EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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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 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
23.05 Consent of Price Waterhouse LLP
23.06 Consent of Price Waterhouse LLP
24.01 Power of Attorney (included on Page II-6 of this Registration
Statement)
99.01 Ticketmaster Stock Plan (As Amended and Restated)
EXHIBIT 5.01
[LETTERHEAD OF WACHTELL, LIPTON, ROSEN & KATZ]
June 24, 1998
USA Networks, Inc.
152 West 57th Street
New York, New York 10019
Re: Registration Statement on Form S-8 of USA Networks, Inc.
Members of the Board:
We are acting as special counsel to USA Networks, Inc., a Delaware
corporation ("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 3,014,850 shares of common
stock, par value $.01 per share (the "Common Stock"), of the Company pursuant to
the Ticketmaster Stock Plan (the "Plan") of Ticketmaster Group, Inc.
("Ticketmaster").
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 Plan and other instruments, and such matters of law and fact as we
have deemed necessary to render the opinion contained herein.
USA Networks, Inc.
June 24, 1998
Page 2
Based upon and subject to the foregoing, we are of the opinion that
the shares of Common Stock available under the Plan, when issued, delivered and
paid for in accordance with the terms and conditions of the Plan, 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
Exhibit 23.02
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in a Registration Statement of
USA Networks, Inc. (formerly HSN, Inc. and Silver King Communications, Inc.)
on Form S-8, pertaining to the registration of common stock of USA Networks,
Inc. for issuance in connection with the Ticketmaster Stock Plan (As Amended
and Restated) of Ticketmaster Group, Inc., of our report dated July 2, 1996
appearing in the Annual Report on Form 10-K of USA Networks, Inc. for the
year ended December 31, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Tampa, Florida
June 23, 1998
Exhibit 23.03
CONSENT OF ERNST & YOUNG LLP
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the Ticketmaster Stock Plan (as amended and restated) of
our report dated March 13, 1998, with respect to the consolidated financial
statements and schedule of USA Networks, Inc. included in its Annual Report
(Form 10-K) for the year ended December 31, 1997, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
New York, New York
June 19, 1998
Exhibit 23.04
[Letterhead of KPMG Peat Marwick]
CONSENT OF KPMG PEAT MARWICK
The Board of Directors
USA Networks, Inc.
We consent to the use of our report dated February 24, 1995 incorporated herein
by reference.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
New York, New York
June 19, 1998
Exhibit 23.05
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of USA Networks, Inc. of our report dated February 21,
1997 relating to the financial statements of USA Networks appearing on page H-7
of HSN, inc's (subsequently renamed USA Networks, Inc.) proxy statement dated
January 12, 1998.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
June 19, 1998
New York, NY
Exhibit 23.06
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of USA Networks, Inc. of our report dated December 8,
1997 relating to the financial statements of Universal Television Group
appearing on page I-9 of HSN, inc's (subsequently renamed USA Networks, Inc.)
proxy statement dated January 12, 1998.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
June 23, 1998
Century City, CA
EXHIBIT 99.01
TICKETMASTER
STOCK PLAN
(AS AMENDED AND RESTATED)[1]
1. Preamble.
Ticketmaster Group, Inc. (formerly known as "Ticketmaster Holdings
Group, Ltd."), an Illinois corporation (the "Company"), established the
Ticketmaster Stock Plan (the "Plan") as a means whereby the Company may, through
awards of (i) incentive stock options within the meaning of section 422 of the
Code (as herein defined), (ii) stock appreciation rights, (iii) non-qualified
stock options, (iv) restricted stock, and (v) phantom stock:
(a) provide employees of the Company and its subsidiaries with
additional incentive to promote the success of the Company's and its
Subsidiaries' businesses;
(b) enable such employees to acquire proprietary interests in the
Company;
(c) encourage such employees to remain in the employ of the Company
and its Subsidiaries; and
(d) provide Officers and Directors of, and consultants to, the
Company and its Subsidiaries (who are not otherwise employees) with
additional incentive to promote the success of the Company's and its
Subsidiaries' businesses.
The Plan was adopted on June 30, 1994, subsequently amended on
September 1, 1994, and is hereby further amended and restated in the form of
this Plan document effective as provided herein. The provisions of this Plan do
not apply to or affect any option, SAR, or stock heretofore or hereafter granted
under any other stock plan of the Company or any Subsidiary, and all such
options, SARs or stock continue to be governed by and subject to the applicable
provisions of the plan or agreement under which they were granted.
2. Definitions.
2.1 "Board" or "Board of Directors" means the board of directors of
the Company.
2.2 "Cause" means, as determined in the sole discretion of the
Board, a Participant's (a) commission of a felony; (b) dishonesty or
misrepresentation involving the Company
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[1] In 1996, the Board of Directors of the Company adjusted the number of
shares, options and option price pursuant to the terms of the Plan to reflect a
1 for 3 stock split of the Common Stock. The shareholders of the Company on
June 10, 1997, approved an amendment to the Plan to increase the number of
shares available for issuance under the Plan. This Plan document reflects the
adjustment of the shares of stock available for issuance under the Plan and as
Directors options as a result of the stock split and the increase in the number
of shares available for issuance under the Plan as approved by the shareholders
of the Company on June 10, 1997.
or any Subsidiary; (c) serious misconduct in the performance or non-performance
of Participant's responsibilities as an employee, Officer, Director or
consultant; (d) violation of a material condition of employment or retention;
(e) unauthorized use of trade secrets or confidential information; or (f) aiding
a competitor of the Company or any Subsidiary.
2.3 "Change in Control" means, the occurrence of any one of the
following events:
(a) any consolidation or merger of the Company in which the Company
is not the continuing or surviving corporation or which contemplates that
all or substantially all of the business and/or assets of the Company
shall be controlled by another corporation or a recapitalization in which
the current controlling stockholders do not continue to be the controlling
stockholders;
(b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and/or its Subsidiaries;
(c) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval;
(d) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than a person who is a stockholder of
the Company on the Option Date, who shall become the beneficial owner of
securities of the Company representing more than 50% of the combined
voting power of the Company's then outstanding securities ordinarily
having the right to vote in the election of directors;
(e) any sale, exchange or transfer (other than transfers to
affiliated entities, i.e. entities controlling, controlled by or under
common control with, the transferor) of securities of the Company
representing more than 50% of (i) the total fair market value of the
Company's then outstanding equity securities, or (ii) the combined voting
power of the Company's then outstanding securities ordinarily having the
right to vote in the election of directors, whether pursuant to a tender
or exchange offer, open market offering, purchase or sale, privately
negotiated purchase and sale or otherwise; or
(f) if during a period of two consecutive years from the Option
Date, individuals who at the beginning of such period constituted the
directors of the Company cease for any reason to constitute a majority
thereof (unless the election, or nomination for election by the Company's
stockholders, of each director of the Company first elected during such
period was approved by a vote of at least a majority of the directors then
still in office who were directors at the beginning of any such period.
2.4 "Code" means the Internal Revenue Code of 1986, as it exists
now and as it may be amended from time to time.
2.5 "Committee" means the committee comprised of two or more
outside Directors appointed by the Board to administer the Plan. Each member of
the Committee shall (a)
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be a "Non-Employee Director" as determined under Rule 16b-3(b)(3)(i) of the
Exchange Act; and (b) be an outside Director as determined under Treasury
Regulation 26 CFR Section 1.162-27(e)(3) or any successor regulation thereto.
Once appointed, the Committee shall continue to serve until otherwise directed
by the Board of Directors.
2.6 "Common Stock" means the Series A common stock of the Company,
no par value, or, if the various series of common stock are eliminated by
amendment to, or restatement of, the Company's Articles of Incorporation, the
resulting class of equity securities ordinarily (and apart from rights accruing
under special circumstances) having the right to vote for the election of
directors.
2.7 "Company" means Ticketmaster Group, Inc. (formerly known as
"Ticketmaster Holdings Group, Ltd"), an Illinois corporation, and any successor
thereto.
2.8 "Director" means a member of the Board.
2.9 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as it exists now or from time to time may hereafter be amended.
2.10 "Fair Market Value" means for the relevant day:
(a) If shares of Common Stock are listed or admitted to unlisted
trading privileges on any national or regional securities exchange, the
last reported sale price, regular way, on the composite tape of that
exchange on the day Fair Market Value is to be determined;
(b) If the Common Stock is not listed or admitted to unlisted
trading privileges as provided in paragraph (a), and if sales prices for
shares of Common Stock are reported by the National Association of
Securities Dealers, Inc. Automated Quotations, Inc. National Market System
("NASDAQ System"), then the last sale price for Common Stock reported as
of the close of business on the day Fair Market Value is to be determined,
or if no such sale takes place on that day, the average of the high bid
and low asked prices so reported; if Common Stock is not traded on that
day, the next preceding day on which such stock was traded; or
(c) If trading of the Common Stock is not reported by the NASDAQ
System or on a stock exchange, Fair Market Value will be determined by the
Committee based upon the best available data, which determination shall be
conclusive for all purposes.
2.11 "ISO" means incentive stock options within the meaning of
Section 422 of the Code.
2.12 "Naked SAR" means a SAR issued not in connection with an ISO
or NSO.
2.13 "NSO" means non-qualified stock options, which are not
intended to qualify under Section 422 of the Code.
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2.14 "Officer" means a corporate officer of the Company or any
Subsidiary.
2.15 "Option" means the right of a Participant, whether granted as
an ISO or an NSO, to purchase a specified number of shares of Common Stock,
subject to the terms and conditions of the Plan.
2.16 "Option Date" means the date upon which an Option, SAR,
Restricted Stock or Phantom Stock is awarded to a Participant under the Plan.
2.17 "Option Price" means the price per share at which an Option
may be exercised.
2.18 "Participant" means an individual to whom an Option, SAR,
Phantom Stock or Restricted Stock has been granted under the Plan.
2.19 "Phantom Stock" means a hypothetical share of Common Stock
issued as phantom stock under the Plan.
2.20 "Plan" means the Ticketmaster Stock Plan, as set forth herein
and as from time to time amended.
2.21 "Restricted Stock" means Common Stock awarded to a Participant
pursuant to this Plan and subject to the restrictions contained in Section 9.
2.22 "SAR" means a stock appreciation right. A SAR may be a Naked
SAR or a Tandem SAR.
2.23 "Securities Act" means the Securities Act of 1933, as it
exists now or from time to time may hereinafter be amended.
2.24 "Subsidiary" means any corporation or other entity of which
the majority voting power or equity interest is owned directly or indirectly by
the Company.
2.25 "Tandem SAR" means a SAR associated with and issued in
connection with an ISO or NSO.
2.26 Rules of Construction.
(a) Governing Law. The construction and operation of this
Plan are governed by the laws of the State of Illinois.
(b) Undefined Terms. Unless the context requires another meaning,
any term not specifically defined in this Plan has the meaning given to it
by the Code.
(c) Headings. All headings in this Plan are for reference only and
are not to be utilized in construing the Plan.
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(d) Gender. Unless clearly appropriate, all nouns of whatever
gender refer indifferently to persons of any gender.
(e) Singular and Plural. Unless clearly inappropriate, singular
terms refer also to the plural and vice versa.
(f) Severability. If any provision of this Plan is determined to be
illegal or invalid for any reason, the remaining provisions shall continue
in full force and effect and shall be construed and enforced as if the
illegal or invalid provision did not exist, unless the continuance of the
Plan in such circumstances is not consistent with its purposes.
3. Stock Subject to the Plan.
Except as otherwise provided in Section 15, the aggregate number of
shares of Common Stock that may be issued under Options or as Restricted Stock,
under this Plan may not exceed 3,750,000 shares. Reserved shares may be either
authorized but unissued shares or treasury shares, in the Board's discretion. If
any awards hereunder shall terminate or expire, as to any number of shares, new
ISOs, NSOs, and Restricted Stock may thereafter be awarded with respect to such
shares. Except as otherwise provided in Section 15, the aggregate number of
shares of Common Stock that may be issued under Options, as Restricted Stock, or
upon which SARs or Phantom Stock may be awarded for any Participant may not
exceed 500,000.
4. Administration.
The Plan shall be administered by the Committee. In addition to any
other powers set forth in this Plan, the Committee has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any
ambiguities or inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and
regulations relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive awards of Options, Restricted Stock, Phantom
Stock and/or SARs, the times when they will receive them, the number of
shares to be subject to each award and the Option Price, payment terms,
payment method, and expiration date applicable to each award;
(d) to contest on behalf of the Company or Participants, at the
expense of the Company, any ruling or decision on any matter relating to
the Plan or to any awards of ISOs, NSOs, Restricted Stock, Phantom Stock
and/or SARs;
(e) generally, to administer the Plan, and to take all such steps
and make all such determinations in connection with the Plan and the
awards of ISOs, NSOs, Restricted Stock, Phantom Stock and/or SARs granted
thereunder as it may deem necessary or advisable;
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(f) to determine the form in which payment of a SAR or a Phantom
Stock award granted hereunder will be made (i.e., cash, Common Stock or a
combination thereof) or to approve a participant's election to receive
cash in whole or in part in settlement of the SAR or Phantom Stock award;
and
(g) to determine the form in which tax withholding under Section 18
of this Plan will be made.
5. Eligible Employees.
Subject to the provisions of the Plan, the Committee shall determine
from time to time those employees, Directors and Officers of, and consultants
to, the Company or a Subsidiary who shall be designated as Participants and the
number, if any, of Options, SARs, Restricted Stock, and Phantom Stock, or any
combination thereof, to be awarded to each such Participant; provided, however,
that no ISOs or Tandem SARs granted with respect to ISOs, shall be awarded under
the Plan after the expiration of the period of ten years from the date this Plan
is adopted by the Board. In addition, no ISOs may be awarded to a Director or
Officer who is not an employee of the Company or a Subsidiary.
6. Terms and Conditions of Incentive Stock Options.
The Committee may in its discretion, grant ISOs to any Participant
under the Plan; provided, however, that no ISOs may be granted to a Participant
who is not an employee of the Company or a Subsidiary. Each ISO shall be
evidenced by an agreement between the Company and the Participant. Each ISO
agreement, in such form as is approved by the Committee, shall be subject to the
following express terms and conditions and to such other terms and conditions,
not inconsistent with the Plan, as the Committee may deem appropriate;
(a) Option Period. Each ISO will expire as of the earliest of:
(i) the date on which it is forfeited under the
provisions of Section 13;
(ii) 10 years (or five years as specified in Section 6(e))
from the Option Date;
(iii) three months after the Participant's termination of
employment for any reason other than death; or
(iv) six months after the Participant's death.
(b) Option Price. Subject to the provisions of Section 6(e), the
Option Price per share shall be determined by the Committee at the time
any ISO is granted, and shall not be less than the Fair Market Value of
the Common Stock subject to the ISO on the Option Date.
(c) Other Option Provisions. The form of ISO authorized by the Plan
may contain such other provisions as the Committee may, from time to time,
determine; provided,
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however, that such other provisions may not be inconsistent with any
requirements imposed on qualified stock options under Section 422 of
the Code.
(d) Limitations on Awards. The aggregate Fair Market Value,
determined as of the Option Date, of Common Stock with respect to which
ISOs are exercisable by a Participant for the first time during any
calendar year under all ISO plans of the Company and any Subsidiary shall
not exceed $100,000.
(e) Awards to Certain Stockholders. Notwithstanding Sections 6(a)
and 6(b) hereof, if an ISO is granted to a Participant who owns stock
representing more than 10 percent of the voting power of all classes of
stock of the Company or a Subsidiary (as determined under the Code), the
exercise period specified in the ISO agreement for which the ISO
thereunder is granted shall not exceed five years from the Option Date,
and the Option Price shall be at least 110% of the Fair Market Value (as
of the Option Date) of the Common Stock subject to the ISO.
7. Terms and Conditions of Non-Qualified Stock Option.
The Committee may, in its discretion, grant NSOs to any Participant
under the Plan. Each NSO shall be evidenced by an agreement between the Company
and the Participant. Each NSO agreement, in such form as is approved by the
Committee, shall be subject to the following express terms and conditions and to
such other terms and conditions, not inconsistent with the Plan as the Committee
may deem appropriate:
(a) Option Period. Each NSO will expire as of the earliest of:
(i) the date on which it is forfeited under the
provisions of Section 13;
(ii) the date three months after the Participant's
termination of employment or membership on the Board, as applicable,
for any reason other than death; or
(iii) the date six months after the Participant's death.
(b) Option Price. At the time when the NSO is granted, the
Committee will fix the Option Price. The Option Price may be greater than,
less than, or equal to Fair Market Value on the Option Date, as determined
in the sole discretion of the Committee.
(c) Other Option Provisions. The form of NSO authorized by the Plan
may contain such other provisions as the Committee may from time to time
determine.
8. Terms and Conditions of Stock Appreciation Rights.
The Committee may, in its discretion, grant a SAR to any Participant
under the Plan. Each SAR shall be evidenced by an agreement between the Company
and the Participant, and may be a Naked SAR or a Tandem SAR. Each SAR awarded to
Participants under the Plan
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shall be subject to the following express terms and conditions and to such other
terms and conditions, not inconsistent with the Plan, as the Committee shall
deem appropriate:
(a) Tandem SARs. Tandem SARs shall terminate on the same date as
the related ISO or NSO. A Tandem SAR shall be exercisable only if the Fair
Market Value of a share of Common Stock on the date of surrender exceeds
either the Option Price for the related ISO or the Fair Market Value of
the Common Stock on the Option Date, if related to an NSO, and then shall
be exercisable to the extent, and only to the extent, that the related ISO
or NSO is exercisable. A Tandem SAR shall entitle the Participant to whom
it is granted the right to elect, so long as such Tandem SAR is
exercisable and subject to such limitations as the Committee shall have
imposed, to surrender any then exercisable portion of his related ISO or
NSO, in whole or in part, and receive from the Company in exchange,
without any payment of cash (except for applicable employee withholding
taxes), that number of shares of Common Stock having an aggregate Fair
Market Value on the date of surrender equal to the product of (i) the
excess of the Fair Market Value of a share of Common Stock on the date of
surrender over the per share Option Price under such ISO or the Fair
Market Value of the Common Stock on the Option Date, if such SAR is
related to an NSO and (ii) the number of shares of Common Stock subject to
such ISO or NSO or portion thereof which is surrendered. Any ISO or NSO or
portion thereof which is surrendered shall no longer be exercisable. The
Committee, in its sole discretion, may allow the Company to settle all or
part of the Company's obligation arising out of the exercise of a Tandem
SAR by the payment of cash equal to the aggregate Fair Market Value of the
shares of Common Stock which the Company would otherwise be obligated to
deliver.
(b) Naked SARs. Naked SARs shall terminate as provided in the
Participant's SAR agreement. The Committee may at the time of granting any
Naked SAR add such conditions and limitations to the Naked SAR as it shall
deem advisable, including but not limited to, limitations on the period
within which the Naked SAR shall be exercisable and the maximum amount of
appreciation to be recognized with regard to such Naked SAR.
(c) Other Conditions. If a Participant is subject to Section 16(a)
and Section 16(b) of the Exchange Act, the Committee may at any time add
such additional conditions and limitations to such SAR which the
Committee, in its discretion, deems necessary or desirable in order to
comply with Section 16(a) or Section 16(b) of the Exchange Act and the
rules and regulations issued thereunder, or in order to obtain any
exemption therefrom.
9. Terms and Conditions of Restricted Stock Awards.
The Committee, in its discretion, may grant Restricted Stock to any
Participant under the Plan. Each grant of Restricted Stock shall be evidenced by
an agreement between the Company and the Participant. All shares of Common Stock
awarded to Participants under the Plan as Restricted Stock shall be subject to
the following express terms and conditions and to such other terms and
conditions, not inconsistent with the Plan, as the Committee shall deem
appropriate:
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(a) Restricted Period. Shares of Restricted Stock awarded to
Participants may not be sold, transferred, pledged or otherwise encumbered
before they vest. Subject to the provisions of subparagraphs (b) and (c)
below and any other restrictions imposed by law, any shares of Restricted
Stock that vest will be transferred to the Participant or, in the event of
his death, to the beneficiary or beneficiaries designated by writing filed
by the Participant with the Committee for such purpose or, if none, to his
estate. Delivery of shares in accordance with the preceding sentence shall
be made within the 30-day period after they vest.
(b) Forfeitures. A Participant shall forfeit all unpaid accumulated
dividends and all shares of Restricted Stock which have not vested prior
to the date that his employment with the Company, or if a Director, his
membership on the Board, is terminated for any reason.
(c) Certificates Deposited With Company. Each certificate issued in
respect of shares of Restricted Stock awarded under the Plan shall be
registered in the name of the Participant and deposited with the Company.
Each such certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions
(including forfeiture) relating to Restricted Stock contained in
the Ticketmaster Stock Plan and an agreement entered into between
the registered owner and Ticketmaster Group, Inc. (f/k/a
Ticketmaster Holdings Group, Ltd.) Copies of such Plan and
agreement are on file at the principal office of Ticketmaster
Group, Inc."
(d) Stockholder Rights. Subject to the foregoing restrictions, each
Participant shall have all the rights of a stockholder with respect to his
shares of Restricted Stock including, but not limited to, the right to
vote such shares.
(e) Dividends. On each Common Stock dividend payment date, each
Participant shall receive an amount equal to the dividend paid on that
date on a share of Common Stock, multiplied by his number of shares of
Restricted Stock.
10. Terms and Conditions of Phantom Stock.
The Committee may, in its discretion, award Phantom Stock to any
Participant under the Plan. Each award of Phantom Stock shall be evidenced by an
agreement between the Company and the Participant. The Committee may at the time
of awarding any Phantom Stock add such additional conditions and limitations to
the Phantom Stock as it shall deem advisable, including, but not limited to, the
right for Participants to receive dividends equivalent to those paid on Common
Stock, limitations on the period or periods within which the Phantom Stock may
be surrendered, and the maximum amount of appreciation to be recognized with
regard to such Phantom Stock. If a Participant is subject to Section 16(a) and
Section 16(b) of the Exchange Act, the Committee may at any time add such
additional conditions and limitations to such Phan-
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tom Stock which, in its discretion, the Committee deems necessary or desirable
in order to comply with Section 16(a) or Section 16(b) of the Exchange Act and
the rules and regulations issued thereunder, or in order to obtain any exemption
therefrom. An award of Phantom Stock shall entitle the Participant to whom it is
awarded the right to elect, so long as such Phantom Stock is vested and subject
to such limitations as the Committee shall have imposed, to surrender any then
vested portion of the Phantom Stock, in whole or in part, and receive from the
Company in exchange therefor the Fair Market Value on the date of surrender of
the Common Stock to which the surrendered Phantom Stock relates in cash or in
shares of Common Stock as the Committee may determine.
11. Director Stock Options.
(a) Each Director who is not otherwise an employee of the Company
or the beneficial owner of 5% or more of the outstanding Common Stock and
who is a Director on August 21, 1996 shall automatically be granted as of
that date NSOs to purchase 25,000 shares of Common Stock having an
exercise price per share equal to $14.50 or, if the Company completes an
initial public offering of Common Stock prior to February 21, 1997, the
price to the public (as adjusted) for any intervening reverse stock split.
(b) Commencing with the date of the annual meeting of the
Shareholders of the Company scheduled to be held in 1997, or, if no annual
meeting of the Shareholders of the Company occurs on the scheduled date
for such meeting as specified in the Company's by-laws, and annually
thereafter each Director who is not otherwise an employee of the Company
or the beneficial owner of 5% or more of the outstanding Common Stock
shall automatically be granted NSOs to purchase 10,000 shares of Common
Stock having an exercise price per share equal to 100% of the Fair Market
Value of the Common Stock at the Option Date.
(c) An automatic Director NSO shall be granted hereunder only if as
of each Option Date the Director (i) is not otherwise an employee of the
Company or any subsidiary or affiliate, (ii) has not been an employee of
the Company or any subsidiary or affiliate for any part of the preceding
fiscal year, and (iii) has served on the Board continuously since the
commencement, prior to such Option Date, of his term.
(d) Paragraph (b) of this Section 11 shall not become effective and
no NSO's shall be automatically granted pursuant thereto until such time
as the Company's Common Stock has been sold pursuant to a public offering.
(e) Each NSO granted pursuant to this Section 11 shall
notwithstanding the provisions of Section 13, be 100% vested as of the
Option Date; provided, however, such NSO may not be exercised at any time
prior to six months after the Option Date. NSOs granted pursuant to this
Section 11 shall expire ten years from the Option Date. The provisions of
Section 7(a)(i) and (ii) shall not apply to any NSO granted pursuant to
this Section 11.
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(f) In the event that the number of shares of Common Stock
available for future grant under the Plan is insufficient to make all
automatic grants required to be made on such date, then all non-employee
Directors entitled to a grant on such date shall share ratably in the
number of NSOs shares available for grant under the Plan.
(g) Except as expressly provided in this Section 11, any NSO
granted hereunder shall be subject to the terms and conditions of the Plan
if the grant were made pursuant to Section 7 hereof.
12. Manner of Exercise of Options.
To exercise an Option in whole or in part, a Participant (or, after
the Participant's death, the Participant's executor or administrator) must give
written notice to the Committee, stating the number of shares to which he
intends to exercise the Option. The Company will issue the shares with respect
to which the Option is exercised upon payment in full of the Option Price. The
Option Price may be paid in (i) cash, (ii) shares of Common Stock having an
aggregate Fair Market Value, as determined on the date of delivery, equal to the
Option Price, or (iii) by delivery of irrevocable instructions to a broker to
promptly deliver to the Company the amount of sale or loan proceeds necessary to
pay for all Common Stock acquired through such exercise and any tax withholding
obligations resulting from such exercise. The Option Price may be paid in shares
of Common Stock which were received by the Participant upon the exercise of one
or more Options. The Option Price may be paid in shares of Common Stock which
were received by the Participant as an award of Restricted Stock under the Plan.
The Option Price may be paid by surrender of Tandem SARs equal to the Option
Price.
13. Vesting.
A Participant may not exercise an Option or surrender a SAR or
Phantom Stock until it has become vested. The portion of an Option, SAR or
Phantom Stock award that is vested depends upon the period that has elapsed
since the Option Date. Unless the Committee establishes a different vesting
schedule at the time when an Option is granted or the Restricted Stock, SAR or
Phantom Stock is awarded, all Options granted under this Plan, Restricted Stock,
SARs, and Phantom Stock awarded under this Plan shall become 25% vested after 12
months from the Option Date, and shall vest monthly pro rata over a period of 36
months thereafter. Except as provided below or in Section 14, if a Participant
terminates his employment with the Company or its Subsidiaries if an employee,
his membership on the Board if a Director, or his retention as a consultant, for
any reason, he forfeits any Options, Restricted Stock, SARs and/or Phantom Stock
that are not yet vested. A transfer from the Company to a Subsidiary or
affiliate, or vice versa is not a termination of employment for purposes of this
Plan. Unless the Committee in its sole discretion specifically waives the
application of this sentence, then notwithstanding the vesting schedule
contained herein or in the Participant's agreement, if the Participant's
employment or retention as a consultant, or if a Director, his membership on the
Board, is terminated for Cause all Options, SARs, Restricted Stock and/or
Phantom Stock granted or awarded to the Participant will be immediately
cancelled and forfeited by the Participant upon delivery to him of notice of
such termination.
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14. Change in Control.
Notwithstanding the provisions of Section 13 or anything contained
in a Participant's agreement to the contrary, upon a Change in Control all
Options, Restricted Stock, SARs and/or Phantom Stock shall become 100% vested
and immediately exercisable.
15. Adjustments to Reflect Changes in Capital Structure.
If there is any change in the corporate structure or shares of the
Company, the Board of Directors may make any adjustments necessary to prevent
accretion, or to protect against dilution, in the number and kind of shares
authorized by the Plan and, with respect to outstanding Options, Restricted
Stock, Phantom Stock and/or SARs, in the number and kind of shares covered
thereby and in the applicable Option Price. For the purpose of this Section 15,
a change in the corporate structure or shares of the Company includes, without
limitation, any change resulting from a recapitalization, stock split, stock
dividend, consolidation, rights offering, spin-off, reorganization, or
liquidation and any transaction in which shares of Common Stock are changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or another corporation.
16. Non-Transferability of Options, SARs and Phantom Stock.
The Options and SARs granted or Phantom Stock awarded under the Plan
are not transferable, voluntarily or involuntarily, other than by will or the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined in Section 414(p) of the Code. During a Participant's lifetime,
his Options may be exercised only by him.
17. Rights as Stockholder.
No Common Stock may be delivered upon the exercise of any Option
until full payment has been made. A Participant has no rights whatsoever as a
stockholder with respect to any shares covered by an Option until the date of
the issuance of a stock certificate for the shares. A Participant who has been
granted SARs or Phantom Stock shall have no rights whatsoever as a stockholder
with respect to such SARs or Phantom Stock.
18. Withholding Tax.
The Company shall have the right to withhold in cash or shares of
Common Stock with respect to any payments made to Participants under the Plan
any taxes required by law to be withheld because of such payments.
Notwithstanding the foregoing, with respect to a Participant subject to Section
16(a) or 16(b) of the Exchange Act, all amounts required to be withheld upon
either (i) the vesting of Restricted Stock or (ii) the exercise of a SAR or
surrender of Phantom Stock which had a set duration and for which payment is
made in Common Stock, shall automatically be withheld in Common Stock otherwise
deliverable to the Participant and having a Fair Market Value determined on the
date the income is includable in the Participant's income equal to the amount of
taxes required to be withheld.
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19. No Right To Employment.
Participation in the Plan will not give any Participant a right to
be retained as an employee of the Company or any subsidiary, or any right or
claim to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
20. Amendment of the Plan.
The Committee may from time to time amend or revise the terms of
this Plan in whole or in part and may without limitation, adopt any amendment
deemed necessary; provided, however, that (a) no change in any award previously
granted to a Participant may be made that would impair the rights of the
Participant without the Participant's consent, and (b) no amendment may extend
the period during which a Participant may exercise an ISO beyond the period set
forth in Section 6(a)(ii) or 6(e).
21. Shareholder Approval.
Continuance of the Plan shall be subject to approval by the
shareholders of the Company within 12 months before or after the date the Plan
is adopted by the Committee in accordance with Rule 16b-3(b) of the Exchange
Act. If such shareholder approval is obtained at a duly held shareholder's
meeting, it may be obtained by the affirmative vote of the holders of a majority
of the shares of the Company's common stock present at the meeting or
represented and entitled to vote thereon.
22. Conditions Upon Issuance of Shares.
An Option shall not be exercisable, a share of Common Stock shall
not be issued pursuant to the exercise of an Option, and Restricted Stock shall
not be awarded until such time as the Plan has been approved by the Shareholders
of the Company and unless the award of Restricted Stock, exercise of such Option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares of Common Stock may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Common Stock is being
purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
23. Participation Rights.
In the event of a sale of equity securities by or on behalf of one
or more of the Company's stockholders (in one transaction or series of
transactions) resulting in a Change in Control, Participants shall be given
timely notice thereof and shall have the right to surrender Options, Phantom
Stock or SARs in such sale and receive, on a pro rata basis, the amount as to
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which the Option, Phantom Stock or SARs could be converted if such Option,
Phantom Stock or SAR was exercised immediately prior to such transaction, less
the Option Price.
24. Effective Date and Termination of Plan.
24.1 Effective Date. This amended and restated Plan is effective
as of the later of the date of its adoption by the Committee, or the date it is
approved by the shareholders of the Company, pursuant to Section 21.
24.2 Termination of the Plan. The Committee may terminate the
Plan at any time with respect to any shares that are not then subject to Options
or Restricted Stock. Termination of the Plan will not affect the rights and
obligations of any Participant with respect to Options, SARs, Phantom Stock or
Restricted Stock awarded before termination.
