. It is the intention of the Company to have the
Plan qualify as an "employee stock purchase plan" under Section 423 of the Code.
The provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423 of the
Code. It is felt that employee participation in the ownership of the Company
will be of mutual benefit to employees and the Company and its Subsidiary
Corporations.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Subject to the limitations contained in this Article 3,
---------
any employee who is regularly and actively employed by the Company or any
Subsidiary Corporation on an Entry Date is eligible to participate in the Plan.
3.2 Restrictions on Participation. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an option to participate in
the Plan:
(a) if such Employee's customary employment by the Company or a
Subsidiary Corporation is twenty (20) hours or less per week;
2
<PAGE>
(b) if such Employee's customary employment by the Company or a
Subsidiary Corporation is five (5) months or less in any calendar
year;
(c) if, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing
five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company (for purposes of
this Section 3.3(c), the rules of Section 424(d) of the Code
--------------
shall apply in determining stock ownership of any employee); or
(d) which permits his rights to purchase stock under all employee
stock purchase plans of the Company to accrue at a rate which
exceeds $25,000 in fair market value of the stock (determined at
the time such option is granted) for each calendar year in which
such option is outstanding.
3.3 Commencement of Participation. In order to Participate in the Plan
during a Plan Period, an Eligible Employee must sign and deliver to the
Committee, or its designated representative (which may be an officer or ad hoc
committee of officers of the Company), no later than January 15 or July 15, as
applicable, of the Plan Period during which he or she desires to Participate, a
Subscription Agreement (the form of which shall be adopted by the Committee
prior to the beginning of the first Plan Period) setting forth the Employee's
name, social security number, address, position and the percentage of his or her
Compensation to be withheld as his or her Payroll Deduction. The Committee
shall cause the form of Subscription Agreement to be distributed to all Eligible
Employees on or prior to the Entry Date of any Plan Period. Each Eligible
Employee shall sign and deliver to the Committee additional documents and
instruments reasonably required by the Committee to properly administer the
Plan.
ARTICLE 4
OFFERINGS; COMMON STOCK
4.1 Maximum Number of Shares to be Offered. The maximum number of shares
of Common Stock that will be offered under the Plan, subject to adjustment upon
changes in capitalization of the Company as provided in Section 11.4, shall be
------------
one hundred thousand (100,000) shares on each Exercise Date plus on each
Exercise Date all unissued shares from any prior Exercise Date, whether offered
or not, not to exceed five hundred thousand (500,000) for all Exercise Dates.
4.2 Participant's Interest in Option Stock. A Participant does not become
the owner of Option Shares purchased under the Plan and does not have any
voting, dividend or other rights as a shareholder of the Company with respect to
such Option Shares until the transfer of the Option Shares to the Participant on
the shareholder records of the Company shall have occurred. The Option Shares
shall be transferred to the Participant within a reasonable time after the
Exercise Date of a particular Plan Period, but only after payment in full for
said Option Shares has been made and there has been compliance with all of the
applicable provisions of the Plan. The Option Shares may be issued in book-
entry form or in the form of physical certificates, at the discretion of the
Company. If issued in book-entry form, the Option Shares will not be evidenced
by physical certificates, and no Participant will have the right to demand the
same. A Participant's ownership of Option Shares will be recorded on or through
the records of the Company. At such time as a Participant shall become the
owner of Option Shares purchased pursuant to this Plan, the Participant shall
have the right to vote, receive dividends and enjoy all other rights as a
shareholder of the Company with respect to such shares.
4.3 Registration of Common Stock. The Common Stock to be delivered to a
Participant under the Plan will be registered in the name of the Participant,
or, if the Participant so directs by written notice to the Secretary of the
Company prior to the Exercise Date applicable thereto, in the names of the
Participant and one such other person as may be designate by the Participant, as
joint tenants with rights of survivorship or as tenants by the entireties, to
the extent permitted by applicable law.
4.4 Restrictions on Transfer of Common Stock.
3
<PAGE>
(a) No Participant who is an affiliate (as defined in the Securities Act
and rules promulgated thereunder) of the Company may sell Option Shares
purchased hereunder unless he shall either (i) cause said Option Shares to be
registered under the Securities Act at his or her own expense; (ii) comply with
the provisions of Rule 144 promulgated under the Securities Act; or (iii)
provide the Company an opinion of competent securities counsel to the effect
that said Participant may lawfully sell Options Shares without complying with
Section 4.4(a)(i) or Section 4.4(a)(ii).
- ----------------- ------------------
(b) No Participant shall sell, exchange, pledge, hypothecate or otherwise
transfer the shares of Common Stock received upon each Exercise under the Plan
until the later of (i) a period of one (1) year after the Exercise Date with
respect to such shares of Common Stock or (ii) a period of two (2) years after
the date the Option to acquire such shares of Common Stock was granted by the
Committee.
(c) The foregoing restrictions upon transfer shall be evidenced by an
appropriate legend on each share certificate issued to a Participant. The
restrictions described in Section 4.4(b) may be waived by the Committee provided
--------------
the Participant demonstrates to the Committee that the Participant has a
financial emergency which necessitates his or her liquidating shares of Common
Stock and makes adequate arrangements to cover withholding taxes resulting from
the early sale of such Common Stock.
ARTICLE 5
PAYROLL DEDUCTIONS
5.1 Amount of Deduction. Each Eligible Employee shall be entitled to
contribute to the Plan in any Plan Period the lesser of (a) five (5%) percent of
his/her Compensation during the Plan Period or (b) Five Thousand ($5,000.00)
Dollars. By way of additional limitation, all Participants during a Plan Period
shall be entitled to acquire Common Stock aggregating no more than the number of
shares designated by the Committee on the Entry Date. If, on the Exercise Date
of a Plan Period, the Committee shall determine that the maximum number of whole
shares of Common Stock purchasable at the Option Price out of the cumulative
balance of all Participants' Accounts exceeds the aggregate number of shares
with respect to which Options were granted by the Committee on the Entry Date,
then each Participant shall be entitled to acquire only that number of shares
determined in the manner set forth in Section 7.1 below.
-----------
5.2 Participant's Account. All Payroll Deductions made for a Participant
shall be credited to his Account under the Plan. A Participant may not make any
separate cash payment into such Account. The Committee shall cause accurate
records of the Payroll Deductions of all Participants to be maintained, and
shall, upon written request by a Participant, report to the Participant his or
her Account balance as of the Date of the most-recently completed pay period
preceding the date of the Participant's request.
5.3 Changes in Payroll Deductions. A Participant may discontinue his
participation in the Plan as provided in Article 8, but no other change can be
---------
made during any Plan Period and, specifically, a Participant may not alter the
amount of his payroll deductions for that Plan Period.
5.4 Leave of Absence. If a Participant goes on a leave of absence, such
Participant shall have the right to elect: (a) to withdraw the balance in his or
her Account pursuant to Section 7.3; (b) to discontinue contributions to the
-----------
Plan but remain a Participant, or (c) remain a Participant, during such leave of
absence, authorizing deductions to be made from payments by the Company to the
Participant during such leave of absence and undertaking to make cash payments
to the Plan at the end of each payroll period to the extent that amounts payable
by the Company to such Participant are insufficient to meet such Participant's
authorized Plan deductions.
ARTICLE 6
GRANTING OF OPTIONS
6.1 Number of Option Shares. On each Entry Date, a Participant shall be
deemed to have been granted an option to purchase a maximum number of shares of
Common Stock in an amount equal to:
4
<PAGE>
(a) (i) that percentage of the Employee's Compensation which he has
elected to have withheld (subject to the limitations set forth in
Section 5.1) multiplied by (ii) Employee's Compensation during the
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Plan Period divided by
(b) 85% of the market value of the Common Stock on the applicable Entry
Date. The market value of the Common Stock shall be determined as
provided in Section 6.2 below.
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An Employee's Compensation during any Plan Period shall be determined by
multiplying his normal weekly rate of pay (as in effect on the last day prior to
the Entry Date of the particular Plan Period) by 26 or the hourly rate by 1,040.
6.2 Option Price. The Option Price of the Common Stock purchased pursuant
to Payroll Deductions made for a Participant therein shall be the lower of:
(a) 85% of the closing price of the stock on the Entry Date or the nearest
prior business day on which trading occurred on the Nasdaq Stock
Market; or
(b) 85% of the closing price of the stock on the Exercise Date or the
nearest prior business day on which trading occurred on the Nasdaq
Stock Market. If the Common Stock is not admitted to trading on any of
the aforesaid dates for which closing prices of the stock are to be
determined, then reference shall be made to the fair market value of
the Common Stock on that date, as determined on such basis as shall be
established or specified for the purpose by the Committee.
6.3 Entry Date. The Entry Date during any Plan Period shall be January 1
and July 1, as applicable, with the initial entry date being January 1, 1999.
The Committee may, in its discretion, grant Options to Eligible Employees on any
Entry Date so long as the Plan has not been terminated and the maximum number of
shares described in Section 4.1 shall not have been purchased by Participants.
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ARTICLE 7
EXERCISE OF OPTIONS
7.1 Automatic Exercise. On the Exercise Date of each Plan Period, the
Committee will automatically exercise on each Participant's behalf the Option to
purchase the number of whole Option Shares (no fractional shares will be issued
under the Plan) resulting by dividing the balance of each Participant's Account
by the Option Price; provided, however, that if the aggregate number of whole
Option Shares which could be purchased by the cumulative Account balances of all
Participants exceeds the total number of shares of Common Stock with respect to
which the Committee granted options on the Entry Date of the Plan Period, then
the Committee automatically will exercise on each Participant's behalf the
Option to purchase the number of Option Shares resulting by multiplying the
number of Option Shares purchasable by such Participant without regard to the
Committee's limitation times a fraction, the numerator of which shall be the
total number of shares of Common Stock with respect to which the Committee
granted Options to all Participants during the Plan Period and the denominator
of which shall be the total number of whole Option Shares which would have been
purchasable by all Participants if said limitation had not been in effect.
Assume, for example, that Employee A had $5,000 withheld between July 1 and
December 31 of the first Plan Period. Assume, further, that all Participants
had a total of $625,000 so withheld. Also assume that the formula Option Price
computed pursuant to Section 6.2 was $25. However, for that year, the Committee
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made available only 12,500 shares under the Plan. The Participants have
contributed enough cash through payroll deductions to acquire 25,000 shares.
However, since the Committee has made available only one-half that number, then
Employee A would be entitled to Exercise his Option with respect to only one-
half the number of shares that he otherwise could have bought with his $5,000
contribution. The mathematics with respect to Employee A are $5,000 / $25 = 200
possible shares. 200 possible shares x [12,500 available shares / 25,000
aggregate possible shares] = 100 shares of Common Stock acquired by Employee A.
If a Participant's Account balance as of any Exercise Date exceeds the aggregate
Option Price payable for that Participant's Option Shares pursusant o this
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section, then such excess shall be refunded to the Participant no later than
fifteen (15) days after the applicable Exercise Date without interest.
7.2 Expiration of Option. If the number of shares of Common Stock with
respect to which Options have been granted during a Plan Period exceeds the
number of Option Shares actually acquired by Exercise on the Exercise Date, then
the Options with respect to such excess shares shall expire on the Exercise
Date; provided, however, that Options with respect to those unissued shares may
be granted in the future.
7.3 Withdrawal of Account. By written notice to the Secretary of the
Company, at any time prior to the Exercise Date in any Plan Period, a
Participant may elect to withdraw all the accumulated Payroll Deductions in his
Account at such time.
7.4 Fractional Shares. Fractional shares will not be issued under the
Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be returned to any Eligible Employee promptly
following the applicable Exercise Date, without interest.
7.5 Transferability of Option. During a Participant's lifetime, Options
held by such Participant shall be exercisable only by that Participant.
7.6 Delivery of Common Stock. As promptly as practicable after the
Exercise Date of each Plan Period, the Company will deliver to each Participant,
as appropriate, the Common Stock purchased upon exercise of his Option.
ARTICLE 8
WITHDRAWAL
8.1 In General. As indicated in Section 7.3, a Participant may withdraw
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Payroll Deductions credited to his Account under the Plan at any time by giving
written notice to the Secretary of the Company. All of the Participant's
Payroll Deductions credited to his Account will be paid to him promptly after
receipt of his notice of withdrawal, and no further Payroll Deductions will be
made from his pay during such Plan Period. The Company may, at its option,
treat any attempt to borrow by an Employee on the security of his accumulated
Payroll Deductions as an election, under Section 7.3, to withdraw such
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deductions.
8.2 Effect on Subsequent Participation. A Participant's withdrawal during
any Plan Period will not have any effect upon his eligibility to participate in
any succeeding Plan Period or in any similar plan which my hereafter be adopted
by the Company.
8.3 Termination of Employment. Upon termination of the Participant's
employment for any reason, including retirement (but excluding death while in
the employ of the Company), the Payroll Deductions credited to his Account will
be returned to him, or, in the case of his death subsequent to the termination
of his employment, to the person or persons entitled thereto under Section 11.1.
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8.4 Termination of Employment Due to Death. Upon termination of the
Participant's employment because of his death, his beneficiary (as defined in
Section 11.1) shall have the right to elect, by written notice given to the
- -------------
Secretary of the Company prior to the earlier of the Exercise Date or the
expiration of a period of sixty (60) days commencing with the date of the death
of the participant, either:
(a) to withdraw all of the Payroll Deductions credited to the
Participant's Account under the Plan, or
(b) to exercise the Participant's Option for the purchase of Common Stock
on the Exercise Date next following the date of the Participant's
death for the purchase of the number of full shares of stock which the
accumulated Payroll Deductions in the Participant's Account at the
date of the Participant's death will purchase at the applicable Option
Price, and any excess in such Account will be returned to said
beneficiary, without interest.
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In the event that no such written notice of election shall be duly received by
the office of the Secretary of the Company, the beneficiary shall automatically
be deemed to have elected, pursuant to Section 8.4(b), to exercise the
--------------
Participant's option.
ARTICLE 9
INTEREST
9.1 Payment of Interest. No interest will be paid or allowed on any money
paid into the Plan or credited to the Account of any Participant; provided,
however, that interest shall be paid on any and all money which is distributed
to an Employee or his beneficiary pursuant to the provisions of Section 7.3,
-----------
Section 8.1, Section 8.3 and Section 8.4. Such distributions shall bear simple
- ----------- ----------- -----------
interest during the period from the date of withholding to the date of return at
the regular passbook savings account rates per annum in effect at Union Planters
Bank, Memphis, Tennessee during the applicable Plan Period or, if such rates are
not published or otherwise available for such purpose, at the regular passbook
savings account rates per annum in effect during such period at another major
commercial bank in Memphis, Tennessee selected by the Committee. Where the
amount returned represents an excess amount in a Participant's Account after
such Account has been applied to the purchase of Common Stock, the Participant's
Account shall be deemed to have been applied first toward purchase of Common
Stock under the Plan, so that interest shall be paid on the last withholdings
during the period which results in the excess amount.
ARTICLE 10
ADMINISTRATIVE PROVISIONS
10.1 Administration of Plan. The Plan shall be administered under the
direction and control of the Committee.
10.2 Authority of Committee. Subject to the express provision of the Plan,
the Committee shall have plenary authority in its discretion to interpret and
construe any and all provisions of the Plan, to adopt rules and regulations for
administering the Plan, and to make all other determinations deemed necessary or
advisable for administering the Plan. The Committee's determination on the
foregoing matters shall be conclusive. Without limiting the generality of the
foregoing, in administering the Plan, the Committee shall have the following
rights and powers, subject only to the terms and the limitations contained
herein:
(a) to establish the maximum number of shares of Common Stock with respect
to which Options may be exercised during a Plan Period (subject to the
limits established in Section 4.1);
-----------
(b) to interpret the terms, conditions and limitations set forth in the
Plan, which determinations shall be final with respect to each and
every Participant;
(c) to refuse to grant Options during a Plan Period;
(d) to determine the eligibility of any Employee to Participate;
(e) to make all computations, maintain all accounts, provide for the
issuance of all Option Shares, and do all other acts and things
reasonably necessary to properly administer the Plan; and
(f) To revoke, alter, or amend the terms and conditions of the Plan
without obtaining the prior approval of the Participants or the
Company's shareholders, subject, however, to the limitations
hereinafter stated.
10.3 Rules Governing the Administration of the Committee. The Board of
Directors may from time to time appoint members of the Committee in substitution
for or in addition to members previously appointed and may fill vacancies,
however caused, in the Committee. The Committee may select one of its members
as its Chairman and shall hold its meetings at such times and places as it shall
deem advisable and may hold telephonic meetings. A majority of
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<PAGE>
its members hall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. The Committee may correct any defect or
omission or reconcile any inconsistency in the Plan, in the manner and to the
extent it shall deem desirable. Any decision or determination reduced to writing
and signed by a majority of the members of the Committee shall be as fully
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary and shall make such rules and
regulations for the conduct of its business as it shall deem advisable.
ARTICLE 11
MISCELLANEOUS
11.1 Designation of Beneficiary. A Participant may file a written
designation of a beneficiary who is to receive any Common Stock and/or cash.
Such designation of beneficiary may be changed by the Participant at any time by
written notice to the Secretary of the Company. Upon the death of a Participant
and upon receipt by the Company of proof of identity and existence at the
Participant's death of a beneficiary validly designated by him under the Plan,
the Company shall deliver such Common Stock and/or cash to such beneficiary. In
the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such Common Stock and/or cash to
the executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such Common Stock and/or cash to the
spouse or to any one or more dependents of the Participant as the Company may
designate. No beneficiary shall, prior to the death of the Participant by whom
he has been designated, acquire any interest in the Common Stock or cash
credited to the Participant under the Plan.
11.2 Transferability. Neither Payroll Deductions credited to a
Participant's Account nor any rights with regard to the exercise of an Option or
to receive Common Stock under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the Participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 7.3.
-----------
11.3 Use of Funds. All Payroll Deductions received or held by the Company
under this Plan may be used by the Company for any corporate purposes and the
Company shall not be obligated to segregate such Payroll Deductions.
11.4 Adjustments upon Change in Capitalization.
(a) If, while any Options are outstanding, the outstanding shares of
Common Stock of the Company have increased, decreased, changed into, or been
exchanged for a different number or kind of shares or securities of the Company
through reorganization, merger, recapitalization, reclassification, stock split,
reverse stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or kind of shares
which are subject to purchase under outstanding Options and on the Option Price
or prices applicable to such outstanding Options. In addition, in any such
event, the number and/or kind of shares which may be offered shall also be
proportionately adjusted. No adjustments shall be made for stock dividends.
For the purposes of this Section 11.4, any distribution of shares to
------------
shareholders in an amount aggregating 20% or more of the outstanding shares
shall be deemed a stock split and any distributions of shares aggregating less
than 20% of the outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another individual or entity, the holder of each option then outstanding under
the Plan will thereafter be entitled to receive at the next Exercise Date upon
the Exercise of such Option for each share as to which such Option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 11.4(b) shall thereafter
---------------
be applicable, as nearly as reasonably
8
<PAGE>
may be determined, in relation to the said cash, securities and/or property as
to which such holder of such Option might thereafter be entitled to receive.
11.5 Amendment and Termination. The Board of Directors shall have complete
power and authority to terminate or amend the Plan; provided, however, that the
Board of Directors shall not, without the approval of the shareholders of the
Corporation:
(a) increase the maximum number of shares which may be issued pursuant to
the Plan (except pursuant to Section 11.4);
-------------
(b) amend the requirements as to the class of Employees eligible to
purchase Common Stock under the Plan or permit the members of the
Committee to purchase stock under the Plan; or
(c) amend the Plan in any manner which would have the effect of causing
the Plan not to be an "employee stock purchase plan" as defined and
set forth in Section 423 of the Code.
No termination, modification, or amendment of the Plan may, without the consent
of an employee then having an Option under the Plan to purchase stock, adversely
affect the rights of such employee under such Option.
11.6 Control of Funds; ERISA. The Plan shall not be subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Plan shall be unfunded. In that regard, the cumulative
amount of Account balances of all Participants shall remain part of the general
funds of the Company and shall at all times during a Plan Period be subject to
the claims of all the Company's creditors.
11.7 Shareholder Approval; Registration. This Plan shall not be effective
until:
(a) it shall have been approved by the shareholders of the Company in
accordance with the Company's bylaws and Tennessee law at the annual
meeting of such shareholders to be held in 1999;
(b) a Registration Statement filed with respect to the Common Stock
offered pursuant to this Plan shall have become effective, and
appropriate registration of the Common Stock with any state agency or
securities law administrator required by the Blue Sky Law of any state
shall likewise have become effective;
(c) each Participant shall have been provided a prospectus meeting the
requirements of Section 10 of the Securities Act no later than the
time such Participant delivers an executed Subscription Agreement to
the Committee, which prospectus will be updated and supplemented as
required by law; and
(d) prior to the issuance of Option Shares on any Exercise Date, the
Company shall have caused said Option Shares to be listed on the
Nasdaq Stock Market, whereupon the Option Shares may be freely sold by
Participants, subject to the limitations contained in the Plan.
Notwithstanding the foregoing, Participants may commence Payroll Deductions upon
adoption of this Plan by the Board of Directors of the Company and will be
deemed to have acquired Option Shares on the December 31, 1999 Exercise Date if
shareholder approval is so obtained, which approval will be retroactive to such
Exercise Date. The Company will pay dividends in respect of such Option Shares
deemed to be so acquired at such time as shareholder approval is obtained.
11.8 No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any shares of Common Stock under the Plan, or create in any employee or
class of employees any right with respect to continuation of employment by the
Company, and it shall not be deemed to interfere in any way with the Company's
right to terminate, or otherwise modify, an employee's employment at any time.
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11.9 Effect of Plan. The provisions of the Plan shall, in accordance with
its terms, be binding upon, and inure to the benefit of, all successors of each
Participant, including, without limitation, such Participant's estate and the
executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
11.10 Governing Law; Venue. The Plan shall be governed by and construed in
accordance with the domestic laws of the State of Tennessee without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Tennessee or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Tennessee. Each of the parties
submits to the jurisdiction of any state or federal court sitting in Memphis,
Tennessee, in any action or proceeding arising out of or relating to the Plan
and agrees that all claims in respect of the action or proceeding shall be heard
and determined in any such court. No Participant shall bring any action or
proceeding arising out of or relating to the Plan in any other court. No
Participant shall raise any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other party with respect thereto.
AS DULY ADOPTED BY THE BOARD OF DIRECTORS OF MASTER GRAPHICS, INC. AS OF
DECEMBER 22, 1998.
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EXHIBIT 5.1
June 9, 1999
Board of Directors
Master Graphics, Inc.
6075 Poplar Avenue
Suite 401
Memphis, Tennessee 38119
Re: Registration Statement on Form S-8
Master Graphics, Inc. 1998 Equity Compensation Plan, as amended
Master Graphics, Inc. 1998 Non-Employee Director Stock Option Plan
Master Graphics, Inc. Employee Stock Purchase Plan
Gentlemen:
We have acted as counsel for Master Graphics, Inc., a Tennessee corporation
(the "Company"), in connection with the Company's Registration Statement on Form
S-8 (the "Registration Statement") pursuant to the Securities Act of 1933, as
amended, relating to the Master Graphics, Inc. 1998 Equity Compensation Plan, as
amended, the Master Graphics, Inc. 1998 Non-Employee Director Stock Option Plan,
and the Master Graphics, Inc. Employee Stock Purchase Plan (each individually a
"Plan," and collectively the "Plans"). This opinion is being furnished in
response to Item 601 of Regulation S-K and the instructions to Form S-8.
We are familiar with the proceedings to date with respect to the proposed
offering and have examined such records, documents and matters of law and
satisfied ourselves as to such matters of fact as we have considered relevant
for purposes of this opinion.
On the basis of the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and existing under the laws
of the State of Tennessee.
<PAGE>
June 9, 1999
Page 2
2. The shares of the Company's common stock, $.001 par value, that may be
issued and sold from time to time in accordance with each Plan have been duly
authorized for issuance and will, when issued, sold and paid for in accordance
with the terms of the respective Plans, be validly issued, fully paid and non-
assessable.
The foregoing opinions are limited to the federal laws of the United States
and the laws of the State of Tennessee, and we are expressing no opinion as to
the effect of the laws of any other jurisdiction.
In rendering the foregoing opinions, we have relied to the extent we deem
such reliance appropriate as to certain matters on statements, representations
and other information obtained from public officials, officers of the Company
and other sources believed by us to be responsible.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.
Very truly yours,
Bass, Berry & Sims PLC
<PAGE>
EXHIBIT 23.1
[KPMG LETTERHEAD APPEARS HERE]
Accountants' Consent
We consent to the use of our report with respect to the consolidated balance
sheets of Master Graphics, Inc. as of December 31, 1997 and 1998 and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the two-year period ended June 30, 1997, the six month
period ended December 31, 1997 and the year ended December 31, 1998,
incorporated by reference herein.
KPMG LLP
Memphis, Tennessee
June 8, 1999
<PAGE>
EXHIBIT 23.2
Accountants' Consent
We consent to incorporation by reference in the Registration Statement
on Form S-8 for Master Graphics, Inc. of our report dated February 26, 1999,
relating to the balance sheet of Columbia Graphics Corporation as of December
31, 1998, and the related statements of income and retained earnings and cash
flows for the year ended December 31, 1998, which report appears in the current
report on Form 8-K/A of Master Graphics, Inc. filed with the United States
Securities and Exchange Commission on May 28, 1999.
MILLER, COOPER & CO., LTD.
/s/ Miller, Cooper & Co., Ltd.
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Certified Public Accountants
Northbrook, Illinois
June 4, 1999
