Exhibit 10.5
CONSOLIDATED GRAPHICS, INC.
AMENDED AND RESTATED LONG-TERM INCENTIVE PLAN
(Effective as of June 30, 2008)
1. Objectives. The Consolidated Graphics, Inc. Amended and Restated Long-Term
Incentive Plan (as amended from time to time, the “Plan”) is designed to retain
selected employees and non-employee directors of Consolidated Graphics, Inc.
(the “Company”) and reward them for making significant contributions to the
success of the Company and its Subsidiaries (as hereinafter defined). These
objectives are to be accomplished by making awards under the Plan and thereby
providing Participants (as hereinafter defined) with a proprietary interest in
the growth and performance of the Company and its Subsidiaries. The Plan
provides for payment of various forms of compensation. It is not intended to be
a plan that is subject to the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”), and shall be interpreted, construed and administered
consistent with its status as a plan that is not subject to ERISA
2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
“Award” means the grant of any form of stock option, stock appreciation right,
stock award or cash award, whether granted singly, in combination or in tandem,
to a Participant pursuant to any applicable terms, conditions and limitations as
the Committee may establish in order to fulfill the objectives of the Plan.
“Award Agreement” means a written agreement between the Company and a
Participant that sets forth the terms, conditions and limitations applicable to
an Award.
“Board” means the Board of Directors of the Company.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means such committee of the Board as is designated by the Board to
administer the Plan. The Committee shall be constituted to permit the Plan to
comply with Rule 16b-3.
“Common Stock” means the Common Stock, par value $.01 per share, of the Company.
“Director” means an individual serving as a member of the Board.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.

 

 

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“Fair Market Value” of one share of Common Stock on the date in question shall
be (i) the closing sales price on such day for a share as quoted on the New York
Stock Exchange or other national securities exchange on which shares are then
principally listed or admitted to trading, or (ii) if not quoted on a national
securities exchange, the average of the closing bid and asked prices for a share
as quoted by the National Quotation Bureau’s “Pink Sheets” or the National
Association of Securities Dealers’ OTC Bulletin Board System. If there was no
public trade of Common Stock on the date in question, Fair Market Value shall be
determined by reference to the last preceding date on which such a trade was so
reported.
“Participant” means an employee or nonemployee director of the Company or any of
its Subsidiaries to whom an Award has been made under this Plan.
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, or any
successor rule.
“Subsidiary” means any corporation of which the Company directly or indirectly
owns shares representing more than 50% of the voting power of all classes or
series of capital stock of such corporation which have the right to vote
generally on matters submitted to a vote of the stockholders of such
corporation.
3. Eligibility. All employees and non-employee directors of the Company and its
Subsidiaries are eligible for Awards under this Plan. The Committee shall select
the Participants in the Plan from time to time by the grant of Awards under the
Plan.
4. Common Stock Available for Awards. There shall be available for Awards
granted wholly or partly in Common Stock (including rights or options which may
be exercised for or settled in Common Stock) during the term of this Plan an
aggregate of 4,585,000 shares of Common Stock, subject to adjustment as provided
in Paragraph 14, all of which may be granted hereunder as incentive stock
options. The Board of Directors and the appropriate officers of the Company
shall from time to time take whatever actions are necessary to file required
documents with governmental authorities and stock exchanges and transaction
reporting systems to make shares of Common Stock available for issuance pursuant
to Awards. Common Stock related to Awards that are forfeited or terminated,
expire unexercised, are settled in cash in lieu of Common Stock or in a manner
such that all or some of the shares covered by an Award are not issued to a
Participant, or are exchanged for Awards that do not involve Common Stock, shall
immediately become available for Awards hereunder. The Committee may from time
to time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate under Rule 16b-3.
5. Administration. This Plan shall be administered by the Committee, which shall
have full and exclusive power to interpret this Plan and to adopt such rules,
regulations and guidelines for carrying out this Plan as it may deem necessary
or proper, all of which powers shall be exercised in the best interests of the
Company and in keeping with the objectives of this Plan. The Committee may, in
its discretion, provide for the extension of the exercisability of an Award,
accelerate the vesting or exercisability of an Award, eliminate or make less
restrictive any restrictions contained in an Award, waive any restriction or
other provision of this Plan or an Award or otherwise amend or modify an Award
in any manner that is either (a) not adverse to the Participant holding such
Award or (b) consented to by such Participant.

 

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The Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision of
the Committee in the interpretation and administration of this Plan shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. No member of the Committee or officer of the
Company to whom it has delegated authority in accordance with the provisions of
Paragraph 6 of this Plan shall be liable for anything done or omitted to be done
by him or her, by any member of the Committee or by any officer of the Company
in connection with the performance of any duties under this Plan, except for his
or her own willful misconduct or as expressly provided by statute.
6. Delegation of Authority. The Committee may delegate to the Chief Executive
Officer and to other senior officers of the Company its duties under this Plan
pursuant to such conditions or limitations as the Committee may establish,
except that the Committee may not delegate to any person the authority to grant
Awards to, or take other action with respect to, Participants who are subject to
Section 16 of the Exchange Act.
7. Awards. The Committee shall determine the type or types of Awards to be made
to each Participant under this Plan. Each Award made hereunder shall be embodied
in an Award Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Committee in its sole discretion and
shall be signed by the Participant and by the Chief Executive Officer, the Chief
Operating Officer or any Vice President of the Company for and on behalf of the
Company. Awards may consist of those listed in this Paragraph 7 and may be
granted singly, in combination or in tandem. Awards may also be made in
combination or in tandem with, in replacement of, or as alternatives to grants
or rights (a) under this Plan or any other employee plan of the Company or any
of its Subsidiaries, including the plan of any acquired entity, or (b) made to
any Company or Subsidiary employee by the Company or any Subsidiary. An Award
may provide for the granting or issuance of additional, replacement or
alternative Awards upon the occurrence of specified events, including the
exercise of the original Award. Notwithstanding anything herein to the contrary,
no Participant may be granted during any calendar year Awards consisting of
stock options or stock appreciation rights exercisable for more than 20% of the
shares of Common Stock originally authorized for Awards under this Plan, subject
to adjustment as provided in Paragraph 14. In the event of an increase in the
number of shares authorized under the Plan, the 20% limitation will apply to the
increased number of shares authorized. The number of Awards that may be granted
in the form of a stock appreciation right or stock award as described in
subparagraph (c) below shall not exceed an aggregate of 62,500 underlying shares
of Common Stock issuable pursuant to such Award.
(a) Stock Option. An Award may consist of a right to purchase a specified number
of shares of Common Stock at a price specified by the Committee in the Award
Agreement or otherwise. No stock option shall have an exercise price less than
100% of the Fair Market Value of a share of the Common Stock on the date of
grant of the stock option, nor shall any stock option be exercisable later than
the day before the expiration of ten (10) years from the date of grant of the
stock option. A stock option may be in the form of an incentive stock option
(“ISO”) which, in addition to being subject to applicable terms, conditions and
limitations established by the Committee, complies with Section 422 of the Code.
ISOs may be granted to any employee of the Company or a Subsidiary, but not to a
non-employee director. Notwithstanding the foregoing, no ISO can be granted
under the Plan more than ten years following the Effective Date of the Plan or,
if later, the date of approval by the Company’s shareholders of an increase in
the number of shares of Common Stock authorized to be issued as Awards under the
Plan, but only with respect to such increase.

 

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(b) Stock Appreciation Right. An Award may consist of a right to receive a
payment, in cash or Common Stock, equal to the excess of the Fair Market Value
or other specified valuation of a specified number of shares of Common Stock on
the date the stock appreciation right (“SAR”) is exercised over a specified
strike price as set forth in the applicable Award Agreement. The strike price of
a SAR shall not be less than 100% of the Fair Market Value per share of Common
Stock on the date the SAR is granted.
(c) Stock Award. An Award may consist of Common Stock or may be denominated in
units of Common Stock. All or part of any stock Award may be subject to
conditions established by the Committee and set forth in the Award Agreement,
which conditions may include, but are not limited to, continuous service with
the Company and its Subsidiaries, achievement of specific business objectives,
increases in specified indices, attaining specified growth rates and other
comparable measurements of performance. Such Awards may be based on Fair Market
Value or other specified valuations. The certificates evidencing shares of
Common Stock issued in connection with a stock Award shall contain appropriate
legends and restrictions describing the terms and conditions of the restrictions
applicable thereto. Restricted stock units are not intended to be deferred
compensation that is subject to Section 409A of the Code. During the period
beginning on the date such an Award is granted and ending on the payment date
specified in the Award Agreement, the Participant’s right to payment under the
Award Agreement shall remain subject to a “substantial risk of forfeiture”
within the meaning of such term under Section 409A of the Code. In addition,
payment to the Participant under a restricted stock unit shall be made within
two and one-half months (21/2) months following the end of the calendar year in
which the substantial risk of forfeiture lapses unless an earlier payment date
is specified in the Award Agreement.
(d) Cash Award. An Award may be denominated in cash with the amount of the
eventual payment subject to future service and such other restrictions and
conditions as may be established by the Committee and set forth in the Award
Agreement, including, but not limited to, continuous service with the Company
and its Subsidiaries, achievement of specific business objectives, increases in
specified indices, attaining specified growth rates and other comparable
measurements of performance.
(e) $100,000 Annual Limit on Incentive Stock Options. Notwithstanding any
contrary provision in the Plan, a stock option designated as an ISO shall be an
ISO only to the extent that the aggregate Fair Market Value (determined as of
the time the ISO is granted) of the shares of Common Stock with respect to which
ISOs are exercisable for the first time by the Participant during any single
calendar year (under the Plan and any other stock option plans of the Company
and its subsidiaries or parent) does not exceed $100,000. This limitation shall
be applied by taking ISOs into account in the order in which they were granted
and shall be construed in accordance with Section 422(d) of the Code.

 

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(f) Notification of Disqualifying Disposition of Shares from Incentive Stock
Options. A Participant who disposes of Shares of Common Stock acquired upon the
exercise of an ISO by a sale or exchange either (i) within two (2) years after
the date of the grant of the ISO under which the shares of Common Stock were
acquired or (ii) within one (1) year after the transfer of such shares to him
pursuant to exercise, shall promptly notify the Company of such disposition, the
amount realized and the adjusted basis in such shares.
8. Payment of Awards.
(a) General. Payment of Awards may be made in the form of cash or Common Stock
or combinations thereof and may include such restrictions as the Committee shall
determine including, in the case of Common Stock, restrictions on transfer and
forfeiture provisions. As used herein, “Restricted Stock” means Common Stock
that is restricted or subject to forfeiture provisions.
(b) Dividends and Interest. Dividends or dividend equivalent rights may be
extended to and made part of any Award denominated in Common Stock or units of
Common Stock, subject to such terms, conditions and restrictions as the
Committee may establish. All dividend equivalents will be paid to the
Participant not later than 60 days after the date that the corresponding
dividend was declared.
9. Stock Option Exercise. The price at which shares of Common Stock may be
purchased under a stock option shall be paid in full at the time of exercise in
cash or, if permitted by the Committee, by means of tendering Common Stock or
surrendering all or part of that or any other Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or
Awards to exercise a stock option as it deems appropriate. If permitted by the
Committee, payment may be made by successive exercises by the Participant. The
Committee may provide for procedures to permit the exercise or purchase of
Awards by (a) loans from the Company or (b) use of the proceeds to be received
from the sale of Common Stock issuable pursuant to an Award. Unless otherwise
provided in the applicable Award Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of a stock option, a number
of the shares issued upon the exercise of the stock option, equal to the number
of shares of Restricted Stock used as consideration therefor, shall be subject
to the same restrictions as the Restricted Stock so submitted as well as any
additional restrictions that may be imposed by the Committee.
10. Tax Withholding. The Company shall have the right to deduct applicable taxes
from any Award payment and withhold, at the time of delivery or vesting of cash
or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax withholding, such shares shall be valued based on the Fair
Market Value when the tax withholding is required to be made.

 

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11. Amendment, Modification, Suspension or Termination. The Board may amend,
modify, suspend or terminate this Plan for the purpose of meeting or addressing
any changes in legal requirements or for any other purpose permitted by law
except that (a) no amendment or alteration that would impair the rights of any
Participant under any Award previously granted to such Participant shall be made
without such Participant’s consent, and (b) no amendment or alteration shall be
effective prior to approval by the Company’s stockholders to the extent such
approval is then required pursuant to Rule 16b-3 in order to preserve the
applicability of any exemption provided by such rule to any Award then
outstanding (unless the holder of such Award consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements.
12. Termination of Employment. Upon the termination of employment by a
Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award. In the event of
such a termination, the Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of this Plan or
an Award or otherwise amend or modify the Award in any manner that is either
(a) not adverse to such Participant or (b) consented to by such Participant.
13. Assignability. Unless otherwise determined by the Committee and provided in
the Award Agreement, no Award or any other benefit under this Plan constituting
a derivative security within the meaning of Rule 16a-1(c) under the Exchange Act
shall be assignable or otherwise transferable except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. The Committee may prescribe and include in applicable
Award Agreements other restrictions on transfer. Any attempted assignment of an
Award or any other benefit under this Plan in violation of this Paragraph 13
shall be null and void.
14. Adjustments.
(a) The existence of outstanding Awards shall not affect in any manner the right
or power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the capital
stock of the Company or its business or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference stock
(whether or not such issue is prior to, on a parity with or junior to the Common
Stock) or the dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any other corporate act or
proceeding of any kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.

 

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(b) In the event of any subdivision or consolidation of outstanding shares of
Common Stock or declaration of a dividend payable in shares of Common Stock or
capital reorganization or reclassification or other transaction involving an
increase or reduction in the number of outstanding shares of Common Stock, the
Committee may adjust proportionally (i) the number of shares of Common Stock
reserved under this Plan and covered by outstanding Awards denominated in Common
Stock or units of Common Stock; (ii) the exercise or other price in respect of
such Awards; and (iii) the appropriate Fair Market Value and other price
determinations for such Awards. In the event of any consolidation or merger of
the Company with another corporation or entity or the adoption by the Company of
a plan of exchange affecting the Common Stock or any distribution to holders of
Common Stock of securities or property (other than normal cash dividends or
dividends payable in Common Stock), the Committee shall make such adjustments or
other provisions as it may deem equitable, including adjustments to avoid
fractional shares, to give property effect to such event. In the event of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Committee shall be authorized to issue or
assume stock options, regardless of whether in a transaction to which Section
424(a) of the Code applies, by means of substitution of new options for
previously issued options or an assumption of previously issued options, or to
make provision for the acceleration of the exercisability of, or lapse of
restrictions with respect to, Awards and the termination of unexercised options
in connection with such transaction.
15. Restrictions. No Common Stock or other form of payment shall be issued with
respect to any Award unless the Company shall be satisfied based on the advice
of its counsel that such issuance will be in compliance with applicable federal
and state securities laws. It is the intent of the Company that this Plan comply
with Rule 16b-3 with respect to persons subject to Section 16 of the Exchange
Act unless otherwise provided herein or in an Award Agreement, that any
ambiguities or inconsistencies in the construction of this Plan be interpreted
to give effect to such intention and that, if any provision of this Plan is
found not to be in compliance with Rule 16b-3, such provision shall be null and
void to the extent required to permit this Plan to comply with Rule 16b-3.
Certificates evidencing shares of Common Stock delivered under this Plan may be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any securities exchange or transaction
reporting system upon which the Common Stock is then listed and any applicable
federal and state securities law. The Committee may cause a legend or legends to
be placed upon any such certificates to make appropriate reference to such
restrictions.
16. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock or
rights thereto, this Plan shall be unfunded. Although bookkeeping accounts may
be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor
shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Participant with respect to a
grant of cash, Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by this Plan and any
Award Agreement, and no such liability or obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. None of the Company, the Board or the Committee shall be required to
give any security or bond for the performance of any obligation that may be
created by this Plan.

 

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17. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.
18. Effective Date of Plan. This Plan, as amended and restated hereby, shall be
effective as of June 30, 2008 (the “Effective Date”). Outstanding Awards granted
pursuant to the Plan prior to its amendment and restatement shall continue to be
governed by the terms of this Plan as amended and restated.
19. Compliance with Code Section 409A. It is intended that Awards granted under
the Plan shall be exempt from taxation under Section 409A of the Code, unless
otherwise determined by the Committee at the time of grant. In that respect, the
Company, by action of its Board, reserves the right to amend the Plan, and the
Board and the Committee each reserve the right to amend any outstanding Award
Agreement, to the extent deemed necessary or appropriate either to exempt such
Award from taxation under Section 409A or to comply with the requirements of
Section 409A. Further, Participants who are “Specified Employees” (as defined
under Section 409A), shall be required to delay payment under an Award for six
(6) months after separation from service, but only to the extent such Award
would otherwise be subject to taxation under Section 409A if no such delay is
imposed.
[Signature page follows.]

 

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IN WITNESS WHEREOF, a duly authorized officer of the Company has executed this
Amended and Restated Long-Term Incentive Plan on behalf of the Company,
effective as of June 30, 2008.

            CONSOLIDATED GRAPHICS, INC.
      By:   Jon C. Biro       Name:   Jon C. Biro       Title:   Executive Vice
President and
Chief Financial and Accounting Officer    

 

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