View:
As filed with the Securities and Exchange Commission on December 24, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933*
HSN, INC.
(Exact name of registrant as specified in its charter)
Delaware 59-2712887
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11831 30th Court North, St. Petersburg, FL 33716
(Address of Principal Executive Offices) (Zip Code)
AMENDED AND RESTATED SAVOY PICTURES ENTERTAINMENT, INC.
STOCK OPTION PLAN
SAVOY PICTURES ENTERTAINMENT, INC. 1995 STOCK OPTION PLAN
HOME SHOPPING NETWORK, INC. 1996 STOCK OPTION PLAN FOR EMPLOYEES
HOME SHOPPING NETWORK, INC. 1996 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
HOME SHOPPING NETWORK, INC. 1986 STOCK OPTION PLAN FOR EMPLOYEES
HOME SHOPPING NETWORK, INC. 1986 STOCK OPTION PLAN
FOR OUTSIDE DIRECTORS
(Full title of the plans)
MICHAEL DRAYER
HSN, INC.
12425 28TH STREET NORTH
ST. PETERSBURG, FL 33716
(Name and address of agent for service)
(813) 573-0339
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE PRICE FEE
Common Stock, 8,602,033 (2) (2) (2)
par value shares
$.01 per share
(1) Also includes an indeterminable number of additional shares that
may become issuable pursuant to the anti-dilution provisions of
the Plans.
(2) Not applicable. All filing fees payable in connection with the
registration of the issuance of these securities were paid in
connection with the filing of (a) preliminary proxy materials on
Schedule 14A of the Registrant and Savoy Pictures Entertainment,
Inc. on March 1, 1996, and of the Registrant, Savoy Pictures
Entertainment, Inc. and Home Shopping Network, Inc. on October
10, 1996 and November 13, 1996 and (b) the Registrant's
Registration Statement on Form S-4 (333-16437) on November 20,
1996.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INTRODUCTORY STATEMENT
This Registration Statement on Form S-8 (the
"Registration Statement") of HSN, Inc., a Delaware corporation
formerly known as Silver King Communications, Inc. (the "Com-
pany" or the "Registrant"), relates to up to 8,602,033 shares
of the Registrant's common stock, par value $.01 per share (the
"Common Stock"), issuable in connection with the Savoy Pictures
Entertainment, Inc. ("Savoy") 1995 Stock Option Plan and the
Amended and Restated Savoy Stock Option Plan (collectively, the
"Savoy Plans"), and in connection with the Home Shopping
Network, Inc. ("HSN") 1996 Stock Option Plan for Employees, the
HSN 1996 Stock Option Plan for Outside Directors, the HSN 1986
Stock Option Plan for Employees and the HSN 1986 Stock Option
Plan for Outside Directors (collectively, the "HSN Plans," and
together with the Savoy Plans, the "Plans"). All such shares
of Common Stock were previously included in the Registration
Statement on Form S-4 filed by the Registrant with the
Securities and Exchange Commission on November 20, 1996 (No.
333-16437).
On December 19, 1996, Thames Acquisition Corp., a
Delaware corporation and a wholly owned subsidiary of the
Registrant ("Thames"), was merged with and into Savoy (the
"Savoy Merger") pursuant to an Agreement and Plan of Merger,
dated as of November 27, 1995, as amended as of March 22, 1996
and as amended as of August 13, 1996, among the Registrant,
Thames and Savoy (the "Savoy Merger Agreement"). As a result
of the Savoy Merger, each outstanding share of Savoy Common
Stock (with certain specified exceptions) was converted into a
fraction of a share of Common Stock pursuant to the exchange
ratio (the "Savoy Exchange Ratio") set forth in the Savoy
Merger Agreement. Also as a result of the Savoy Merger, shares
of Savoy Common Stock are no longer issuable upon the exercise
of options to purchase Savoy Common Stock ("Savoy Options")
pursuant to the Savoy Plans. Instead, upon exercise of Savoy
Options, participants in the Savoy Plans will receive that
number of shares of Common Stock of the Registrant equal to the
number of shares of Savoy Common Stock issuable immediately
prior to the effective time of the Savoy Merger upon exercise
of a Savoy Option multiplied by the Savoy Exchange Ratio, with
an exercise price for each share of Common Stock equal to the
exercise price for a share of Savoy Common Stock which existed
under the corresponding Savoy Option divided by the Savoy
Exchange Ratio (subject to adjustment as provided in the
applicable Plan).
In addition, on December 20, 1996, House Acquisition
Corp., a Delaware corporation and a subsidiary of the
Registrant ("House"), was merged with and into HSN (the "HSN
Merger") pursuant to an Agreement and Plan of Exchange and
Merger, dated as of August 25, 1996, among the Registrant,
House, HSN and Liberty HSN, Inc., a Colorado corporation (the
"HSN Merger Agreement"). As a result of the HSN Merger, each
outstanding share of HSN Common Stock (with certain specified
exceptions) was converted into a fraction of a share of Common
Stock of the Registrant pursuant to the exchange ratio (the
"HSN Common Exchange Ratio") set forth in the HSN Merger
Agreement. Also as a result of the HSN Merger, shares of HSN
Common Stock are no longer issuable upon the exercise of
options to purchase HSN Common Stock ("HSN Options") pursuant
to the HSN Plans. Instead, upon exercise of HSN Options,
participants in the HSN Plans will receive that number of
shares of Common Stock of the Registrant equal to the number of
shares of HSN Common Stock issuable immediately prior to the
effective time of the HSN Merger upon exercise of a HSN Option
multiplied by the HSN Common Exchange Ratio, with an exercise
price for each share of Common Stock equal to
II-1
the exercise price for a share of HSN Common Stock which
existed under the corresponding HSN Option divided by the HSN
Common Exchange Ratio (subject to adjustment as provided in the
applicable Plan).
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are incorporated by
reference in this Registration Statement. All documents filed
by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), subsequent to the date of the filing of this
Registration Statement and prior to the filing of a post-
effective amendment that indicates that all securities
registered hereunder have been sold, or that deregisters all
securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to
be a part hereof from the date of the filing of such documents.
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1995;
(b) The Company's Quarterly Report on Form 10-Q for the
quarters ended November 30, 1995, March 31, 1996, June 30, 1996
and September 30, 1996; the Company's Transition Report on Form
10-Q for the four-month period ended December 31, 1995; and the
Company's Current Reports on Form 8-K dated October 25, 1995,
November 27, 1995, February 13, 1996 (as amended on Form 8-K/
A), July 2, 1996, August 25, 1996 and December 23, 1996;
(c) The information contained in the Company's Joint
Proxy Statement/Prospectus, dated November 20, 1996, for its
annual meeting of stockholders held on December 19, 1996, filed
with the Commission on November 20, 1996; and
(d) The description of the Common Stock contained in the
Company's Registration Statement on Form S-4 dated November 20,
1996, (No. 333-16437).
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Amended and Restated Certificate of
Incorporation limits, to the maximum extent permitted by
Delaware law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as directors. The
Registrant's Bylaws provide that the directors, officers and
certain other persons will be indemnified with respect to
third-party actions or suits, provided such person acted in
good faith and in a manner such person reasonably believed to
be in or not opposed to the best interests of the Registrant.
The Registrant's Bylaws further provide that directors, offic-
ers and certain other persons will be indemnified with respect
to actions or suits by or in the right of the Registrant, pro-
vided that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best
interests of the Registrant; except that no indemnification
shall be made in the event that such person shall be adjudged
to be liable to the Registrant, unless a court determines that
indemnification is fair and reasonable in view of all the cir-
cumstances. The Registrant's Bylaws allow the Registrant to
pay all expenses incurred by a director, officer, employee or
agent in defending any proceeding within the scope of the
indemnification provisions as such expenses are incurred in
advance of its final disposition, subject to repayment if it is
ultimately determined that such party was not entitled to
indemnity by the Registrant. The Registrant believes that
these agreements are necessary to attract and retain qualified
persons as directors and officers.
II-2
Section 145 of the Delaware General Corporation Law pro-
vides that a corporation may indemnify a director, officer,
employee or agent made a party to an action by reason of the
fact that he was a director, officer or agent of the
corporation or was serving at the request of the corporation
against expenses actually and reasonably incurred by him in
connection with such action if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the
best interests of the corporation and, with respect to any
criminal action, had no reasonable cause to believe his conduct
was unlawful.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended (the "Securities Act"),
may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, the Regis-
trant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable.
ITEM 8. EXHIBITS.
Exhibit
Number Description of Exhibit
5.01 Opinion of Wachtell, Lipton, Rosen & Katz as to
legality of the shares of Common Stock being
registered
23.01 Consent of Wachtell, Lipton, Rosen & Katz (included
in Opinion filed as Exhibit 5.01 hereto)
23.02 Consent of Deloitte & Touche LLP
23.03 Consent of Ernst & Young LLP
23.04 Consent of KPMG Peat Marwick LLP
24.01 Power of Attorney (included on Pages II-6 and II-7 of
this Registration Statement)
99.01 Amended and Restated Savoy Pictures Entertainment,
Inc. Stock Option Plan
99.02 Savoy Pictures Entertainment, Inc. 1995 Stock Option
Plan
99.03 Home Shopping Network, Inc. 1996 Stock Option Plan
for Employees
99.04 Home Shopping Network, Inc. 1996 Stock Option Plan
for Outside Directors
99.05 Home Shopping Network, Inc. 1986 Stock Option Plan
for Employees
99.06 Home Shopping Network, Inc. 1986 Stock Option Plan
for Outside Directors
II-3
ITEM 9. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(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, as amended (the "Securities Act"); (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; and (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 clauses (i) and (ii) do not apply
if the information required to be included in a post-
effective amendment by those clauses is contained in
periodic reports filed with or furnished to the Securities
and Exchange Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any
liability under the Securities Act, each such post-
effective amendment shall be deemed to be a new registra-
tion 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; and
(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, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act
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 may be permitted to directors,
officers and controlling persons of the Registrant pursuant to
the provisions described under Item 6 above 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing
this Registration Statement on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 23rd day of December, 1996.
HSN, INC.
By: /s/ Barry Diller
Name: Barry Diller
Title: Chairman of the
Board and Chief
Executive Officer
II-5
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints James G.
Gallagher and Michael Drayer, jointly and severally, his
attorneys-in-fact, each with the power of substitution, for him
in any and all capacities, to sign any amendments to this
Registration Statement and to file the same, with exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement on Form S-8 has been signed
by the following persons in the capacities and on the dates
indicated:
SIGNATURE TITLE DATE
/s/ Barry Diller Chairman of the December 23, 1996
Barry Diller Board and Chief
Executive Officer
/s/ James G. Held Director December 23, 1996
James G. Held
/s/ Victor A. Kaufman Director, Office December 23, 1996
Victor A. Kaufman of the Chairman
/s/ John E. Oxendine Director December 23, 1996
John E. Oxendine
Director
Bruce M. Ramer
Director
H. Norman Schwarzkopf
/s/ Eli J. Segal Director December 23, 1996
Eli J. Segal
Director
Sidney J. Sheinberg
/s/ Richard E. Snyder Director December 23, 1996
Richard E. Snyder
II-6
/s/ Kevin J. McKeon Principal December 23, 1996
Kevin J. McKeon financial and
accounting officer
II-7
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
5.01 Opinion of Wachtell, Lipton, Rosen & Katz as to
legality of the shares of Common Stock being
registered
23.01 Consent of Wachtell, Lipton, Rosen & Katz (included
in Opinion filed as Exhibit 5.01 hereto)
23.02 Consent of Deloitte & Touche LLP
23.03 Consent of Ernst & Young LLP
23.04 Consent of KPMG Peat Marwick LLP
24.01 Power of Attorney (included on Pages II-6 and II-7 of
this Registration Statement)
99.01 Amended and Restated Savoy Pictures Entertainment,
Inc. Stock Option Plan
99.02 Savoy Pictures Entertainment, Inc. 1995 Stock Option
Plan
99.03 Home Shopping Network, Inc. 1996 Stock Option Plan
for Employees
99.04 Home Shopping Network, Inc. 1996 Stock Option Plan
for Outside Directors
99.05 Home Shopping Network, Inc. 1986 Stock Option Plan
for Employees
99.06 Home Shopping Network, Inc. 1986 Stock Option Plan
for Directors
EXHIBIT 5.01
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
December 23, 1996
HSN, Inc.
11831 30th Court North
St. Petersburg, FL 33716
RE: REGISTRATION STATEMENT ON FORM S-8 OF HSN, INC.
Members of the Board:
We are acting as special counsel to HSN, Inc., a
Delaware corporation formerly known as Silver King
Communications, Inc. ("the Company"), in connection with the
above-captioned Registration Statement on Form S-8 filed with
the Securities and Exchange Commission (the "Registration
Statement") with respect to the up to 8,602,033 shares of
common stock, par value $.01 per share (the "Common Stock"), of
the Company pursuant to the Savoy Pictures Entertainment, Inc.
("Savoy") 1995 Stock Option Plan, the Amended and Restated
Savoy Stock Option Plan, the Home Shopping Network, Inc.
("HSN") 1996 Stock Option Plan for Employees, the HSN 1996
Stock Option Plan for Outside Directors, the HSN 1986 Stock
Option Plan for Employees and the HSN 1986 Stock Option Plan
for Outside Directors (collectively, the "Plans").
In connection with this opinion, we have reviewed the
Registration Statement and the exhibits thereto, and we have
examined originals or copies, certified or otherwise identified
to our satisfaction, of such corporate records, agreements,
certificates of public officials and of officers of the
Company, the Plans and other instruments, and such matters of
law and fact as we have deemed necessary to render the opinion
contained herein.
HSN, Inc.
December 23, 1996
Page 2
Based upon and subject to the foregoing, we are of
the opinion that the shares of Common Stock available under the
Plans, when issued, delivered and paid for in accordance with
the terms and conditions of the respective Plans, will be
validly issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion with
the Securities and Exchange Commission as an exhibit to the
Registration Statement. In giving such consent, we do not
hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of
1933, as amended.
Very truly yours,
/s/ WACHTELL, LIPTON, ROSEN & KATZ
PSS:flm
EXHIBIT 23.02
[LETTERHEAD OF DELOITTE & TOUCHE LLP]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement on Form S-8 of HSN, Inc., formerly known
as Silver King Communications, Inc. (the "Registrant")
pertaining to the Savoy Pictures Entertainment, Inc. ("Savoy")
1995 Stock Option Plan, the Amended and Restated Savoy Stock
Option Plan, the Home Shopping Network, Inc. ("HSN") 1996 Stock
Option Plan for Employees, the HSN 1996 Stock Option Plan for
Outside Directors, the HSN 1986 Stock Option Plan for Employees
and the HSN 1986 Stock Option Plan for Outside Directors, of our
report dated July 2, 1996, appearing in the Form 8-K dated
July 2, 1996 of the Registrant and of our report dated
November 13, 1995 appearing in the Annual Report on Form 10-K
of the Registrant for the fiscal year ended August 31, 1995.
/s/ Deloitte & Touche LLP
December 23, 1996
EXHIBIT 23.03
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in this
Registration Statement on Form S-8 of HSN, Inc., formerly known
as Silver King Communications, Inc., pertaining to the Savoy
Pictures Entertainment, Inc. ("Savoy") 1995 Stock Option Plan,
the Amended and Restated Savoy Stock Option Plan, the Home
Shopping Network, Inc. ("HSN") 1996 Stock Option Plan for
Employees, the HSN 1996 Stock Option Plan for Outside Di-
rectors, the HSN 1986 Stock Option Plan for Employees and the
HSN 1986 Stock Option Plan for Outside Directors, of our report
dated February 9, 1996 (except for Notes 3 and 7, as to which
the date is March 11, 1996), with respect to the consolidated
financial statements and schedule of Savoy Pictures
Entertainment, Inc. included in its Annual Report (Form 10-K)
for the year ended December 31, 1995, filed with the Securities
and Exchange Commission.
/s/ Ernst & Young LLP
New York, New York
December 18, 1996
EXHIBIT 23.04
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
HSN, Inc.
We consent to incorporation by reference in the Registration
Statement on Form S-8 of HSN, Inc. (formerly known as Silver
King Communications, Inc.) of our reports dated February 21,
1996 relating to the consolidated balance sheets of Home
Shopping Network, Inc. and subsidiaries as of December 31, 1995
and 1994, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1995, and the
related consolidated financial statement schedule, which
reports appear in the December 31, 1995 annual report on Form
10-K of Home Shopping Network, Inc.
/s/ KPMG Peat Marwick LLP
St. Petersburg, Florida
December 24, 1996
EXHIBIT 99.01
AMENDED AND RESTATED
SAVOY PICTURES ENTERTAINMENT, INC.
STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
The terms used in this Stock Option Plan (the
"Plan"), which provides for the issuance of non-qualified stock
options ("Options"), shall, unless the context shall require
otherwise, have the following meanings:
A. "Adjusted Fair Market Value" shall mean, in the
event of a Change in Control, the greater of (i) the highest
price per share of Common Stock paid to holders of the Common
Stock in any transaction (or series of transactions) constitut-
ing or resulting in a Change of Control or (ii) the highest
Fair Market Value of a share of Common Stock during the ninety
(90) day period ending on the date of a Change in Control.
B. "Agreement" shall mean the written agreement
between the Company and a Recipient evidencing the grant of an
Option and setting forth the terms and conditions thereof.
C. A "Change of Control" shall occur, for purposes
of this Plan, at such time as any person or group, other than
stockholders of the Company specified in Annex I hereto (the
"Stockholders") and any other entities that become stockholders
before December 31, 1992 and their Permitted Transferees (as
defined in the Stockholders Agreement), acquire beneficially at
least 50% of the common stock of the Company, unless such event
occurs as a result of sales to stock in one or more IPOs.
D. "Common Stock" shall refer to the Company's
common stock.
E. The "Company" is Savoy Pictures Entertainment,
Inc., a New York corporation, and any successors in interest by
merger, operation of law, assignment, purchase or otherwise or
all or substantially all of the property, assets and business
of the Company.
F. The "Compensation Committee" shall mean the
Compensation Committee designated by the Board of Directors of
the Company.
G. An "Executive" shall include an elected or ap-
pointed executive of the Company in the position of "Vice
President" or a position of greater authority, and shall also
include any other employee of or consultant to the Company of
any of its subsidiaries designated for participation by either
(a) the unanimous written consent, dated March 2, 1992, of the
Company's Board of Directors or (b) by the Compensation Commit-
tee at any time.
H. "Fair Market Value" of the Company's Common
Stock shall mean the value established by the Board of Direc-
tors is good faith, after consultation with the Company's in-
vestment bankers, which shall not be less than book value as
set forth in the then most current financial statements of the
Company; provided, however, that, if the Common Stock is pub-
licly traded in the over-the-counter market or on a recognized
exchange, Fair Market Value shall be the average closing price
of the Shares for the 20 trading days immediately preceding the
event which required the determination of Fair Market Value.
I. "IPO" shall mean the completion of one or more
transactions, after giving effect to which, more than an ag-
gregate of 20% of the then outstanding shares of the Company
will have been sold to the public pursuant to a registration
statement declared effective by the Securities Exchange Commis-
sion under the Securities Act of 1933, as amended.
J. A "Recipient" is an Executive whom the Board of
Directors or Compensation Committee has designated to receive
an Option pursuant to the terms of the Plan.
K. The "Stockholder Agreement" shall mean the
Stockholders Agreement, dated as of March 2, 1992, between the
Company and the Stockholders, as amended from time to time.
L. "Termination for Cause" shall mean termination
for (a) conviction of any crime which constitutes a felony in
the jurisdiction involved, (b) gross negligence or willful mal-
feasance in performing the Recipient's obligations to the Com-
pany or in following the instructions of the Company's Board of
Directors, provided that the Company has given the Recipient
written notice setting forth with specificity the nature of the
Recipient's alleged gross negligence or malfeasance or (c)
cause pursuant to the terms of any written employment agreement
with the Company (or any of its subsidiaries) to which the Re-
cipient is a party.
ARTICLE II
PURPOSE AND SCOPE
A. Purpose - The Plan is being adopted by the Com-
pany for the purpose of establishing incentives designed to
attract and retain personnel with outstanding ability and expe-
rience to the Company, and to encourage the efforts and perfor-
mance of the Company's Executives by increasing their propri-
etary interest in the Company.
B. Eligibility - Executives shall be eligible to
receive Options under the Plan. The Compensation Committee, in
its sole discretion (or the Board of Directors in the case of
grants made on March 2, 1992) shall determine which Executives
shall become Recipients, the number of Options which shall be
granted to each Recipient, the date of the grant and the terms
of exercise of each Option.
ARTICLE III
ADMINISTRATION
A. Administration - The Plan shall be administered
by the Compensation Committee, which shall consist of members
designated by the Board of Directors of the Company. Without
limiting the generality of the foregoing, the Compensation Com-
mittee shall have authority, in its sole discretion (and its
determinations shall be final and binding on the Company and
Recipients of Options): to interpret conclusively the provi-
sions of the Plan and decide questions of fact arising in its
application; to adopt, amend and revoke rules and regulations
relating to the Plan; to determine the Executives to whom Op-
tions shall be granted, the number of such Options, their date
of grant and their exercise price; and to make any other deter-
mination necessary or desirable in the administration of the
Plan, except for those determinations reserved to the Board of
Directors of the Company; provided, however, that, with respect
to decisions by the Board of Directors or the Compensation Com-
mittee with respect to grants of Options to the Chief Executive
Officer or the Chief Operating Officer, the Chief Executive
Officer and the Chief Operation Officer shall not vote and the
action of the Compensation Committee with respect to them shall
be submitted to the Board of Directors for ratification.
B. Committee Action - A majority of the Compensa-
tion Committee shall constitute a quorum, and a majority of a
quorum may authorize any action.
C. Expenses - All costs of administering the Plan
shall be borne by the Company.
ARTICLE IV
SHARES SUBJECT TO PLAN
A. Maximum Shares - The maximum number of shares of
Common Stock which may be subject to Options under the Plan
shall be 1,000,000, subject to adjustment as provided in Sec-
tion 4.2 below. Either treasury stock or shares which have
been authorized but not yet issued (or a combination of both)
may be used to satisfy the Company's obligations under the
Plan. If an Option is cancelled or expires for any reason (in-
cluding forfeitures) prior to being exercised by its Recipient,
all shares subject to such Option shall become available for
future Options.
B. Adjustments - In the event of a stock split,
stock dividend, merger, combination, reorganization, recapital-
ization, reclassification, consolidation, spin-off, split-up or
substantially similar event affecting the number of shares of
Common Stock outstanding, or the issuance to all holders of
Common Stock of warrants or rights to buy Common Stock, the
maximum number of shares which may be subject to Options shall
be appropriately adjusted by the Compensation Committee.
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
Each Option shall be evidenced by an agreement (the
"Agreement") between the Company and the Recipient evidencing
the grant of an Option as herein provided. Each Agreement
shall conform to the following terms and conditions:
A. Option Price - The purchase price per share un-
der each Option granted by the Compensation Committee shall be
set by the Compensation Committee on the date of grant, and
shall not be less than the Fair Market Value of the Company's
Common Stock on that date; provided, however, that the Compen-
sation Committee with respect to options granted on or prior to
March 2, 1993 may provide that the purchase price per share
shall be $12.
B. Duration of Option - The Compensation Committee
shall determine the duration of each Option which it grants,
and each Agreement shall specify the maximum period during
which the Option to which it relates may be exercised. No Op-
tion shall be exercisable more than ten years after the date it
is granted, nor shall any Options be granted under the Plan
after March 2, 2002.
C. Vesting - Each Option shall vest (become exer-
cisable) in accordance with a determination by the Compensation
Committee.
D. Exercise of Option - Subject to Article VI be-
low, a Recipient who is vested with respect to all or part of
an Option may exercise all or a part of such vested portion of
delivering to the Company, at its principal executive office,
written notice specifying the number of shares with respect to
which the Option is being exercised, together with payment in
full of the purchase price of the shares. Such payment shall
be in cash or check or such other property (including shares of
Common Stock) as may be acceptable to the Compensation Commit-
tee. The Compensation Committee shall prescribe the method of
delivery of the notice. Vested Options may be exercised in any
order of grant that the Recipients (or his personal representa-
tive, if applicable) elects.
E. Rights After Issue - Upon the issuance of stock
certificates evidencing shares purchased under an Option, the
Recipient shall have all of the rights of a stockholder of the
Company with respect to the shares of Common Stock represented
by the certificate, including the right to vote the shares and
to receive all dividends and other distributions with respect
thereto. Prior to such issuance, the Recipient shall not be
entitled to any rights of a stockholder (including the right to
vote or receive dividends or distributions). Upon the exercise
of an Option, the Recipient shall become subject to the duties
and obligations, and entitled to the rights and benefits, of
the Stockholders Agreement, and the shares purchased under an
Option shall be subject to the transfer restrictions and voting
agreement contained in the Stockholders Agreement.
F. Non-Qualification - An Option granted pursuant
to the Plan shall not qualify as an "Incentive Stock Option"
under Section 422 of the Internal Revenue Code.
G. Non-Transferability - An Option granted pursuant
to the Plan may not be transferred in any manner otherwise than
by will or by the laws of descent and distribution and may be
exercised during the lifetime of the Recipient only by the Re-
cipient or by his guardian or legal representative. The terms
of any such Option shall be binding upon the executors, admin-
istrators, heirs and successors of the Recipient.
H. Effect of Change in Control - Notwithstanding
anything contained in the Plan or an Agreement to the contrary,
in the event of a Change in Control, (i) all Options outstand-
ing on the date of such Change in Control shall become im-
mediately and fully exercisable and (ii) a Recipient will be
permitted to surrender for cancellation, within sixty (60) days
after such Change in Control, any Option or portion of an Op-
tion to the extent not yet exercised and the Recipient will be
entitled to receive a cash payment in an amount equal to the
excess, if any, of (x) the greater of (1) the Fair Market
Value, on the date preceding the date of surrender, of the Com-
mon Stock subject to the Option or portion thereof surrendered
or (2) the Adjusted Fair Market Value of the Common Stock sub-
ject to the Options or portion thereof surrendered over (y) the
aggregate purchase price for such Common Stock under the Option
or portion thereof surrendered; provided, however, that in the
case of an Option granted within six (6) months prior to the
Change in Control to any Recipient who may be subject to li-
ability under Section 16(b) of the Securities Exchange Act of
19343, as amended (the "Exchange Act"), such Recipient shall be
entitled to surrender for cancellation his or her Option during
the sixty (60) day period commencing upon the expiration of six
(6) months from the date of grant of any such Option.
ARTICLE VI
TERMINATION OF EMPLOYMENT
An Option may be exercised by a Recipient whose em-
ployment by the Company (or a subsidiary of the Company) has
terminated only in accordance with the following rules:
1. In the event of the Recipient's Termination
for Cause, he shall forfeit all vested and non-vested
Options which have not been exercised at the date of
termination.
2. If the Recipient's employment is terminated
by reason of his death, permanent disability or re-
tirement, then he or his personal representative may
exercise any vested Option at any time before the
earlier of the third anniversary of his termination
of employment or the stated expiration date of such
Option.
3. If the Recipient's employment terminates
for any reason other than cause, death, disability or
retirement, he may exercise any vested Option at any
time before the earlier of the date six months after
such termination or the stated expiration date of
such Option.
4. If the Recipient dies after his employment
has terminated (whether by reason of disability or
otherwise) but before the period in which he may ex-
ercise an Option has expired, then his personal rep-
resentative may exercise any vested Option only dur-
ing the period that the Recipient, if alive, may have
exercised the Option.
ARTICLE VII
ADJUSTMENTS
1. Appropriate adjustments shall be made by the
Compensation Committee to the number of shares covered by an
Option, and to the purchase price per share, in the event of a
change in the number of the Company's shares of Common Stock
outstanding caused by a stock split, reverse stock split, stock
dividend, merger, combination, reorganization, recapitaliza-
tion, reclassification, consolidation, spin-off, split-up or
substantially similar event, or the issuance to all holders of
Common Stock of warrants or rights to buy Common Stock.
2. In the event of any conversion of Common Stock
generally into securities of another corporation, or the con-
solidation of the Company with, or the merger of the Company
with or into another corporation, or the sale of all or sub-
stantially all of the assets of the Company to another corpora-
tion, such Options not theretofore exercised prior to such
transaction shall thereafter, upon exercise, represent the
right to receive upon payment of the Option price in effect
immediately prior to such transaction, the kind and amount of
shares, security or property (including cash) which the holder
of the Option would have been entitled to receive following
consummation of such transaction had the Option been exercised
immediately prior to such transaction (subject to subsequent
adjustments as provided in paragraph (a) of this Article VII
upon the occurrence of the events herein specified).
ARTICLE VII
TERMINATION AND AMENDMENT
A. Termination or Amendment - The Board of Direc-
tors of the Company may terminate or amend the Plan at any
time, except that an Option then outstanding shall not be af-
fected thereby without the written consent and acquiescence of
the Recipient holding such Option.
B. Stockholder Approval - The Board may make such
amendments to the Plan as it shall deem advisable except that
the approval of a majority of the stockholders of the Company,
present or represented at a meeting duly held in accordance
with the laws of the State of New York, shall be required for
any amendment which would:
1. materially modify the requirements as to
eligibility for Option under the Plan;
2. materially increase the maximum number of
shares of Common Stock available under Paragraph 4.1
hereof; or
3. materially increase the benefits accruing
to Recipients under the Plan.
ARTICLE IX
MISCELLANEOUS
A. Limitation of Liability - As illustrative of the
limitations of the Company, but not intended to be exhaustive
thereof, nothing in the Plan shall be construed to:
1. give any person any right to be granted an
Option other than at the sole discretion of the Com-
pensation Committee;
2. give any person any rights whatsoever with
respect to shares of Common Stock except as specifi-
cally provided in the Plan;
3. limit in any way the right of the Company
to terminate the employment of any person at any
time; or
4. be evidence of any agreement or understand-
ing, expressed or implied, that the Company will em-
ploy any person in any particular position at any
particular rate of compensation or for any particular
period of time.
B. Non-Exclusivity of Plan - Nothing contained in
the Plan is intended to amend, modify or rescind any previously
approved compensation plans or programs entered into by the
Company. The Plan shall be construed to be in addition to any
and all such plans or programs. The adoption of the Plan shall
not be construed as creating any limitations on the power or
authority of the Board of Directors of the Company to adopt
such other additional incentive or other compensation arrange-
ments as the Board of Directors may deem necessary or desir-
able.
C. Withholding of Taxes - The Company shall have
the right to deduct from any distribution of cash to any Re-
cipient an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be with-
held (the "Withholding Taxes") with respect to any Option. If
a Recipient is entitled to receive Common Stock upon exercise
of an Option, the Recipient shall pay the Withholding Taxes to
the Company prior to the issuance, or release from escrow, of
such Common Stock. In satisfaction of the Withholding Taxes to
the Company, the Recipient may make a written election (the
"Tax Election"), which may be accepted or rejected in the dis-
cretion of the Compensation Committee, to have withheld a por-
tion of the Common Stock issuable to him or her upon exercise
of the Option having an aggregate Fair Market Value, on the
date preceding the date of exercise, equal to the Withholding
Taxes, providing that in respect of a Recipient who may be sub-
ject to liability under Section 16(b) of the Exchange Act
either (i) (A) the Recipient makes the Tax Election at least
six (6) months after the date the Option was granted, (B) the
Option is exercised during the ten-day period beginning on the
third business day and ending on the twelfth business day fol-
lowing the release for publication of the Company's quarterly
or annual statements of earnings (a "Window Period") and (C)
the Tax Election is made during the Window Period in which the
Option is exercised or prior to such Window Period and subse-
quent to the immediately preceding Window Period or (ii) (A)
the Tax Election is made at least six months prior to the date
the Option is exercised and (B) the Tax Election is irrevocable
with respect to the exercise of all Options which are exercised
prior to the expiration of six months following an election to
revoke the Tax Election. Notwithstanding the foregoing, the
Compensation Committee may, by the adoption of rules or other-
wise, (i) modify the provisions in the preceding sentence or
impose such other restrictions or limitations on Tax Elections
as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times
and subject to such other conditions as the Compensation Com-
mittee determines will constitute exempt transactions under
Section 16(b) of the Exchange Act.
D. Interpretation of the Program - 1. The headings
of Articles and Sections in the Plan are for convenience only,
and are not meant to modify the meaning of the text of each
such Article and Section.
2. As used herein, pronouns in the masculine gender
shall also include the feminine and the singular form of words
may include the plural, unless the context clearly requires the
contrary.
E. Effective Date - The Plan shall be effective as
of March 2, 1992.
ANNEX I
STOCKHOLDERS
1. GKH Partners, L.P.
2. Allen & Company Incorporated
3. Allen Value Limited
4. Allen Value Partners, L.P.
5. American Home Assurance Company
6. Mitsui & Co., Ltd.
7. Mitsui & Co. (USA), Inc.
8. Toho-Towa Co., Ltd.
9. Valdi Corporation N.V.
10. Weinberg Fund
11. Victor A. Kaufman
and Loretta Kaufman
12. Lewis J. Korman
and Sharon Korman
13. Frank Price
14. Chargeurs S.A.
15. Pricel S.A.
16. Allied Filmmakers N.V.
17. HKW Voting Trust
SAVOY PICTURES ENTERTAINMENT, INC.
FORM OF
STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of __________________ (the
"Grant Date") between Savoy Pictures Entertainment, Inc., a
Delaware corporation (the "Company"), and _______________ (the
"Optionee").
WHEREAS, the Company has adopted the Savoy Pictures
Entertainment, Inc. Stock Option Plan in order to provide ad-
ditional incentive to certain officers and employees of, and
consultants to, the Company and its subsidiaries; and
WHEREAS, the Company has determined to grant to op-
tion to the Optionee as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1. The Company hereby grants to the Optionee
the right and option (the "Option") to purchase, to the extent
the Option becomes vested and exercisable, all or any part of
an aggregate of _____ whole shares of common stock, par value
$.01 per share, of the Company ("Shares") subject to, and in
accordance with, the terms and conditions set forth in this
Agreement.
1.2. The Option is not intended to qualify as
an Incentive Stock Option within the meaning of Section 422 of
the Code.
2. Purchase Price.
The price at which the Optionee shall be entitled to
purchase Shares upon the exercise of the Option shall be $_____
per Share.
3. Duration of Option.
The Option shall be exercisable to the extent and in
the manner provided herein for a period of ten (10) years from
the Grant Date (the "Exercise Term"); provided, however, that
the Option may be earlier terminated as provided in Section 6
hereof.
4. Vesting and Exercisability of Option.
The Option shall vest and become exercisable with
respect to 33-1/3% of the Shares on the first anniversary of
the Grant Date, and an additional 33-1/3% of the Option shall
vest on each of the second and third anniversaries of the Grant
Date if and only if the Optionee has remained employed (as an
employee or consultant) by the Company until each of such
dates. The entire Option shall vest immediately if (i) the
Optionee dies or becomes permanently disabled while employed by
the Company, (ii) the Optionee is terminated without Cause (as
hereinafter defined), (iii) there occurs a Change of Control
(as hereinafter defined) of the Company or (iv) the Compensa-
tion Committee of the Company so decides. The Option shall
terminate to the extent it is unused.
5. Manner of Exercise and Payment.
5.1. Subject to the terms and conditions of
this Agreement, the Option may be exercised by delivery of
written notice to the Company, at its principal executive of-
fice. Such notice shall state that the Optionee is electing to
exercise the Option and the number of Shares in respect of
which the Option is being exercised.
5.2. The notice of exercise described in Sec-
tion 5.1 shall be accompanied by the full purchase price for
the Shares in respect of which the Option is being exercised,
in cash or check or such other property as may be acceptable to
the Board of Directors of the Company.
5.3. Upon receipt of notice of exercise and
full payment for the Shares in respect of which the Option is
being exercised, the Company shall take such action as may be
necessary to effect the transfer to the Optionee of the number
of Shares as to which such exercise was effective.
5.4. The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with re-
spect to any shares subject to the Option until (i) the Option
shall have been exercised pursuant to the terms of this Agree-
ment and the Optionee shall have paid the full purchase price
for the number of Shares in respect of which the Option was
exercised, (ii) the Company shall have issued and delivered the
Shares to the Optionee, and (iii) the Optionee's name shall
have been entered as a stockholder of record on the books of
the Company, whereupon the Optionee shall have full voting and
other ownership rights with respect to such Shares.
-2-
6. Death, Disability, Retirement or Other Termina-
tion of Employment or Consultancy.
If the employment or consultancy of the Optionee is
terminated as a result of his death, disability or retirement,
the Option shall continue to be exercisable in whole or in part
at any time within three (3) years after the date of such ter-
mination of employment or consultancy, but in no event after
the expiration of the Exercise Term. If the employment or con-
sultancy of the Optionee terminates for any other reason, other
than for Cause, this Option shall continue to be exercisable in
whole or in part at any time within six (6) months after the
date of such other termination or employment or consultancy,
but in no event after the expiration of the Exercise Term. In
the event of termination for Cause, all vested Options shall
expire upon termination. In the event of the Optionee's death,
the Option shall be exercisable by the legatee or legatees un-
der his will, or by his personal representatives or distribu-
tees, and such person or persons shall be substituted for the
Optionee each time the Optionee is referred to herein.
7. Nontransferability.
The Option shall not be transferable other than by
will or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable only
by the Optionee.
8. No Right to Continued Employment or Consultancy.
Nothing in this Agreement shall be interpreted or
construed to confer upon the Optionee any right with respect to
continuance of employment or consultancy by the Company, nor
shall this Agreement interfere in any way with the right of the
Company to terminate the Optionee's employment or consultancy
at any time.
9. Adjustments.
In the event of a Change in Capitalization (as here-
inafter defined), appropriate adjustments shall be made (as
determined in good faith by the Board of Directors of the Com-
pany) regarding the number and class of Shares or other stock
or securities subject to the Option and the purchase price for
such Shares or other stock or securities.
10. Termination Events.
In the event of (i) the liquidation or dissolution of
the Company or (ii) a merger or consolidation of the Company (a
-3-
"Transaction"), the Option shall continue in effect in ac-
cordance with its terms for 90 days from the date of such
transaction and the Optionee shall only be entitled to receive
in respect of all Shares subject to the Option, upon exercise
of the Option within such ninety (90) day period, the same num-
ber and kind of stock, securities, cash, property or other con-
sideration that each holder of Shares was entitled to receive
in the Transaction.
11. Withholding of Taxes.
Upon exercise of the Option, the Optionee shall pay
the Withholding Taxes (as defined in Section 12) to the Company
in cash or check prior to the issuance, or release from escrow,
of such Shares. In satisfaction of the Withholding Taxes, the
Optionee may make a written election (the "Tax Election"),
which may be accepted or rejected in the discretion of the Com-
pany, to have withheld a portion of the Shares issuable to him
or her upon exercise of the Option, having an aggregate Fair
Market Value (as hereinafter defined) on the date preceding the
Tax Date (as defined in Section 12) equal to the Withholding
Taxes.
12. Definitions. For the purposes of this Agree-
ment:
(a) "Agreement" shall mean this written agree-
ment between the Company and the Optionee evidencing the grant
of an Option and setting forth the terms and conditions hereof.
(b) "Change in Capitalization" shall mean an
increase or reduction in the number of Shares by reason of re-
classification, recapitalization, merger, consolidation, reor-
ganization, spin-off, split-up, stock dividend, stock split or
reverse stock split or a substantially similar event, or the
issuance to all the holders of Shares of warrants or rights to
purchase Shares.
(c) "Cause" shall mean (a) conviction of any
crime which constitutes a felony in the jurisdiction involved
or (b) gross negligence or willful malfeasance in performing
the Optionee's obligations to the Company or in following the
instructions of the Company's Board of directors, provided that
the Company has given the Optionee written notice setting forth
with specificity the nature of the Optionee's alleged gross
negligence or willful malfeasance.
(d) "Change of Control" shall occur, for pur-
poses of this Agreement, at such time as any person or group,
other than the Stockholders of the Company specified in Annex I
-4-
hereto and any other entities that become stockholders before
December 31, 1992 and their Permitted Transferees (as defined
in the Stockholders Agreement between the Company and the
Stockholders dated as of March 2, 1992, as amended) acquire
beneficially at least 50% of the common stock of the Company,
unless such event occurs as a result of sales or stock in one
or more IPOs (as defined in the Stockholders Agreement between
the Company and the Stockholders dated as of March 2, 1992, as
amended).
(e) "Disability" shall mean a physical or men-
tal infirmity which impairs the Optionee's ability to perform
substantially his or her duties for a period of one hundred
eighty (180) days in any calendar year.
(f) "Fair Market Value" shall mean the value
established by the Board of Directors in good faith, after con-
sultation with the Company's investment bankers.
(g) "Stockholders" shall mean the stockholders
of the Company who are parties to the Stockholders Agreement,
dated as of March 2, 1992, as amended.
(h) "Tax Date" shall mean the date that the
amount of Withholding Taxes are determined.
(i) "Withholding Taxes" shall mean an amount,
as determined by the Company, equal to the sum of federal,
state and local income taxes and any other taxes as the Company
may be required by law to withhold with respect to the exercise
of the Option.
13. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only
by a written instrument executed by the parties hereto.
14. Severability.
Should any provision of this Agreement be held by a
court of competent jurisdiction to be enforceable or invalid
for any reason, the remaining provisions of this Agreement
shall not be affected by such holding and shall continue in
full force in accordance with their terms.
-5-
15. Governing Law.
The validity, interpretation, construction and per-
formance of this Agreement shall be governed by the laws of the
State of New York without giving effect to the conflicts of
laws principles thereof.
16. Successors in Interest.
This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal representa-
tives. All obligations imposed upon the Optionees and all
rights granted to the Company under this Agreement shall be
final, binding and conclusive upon the Optionee's heirs, execu-
tors, administrators and successors.
Savoy Pictures Entertainment, Inc.
Attest: By:
Lewis J. Korman, President
and Chief Operating Officer
Terri Napolitani
Assistant Secretary
-6-
ANNEX I
STOCKHOLDERS
1. GKH Partners, L.P.
2. American Home Assurance Company
3. Allen & Company Incorporated
4. Allen Value Limited
5. Allen Value Partners, L.P.
6. Valdi Corporation N.V.
7. Mitsui & Co., Ltd.
8. Mitsui & Co. (USA), Inc.
9. Toho-Towa Co., Ltd.
10. Weinberg Fund
11. Weinberg Fund II
12. Victor A. Kaufman and Loretta Kaufman
13. Lewis J. Korman and Sharon Korman
14. Frank Price
15. Chargeurs S.A.
16. Pricel S.A.
17. Allied Filmakers B.V.
18. HKW Voting Trust
19. Cecchi Gori Europa B.V.
20. Rete Europa B.V.
21. High Speed Video B.V.
22. Home Box Office Division of Time Warner Enter-
tainment L.P.
EXHIBIT 5
[LETTERHEAD OF FRIED, FRANK, HARRIS, SHRIVER & JACOBSON]
830-8164
October 22, 1993 (FAX: 820-8587)
Savoy Pictures Entertainment, Inc.
Carnegie Hall Tower
152 West 57th Street
New York, New York 10019
Re: Savor Pictures Entertainment, Inc.
Registration Statement on Form S-8
- Stock Option Plan
Dear Sirs:
We are acting as counsel to Savoy Pictures Entertain-
ment Inc., a Delaware corporation (the "Company"), in connec-
tion with the possible issuance of up to 1,000,000 shares (the
"Shares") of common stock, par value $0.01 per share, of the
Company to officers, nonemployee directors, consultants and
employees of the Company and its subsidiaries upon the exercise
of options which may be granted to them pursuant to the Savoy
Pictures Entertainment Inc. Stock Option Plan (the "Plan").
We have examined the originals, or certified, con-
formed or reproduction copies, of all such records, agreements,
instruments and documents as we have deemed relevant or neces-
sary as the basis of the opinion hereinafter expressed. In all
such examinations, we have assumed the genuineness of all sig-
natures on original or certified copies and the conformity to
original or certified copies of all copies submitted to us as
conformed or reproduction copies. As to various questions of
fact relevant to such opinion, we have relied upon certificates
and statements of public officials, officers or representatives
of the Company and others.
Based upon the foregoing, and subject to the limita-
tions set forth herein, we are of the opinion that the issuance
of up to 1,000,000 Shares pursuant to the Plan has been duly
authorized and that such Shares, when issued and paid for (with
the consideration received by the Company being not less than
the par value thereof) in accordance with the Plan, will be
validly issued, fully paid and non-assessable.
Savoy Pictures
Entertainment Inc. -2- October 22, 1993
The opinion expressed herein is limited to the fed-
eral laws of the United States, the laws of the State of New
York and, to the extent required by the foregoing opinion, the
General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement on Form S-8 relating to
the registration of the Shares. In giving this consent, we do
not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act of
1933.
Very truly yours,
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
By: /s/ David C. Golay
David C. Golay
EXHIBIT 24.1
CONSENT OF ERNST & YOUNG
We consent to the incorporation by reference in the Registra-
tion Statement (Form S-8) for the registration of 1,000,000
shares of common stock pertaining to the Stock Option Plan of
Savoy Pictures Entertainment, Inc. of our report dated February
5, 1993, except as to Note 9, as to which the date is March 16,
1993, with respect to the consolidated financial statements and
schedule of Savoy Pictures Entertainment, Inc. included in
Amendment No. 2 to the Company's Registration Statement on Form
S-1 (File No. 33-63192) for the year ended December 31, 1992,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young
ERNST & YOUNG
New York, New York
October 21, 1993
EXHIBIT 99.02
SAVOY PICTURES ENTERTAINMENT, INC.
1995 STOCK OPTION PLAN
ARTICLE 1
DEFINITIONS
The terms used in this Stock Option Plan (the
"Plan"), which provides for the issuance of non-qualified stock
options ("Options"), shall, unless the context shall require
otherwise, have the following meanings:
1.1. "Adjusted Fair Market Value" shall mean, in the
event of a Change in Control, the greater of (i) the highest
price per share of Common Stock paid to holders of the Common
Stock in any transaction (or series of transactions) constitut-
ing or resulting in a Change in Control or (ii) the highest
Fair Market Value of a share of Common Stock during the ninety
(90) day period ending an the date of a Change in Control.
1.2. "Agreement" shall mean the written agreement
between the Company and a Recipient evidencing the grant of an
option and setting forth the terms and conditions thereof.
1.3. A "Change of Control" shall occur, for purposes
of this Plan, at such time as any person or group, other than
stockholders of the Company specified in Annex I hereto and
their Permitted Transferees (as defined in the Stockholders
Agreement), acquire beneficially at least 50% of the common
stock of the Company.
1.4. "Common Stock" shall refer to the Company's
common stock.
1.5. The "Company" is Savoy Pictures Entertainment,
Inc., a Delaware corporation, and any successors in interest by
merger, operation of law, assignment, purchase or otherwise of
all or substantially all of the property, assets and business
of the Company.
1.6. The "Compensation Committee" shall mean the
Compensation Committee designated by the Board of Directors of
the Company.
1.7. "Disability" shall mean a physical or mental
infirmity which impairs the Optionee's ability to perform sub-
stantially all his or her duties for a period of one hundred
eighty (180) days in any calendar year.
1.8. An "Employee" shall mean any employee of or
consultant to the Company or any of its subsidiaries designated
for participation in the Plan by the Compensation committee at
any time, other than (i) any such person who is an executive
officer or director of the Company or (ii) any officer of the
Company other than an officer who at the time of the grant was
not previously employed by the Company and with respect to whom
the grant was an inducement essential to the individual's en-
tering into an employment contract with the Company.
1.9. "Fair Market Value" of the Company's Common
Stock shall mean the value established by the Board of Direc-
tors in good faith, after consultation with the Company's
investment bankers, which shall not be less than book value as
set forth in the then most current financial statements of the
Company; provided, however, that, if the Common Stock is pub-
licly traded in the over-the-counter market or on a recognized
exchange, Fair market value shall be the average closing price
of the Shares for the 20 trading days immediately preceding the
event which required the determination of Fair Market Value.
1.10. A "Recipient" is an Employee whom the Board of
Directors or Compensation Committee has designated to receive
an Option pursuant to the terms of the Plan.
1.11. The "Stockholders Agreement" shall mean the
Stockholders Agreement, dated as of March 2, 1992, between the
Company and the Stockholders, as amended from time to time.
1.12. "Cause" shall mean (a) conviction of any crime
which constitutes a felony in the jurisdiction involved, (b)
gross negligence or willful malfeasance in performing the
Recipient's obligations to the Company or in following the
instructions of the Company's Board of Directors, provided that
the Company has given the Recipient written notice setting
forth with specificity the nature of the Recipient's alleged
gross negligence or malfeasance or (c) cause pursuant to the
terms of any written employment agreement with the Company (or
any of its subsidiaries) to which the Recipient is a party.
ARTICLE 2
PURPOSE AND SCOPE
2.1. Purpose - The Plan is being adopted by the Com-
pany for the purpose of establishing incentives designed to
attract and retain personnel with outstanding ability and expe-
rience to the Company, and to encourage the efforts and perfor-
mance of the Company's Employees by increasing their propri-
etary interest in the Company.
2.2. Eligibility - Employees shall be eligible to
receive options under the Plan. The Compensation Committee, in
its sole discretion shall determine which Employees shall
become Recipients, the number of Options which shall be granted
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to each Recipient, the date of the grant and the terms of exer-
cise of each Option.
ARTICLE 3
ADMINISTRATION
3.1. Administration - The Plan shall be administered
by the Compensation Committee, which shall consist of members
designated by the Board of Directors of the Company. Without
limiting the generality of the foregoing, the Compensation Com-
mittee shall have authority, in its sole discretion (and its
determinations shall be final and binding on the Company and
Recipients of Options): to interpret conclusively the provi-
sions of the Plan and decide questions of fact arising in its
application; to adopt, amend and revoke rules and regulations
relating to the Plan; to determine the Employees to whom
options shall be granted, the number of such Options, their
date of grant and their exercise price; and to make any other
determination necessary or desirable in the administration of
the Plan, except for those determinations reserved to the Board
of Directors of the Company.
3.2. Committee Action - A majority of the Compensa-
tion Committee shall constitute a quorum, and a majority of a
quorum may authorize any action.
3.3. Expenses - All costs of administering the Plan
shall be borne by the Company.
ARTICLE 4
SHARES SUBJECT TO PLAN
4.1. Maximum Shares - The maximum number of shares
of Common Stock which may be subject to Options under the Plan
shall be 250,000, subject to adjustment as provided in Section
4.2 below. Either treasury stock or shares which have been
authorized but not yet issued (or a combination of both) may be
used to satisfy the Company's obligations under the Plan. If
an option is cancelled or expires for any reason (including
forfeiture) prior to being exercised by its Recipient, all
shares subject to such Option shall become available for future
Options.
4.2. Adjustments - In the event of a stock split,
stock dividend, merger, combination, reorganization, recapital-
ization, reclassification, consolidation, spin-off, split-up or
substantially similar event affecting the number of shares of
Common Stock outstanding, or the issuance to all holders of
common Stock of warrants or rights to buy Common Stock, the
-3-
maximum number of shares which may be subject to Options shall
be appropriately adjusted by the Compensation Committee.
ARTICLE 5
TERMS AND CONDITIONS OF OPTIONS
Each Option shall be evidenced by an agreement (the
"Agreement") between the Company and the Recipient evidencing
the grant of an option an herein provided. Each Agreement
shall conform to the following terms and conditions:
5.1. Option Price - The purchase price per share
under each Option granted by the Compensation Committee shall
be set by the Compensation Committee on the date of grant, and
shall not be less than the Fair Market Value of the Company's
Common Stock on that date.
5.2. Duration of Option - The Compensation Committee
shall determine the duration of each Option which it grants,
and each Agreement shall specify the maximum period during
which the Option to which it relates may be exercised. No
Option shall be exercisable more than ten years after the date
it is granted, nor shall any Options be granted under the Plan
after March 2, 2002.
5.3. Vesting - Each Option shall vest (become exer-
cisable) in accordance with a determination by the Compensation
Committee.
5.4. Exercise of Option - Subject to Article VI
below, a Recipient who is vested with respect to all or part of
an Option may exercise all or a part of such vested portion by
delivering to the Company, at its principal executive office,
written notice specifying the number of shares with respect to
which the Option is being exercised, together with payment in
full of the purchase price of the shares. Such payment shall
be in cash or check or such other property (including shares of
Common Stock) as may be acceptable to the Compensation Commit-
tee. The Compensation Committee shall prescribe the method of
delivery of the notice. Vested options may be exercised in any
order of grant that the Recipients (or his personal representa-
tive, if applicable) elects.
5.5. Rights After Issue - Upon the issuance of stock
certificates evidencing shares purchased under an Option, the
Recipient shall have all of the rights of a stockholder of the
Company with respect to the shares of Common Stock represented
by the certificate including the right to vote the shares and
to receive all dividends and other distributions with respect
thereto. Prior to such issuance, the Recipient shall not be
entitled to any rights of a stockholder (including the right to
vote or receive dividends or distributions). Upon the exercise
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of an Option, the Recipient shall become subject to the duties
and obligations, and entitled to the rights and benefits, of
the Stockholders Agreement, and the shares purchased under an
Option shall he subject to the transfer restrictions and voting
agreement contained in the Stockholders Agreement.
5.6. Non-Qualification - An Option granted pursuant
to the Plan shall not qualify as an "Incentive Stock Option"
under Section 422 of the Internal Revenue Code.
5.7. Non-Transferability - An Option granted pursu-
ant to the Plan may not be transferred in any manner otherwise
than by will or by the laws of descent and distribution and may
be exercised during the lifetime of the Recipient only by the
Recipient or by his guardian or legal representative. The
terms of any such Option shall be binding upon the executors,
administrators, heirs and successors of the Recipient.
5.8. Effect of Change in Control - Notwithstanding
anything contained in the Plan or an Agreement to the contrary,
in the event of a change in control, (i) all Options outstand-
ing on the date of such Change in Control shall become Immedi-
ately and fully exercisable and (ii) a Recipient will be per-
mitted to surrender for cancellation, within sixty (60) days
after such Change in Control, any Option or portion of an Op-
tion to the extent not yet exercised and the Recipient will be
entitled to receive a cash payment in an amount equal to the
excess, if any, of (x) the greater of (1) the Fair Market Val-
ue, on the date preceding the date of surrender, of the Common
Stock subject to the Option or portion thereof surrendered or
(2) the Adjusted Fair Market Value of the Common Stock subject
to the Option or portion thereof surrendered over (y) the
aggregate purchase price for such Common Stock under the option
or portion thereof surrendered; provided, however, that, in the
case of an Option granted within six (6) months prior to the
Change in Control to any Recipient who may be subject to lia-
bility under Section 16(b) of the Exchange Act at such time,
such Recipient shall be entitled to surrender for cancellation
his or her Option during the sixty (60) day period commencing
upon the expiration of six (6) months from the date of grant of
any such Option, unless some other treatment of the Option has
been agreed to with such Recipient.
ARTICLE 6
TERMINATION OF EMPLOYMENT
An Option may be exercised by a Recipient whose
employment by the Company (or a subsidiary of the Company) has
terminated only in accordance with the following rules:
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(a) In the event of the Recipient's termination for
Cause, he shall forfeit all vested and non-vested Options
which have not been exercised at the date of termination.
(b) If the Recipient's employment in terminated by
reason of his death, permanent disability or retirement,
then he or his personal representative may exercise any
vested Option at any time before the earlier of the third
anniversary of his termination of employment or the stated
expiration date of such Option.
(c) If the Recipient's employment terminates for any
reason other than cause, death, disability or retirement,
he may exercise any vested Option at any time before the
earlier of the date six months after such termination or
the stated expiration date of such Option.
(d) If the Recipient dies after his employment has
terminated (whether by reason of disability of otherwise)
but before the period in which he may exercise an Option
has expired, then his personal representative may exercise
any vested Option only during the period that the Recipi-
ent, if alive, may have exercised the Option.
ARTICLE 7
ADJUSTMENTS
(a) Appropriate adjustments shall be made by the
Compensation Committee to the number of shares covered by an
Option, and to the purchase price per share, in the event of a
change in the number of the Company's shares of Common Stock
outstanding caused by a stock split, reverse stock split, stock
dividend, merger, combination, reorganization, recapitaliza-
tion, reclassification, consolidation, spin-off, split-up or
substantially similar event, or the issuance to all holders of
Common Stock of warrants or rights to buy Common Stock.
(b) In the event of any conversion of Common Stock
generally into securities of another corporation, or the con-
solidation of the Company with, or the merger of the Company
with or into another corporation, or the sale of all or sub-
stantially all of the assets of the Company to another corpora-
tion, such Options not theretofore exercised prior to such
transaction shall thereafter, upon exercise, represent the
right to receive upon payment of the Option price in effect
immediately prior to such transaction, the kind and amount of
shares, security or property (including cash) which the holder
of the Option would have been entitled to receive following
consummation of such transaction had the Option been exercised
immediately prior to such transaction (subject to subsequent
adjustments as provided In paragraph (a) of this Article VII
upon the occurrence of the events herein specified).
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ARTICLE 8
TERMINATION AND AMENDMENT
8.1. Termination or Amendment - The Board of Direc-
tors of the Company may terminate or amend the Plan at any
time, except that any Option then outstanding shall not be
affected thereby without the written consent and acquiescence
of the Recipient holding such Option.
8.2. Stockholder Approval. The Board of Directors
may make such amendments to the Plan as it shall deem advisable
without the approval of the stockholders of the Company.
ARTICLE 9
MISCELLANEOUS
9.1. Limitation of Liability - As illustrative of
the limitations of the Company, but not intended to be exhaus-
tive thereof, nothing in the Plan shall be construed to:
(a) give any person any right to be granted an
Option other than at the sole discretion of the Compensa-
tion Committee;
(b) give any person any rights whatsoever with
respect to shares of Common Stock except as specifically
provided in the Plan;
(c) limit in any way the right of the Company to
terminate the employment of any person at any time; or
(d) be evidence of any agreement or understanding,
expressed or implied, that the Company will employ any
person in any particular position at any particular rate
of compensation or for any particular period of time.
9.2. Non-Exclusivity of Plan - Nothing contained in
the Plan is intended to amend, modify or rescind any previously
approved compensation plans or programs entered into by the
Company. The Plan shall be construed to be in addition to any
and all such plans or programs. The adoption of the Plan shall
not be construed as creating any limitations on the power or
authority of the Board of Directors of the Company to adopt
such other additional incentive or other compensation arrange-
ments as the Board of Directors may deem necessary or desir-
able.
9.3. Withholding of Taxes - The Company shall have
the right to deduct from any distribution of cash to any Recip-
ient an amount equal to the federal, state and local income
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taxes and other amounts as may be required by law to be with-
held (the "Withholding Taxes") with respect to any option. If
a Recipient is entitled to receive Common Stock upon exercise
of an option, the Recipient shall pay the Withholding Taxes to
the Company prior to the issuance, or release from escrow, of
such Common Stock. In satisfaction of the Withholding Taxes to
the Company, the Recipient may make a written election (the
"Tax Election"), which may be accepted or rejected in the dis-
cretion of the Compensation Committee, to have withheld a por-
tion of the Common Stock issuable to him or her upon exercise
of the Option having an aggregate Fair Market Value, on the
date preceding the date of exercise, equal to the Withholding
Taxes, provided that in respect of a Recipient who may become
subject to liability under Section 16(b) of the Exchange Act
either (i) (A) the Recipient makes the Tax Election at least
six (6) months after the date the Option was granted, (B) the
Option is exercised during the ten-day period beginning on the
third business day and ending on the twelfth business day fol-
lowing the release for publication of the Company's quarterly
or annual statements of earnings (a "Window Period") and (C)
the Tax Election is made during the Window Period in which the
Option is exercised or prior to such Window Period and subse-
quent to the immediately preceding Window Period or (ii) (A)
the Tax Election is made at least six months prior to the date
the Option is exercised and (B) the Tax Election is irrevocable
with respect to the exercise of all options which are exercised
prior to the expiration of six months following an election to
revoke the Tax Election. Notwithstanding the foregoing, the
Compensation Committee may, by the adoption of rules or other-
wise, (i) modify the provisions in the preceding sentence or
impose such other restrictions or limitations on Tax Elections
as may be necessary to ensure that the Tax Elections will be
exempt transactions under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times
and subject to much other conditions as the Compensation Com-
mittee determines will constitute exempt transactions under
Section 16(b) of the Exchange Act.
9.4. Interpretation of the Program - (a) The head-
ings of Articles and Sections in the Plan are for convenience
only, and are not meant to modify the meaning of the text of
each such Article and Section.
(b) As used herein, pronouns in the masculine gender
shall also include the feminine and the singular form of words,
and may include the plural, unless the context clearly requires
the contrary.
9.5. Effective Date The Plan shall be effective as
of May 3, 1995.
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ANNEX I
STOCKHOLDERS
1. GKH Partners, L.P.
2. Allen & Company Incorporated
3. Allen Value Limited
4. Allen Value Partners, L.P.
5. American Home Assurance Company
6. Mitsui & Co., Ltd.
7. Mitsui & Co. (USA), Inc.
8. Toho-Towa Co., Ltd.
9. Valdi Corporation N.V.
10. Weinberg Fund I
11. Weinberg Fund II
12. Victor A. Kaufman
and Loretta Kaufman
13. Lewis J. Korman
and Sharon Korman
14. Frank Price
15. Chargeurs S.A.
16. Pricel S.A.
17. Allied Filmmakers N.V.
18. HKW Voting Trust
19. Ceechi Gori Europa B.V.
20. Rate Europa B.V.
21. High Speed Video B.V.
22. Home Box Office Division of
Time Warner Entertainment L.P.
SAVOY PICTURES ENTERTAINMENT, INC.
FORM OF
STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of ____________ (the "Grant
Date"), between Savoy Pictures Entertainment, Inc., a Delaware
corporation (the "Company"), and ________________ (the
"Optionee") (the "Agreement").
WHEREAS, the Company has adopted the Savoy Pictures
Entertainment, Inc. 1995 Stock Option Plan, as amended (the
"Plan") in order to provide additional incentive to certain
officers and employees of, and consultants to, the Company and
its subsidiaries; and
WHEREAS, the Compensation Committee (as defined in
the Plan) has determined [as an inducement to Optionee to enter
into employment with the Company,]1 to grant an option to the
Optionee as provided herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option.
1.1. The Company hereby grants to the Optionee the
right and option (the "Option") to purchase, to the extent the
Option becomes vented and exercisable, all or any part of an
aggregate of _____ whole shares of common stock, par value $.01
per share, of the Company ("Shares") subject to, and in accor-
dance with, the terms and conditions set forth in this Agree-
ment and the Plan. In the event of any conflict between the
terms of the Plan and this Agreement, the terms of the Plan
shall control (unless otherwise determined by the Compensation
Committee).
1.2. The Option is not intended to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code.
2. Purchase Price.
The price at which the Optionee shall be entitled to
purchase Shares upon the exercise of the Option shall be $
per Share.
_____________________
1 To be inserted for options granted to officers only.
3. Duration of Option.
The Option shall be exercisable to the extent and in
the manner provided herein for a period of ten (10) years from
the Grant Date (the "Exercise Term"); provided, however, that
the Option may be earlier terminated as provided in Section 6
hereof.
4. Vesting and Exercisability of Option.
The Option shall vest and become exercisable with
respect to 33-1/3% of the Shares on the first anniversary of
the Grant Date, and an additional 33-1/3% of the Option shall
vest on each of the second and third anniversaries of the Grant
Date if and only it the Optionee has remained employed (as an
employee or consultant) by the Company until each of such
dates. The entire Option shall vest immediately if (i) the
Optionee dies or becomes permanently disabled while employed by
the Company, (ii) the Optionee is terminated without Cause (as
hereinafter defined), (iii) there occurs a Change of Control
(as hereinafter defined) of the Company or (iv) the Compensa-
tion Committee of the Company so decides. The Option shall
terminate to the extent it is unused.
5. Manner of Exercise and Payment.
5.1. Subject to the terms and conditions of this
Agreement, the Option may be exercised by delivery of written
notice to the Company, at its principal executive office. Such
notice shall state that the Optionee is electing to exercise
the Option and the number of Shares in respect of which the
Option is being exercised.
5.2. The notice of exercise described in Section 5.1
shall be accompanied by the full purchase price for the Shares
in respect of which the Option is being exercised, in cash or
check or such other property as may be acceptable to the Board
of Directors of the Company.
5.3. Upon receipt of notice of exercise and full
payment for the Shares in respect of which the option is being
exercised, the company shall take such action as may be neces-
sary to affect the transfer to the Optionee of the number of
Shares as to which such exercise was effective.
5.4. The Optionee shall not be deemed to be the
holder of, or to have any of the rights of a holder with
respect to any Shares subject to the Option until (i) the
Option shall have been exercised pursuant to the terms of this
Agreement and the Optionee shall have paid the full purchase
price for the number of Shares in respect of which the Option
was exercised, (ii) the Company shall have issued and delivered
the Shares to the Optionee, and (iii) the Optionee's name shall
have been entered as a stockholder of record on the books of
-2-
the Company, whereupon the Optionee shall have full voting and
other ownership rights with respect to such Shares.
6. Death, Disability, Retirement or Other Termina-
tion of Employment or Consultancy.
If the employment or consultancy of the Optionee is
terminated, the Option shall be exercisable as set forth in
Article 6 of the Plan.
7. Nontransferability.
The Option shall not be transferable other than by
will or by the laws of descent and distribution. During the
lifetime of the Optionee, the Option shall be exercisable only
by the Optionee.
8. No Right to Continued Employment or Consultancy.
Nothing in this Agreement shall be interpreted or
construed to confer upon the Optionee any right with respect to
continuance of employment or consultancy by the Company, nor
shall this Agreement interfere in any way with the right of the
Company to terminate the Optionee's employment or consultancy
at any time.
9. Adjustments.
In the event of a Change in Capitalization (as here-
inafter defined), appropriate adjustments shall be made (as
determined in good faith by the Board of Directors of the Com-
pany) regarding the number and class of Shares or other stock
or securities subject to the Option and the purchase price for
such Shares or other stock or securities.
10. Terminating Events.
In the event of (i) the liquidation or dissolution of
the Company or (ii) a merger or consolidation of the company (a
"Transaction"), the Option shall continue in effect in accor-
dance with its terms for 90 days from the date of such transac-
tion and the Optionee shall only be entitled to receive in
respect of all Shares subject to the Option, upon exercise of
the Option within such ninety (90) day period, the same number
and kind of stock, securities, cash, property or other consid-
eration that each holder of Shares was entitled to receive in
the Transaction.
11. Withholding of Taxes.
Upon exercise of the Option, the Optionee shall pay
the Withholding Taxes (as defined in Section 9.3 of the Plan)
to the Company as provided in Section 9.3 of the Plan.
-3-
12. Definitions.
Unless otherwise defined herein, capitalized terms
used in this Agreement shall have the meanings ascribed thereto
in the Plan.
13. Modification of Agreement.
This Agreement may be modified, amended, suspended or
terminated, and any terms or conditions may be waived, but only
by a written instrument executed by the parties hereto.
14. Severability.
Should any provision of this Agreement be held by a
court of competent jurisdiction to be unenforceable or invalid
for any reason, the remaining provisions of this Agreement
shall not be affected by such holding and shall continue in
full force in accordance with their terms.
15. Governing Law.
The validity, interpretation, construction and per-
formance of this Agreement shall be governed by the laws of the
State of Now York without giving effect to the conflicts of
laws principles thereof.
16. Successors in Interest.
This Agreement shall inure to the benefit of and be
binding upon any successor to the Company. This Agreement
shall inure to the benefit of the Optionee's legal representa-
tives. All obligations imposed upon the Optionee and all
rights granted to the Company under this Agreement shall be
final, binding and conclusive upon the Optionee's heirs, execu-
tors, administrators and successors.
SAVOY PICTURES ENTERTAINMENT, INC.
Attest: By: ____________________________
Lewis J. Korman
President and Chief
______________________ Operating Officer
Secretary
____________________________
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EXHIBIT 99.03
HOME SHOPPING NETWORK, INC.
1996 STOCK OPTION PLAN FOR EMPLOYEES
ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
ESTABLISHMENT. The Home Shopping Network, Inc. 1996
Stock Option Plan for Employees (the "PLAN") is hereby
established effective as of May 10, 1996 (the "EFFECTIVE
DATE").
PURPOSE. The purpose of the Plan is to promote the
success of the Company and its Subsidiaries by attracting and
retaining employees by supplementing their cash compensation
and providing a means for them to increase their holdings of
Stock of the Company. The opportunity so provided and the
receipt of Options as compensation are intended to foster in
participants a strong incentive to put forth maximum effort for
the continued success and growth of the Company for the benefit
of customers and shareholders, to aid in retaining individuals
who put forth such efforts, and to assist in attracting the
best available individuals in the future.
TERM OF PLAN. The Plan shall continue in effect
until the earlier of its termination by the Board or the date
on which all of the shares of Stock available for issuance
under the Plan have been issued. However, all Options shall be
granted, if at all, within ten (10) years from the Effective
Date. Notwithstanding the foregoing, if the maximum number of
shares of Stock issuable pursuant to the Plan as provided in
Section 3.1 has been increased at any time, all Options shall
be granted, if at all, within ten (10) years from the date such
amendment was adopted by the Board. On the effective date of
the Plan, it shall supersede the 1986 Stock Option Plan for
Employees, which shall terminate on that date.
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Whenever used herein, the
following terms shall have their respective meanings set forth
below:
(a) "BOARD" means the Board of Directors of the
Company or the Committee.
(b) "CODE" means the Internal Revenue Code of
1986, as amended, and any applicable regulations promulgated
thereunder.
(c) "COMMITTEE" means the Compensation/Benefits
Committee or other committee of the Board duly appointed to
administer the Plan and having such powers as shall be
specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of
the powers of the Board granted herein, including, without
limitation, the power to amend or terminate the Plan at any
time, subject to the terms of the Plan and any applicable
limitations imposed by law.
(d) "COMPANY" means Home Shopping Network,
Inc., a Delaware corporation, or any successor corporation
thereto.
(e) "EMPLOYEE" means any person treated as an
employee (including an officer or a director who is also
treated as an employee) in the records of the Company and its
Subsidiaries; provided, however, that neither service as a
director nor payment of a director's fee shall be sufficient to
constitute employment for purposes of the Plan.
Notwithstanding the foregoing, the Chairman of the Board and
any consultant approved by the Board shall be deemed an
Employee for purposes of the Plan; provided, however neither
the Chairman nor a consultant may be issued Incentive Stock
Options.
(f) "EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended.
(g) "FAIR MARKET VALUE" means, as of any date,
the closing price of the Stock on the New York Stock
Exchange, Inc. (as published by the Wall Street Journal, if
published) on the day prior to such date, or if the Stock was
not traded on such day, on the next preceding day on which the
Stock was traded.
(h) "INCENTIVE STOCK OPTION" means an Option so
denominated in the Option Agreement and which qualifies as an
incentive stock option within the meaning of Section 422(b) of
the Code.
(i) "NONQUALIFIED STOCK OPTION" means an Option
so denominated or which does not qualify as an Incentive Stock
Option.
(j) "OPTION" means a right to purchase Stock
(subject to adjustment as provided in Section 3.2) pursuant to
the terms and conditions of the Plan. An Option may be either
an Incentive Stock Option or a Nonqualified Stock Option.
(k) "OPTION AGREEMENT" means a written
agreement between the Company and an Optionee setting forth the
terms, conditions and restrictions of the Option and/or SAR
granted to the Optionee.
(l) "OPTIONEE" means a person who has been
granted one or more Options and/or SAR's pursuant to the Plan.
(m) "RULE 16B-3" means Rule 16b-3 under the
Exchange Act, as amended from time to time, or any successor
rule or regulation.
(n) "STOCK" means the Company's common stock,
$.01 par value, as adjusted from time to time in accordance
with Section 3.2.
(o) "STOCK APPRECIATION RIGHT (SAR)" means the
right, granted by the Board (subject to adjustments provided in
Section 3.2), pursuant to the terms of the Plan, to receive
payment equal to the subsequent increase in the Fair Market
Value of the Stock.
(p) "SUBSIDIARY" means any present or future
"subsidiary corporation" of the Company, as defined in Section
424(f) of the Code.
(q) "TEN PERCENT OWNER OPTIONEE" means an
Optionee who, at the time an Option is granted to the Optionee,
owns stock constituting more than ten percent (10%) of the
total combined voting power of all classes of stock of Company
within the meaning of Section 422(b)(6) of the Code.
(r) "TRANSFER OF CONTROL" shall mean a
transaction or a series of related transactions (collectively,
the "TRANSACTION") wherein the shareholders of the Company
immediately before the Transaction do not retain immediately
after the Transaction, in substantially the same proportions as
their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect
beneficial ownership of more than fifty percent (50%) of the
total combined voting power of the outstanding voting stock of
the Company or the corporation or corporations to which the
assets of the Company were transferred (the "TRANSFEREE
CORPORATION(S)"), as the case may be, except for such a
transaction pursuant to which Barry Diller, Liberty Media
Corporation or any of their respective affiliates, is or
becomes such a 50% owner. For purposes of the preceding
sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of the
Transaction, own the Company or the Transferee Corporation(s),
as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to
determine whether multiple sales or exchanges of the voting
stock of the Company are related, and its determination shall
be final, binding and conclusive.
1.2 CONSTRUCTION. Captions and titles contained
herein are for convenience only and shall not affect the
meaning or interpretation of any provision of the Plan. Except
when otherwise indicated by the context, the singular shall
include the plural, the plural shall include the singular, and
the term "or" shall include the conjunctive as well as the
disjunctive.
2. ADMINISTRATION.
2.1 ADMINISTRATION BY THE BOARD. The Plan shall be
administered by the Board, including any duly appointed
committee of the Board. All questions of interpretation of the
Plan or of any Option or SAR shall be determined by the Board,
and such determinations shall be final and binding upon all
persons having an interest in the Plan or such Option or SAR.
2.2 POWERS OF THE BOARD. In addition to any other
powers set forth in the Plan and subject to the provisions of
the Plan and restrictions regarding Incentive Stock Options set
forth in the Code, the Board shall have the full and final
power and authority, in its sole discretion:
(a) to determine the persons to whom, and the
time or times at which, Options shall be granted and the number
of shares of Stock to be subject to each Option which
determination need not be uniform among persons similarly
situated and may be made selectively among Employees;
(b) to designate Options as Incentive Stock
Options or Nonqualified Stock Options;
(c) to determine the persons to whom, and the
time or times at which, SAR's and the number thereof shall be
granted which determination need not be uniform among persons
similarly situated and may be made selectively among Employees;
(d) to determine the terms, conditions and
restrictions applicable (which need not be identical) to each
Option and SAR including, without limitation, (i) the exercise
price of the Option or SAR, (ii) the method of payment for
shares purchased upon the exercise of the Option, (iii) the
method for satisfaction of any tax withholding obligation
arising in connection with the Option or SAR , including by the
withholding or delivery of shares of stock, (iv) the method of
payment upon exercise of any SAR's, (v) the timing, terms and
conditions of the exercisability of the Option or SAR, (vi) the
time of the expiration of the Option or SAR, (vii) the effect
of the Optionee's termination of employment or service with
Company on any of the foregoing, and (viii) all other terms,
conditions and restrictions applicable to the Option or SAR or
such shares not inconsistent with the terms of the Plan;
(e) to approve one or more forms of Option
Agreement;
(f) to amend the exercisability of any Option
or SAR , including with respect to the period following an
Optionee's termination of employment or service with the
Company;
(g) to prescribe, amend or rescind rules,
guidelines and policies relating to the Plan, or to adopt
supplements to, or alternative versions of, the Plan,
including, without limitation, as the Board deems necessary or
desirable to comply with the laws of, or to accommodate the tax
policy or custom of, foreign jurisdictions whose citizens may
be granted Options or SAR's; and
(h) to correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Option
Agreement and to make all other determinations and take such
other actions with respect to the Plan or any Option or SAR as
the Board may deem advisable to the extent consistent with the
Plan and applicable law.
2.3 DISINTERESTED ADMINISTRATION. The Plan shall be
administered in compliance with the "disinterested
administration" requirements of Rule 16b-3.
3. SHARES SUBJECT TO PLAN.
3.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to
adjustment as provided in Section 3.2, the maximum aggregate
number of shares of Stock that may be issued under the Plan and
under the 1996 Stock Option Plan for Outside Directors shall be
Eighteen Million Seven Hundred Thousand (18,700,000) and shall
consist of authorized but unissued or reacquired shares of
Stock or any combination thereof. If an outstanding Option or
SAR for any reason expires or is terminated or canceled prior
to being fully exercised, the shares of Stock allocable to the
unexercised portion of such Option or SAR, shall again be
available for issuance under the Plan.
3.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.
In the event of any stock dividend, stock split, reverse stock
split, recapitalization, combination, reclassification or
similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class
of shares subject to the Plan and to any outstanding Options
and SAR's and in the exercise price per share of any
outstanding Options and SAR's. If a majority of the shares
which are of the same class as the shares that are subject to
outstanding Options and SAR's are exchanged for, converted
into, or otherwise become (whether or not pursuant to a
Transfer of Control ) shares of another corporation (the "NEW
SHARES"), the Board shall amend the outstanding Options and
SAR's to provide that such Options and SAR's are exercisable
for or with respect to New Shares. In the event of any such
amendment, the number of shares subject to, and the exercise
price per share of, the outstanding Options and SAR's shall be
adjusted in a fair and equitable manner as determined by the
Board, in its sole discretion. In the event of any merger,
consolidation or other combination materially effecting the
number of shares of Stock outstanding, the Board may, in its
discretion, amend the outstanding Options to make appropriate
adjustments in the number and class of shares subject to the
Plan and to any outstanding Options and SAR's and in the
exercise price per share of any outstanding Options and SAR's.
Notwithstanding the foregoing, any fractional share resulting
from an adjustment pursuant to this Section 3.2 shall be
rounded up or down to the nearest whole number, as determined
by the Board, and in no event may the exercise price be
decreased to an amount less than the par value, if any, of the
stock subject to the Option. The adjustments determined by the
Board pursuant to this Section 3.2 shall be final, binding and
conclusive.
4. ELIGIBILITY AND OPTION LIMITATIONS.
4.1 PERSONS ELIGIBLE FOR OPTIONS AND SAR'S. Options
and SAR's may be granted only to Employees.
4.2 DIRECTORS SERVING ON COMMITTEE. No member of a
committee established to administer the Plan in compliance with
the "disinterested administration" requirements of Rule 16b-3,
while a member, shall be eligible to be granted an Option or
SAR.
4.3 FAIR MARKET VALUE LIMITATION. To the extent
that the aggregate Fair Market Value of stock with respect to
which options designated as Incentive Stock Options are
exercisable by an Optionee for the first time during any
calendar year (under all stock option plans of the Company,
including the Plan) exceeds One Hundred Thousand Dollars
($100,000), the portion of such Options which exceeds such
amount shall be treated as Nonqualified Stock Options. For
purposes of this Section 4.3, options designated as Incentive
Stock Options shall be taken into account in the order in which
they were granted, and the Fair Market Value of stock shall be
determined as of the time the Option with respect to such stock
is granted. If the Code is amended to provide for a different
limitation from that set forth in this Section 4.3, such
different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code. If an
Option is treated as an Incentive Stock Option in part and as a
Nonqualified Stock Option in part by reason of the limitation
set forth in this Section 4.3, the Optionee may designate which
portion of such Option the Optionee is exercising and may
request that separate certificates representing each such
portion be issued upon the exercise of the Option. In the
absence of such designation, the Optionee shall be deemed to
have exercised the Incentive Stock Option portion of the Option
first.
4.4 NO RIGHT OF EMPLOYMENT. Nothing in the Plan or
in any Option or SAR granted shall confer any right on an
Employee to continue in the employ of the Company or its
Subsidiaries or shall interfere in any way with the right of
the Company or its Subsidiaries to terminate such Employee's
employment at any time.
5. TERMS AND CONDITIONS OF GRANTS. Options and
SAR's shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the
Board shall from time to time establish. SAR's may be granted
alone or in tandem with an Option grant, in the Board's sole
discretion(but at all times subject to the provisions of the
Code). Option Agreements may incorporate all or any of the
terms of the Plan by reference and shall comply with and be
subject to the following terms and conditions:
5.1 EXERCISE PRICE. The exercise price for each
Option and SAR shall be established in the sole discretion of
the Board; provided, however, if the Option is an Incentive
Stock Option that (a) the exercise price per share for an
Option shall not be less than the Fair Market Value of a share
of Stock on the effective date of grant of the Option; and (b)
no Option granted to a Ten Percent Owner Optionee shall have an
exercise price per share less than one hundred ten percent
(110%) of the Fair Market Value of a share of Stock on the
effective date of grant of the Option. The exercise price for
a Nonqualified Stock Option and SAR shall be the same as
provided above, unless otherwise determined by the Board (but
at all times subject to the provisions of the Code).
Notwithstanding the foregoing, an Option (whether an Incentive
Stock Option or a Nonqualified Stock Option) may be granted
with an exercise price lower than the minimum exercise price
set forth above if such Option is granted pursuant to an
assumption or substitution for another option in a manner
qualifying under the provisions of Section 424(a) of the Code.
5.2 EXERCISE PERIOD. Options and SAR's shall be
exercisable at such time or times, or upon such event or
events, and subject to such terms, conditions, performance
criteria, and restrictions as shall be determined by the Board
and set forth in the Option Agreement evidencing such Option;
provided, however, that (a) no Option or SAR shall be
exercisable after the expiration of ten (10) years after the
effective date of grant of such Option or SAR; and (b) no
Incentive Stock Option granted to a Ten Percent Owner Optionee
shall be exercisable after the expiration of five (5) years
after the effective date of grant of such Option.
5.3 PAYMENT OF OPTION EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except
as otherwise provided below, payment of the exercise price for
the number of shares of Stock being purchased pursuant to any
Option shall be made (i) in cash, by check, or cash equivalent,
(ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the
Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal
Reserve System) (a "CASHLESS EXERCISE"), (iv) by such other
consideration as may be approved by the Board from time to time
to the extent permitted by applicable law or (v) by any
combination thereof. The Board may at any time or from time to
time, by adoption of or by amendment to the standard forms of
Option Agreement described in Section 6, or by other means,
grant Options which do not permit all of the foregoing forms of
consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.
(b) TENDER OF STOCK. Notwithstanding the
foregoing, an Option may not be exercised by tender to the
Company of shares of Stock to the extent such tender of Stock
would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the
Company's stock. Unless otherwise provided by the Board, an
Option may not be exercised by tender to the Company of shares
of Stock unless such shares either have been owned by the
Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. The Company reserves,
at any and all times, the right, in the Company's sole and
absolute discretion, to establish, decline to approve or
terminate any program or procedures for the exercise of Options
by means of a Cashless Exercise.
5.4 PAYMENT OF SAR'S. Upon exercise of a SAR the
Company shall pay, subject to 5.5 below, the amount, if any,
by which the Fair Market Value of a share of Stock on the date
of exercise exceeds the Fair Market Value on the date of grant.
The exercise of a SAR shall cancel any Option associated with
it if said SAR was granted in tandem with an Option. The
payment for SAR's shall be made in shares of Stock, valued at
the Fair Market Value on the date of exercise or, at the sole
discretion of the Board, in cash, or partly in cash and partly
in Stock.
5.5 TAX WITHHOLDING. The Company shall have the
right, but not the obligation, to deduct from the shares of
Stock issuable upon the exercise of an Option, or to deduct
from amounts due the Optionee upon exercise of a SAR or to
accept from the Optionee the tender of, a number of whole
shares of Stock having a Fair Market Value, as determined by
the Company, equal to all or any part of the federal, state,
local and foreign taxes, if any, required by law to be withheld
by the Company with respect to such Option or SAR exercise.
Alternatively, or in addition, in its sole discretion, the
Company shall have the right to require the Optionee, through
payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for
any such tax withholding obligations of the Company arising in
connection with the Option or SAR exercise. The Company shall
have no obligation to deliver shares of Stock, money or to
release shares of Stock from an escrow established pursuant to
the Option Agreement until the Company's tax withholding
obligations have been satisfied by the Optionee.
6. STANDARD FORMS OF OPTION AGREEMENT.
6.1 INCENTIVE STOCK OPTIONS. Unless otherwise
provided by the Board at the time the Option is granted, an
Option designated as an "Incentive Stock Option" shall comply
with and be subject to the terms and conditions set forth in
the appropriate form of Incentive Stock Option Agreement as
adopted by the Board and as amended from time to time.
6.2 NONQUALIFIED STOCK OPTIONS. Unless otherwise
provided by the Board at the time the Option is granted, an
Option designated as a "Nonqualified Stock Option" shall comply
with and be subject to the terms and conditions set forth in
the appropriate form of Nonqualified Stock Option Agreement as
adopted by the Board and as amended from time to time.
6.3 SAR'S. Unless otherwise provided by the Board
at the time a SAR is granted, a SAR awarded either alone or in
tandem with an Option shall comply with and be subject to the
terms and conditions set forth in the appropriate form of SAR
Option Agreement as adopted by the Board and as amended from
time to time.
6.4 STANDARD TERM OF OPTIONS. Except as otherwise
provided by the Board in the grant of an Option or SAR, any
Option or SAR granted hereunder shall have a term of ten (10)
years from the effective date of grant of the Option or SAR.
6.5 STANDARD VESTING PROVISIONS. Except as
otherwise provided by the Board in the grant of an Option or
SAR, any Options or SAR's granted hereunder shall become vested
and exercisable at the rate of twenty percent (20%) per year,
commencing upon the first anniversary of the effective date of
grant of the Option or SAR and each of the four (4) subsequent
anniversaries thereafter.
6.6 AUTHORITY TO VARY TERMS. The Board shall have
the authority from time to time to vary the terms of any of the
standard forms of Option Agreement described in this Section 6
either in connection with the grant or amendment of an
individual Option or SAR or in connection with the
authorization of a new standard form or forms; provided,
however, that the terms and conditions of any such new, revised
or amended standard form or forms of Option Agreement shall be
in accordance with the terms of the Plan. The Board, may in
its discretion, provide for the extension of the exercise
period of an Option or SAR, accelerate the vesting of an Option
or SAR, eliminate or make less restrictive any restrictions
contained in an Option Agreement or waive any restriction or
provision of this Plan or an Option Agreement in any manner
that is either (i) not adverse to the Optionee or (ii)
consented to by the Optionee.
7. NONTRANSFERABILITY OF OPTIONS. During the
lifetime of the Optionee, an Option or SAR shall be exercisable
only by the Optionee or the Optionee's guardian or legal
representative. No Option or SAR shall be assignable or
transferable by the Optionee, except by will or by the laws of
descent and distribution. Following an Optionee's death, the
Option shall be exercisable to the extent provided in Section 8
below.
8. EFFECT OF TERMINATION OF SERVICE.
8.1 OPTION AND SAR EXERCISABILITY.
(a) DISABILITY. If the Optionee's service with
the Company is terminated because of the disability of the
Optionee, the Option, to the extent unexercised and exercisable
on the date on which the Optionee's service terminated, may be
exercised by the Optionee (or the Optionee's guardian or legal
representative) at any time prior to the expiration of three
(3) months after the date on which the Optionee's service
terminated, but in any event no later than the Option
expiration date.
(b) DEATH. If the Optionee's service with the
Company is terminated because of the death of the Optionee,
the Option, to the extent unexercised and exercisable on the
date on which the Optionee's service terminated, may be
exercised by the the Optionee's legal representative or other
person who acquired the right to exercise the Option by reason
of the Optionee's death at any time prior to the expiration of
six (6) months after the date on which the Optionee's service
terminated, but in any event no later than the Option
Expiration Date. The Optionee's service shall be deemed to
have terminated on account of death if the Optionee dies within
three (3) months after the Optionee's termination of service.
(c) TERMINATION OF SERVICE. If the Optionee's
service with the Company terminates for any reason, except
disability or death, the Option, to the extent unexercised and
exercisable by the Optionee on the date on which the Optionee's
service terminated, may be exercised by the Optionee within six
(6) months after the date on which the Optionee's service
terminated, but in any event no later than the Option
Expiration Date. Notwithstanding the foregoing, the Company ,
may in its sole discretion, cancel the Options if the Optionee
has been Terminated for Cause (as defined in Section 8.2).
(e) SAME CONDITIONS APPLICABLE TO SAR'S. The
same terms and conditions applicable to Options shall apply to
the exercisability of SAR's upon the occurrence of (a) - (d)
above.
8.2 TERMINATION FOR CAUSE. "TERMINATION FOR CAUSE"
shall mean termination by the Company of the Optionee's
service with Company for any of the following reasons: (i)
theft, dishonesty, or falsification of any employment or
Company records; (ii) improper use or disclosure of Company's
confidential or proprietary information; (iii) the Optionee's
failure or inability to perform any reasonable assigned duties
after written notice from Company of, and a reasonable
opportunity to cure, such failure or inability; (iv) any
material breach by the Optionee of any employment agreement
between the Optionee and Company, which breach is not cured
pursuant to the terms of such agreement; or (v) the Optionee's
conviction of any criminal act which impairs Optionee's
ability to perform his or her duties with Company.
Termination for Cause pursuant to the foregoing shall be
determined in the sole but reasonably exercised discretion of
the Company.
9. EFFECT OF TRANSFER OF CONTROL. Except as
otherwise provided by the Board in the grant of an Option or
SAR, in the event of a Transfer of Control, any Options and
SAR's outstanding as of the date such Transfer of Control is
determined to have occurred, and which are not then exercisable
and vested, shall become fully exercisable and vested to the
full extent of the original grant; provided, however, in the
case of any holder of SAR's who is subject to Section 16(b) of
the Exchange Act, and whose SAR's are not already outstanding
for at least six months at the date of the Transfer of Control,
such SAR's shall not become fully exercisable and vested until
they have been outstanding for six months.
10. INDEMNIFICATION. In addition to such other
rights of indemnification as they may have as members of the
Board or officers or employees of the Company , members of the
Board and any officers or employees of the Company to whom
authority to act for the Board is delegated shall be
indemnified by the Company against all reasonable expenses,
including attorneys' fees, incurred in connection with the
defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a
party by reason of any action taken or failure to act under or
in connection with the Plan, Option, or any right granted
hereunder, and against all amounts in settlement thereof
(provided such settlement is approved by independent legal
counsel selected by the Company) or paid in satisfaction of a
judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such person is liable for gross
negligence, bad faith or intentional misconduct in duties;
provided, however, that within sixty (60) days after the
institution of such action, suit or proceeding, such person
shall offer to the Company, in writing, the opportunity at its
own expense to handle and defend the same. Without limiting
the generality of the foregoing, Company will pay the expenses
(including reasonable counsel fees) of defending any such
claim, action, suit or proceeding in advance of its final
disposition, upon receipt of such person's written agreement
to repay all amounts advanced if it should ultimately be
determined that such person is not entitled to be indemnified
under this Section.
11. TERMINATION OR AMENDMENT OF PLAN. The Board,
without further approval of the shareholders, may terminate or
amend this Plan at any time in any respect as the Board deems
advisable, subject to any required stockholder or regulatory
approval and to any conditions established by the terms of such
amendment, provided that in no event shall the Plan be amended
more than once every six (6) months other than to comply with
changes in any applicable law or governmental regulation in the
Code, the Employee Retirement Income Security Act, or the rules
promulgated by the Securities and Exchange Commission. In any
event, no termination or amendment of the Plan may adversely
affect any then outstanding Option or SAR or any unexercised
portion thereof, without the consent of the Optionee, unless
such termination or amendment is required to enable an Option
designated as an Incentive Stock Option to qualify as an
Incentive Stock Option or is necessary to comply with any
applicable law or government regulation.
12. DISSOLUTION OF COMPANY. Upon the dissolution of
the Company, the Plan shall terminate and any and all Options
previously granted shall lapse on the date of such dissolution.
13. RIGHTS AS SHAREHOLDERS. No Optionee, nor any
beneficiary or other person claiming through an Optionee, shall
have any interest in any shares of Stock allocated for the
purposes of the Plan or subject to any Option or SAR until such
shares of Stock shall have been issued to the Optionee or such
beneficiary or other person. Furthermore, the existence of
the Options or the SAR's shall not affect the right or power of
the Company or its shareholders to make adjustments,
recapitalization, reorganizations, or other changes in the
Company's capital structure or its business; issue bonds,
debentures, preferred or prior preference stocks affecting the
Stock of the Company or the rights thereof; dissolve the
Corporation or sell or transfer any part of its assets or
business; or do any other corporate act, whether of a similar
character or otherwise.
14. GOVERNING LAW. The validity, interpretation,
and administration of the Plan and of any rules, regulations,
determinations, or decisions made thereunder, and the rights of
any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in
accordance with the laws of the State of Florida, without
giving effect to choice of law provisions. Without limiting
the generality of the foregoing, the period within which any
action in connection with the Plan must be commenced shall be
governed by the laws of the State of Florida, without regard to
the place where the act or omission complained of took place or
the residence of any party to such action.
15. ARBITRATION. Any action brought in connection
with the Plan or an Option Agreement shall be settled
exclusively by binding arbitration conducted in the City of
Tampa, Florida in accordance with the commercial rules of the
American Arbitration Association then in effect (the "Rules"),
by a single, independent arbitrator selected by the Company and
the other party to the action. If the parties cannot agree on
an arbitrator, within thirty (30) days of the commencement of
an arbitration proceeding hereunder, either party may request
that the American Arbitration Association select an arbitrator,
with experience in law relating to option plans, in accordance
with the Rules. The decision of the arbitrator shall be final
and binding. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof. The cost of any arbitration proceeding conducted
hereunder shall be borne equally between the parties unless
otherwise determined by the arbitrator.
16. SHAREHOLDER APPROVAL. The Plan or any increase
in the maximum number of shares of Stock issuable thereunder as
provided in Section 3.1 (the "MAXIMUM SHARES") shall be
approved by the shareholders of the Company within twelve (12)
months of the date of adoption thereof by the Board. Options
granted prior to shareholder approval of the Plan or in excess
of the Maximum Shares previously approved by the shareholders
shall become exercisable no earlier than the date of
shareholder approval of the Plan or such increase in the
Maximum Shares, as the case may be.
IN WITNESS WHEREOF, the undersigned Secretary of the
Company certifies that the foregoing Home Shopping Network,
Inc. 1996 Stock Option Plan for Employees was duly adopted by
the Board on February 12, 1996.
________________________________
Secretary
EXHIBIT 99.04
HOME SHOPPING NETWORK, INC.
1996 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
I. Purpose
It is the belief of the management of Home Shopping
Network, Inc. (the "Company") that the Board of Directors will
effect decisions and render guidance to the Company which
materially enhance the economic growth of the Company and
provide material benefit to the Company. Accordingly,
management believes that Directors should be afforded the
opportunity to participate in the Company's growth by acquiring
the Company's Common Stock on a regular basis. By providing
this opportunity through the adoption of this Stock Option Plan
for Outside Directors (the "Plan"), it is the intention of the
Company to give appropriate recognition to these individuals
who will have continuing responsibility for the Company's
growth and profitability.
II. Eligibility
The only persons eligible to receive options (the
"Options") for the Company's common stock, $.01 par value
("Stock") under the Plan shall be the Company's existing and
future Directors who are not also employees of the Company.
III. Shares Subject to the Plan
The maximum number of shares of Stock which may be
issued upon exercise of Options granted under the Plan and
under the Company's 1996 Stock Option Plan for Employees shall
not exceed 18,700,000 shares. If any Option expires or
terminates prior to being fully exercised, any shares of Stock
allocable to the unexercised portion of such Option may again
be issued subject to the terms of the Plan.
Appropriate adjustments shall be made in the number
of shares of Stock available under the Plan and in the Option
price per share to give effect to adjustments necessary as a
result of a merger, consolidation, recapitalization,
reclassification, combination, stock dividend, stock split or
other relevant change in the capital structure of the Company.
Such adjustments shall be determined by the Board of Directors
in their good faith determination; to the maximum extent
possible, such adjustments shall be consistent with adjustments
made to options granted under the Company's 1996 Stock Option
Plan for Employees.
IV. Terms and Conditions
(a) Grant of Options. Subject to the provisions of
the Plan, Directors of the Company shall be granted
Nonqualified Stock Options for the purchase of shares of Stock
as set forth in the Plan.
(b) Option Agreement. Each Option shall be
evidenced by a written agreement between the Company and the
Director specifying the number of shares of Stock that may be
exercised by its purchase, and containing such other terms and
provisions as may be approved by the Board of Directors.
(c) Date of Grant. The date on which an Option is
granted shall be: (1) the first day upon which a Director who
is not also an employee is first elected to the Board of
Directors, or (2) the date on which an Option is issued in
substitution for an option previously granted under the Plan or
an Option previously granted that is subsequently amended, or
(3) the anniversary of the date on which a Director was elected
to the Board of Directors.
(d) Option Price. Each Option Agreement shall state
the purchase price of each share of Stock which may be acquired
upon exercising the Option, which price shall be the fair
market value of each share as of the Date of Grant. Fair
Market Value shall be deemed to be the closing price of the
shares on the New York Stock Exchange, Inc. (or any other
national securities exchange on which the shares are traded) on
the trading day preceding the Date of Grant.
(e) Number of Shares Granted.
(1) Each Director shall receive a Nonqualified
Stock Option to purchase 5,000 shares of Stock automatically on
the date specified in paragraph (c) of this Article IV,
exercisable in accordance with the provisions of paragraph (f)
(1) of this Article IV.
(2) Each Director shall receive a Nonqualified
Stock Option to purchase an additional 5,000 shares of Stock
automatically on the date that such Director commences his
second year of service as a director, and an additional 5,000
shares on the date that he commences each year of service as a
director thereafter.
(f) Option Period and Restrictions of Exercise
(1) The Options granted pursuant to paragraph
(e) shall be exercisable in the following manner for the
periods specified: Options for 1,668 shares of the Stock shall
first become exercisable on the date the Options are granted
and must be fully exercised within five years from that date.
Options for an additional 1,666 shares of the Stock shall
become exercisable on the first and second anniversary of the
date the Options were granted; such Options must be exercised
within five years from the date they first become exercisable.
Any Options which are not exercised within the five
year periods specified above shall expire.
(g) Manner of Exercise. Subject to the conditions
and restrictions contained in paragraph IV (h) below, the
Option shall be exercised by delivering written notice of
exercise to the Secretary or Treasurer of the Company. Such
notice is irrevocable and must be accompanied by payment in
cash and a signed Option exercise form.
(h) Payment of Option Exercise Price.
(1) Forms of Consideration Authorized. Except
as otherwise provided below, payment of the exercise price for
the number of shares of Stock being purchased pursuant to any
Option shall be made (i) in cash, by check, or cash equivalent,
(ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the
Company without regard to any restrictions on transferability
applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated
from time to time by the Board of Governors of the Federal
Reserve System) (a "Cashless Exercise"), or (iv) by any
combination thereof.
(2) Tender of Stock. Notwithstanding the
foregoing, an Option may not be exercised by tender to the
Company of shares of Stock to the extent such tender of Stock
would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the
Company's stock. An Option may not be exercised by tender to
the Company of shares of Stock unless such shares either have
been owned by the Optionee for more than six (6) months.
(3) Cashless Exercise. The Company reserves,
at any and all times, the right, in the Company's sole and
absolute discretion, to establish, decline to approve or
terminate any program or procedures for the exercise of Options
by means of a Cashless Exercise.
(i) Tax Withholding. The Company shall have the
right, but not the obligation, to deduct from the shares of
Stock issuable upon the exercise of an Option, or to accept
from the Optionee the tender of, a number of whole shares of
Stock having a Fair Market Value, as determined by the Company,
equal to all or any part of the federal, state, local and
foreign taxes, if any, required by law to be withheld by the
Company with respect to such Option exercise. Alternatively,
or in addition, in its sole discretion, the Company shall have
the right to require the Optionee, through cash payment or
otherwise, including by means of a Cashless Exercise, to make
adequate provision for any such tax withholding obligations of
the Company arising in connection with the Option exercise.
The Company shall have no obligation to deliver shares of
Stock, money or to release shares of Stock from an escrow
established pursuant to the Option Agreement until the
Company's tax withholding obligations have been satisfied by
the Optionee.
(j) Transferability and Termination of Option. Each
Option granted hereunder may be exercised only by the
individual to whom it is issued and only during the period in
which he or she is serving as an outside Director of the
Company or within the thirty (30) day period following his or
her resignation or other termination of such service for any
reason other than death. If such holder dies before fully
exercising any portion of an option then exercisable, such
Option may be exercised by such holder's legal
representative(s), heir(s) or devisee(s) at any time within the
six (6) month period following his or her death.
(k) Director Becoming Employee. In the event that
an outside Director becomes a full-time employee of the
Company, the outside Director shall not forfeit the Options
granted pursuant to this Plan. However, the outside Director
shall have to satisfy all other terms and provisions of this
Plan with respect to the Options granted hereunder.
(l) Modification or Substitution of Options.
Subject to the terms and conditions and within the limitations
of the Plan, the members of the Board of Directors who are not
eligible to participate in the Plan may modify outstanding
Options granted under the Plan or accept the surrender and
cancellation of outstanding Options and authorize the granting
of new Options in substitution therefor. The foregoing
notwithstanding, no modification, cancellation or substitution
of an Option pursuant to this section shall alter or impair any
rights or obligations under any Option theretofore granted
under the Plan and no modification, cancellation or
substitution may serve to increase the aggregate number of
securities which may be issued under the Plan.
V. Effective Date and Term of Plan; Shareholder Approval
Subject to the approval of the Plan by an
affirmative vote of the holders of a majority of the Company's
outstanding stock entitled to vote thereon at the Annual
Meeting of Shareholders to be conducted on May 9, 1996, the
effective date of the Plan shall be May 10, 1996, and it shall
remain in existence for a period of ten years thereafter. In
the event of shareholder rejection of the Plan, any Option
granted hereunder shall be void and of no legal effect. No
Option may be granted subsequent to the expiration date of the
Plan, but Options then outstanding shall be exercisable in
accordance with the terms hereof.
Any increase in the maximum number of shares of Stock
issuable hereunder as provided in Article III (the "Maximum
Shares") shall be approved by the shareholders of the Company
within twelve (12) months of the date of adoption thereof by
the Board. Options granted prior to shareholder approval of
the Plan, or in excess of the Maximum Shares previously
approved by the shareholders, shall become exercisable no
earlier than the date of shareholder approval of the Plan or
such increase in the Maximum Shares, as the case may be.
On the Effective Date of the Plan, it shall supersede
the 1986 Stock Option Plan for Outside Directors, which shall
terminate on that date.
VI. Amendment
The Board of Directors may at any time suspend or
discontinue the Plan, but no amendment shall be authorized
without shareholder approval which (i) materially increases the
benefits accruing to participants under the Plan; (ii)
materially increases the number of securities which may be
issued under the Plan, except as otherwise provided in Article
III; or (iii) materially modifies the requirements as to
eligibility for participation in the Plan.
VII. Rights as Shareholders
No Optionee, nor any beneficiary or other person
claiming through an Optionee, shall have any interest in any
shares of Stock allocated for the purposes of the Plan or
subject to any Option until such shares of Stock shall have
been issued to the Optionee or such beneficiary or other
person. Furthermore, the existence of the Options shall not
affect the right or power of the Company or its shareholders to
make adjustments, recapitalization, reorganizations, or other
changes in the Company's capital structure or its business;
issue bonds, debentures, preferred or prior preference stocks
affecting the Stock of the Company or the rights thereof;
dissolve the Corporation or sell or transfer any part of its
assets or business; or do any other corporate act, whether of a
similar character or otherwise.
VIII. Choice of Law
The validity, interpretation, and administration of
the Plan and of any rules, regulations, determinations, or
decisions made thereunder, and the rights of any and all
persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance with
the laws of the State of Florida, without giving effect to
choice of law principles thereof. Without limiting the
generality of the foregoing, the period within which any action
in connection with the Plan must be commenced shall be governed
by the Laws of the State of Florida without regard to the place
where the act or omission complained of took place or the
residence of any party to such action. Any action in
connection with the Plan must be brought in the State of
Florida, in the County of Pinellas or Hillsborough.
IN WITNESS WHEREOF, the undersigned Secretary of the
Company certifies that the foregoing Home Shopping Network,
Inc. 1996 Stock Option Plan for Outside Directors was duly
adopted by the Board on February 12, 1996.
____________________________
Secretary
EXHIBIT 99.05
HOME SHOPPING NETWORK, INC.
1986 Stock Option Plan For Employees
This is the 1986 Stock Option/Stock Appreciation Rights Plan
for Employees (the "Plan") of Home Shopping Network, Inc. (the
"Corporation"), a Delaware corporation with its principal of-
fices in Clearwater, Florida. The Plan has provisions under
which options may be granted to full-time employees of the Cor-
poration and its subsidiaries from time to time purchase shares
of the Corporation's common stock, or that in lieu of exercis-
ing an Option, the employee may elect to exercise a Stock Ap-
preciation Right (SAR), subject to the limitations, provisions,
and requirements hereinafter set forth.
I. Plan Objectives
The Plan is intended to provide a method whereby full-time
employees of the Corporation and its subsidiaries who are
largely responsible for the management, growth, and pro-
tection of the business, and who are making and can con-
tinue to make substantial contributions to the success of
the Corporation, may be encouraged to acquire stock owner-
ship in the Corporation. This ownership increases plan
members' proprietary interest in the business, provides
them with greater incentive for their continued employ-
ments, and promotes the interests of the Corporation and
all its shareholders. Stock Appreciation Rights serve to
further align the interests of management with the inter-
ests of shareholders by offering a stock-related compensa-
tion vehicle.
Stock options granted under the Plan may be designated by
the Stock Option Committee of the Corporation's Board of
Directors (the "Committee") at its election as either In-
centive Stock Options or Nonqualified Stock Options. Such
designation as to whether an option is either an Incentive
Stock Option or Nonqualified Stock Option shall be made on
the date of grant, each evidenced by a separate written
instrument.
II. Plan Definitions
The following definition will be established with the Plan
text, and unless the text indicates otherwise, shall have
the meanings set forth below.
"Board" means the Board of Directors of the Corpora-
tion.
"Code" means the Internal Revenue Code of 1954, as
amended.
"Committee" means the Stock Option Committee of the
Board, which is the designated administrator of the
Plan.
"Common Stock" means the Corporation's common stock,
at $.01 par value per share, or such other class of
shares or securities as to which the provisions of
the Plan may be applicable.
"Fair Market Value" when used in connection with Com-
mon Stock on a certain date, means the reported clos-
ing price of the Common Stock based on the composite
of transactions as reported on the American Stock
Exchange (as published by the Wall Street Journal, if
published) on the day prior to such date, or if the
Common Stock was not traded on such date, on the next
preceding day on which the Common Stock was traded
thereon.
"Grant Date" as used in reference to a particular
Option, means the date which such Option is granted
by the Committee pursuant to the Plan.
"Grantee" means the individual to whom an Option is
granted by the Committee pursuant to the Plan.
"Incentive Stock Option" means an Option that quali-
fies as an Incentive Stock Option as described in
Section 422A of the Code.
"Nonqualified Stock Option" means any Option granted
under the Plan other than an Incentive Stock Option.
"Option" means an option granted by the Committee
pursuant to the Plan to purchase shares of Common
Stock, which may be designated as either an Incentive
Stock Option or a Nonqualified Stock Option.
"Option Period" means the period beginning on the
Grant Date and ending on the day prior to the tenth
anniversary of the Grant Date or such shorter ending
date as set by the Committee on the Grant Date.
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"Stock Appreciation Right (SAR)" means the right,
granted by the Committee pursuant to Section VII of
the plan, to receive payment equal to the subsequent
increases in the Fair Market Value of a share of Com-
mon Stock.
III. Administration of the Plan - the Committee
(a) Appointment of the Committee
The Plan shall be administered by the Stock Op-
tion Committee of the Board of Directors. The
Committee shall never have less than three mem-
bers, all of whom shall be "disinterested per-
sons" within the meaning of rule 16b-3 of the
Securities Exchange Act of 1934, as amended from
time to time. No member of the Committee shall
be eligible to receive Options or SARs pursuant
to the Plan during the period which they serve
on the Committee.
(b) Committee Powers
The Committee shall administer the Plan. Fur-
ther, it shall have full power to construe and
interpret the Plan, establish rules for the
Plan's administration, determine the persons
eligible to receive Options and SARs, and grant
Options and SARs to eligible persons.
(c) Committee Action
A majority of the members of the Committee shall
constitute a quorum for the transaction of busi-
ness. All actions by the Committee at a meeting
shall be the vote of a majority of those present
at such meeting, but any action may be taken by
the Committee without a meeting upon written
consent signed by all members of the Committee.
Members of the Committee may participate in a
meeting by means of a conference telephone or
similar communications equipment with which all
persons participating in the meeting can hear
each other.
(d) Committee Determinations Conclusive
All determinations of the Committee as to which
persons shall receive Options and SARs, which
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Options are to be designated as Incentive Stock
Options, and the number of shares pursuant to
each Option and SAR granted, shall be final,
binding, and conclusive for all persons inter-
ested in the Plan.
The determination of the Committee as to the
construction or interpretation of any terms and
provisions of the Plan, including whether and
when there has been a termination of an
employee's employment, shall be final, binding,
and conclusive upon all persons.
IV. Shares Subject to the Plan
The aggregate number of shares of Common Stock with re-
spect to which Options and SARs may be granted shall not
exceed 400,000 shares of Common Stock (the "Reserved
Shares"), subject tot he adjustment in accordance with
Section IX of the Plan. In the event that any Option or
SAR expires, lapses, or otherwise terminates prior to be-
ing fully exercised, any shares of Common Stock allocable
to the unexercised portion of such Option or SAR may again
be made subject to an Option or SAR.
V. Eligibility
(a) Eligible Employees
Options and SARs shall be granted only to per-
sons who are key management employees of the
Corporation or its subsidiaries as determined by
the Committee. Directors or employees who are
not full-time employees of the Corporation or
its subsidiaries are not eligible to participate
in the Plan.
(b) No Right of Employment
Nothing in the Plan or in any Option or SAR
granted shall confer any right on an employee to
continue in the employe of the Corporation or
its subsidiaries or shall interfere in any way
with the right of the corporation or its subsid-
iaries to terminate such employee's employment
at any time.
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VI. Options
(a) Grant of Options
The Committee may from time to time, subject to
the provisions of the Plan, grant to employees
of the Corporation or its subsidiaries either
Incentive Stock Options or Nonqualified Stock
Options, or both, for the purchase of shares of
Common stock allotted in accordance with Section
IV. At the time of grant, the Committee may
designate any Option as either an Incentive
Stock Option or a Nonqualified Stock Option, but
must make such designation by the Grant Date.
Any Option not designated as an Incentive Stock
Option will be a Nonqualified Stock Option and
must satisfy the requirements of Section VI(b)
and (c), but shall not be subject to the re-
quirements of section VI(d).
(b) Option Requirements
(i) An Option shall be evidenced by a written in-
strument specifying the number of shares of
Common stock that may be purchased by its
exercise and containing such terms and condi-
tions consistent with the Plan as the Commit-
tee shall determine. There shall be a sepa-
rate written instrument for each Incentive
Stock Option and each Nonqualified Stock Op-
tion.
(ii) An Option shall not be granted on or after the
tenth anniversary of the date upon which the
Plan was adopted by the Committee.
(iii) An Option shall not be exercisable after the
expiration of the Option Period.
(iv) The Option price per share of Common Stock
shall be equal to the Fair Market Value of a
share of Common Stock on the Grant Date.
(v) An Option shall not be transferable other than
by will or the laws of descent and distribu-
tion. During the Grantee's lifetime, an Op-
tion shall be exercisable only by the Grantee,
except as otherwise provided herein. The Com-
mittee may permit the transfer, upon Grantee's
death, to beneficiaries designated by the
-5-
Grantee and may permit the exercise, during
Grantee's lifetime, by Grantees's guardian or
legal representative, provided that the Com-
mittee determines that such transfer and such
exercise are consonant with requirements for
exemption form Section 16(b) of the Securities
Exchange Act of 1934, as amended, and, with
respect to an Incentive Stock Option, the re-
quirements of Section 422A(b)(5) of the Code.
(vi) In the event of voluntary termination of em-
ployment at the election of the employee or
termination for cause at the election of the
Corporation or its subsidiaries, all Options
shall lapse forthwith.
(vii) A person electing to exercise an Option shall
give written notice, in such form as the Com-
mittee may require, of such election to the
Corporation and shall tender to the Corpora-
tion the full purchase price for the shares of
Common Stock for which the election is made.
Payment of the purchase price shall be made in
cash or in such other form as the Corporation
may approve, including shares of Common Stock
of the Corporation valued at the Fair Market
Value on the date of exercise of the Option.
(c) Nonqualified Stock Option Requirements
In the event of retirement or the termination of
employment due to total and permanent dis-
ability, a Nonqualified Stock Option shall lapse
at the earlier of the end of the Option Period
or at the end of a period of time after the date
of such retirement or termination equal to one
month for each full or partial year of employ-
ment with the Corporation or its subsidiaries of
its subsidiaries from the most recent date of
employment.
(d) Incentive Stock Option Requirements
(i) An Option designated by the Committee as an
Incentive Stock Option is intended to qualify
as an "Incentive Stock Option" within the
meaning of Subsection (b) of Section 422A of
the Code and shall satisfy, in addition to the
conditions of Section VI(b) of the Plan, the
conditions set forth in this Section VI(d).
-6-
(ii) An Incentive Stock Option shall not be granted
to an individual who, on the Grant Date, owns
stock possessing more than ten percent of the
total combined voting power of all classes of
stock of the Corporation. For purposes of
this subparagraph VI(d)(ii), in determining
stock ownership, an individual shall be con-
sidered as owning the stock owned, directly or
indirectly, by or for his or her brothers and
sisters, spouse, ancestors, and lineal descen-
dants. Stock owned, directly or indirectly,
by or for a corporation, partnership, estate,
or trust shall be considered as being owned
proportionately by or for its shareholders,
partners, or beneficiaries. Stock with re-
spect to which an individual holds an Option
shall not be counted. "Outstanding stock"
shall include all stock actually issued and
outstanding immediately after the grant of the
Option. "Outstanding stock" shall not include
shares authorized for issue under outstanding
options held by the Grantee or by any other
person.
(iii) An Incentive Stock Option shall not be exer-
cisable while there is outstanding (within the
meaning of Section 422A(c)(7) of the Code) any
other "Incentive Stock Option," within the
meaning of Subsection (b) of Section 422A of
the Code, which was granted before the grant-
ing of the Incentive Stock Option to the
grantee to purchase stock in the Corporation.
(iv) The aggregate Fair Market Value, determined on
the Grant Date, of the shares of Common Stock
with respect to which any Grantee may be
granted one or more Incentive Stock Options
under the Plan (within the meaning of Subsec-
tion (b) of the Section 422A of the Code) in
any calendar year shall not exceed $100,000
plus any "unused limit carryover" to such
year, determined in accordance with Section
422A(c)(4) of the Code. For purposes of this
paragraph IV(d)(iv), an "unused limited carry-
over" shall be equal to one-half of the excess
of (i) $100,000 over (ii) the aggregate fair
market value (determined on the date an Option
is granted) of the stock for which the Grantee
is granted Incentive Stock Options in such
year under the Plan. The unused limit carry-
-7-
over arising in any calendar year may be car-
ried over to any of the three consecutive
calendar years next following such year but
only to the extent not used in any earlier
calendar year. The value of the Common stock
for which Incentive Stock Options are granted
under the Plan in any calendar year shall be
applied first against the basis $100,000 limit
for each year and then against any unused
limit carryovers which may be carried over to
such year in the order of the calendar years
in which such carryovers arose.
(v) In the event of retirement, the Incentive
Stock Option shall lapse at the earlier of the
end of the Option period or three months after
the date of retirement. In the event of ter-
mination of employment due to total and perma-
nent disability, the Incentive Stock Option
shall lapse at the earlier of the end of the
Option Period or one year after the date of
such termination.
VII. Stock Appreciation Rights (SARs)
(a) Grant of Stock Appreciation Rights
In relation to any Option granted, the Committee may
grant an SAR with respect to each share of Common
Stock that may be purchased by the exercise of the
Option. The grant of each SAR shall be subject to
the same terms and provisions as to the underlying
Option.
(b) Exercise of Stock Appreciation Rights
In lieu of exercising an Option, a Grantee may elect
to exercise an SAR for each Option granted, if such
grant had SARs attached in relationship with that
grant. Upon exercising the SAR, the Corporation
shall pay the amount, if any, by which the Fair
Market Value of a share of Common Stock on the date
of exercise exceeds the Fair Market Value of a share
of Common Stock on the Grant Date. The exercise of
an SAR shall cancel the Option associated with that
grant.
-8-
(c) Payment of Stock Appreciation Rights
The payment for SARs shall be made in shares of Com-
mon Stock, valued at Fair Market Value on the date of
exercise or, at the sole discretion of the Committee,
in cash, or partly in cash and partly in shares of
Common Stock.
(d) Requirements of Stock Appreciation Rights
Stock Appreciation Rights (SARs) granted in relation
to an Option shall be exercisable only to the extent
that the Option is exercisable. Stock Appreciation
Rights (SARs) shall be evidenced by a written instru-
ment containing such terms and consistent with the
underlying Option and the Plan as the Committee shall
determine. A Grantee electing to exercise SARs shall
give written notice, in such form as the Committee
may require, of such election to the Corporation.
(e) Lapse of an Option
The lapse of an Option to purchase any number of
shares of Common Stock shall cause a corresponding
reduction in the same number of related SARs.
(f) Nontransferability of Stock Appreciation Rights
Stock Appreciation Rights (SARs) shall not be trans-
ferable other than by will or the laws of descent and
distribution and, during the Grantee's lifetime, the
SARs shall be exercisable only by the Grantee; ex-
cept, that the Committee may permit:
(i) exercise, during Grantee's lifetime, by a
guardian or legal representative; or
(ii) transfer, upon Grantee's death, to benefi-
ciaries designated by the Grantee in a manner
authorized by the Committee, provided that the
Committee determines that such exercise or
such transfer is consonant with requirements
for exemption from Section 16(b) of the Secu-
rities Exchange Act of 1934, as amended.
VIII. Modification, Extension, or Renewal of Option
Subject to the terms and conditions and within the limita-
tions of the Plan, the Committee may modify, extend, or
-9-
renew outstanding Options or SARs granted under the Plan
or accept the surrender of outstanding Options or SARs (to
the extent not theretofore exercised) and authorize the
granting of new Options or SARs in substitution therefore.
Without limiting the generality of the foregoing, the Com-
mittee may grant to Grantee, if he or she is otherwise
eligible and consents thereto, a new or modified Option or
SAR in lieu of an outstanding Option or SAR for a number
of shares, at an exercise price and for a term which are
greater or lesser than under the earlier Option or SAR, or
may do so by cancellation and regrant, amendment, substi-
tution, or otherwise, subject only to the general limita-
tions and conditions of the Plan. The foregoing notwith-
standing, no modification of an Option or SAR shall,
without the consent of the Grantee, alter or impair any
rights or obligations under any Option or SAR theretofore
granted under the Plan.
IX. Changes in Capitalization
(a) Adjustment Provisions
In the event that:
(i) a recapitalization, reclassification, split-
up, or consolidation of Common Stock is ef-
fected;
(ii) the outstanding shares of Common Stock are
exchanged, in connection with a merger or con-
solidation of the Corporation or a sale by the
Corporation of all or a part of its assets,
for a different number or class of shares of
stock or other securities of the Corporation
or for shares of the stock or other securities
of any other corporation;
(iii) new, different, or additional shares or other
securities of the Corporation or of another
corporation are received by the holders of
Common Stock; or
(iv) any distribution is made to the holders of
Common Stock other than a cash dividend;
then the Committee shall make the appropriate adjust-
ments to:
-10-
(i) the number and class of shares or other secu-
rities that may be issued pursuant to the
exercise of Options;
(ii) the purchase price to be paid per share under
outstanding Options; and
(iii) the number of shares covered by each outstand-
ing Option.
(b) Dissolution
Upon the dissolution of the Corporation, the Plan
shall terminate and all Options previously granted
shall lapse on the date of such dissolution.
X. Legal Restrictions
The Corporation will not be obligated to issue shares of
Common Stock if counsel to the Corporation determines that
such issuance would violate any law or regulation of any
governmental authority or any agreement between the
Corporation and any national securities exchange upon
which the Common Stock is listed. In connection with any
stock issuance or transfer, the person acquiring the
shares shall, if requested by the Corporation, give
assurances satisfactory to counsel to the Corporation
regarding such matters as the Corporation may deem desir-
able to assure compliance with all legal requirements.
The Corporation shall in no event be obliged to take any
action in order to cause the exercise of any Option or
SAR.
XI. Rights as Shareholders
No Grantee, nor any beneficiary or other person claiming
through a Grantee, shall have any interest in any shares
of Common Stock allocated for the purpose of the Plan or
subject to any Option or SAR until such shares of Common
Stock shall have been issued to the Grantee or such per-
son. Furthermore, the existence of the Options or the
SARs shall not affect the right or power of the Corpora-
tion or its shareholders to make adjustments, recapital-
izations, reorganizations, or other changes in the
Corporation's capital structure or its business; issue
bonds, debentures, preferred or prior preference stocks
affecting the Common Stock of the Corporation or the
rights thereof; dissolve the Corporation or sell or trans-
-11-
fer any part of its assets or business; or do any other
corporate act, whether of a similar character or other-
wise.
XII. Choice of Law
The validity, interpretation and administration of the
Plan and of any rules, regulations, determinations, or
decisions made thereunder, and the rights of any and all
persons having or claiming to have any interest therein or
thereunder, shall be determined exclusively in accordance
with the laws of the State of Florida. Without limiting
the generality of the foregoing, the period within which
any action in connection with the Plan must be commenced
shall be governed by the Laws of the State of Florida
without regard to the place where the act or omission com-
plained of took place, the residence of any party to such
action, or the place where the action may be brought.
XIII. Amendment, Suspension, or Termination of the Plan
The Committee may at any time terminate, suspend, or amend
the Plan; however, no amendment shall, without the ap-
proval of shareholders of the Corporation:
(i) increase the aggregate number of shares which may
be issued in connection with Options or SARs;
(ii) change the Option exercise price;
(iii) increase the maximum period during which Options or
SARs may be exercised;
(iv) extend the effective date of the Plan; or
(v) materially modify the requirements as to eligibil-
ity for participation in the Plan.
XIV. Duration of the Plan
No Option shall be granted under the Plan after July 31,
1996. Options granted before that date shall remain valid
thereafter in accordance with their terms.
-12-
XV. Effective Date of the Plan
The Plan was adopted by the Board on August 1, 1986. It
will become effective if and when approved by shareholders
holding a majority of the Corporation's outstanding shares
represented in person or by proxy and entitled to vote on
the Plan at the Annual Meeting of Shareholders in 1986.
-13-
HOME SHOPPING NETWORK, INC.
FIRST AMENDMENT TO THE
1986 STOCK OPTION PLAN FOR EMPLOYEES
This is the First Amendment to the 1986 Stock Option Plan
for Employees (the "Plan") of Home Shopping Network, Inc. (the
"Corporation"), a Delaware corporation with its principal of-
fices in Clearwater, Florida.
Paragraph IV of the Plan is hereby amended to read as fol-
lows:
IV Shares Subject to the Plan
The aggregate number of shares of Common Stock with
respect to which Options and SARs may be granted shall not
exceed 2,200,000 shares of Common Stock (the "Reserved
Shares"), subject to the adjustment in accordance with
Section IX of the Plan. In the event that any Option or
SAR expires, lapses or otherwise terminates prior to being
fully exercised, any shares of Common Stock allocable to
the unexercised portion of such Option or SAR may again be
made subject to an Option or SAR.
Dated this 21st day of November, 1986.
HOME SHOPPING NETWORK, INC.
SECOND AMENDMENT TO THE
1986 STOCK OPTION PLAN FOR EMPLOYEES
This is the Second Amendment to the 1986 Stock Option Plan
for Employees (the "Plan") of Home Shopping Network, Inc. (the
"Corporation"), a Delaware corporation with its principal
offices in Clearwater, Florida.
Paragraph IV of the Plan is hereby amended to read as fol-
lows:
IV Shares Subject to the Plan
The aggregate number of shares of Common Stock with
respect to which Options and SARs may be granted shall not
exceed 10,000,000 shares of Common Stock (the "Reserved
Shares"), subject to the adjustment in accordance with
Section IX of the Plan. In the event that any Option or
SAR expires, lapses or otherwise terminates prior to being
fully exercised, any shares of Common Stock allocable to
the unexercised portion of such Option or SAR may again be
made subject to an Option or SAR.
Dated this 14th day of July, 1987.
HOME SHOPPING NETWORK, INC.
THIRD AMENDMENT TO THE
1986 STOCK OPTION PLAN FOR EMPLOYEES
This is the Third Amendment to the 1986 Stock Option Plan
for Employees (the "Plan") of Home Shopping Network, Inc. (the
"Corporation"), a Delaware corporation with its principal
offices in St. Petersburg, Florida.
Section (vi) of Paragraph (b) of Article VI of the Plan is
hereby amended to read as follows:
(vi) The Committee may, in its sole discretion, cancel
options granted to an employee whose employment has been
terminated for cause. Upon the termination of employment
other than for cause, options granted under the Plan shall
be cancelled only to the extent that such options were not
exercisable as of the date of such termination.
The effective date of this amendment shall be August 1,
1986, the effective date of the Plan.
Adopted this 26th day of September 1988 by the
Compensation/Benefits Committee of the Board of Directors of
Home Shopping Network, Inc.
EXHIBIT 10.31
HOME SHOPPING NETWORK, INC.
FOURTH AMENDMENT TO THE
1986 STOCK OPTION PLAN FOR EMPLOYEES
This is the Fourth Amendment to the 1986 Stock Option Plan
for Employees (the "Plan") of Home Shopping Network, Inc., a
Delaware corporation (the "Corporation"), with its principal
offices in St. Petersburg, Florida.
1. All references in the Plan to Section 422A of the Code
shall be changed to Section 422 of the Code.
2. Section (iii) of Paragraph (d) of Article VI of the
Plan is hereby amended to read as follows:
(iii) An Incentive Stock Option shall not be exercisable
while there is outstanding (within the meaning of former
Subsection 4322A(c)(7) of the Code) any other "Incentive
Stock Option," within the meaning of Subsection 422(b) of
the Code, which was granted before the granting of the
Incentive Stock Option to the grantee to purchase stock in
the Corporation; provided, however, that the foregoing
clause requiring that Incentive Stock Options be exercised
sequentially shall not apply to Incentive Stock options
granted after the date of this Fourth Amendment, which
Incentive Stock Options may be exercised without regard to
previously granted and still outstanding Incentive Stock
Options.
3. Section (iv) of Paragraph (d) of Article VI of the
Plan is hereby amended to read as follows:
(iv) An optionee may hold and exercise more than one In-
centive Stock Option, but only on the terms and subject to
the restrictions hereafter set forth. The aggregate fair
market value (determined as of the time an Incentive Stock
Option is granted) of the Common Stock with respect to
which Incentive Stock Options are exercisable for the
first time by any employee in any calendar year under the
Plan and under all other Incentive Stock Option plans of
the Corporation and any parent and subsidiary corporations
of the Corporation (as those terms are defined in Section
425 of the Internal Revenue Code of 1986, as amended)
shall not exceed $100,000.
The effective date of this amendment shall be the date
adopted.
Adopted this 16th day of June, 1992 by the Compensation/
Benefits Committee of Home Shopping Network, Inc.
EXHIBIT 99.06
HOME SHOPPING NETWORK, INC.
1986 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
I. Purpose
It is the belief of the management of Home Shopping Net-
work, Inc. (the "Corporation") that the Corporate Directors
will effect decisions and render guidance to the Corporation
which will materially enhance the stability and economic growth
of the Corporation. Accordingly, subject to shareholder ap-
proval, Directors not also serving as employees of the Corpora-
tion should be afforded the opportunity to acquire shares of
authorized common stock on a permissible exercise date. By
providing this opportunity through the adoption of a Stock Op-
tion Plan for Outside Directors (the "Plan"), it is the inten-
tion of the Corporation to give appropriate recognition to a
group who will have continuing responsibility for the
Corporation's growth and profitability.
II. Eligibility
The only persons eligible to receive Options under the
Plan shall include each of the Corporation's existing and fu-
ture Directors who are not also employees of the Corporation.
III. Shares Subject to the Plan
The shares which shall be issued and delivered upon exer-
cise of Options granted under the Plan shall be shares of the
Corporation's common stock. The maximum number of shares which
may be issued upon exercise of Options granted under the Plan
shall not exceed 105,000 shares. If any Option expires or ter-
minates prior to being fully exercised, any shares allocable to
the unexercised portion of such Option may again be made
subject to the terms of the Plan.
Appropriate adjustments in the number of shares available
under the Plan and in the Option price per share shall give
effect to adjustments made in the number of shares as a result
of a merger, consolidation, recapitalization, reclassification,
combination, stock dividend, stock split or other relevant
change in the capital structure of the Corporation.
IV. Terms and Conditions
(a) Grant of Options
Subject to the provisions of the Plan, Directors of
the Corporation shall be granted Nonqualified Stock
Options for the purchase of shares of common stock
of the Corporation.
(b) Option Agreement
Each Option shall be evidenced by a written agree-
ment between the Corporation and the Director speci-
fying the number of shares of common stock that may
be exercised by its purchase.
(c) Date of Grant
The date on which an option is granted shall be ei-
ther: (1) The date that the Plan has been adopted
by the Board of Directors; or (2) The first day upon
which a Director who is not also an employee is
first elected to the Board of Directors.
(d) Option Price
Each Option Agreement shall state the purchase price
of each share of common stock which may be acquired
upon exercising the Option, which price shall be the
fair market value of each shares as of the Date of
Grant. Fair Market Value shall be deemed to be the
closing price of the shares on the applicable Date
of Grant, as published by the national securities
exchange on which the shares are traded. If such
price is not published for the Date of Grant, such
value shall be deemed to be the closing price on the
trading date occurring the nearest to and before the
valuation date.
(e) Number of Shares Granted
Each Director shall receive a Nonqualified Stock
Option to purchase 15,000 shares of Common Stock of
the Corporation on the date of grant. This grant
shall occur automatically on either: (1) The date
that the Plan has been adopted by the Board of Di-
rectors; or (2) The first day upon which a Director
who is not also an employee is first elected to the
Board of Directors.
(f) Option Period and Restrictions of Exercise
The 15,000 Option shares shall be exercisable in the
following manner for the periods specified:
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- 5,000 Option shares shall first become exercis-
able on the date of grant and must be fully ex-
ercised within two years from the date granted.
The failure to exercise the 5,000 Option shares
during this two-year period shall mean that such
Options shall be forfeited.
- 5,000 Option shares shall become exercisable one
year from the date such Option shares were
granted and must be exercised within two years
from the date such Option shares become first
exercisable. The failure to exercise the 5,000
Option shares during this two-year period shall
mean that such Options shall be forfeited.
- 5,000 Option shares shall become exercisable two
years from the date such Option shares were
granted and must be exercised within two years
from the date such Option shares become first
exercisable. The failure to exercise the 5,000
Option shares during this two-year period shall
mean that such Options shall be forfeited.
(g) Manner of Exercise
Subject to the conditions and restrictions contained
in paragraph IV(h) below, the Option shall be exer-
cised by delivering written notice of exercise to
the Corporate Secretary of Home Shopping Network,
Inc. Such notice is irrevocable and must be ac-
companied by payment in cash and a signed Option
exercise form. If prior authorization has been ob-
tained, payment for the shares may be made by deliv-
ery of common stock.
(h) Transferability and Termination of Option
Each Option granted hereunder may be exercised only
by the individual to whom it is issued and only dur-
ing the period in which he or she is serving as an
outside Director of the Corporation or within the
thirty (30) day period following his or her resigna-
tion or other termination of such service for any
reason other than death. If such holder dies before
fully exercising any portion of an option then exer-
cisable, such Option may be exercised by such
holder's legal representative(s), heir(s) or
devisee(s) at any time within the six (6) month pe-
riod following his or her death.
In the event that an outside Director becomes a
full-time employee of the Corporation, the outside
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Director shall not have to forfeit the 15,000 Option
shares granted pursuant to this Plan. However, the
outside Director shall have to satisfy all other
terms and provisions of this Plan with respect to
the Options granted hereunder.
V. Effective Date and Term of Plan
Subject to the prospective approval of the Plan by an
affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the Annual Meeting of
Shareholders to be conducted on August 14, 1986, the effective
date of the Plan shall be August 1, 1986, and it shall remain
in existence for a period of ten years thereafter. In the
event of shareholder rejection of the Plan, any Option granted
hereunder shall be void and of no legal effect. No Option may
be granted subsequent to the expiration date of the Plan, but
Options then outstanding shall be exercisable in accordance
with the terms hereof.
VI. Amendment
The Board of Directors may at any time suspend or discon-
tinue the Plan, but no amendment shall be authorized without
shareholder approval.
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Exh. 10-13
THIRD AMENDMENT OF THE OUTSIDE DIRECTORS PLAN
October 31, 1991
Extension of Exercise Period of Outstanding Director Options
WHEREAS, the terms of the 1986 Stock Option Plan for Out-
side Directors, as amended (the ("Plan") of the Company permit
the members of the Board of Directors who are not eligible to
participate in the Plan to modify existing options;
WHEREAS, management deems it to be in the best interest
of the Company to extend the exercise period of all Options
held by persons who are outside directors on the date hereof;
NOW, THEREFORE, BE IT RESOLVED, that the exercise period
of Options held by persons who are outside directors on the
date hereto shall be extended so that the exercise period for
each portion of Options if five (5) years.
Exh. 10-13
FOURTH AMENDMENT TO THE HOME SHOPPING NETWORK, INC.
1986 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
This is the Fourth Amendment to the 1986 Stock Option
Plan for Outside Directors (the ("Plan") of Home Shopping Net-
work, Inc., a Delaware corporation (the "Corporation"), with
its principal offices in St. Petersburg, Florida.
1. The number of shares subject to the Plan as
specified in Article III, Shares Subject to the Plan, of the
Plan shall be increased to, and shall not exceed 1,630,000.
2. Paragraph (e) of Article IV, Terms and Condi-
tions, of the Plan is hereby deleted in its entirety, and the
following is substituted in lieu thereof:
(e)(1) Each Director shall receive a Nonqualified Stock
Option to purchase 90,000 shares of Common Stock
of the Corporation automatically on the date
specified in paragraph (c) of this Article IV,
exercisable in accordance with the provisions of
paragraph (f)(1) of this Article IV.
(e)(2) Each Director who is commencing his sixth year of
service as a director shall receive a Nonquali-
fied Stock Option to purchase an additional
90,000 shares of Common Stock of the Corporation
automatically on the later of (A) the date this
Fourth Amendment is adopted by the Corporation's
Board of Directors, subject to the proviso con-
tained in paragraph 4 of this Fourth Amendment,
or (B) the first day upon which a Director who is
not also an employee is first elected to the
Board of Directors, exercisable in accordance
with the provisions of paragraph (f)(2) of this
Article IV.
(e)(3) Under no circumstances shall a Director pursuant
to paragraphs (e)(1) and (e)(2) of this Article
IV ever receive a Nonqualified Stock Option or
Options for greater than 180,000 shares of the
Common Stock of the Corporation.
(e)(4) No amendment to this Article IV of the Plan may
be made more than once every six months, other
than to comport with changes in the Internal Rev-
enue Code, the Employee Retirement Income Secu-
rity Act, or the rules thereunder.
3. Paragraph (f) of Article IV, Terms and Condi-
tions, of the Plan is hereby renumbered as paragraph (f)(1),
and a new paragraph (f)(2) of Article IV of the Plan is hereby
added as follows:
(f)(2) Option Period and Restrictions of Exercise
The 90,000 Option shares shall be exercisable in
the following manner for the periods specified:
18,000 Option shares shall first become exercis-
able on the date of grant and must be fully exer-
cised within five years from the date granted.
The failure to exercise the 18,000 Option shares
during this five-year period shall mean that such
Options shall be forfeited.
18,000 Option shares shall become exercisable one
year from the date such Option shares were
granted and must be exercised within five years
from the date such Option shares become first
exercisable. The failure to exercise the 18,000
Option shares during this five-year period shall
mean that such Options shall be forfeited.
18,000 Option shares shall become exercisable two
years from the date such Option shares were
granted and must be exercised within five years
from the date such Option shares become first
exercisable. The failure to exercise the 18,000
Option shares during this five-year period shall
mean that such Options shall be forfeited.
18,000 Option shares shall become exercisable
three years from the date such Option shares were
granted and must be exercised within five years
from the date such Option shares become first
exercisable. The failure to exercise the 18,000
Option shares during this five-year period shall
mean that such Options shall be forfeited.
18,000 Option shares shall become exercisable
four years from the date such Option shares were
granted and must be exercised within five years
from the date such Option shares become first
exercisable. The failure to exercise the 18,000
Option shares during this five-year period shall
mean that such Options shall be forfeited.
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4. The effective date of this Fourth Amendment to
the Plan shall be the date on which this Fourth Amendment is
approved by the stockholders of the Corporation; provided, how-
ever, that options (and any shares issued pursuant thereto)
shall be granted conditionally pursuant to this Fourth Amend-
ment immediately upon its adoption by the Board of Directors of
the Corporation so long as stockholder approval is received at
the next annual meeting of the stockholders.
DATE adopted by the Board of Directors: ________________
DATE approved by the stockholders: ________________
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