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
-2-
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
-4-
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:
-5-
(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).
-6-
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
-7-
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.
-8-
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
____________________________
-4-