1997 STOCK OPTION PLAN
TABLE OF CONTENTS
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SECTION 1. PURPOSE...................................................1
SECTION 2. DEFINITIONS...............................................1
(a) "BOARD OF DIRECTORS"......................................1
(b) "CODE"....................................................1
(c) "COMMITTEE"...............................................1
(d) "COMPANY".................................................1
(e) "EMPLOYEE"................................................1
(f) "EXERCISE PRICE"..........................................1
(g) "FAIR MARKET VALUE".......................................2
(h) "NONSTATUTORY OPTION".....................................2
(i) "OPTION"..................................................2
(j) "OPTIONEE"................................................2
(k) "PLAN"....................................................2
(l) "SERVICE".................................................2
(m) "SHARE"...................................................2
(n) "STOCK"...................................................2
(o) "STOCK OPTION AGREEMENT"..................................2
(p) "SUBSIDIARY"..............................................2
SECTION 3. ADMINISTRATION............................................3
(a) COMMITTEE MEMBERSHIP......................................3
(b) COMMITTEE PROCEDURES......................................3
(c) COMMITTEE RESPONSIBILITIES................................3
SECTION 4. ELIGIBILITY...............................................4
SECTION 5. STOCK SUBJECT TO PLAN.....................................5
(a) BASIC LIMITATION..........................................5
(b) ADDITIONAL SHARES.........................................5
SECTION 6. TERMS AND CONDITIONS OF OPTIONS...........................5
(a) STOCK OPTION AGREEMENT....................................5
(b) NUMBER OF SHARES..........................................5
(c) EXERCISE PRICE............................................5
(d) WITHHOLDING TAXES.........................................6
(e) EXERCISABILITY AND TERM...................................6
(f) NONTRANSFERABILITY........................................6
(g) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE.............6
(h) NO RIGHTS AS A SHAREHOLDER................................7
(i) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS.........7
(j) RESTRICTIONS ON TRANSFER OF SHARES........................7
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SECTION 7. PAYMENT FOR SHARES.........................................7
(a) GENERAL RULE...............................................7
(b) SURRENDER OF STOCK.........................................7
(c) CASHLESS EXERCISE..........................................8
SECTION 8. ADJUSTMENT OF SHARES.......................................8
(a) GENERAL....................................................8
(b) REORGANIZATIONS............................................8
(c) RESERVATION OF RIGHTS......................................8
SECTION 9. LEGAL REQUIREMENTS.........................................9
SECTION 10. NO EMPLOYMENT RIGHTS.......................................9
SECTION 11. DURATION AND AMENDMENTS....................................9
(a) TERM OF THE PLAN...........................................9
(b) RIGHT TO AMEND OR TERMINATE THE PLAN.......................9
(c) EFFECT OF AMENDMENT OR TERMINATION....................... 10
SECTION 12. EXECUTION................................................ 10
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1997 STOCK OPTION PLAN
SECTION 1. PURPOSE.
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The purpose of the Plan is to offer selected employees an opportunity
to acquire a proprietary interest in the success of the Company, or to increase
such interest, to encourage such selected persons to remain in the employ of the
Company and to attract new employees with outstanding qualifications by
purchasing Shares of the Company's Class A Common Stock. The Plan provides for
the grant of Options to purchase Shares. Options granted under the Plan are
Nonstatutory Options. The Plan was adopted effective as of December 10, 1997.
SECTION 2. DEFINITIONS.
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(a) "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company, as constituted from time to time.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMITTEE" shall mean the committee appointed by the Board of
Directors pursuant to Section 3(a).
(d) "COMPANY" shall mean McClatchy Newspapers, Inc., a Delaware
corporation.
(e) "EMPLOYEE" shall mean any individual who is a common-law employee
of the Company or of a Subsidiary, including officers and directors of the
Company who are also employees.
(f) "EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement.
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(g) "FAIR MARKET VALUE" shall mean the fair market value of a Share as
determined by Committee in good faith as follows:
(i) If the Share was trade on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the closing
price reported by the applicable composite transactions report for
such date; and
(ii) If the foregoing provision is not applicable, then the
Fair Market Value shall be determined by the Committee on such basis
as it deems appropriate. (h) "NONSTATUTORY OPTION" shall mean an
employee stock option that is not qualified under section 422 of
the Code.
(i) "OPTION" shall mean Nonstatutory Option granted under the Plan and
entitling the holder to purchase Shares.
(j) "OPTIONEE" shall mean an individual who holds an Option.
(k) "PLAN" shall mean this McClatchy Newspapers, Inc. 1997 Stock
Option Plan.
(l) "SERVICE" shall mean service as an Employee. For purposes of this
Plan, "Service shall continue if an Employee becomes a consultant to the Company
or a Subsidiary.
(m) "SHARE" shall mean one share of Stock, as adjusted in accordance
with Section 8 (if applicable).
(n) "STOCK" shall mean the Class A Common Stock of the Company, and
such other stock as may be substituted therefor in accordance with the
adjustment provisions of the Plan.
(o) "STOCK OPTION AGREEMENT" shall mean the agreement between the
Company and an Optionee which contains the terms, conditions and restrictions
pertaining to his or her Option.
(p) "SUBSIDIARY" shall mean any corporation, of which the Company
and/or one or more other Subsidiaries own not less than 50 percent of the total
combined voting power of all classes of outstanding stock of such corporation. A
corporation that attains the status of a Subsidiary on
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a date after the adoption of the Plan shall be considered a Subsidiary
commencing as of such date.
SECTION 3. ADMINISTRATION.
(a) COMMITTEE MEMBERSHIP. The Plan shall be administered by the
Committee which shall consist of not less than two directors appointed by the
Board of Directors each of whom shall satisfy the requirements of Rule 16b-3, as
amended of the Securities Exchange Act of 1933.
(b) COMMITTEE PROCEDURES. The Board of Directors shall designate one
of the members of the Committee as chairperson. The Committee may hold meetings
at such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by all Committee members, shall be valid acts of the
Committee.
(c) COMMITTEE RESPONSIBILITIES. Subject to the provisions of the Plan,
the Committee shall have full authority and discretion to take the following
actions:
(i) To interpret the Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms
relating to the Plan;
(iii) To authorize any person to execute, on behalf of the
Company, any instrument required to carry out the purposes of the
Plan;
(iv) To determine when Options are to be granted under the Plan;
(v) To select the Optionees;
(vi) To determine the number of Shares to be made subject to each
Option;
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(vii) To prescribe the terms and conditions of each Option,
including (without limitation) the Exercise Price and to specify the
provisions of the Stock Option Agreement relating to such Option;
(viii) To amend or terminate any outstanding Stock Option
Agreement;
(ix) To determine the disposition of an Option in the event of an
Optionee's divorce or dissolution of marriage;
(x) To correct any defect, supply any omission, or reconcile any
inconsistency in the Plan and any Option;
(xi) To prescribe the consideration for the grant of each Option
under the Plan and to determine the sufficiency of such consideration;
and
(xii) To take any other actions deemed necessary or advisable for
the administration of the Plan.
Subject to the requirements of applicable law, the Committee may designate
persons other than members of the Committee to carry out its responsibilities
and may prescribe such conditions and limitations as it may deem appropriate,
except that the Committee may not delegate its authority with regard to the
selection for participation of or the granting of Options or other rights under
the Plan to persons subject to Section 16 of the Exchange Act. All decisions,
interpretations and other actions of the Committee shall be final and binding on
all Offerees, all Optionees, and all persons deriving their rights from an
Optionee. No member of the Committee shall be liable for any action that he has
taken or has failed to take in good faith with respect to the Plan, any Option,
or any right to acquire Shares under the Plan.
SECTION 4. ELIGIBILITY.
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Only Employees shall be eligible for designation as Optionees by the
Committee.
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SECTION 5. STOCK SUBJECT TO PLAN.
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(a) BASIC LIMITATION. Shares offered under the Plan shall be
authorized but unissued Shares. The aggregate number of Shares which may be
issued under the Plan (upon exercise of Options) shall not exceed 750,000
Shares, subject to adjustment pursuant to Section 8. The number of Shares which
are subject to Options outstanding at any time under the Plan shall not exceed
the number of Shares which then remain available for issuance under the Plan.
The Company, during the term of the Plan, shall at all times reserve and keep
available sufficient Shares to satisfy the requirements of the Plan.
(b) ADDITIONAL SHARES. In the event that any outstanding Option for
any reason expires or is canceled or otherwise terminated, the Shares allocable
to the unexercised portion of such Option shall again be available for the
purposes of the Plan.
SECTION 6. TERMS AND CONDITIONS OF OPTIONS.
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(a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan
shall be evidenced by a Stock Option Agreement between the Optionee and the
Company. Such Option shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock
Option Agreements entered into under the Plan need not be identical.
(b) NUMBER OF SHARES. Each Stock Option Agreement shall specify the
number of Shares that are subject to the Option and shall provide for the
adjustment of such number in accordance with Section 8.
(c) EXERCISE PRICE. Each Stock Option Agreement shall specify the
Exercise Price which shall be determined by the Committee in its sole
discretion. The Exercise Price may be
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less than the Fair Market Value of a Share. The Exercise Price shall be payable
in a form described in Section 7.
(d) WITHHOLDING TAXES. As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Committee may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations
that may arise in connection with such exercise. The Optionee shall also make
such arrangements as the Committee may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.
(e) EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify
the date when all or any installment of the Option is to become exercisable. The
Stock Option Agreement shall also specify the term of the Option. The Committee
in its sole discretion shall determine when all or any part of an Option is to
become exercisable and when such Option is to expire.
(f) NONTRANSFERABILITY. Except as provided in the applicable Stock
Option Agreement, no Option shall be transferable by the Optionee other than by
will or by the laws of descent and distribution. An Option may be exercised
during the lifetime of the Optionee only by him or by his guardian or legal
representative. No Option or interest therein may be transferred, assigned,
pledged or hypothecated by the Optionee during his lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or
similar process.
(g) EXERCISE OF OPTIONS ON TERMINATION OF SERVICE. Each Option shall
set forth the extent to which the Optionee shall have the right to exercise the
Option following termination of the Optionee's Service with the Company and its
Subsidiaries. Such provisions shall be determined in the sole discretion of the
Committee, need not be uniform among all Options issued pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
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(h) NO RIGHTS AS A SHAREHOLDER. An Optionee, or a transferee of an
Optionee, shall have no rights as a shareholder with respect to any Shares
covered by an Option until the date of the issuance of a stock certificate for
such Shares.
(i) MODIFICATION, EXTENSION AND ASSUMPTION OF OPTIONS. Within the
limitations of the Plan, the Committee may modify, extend or assume outstanding
Options or may accept the cancellation of outstanding Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise
Price or for other consideration.
(j) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon
exercise of an Option shall be subject to such rights of repurchase, rights of
first refusal and other transfer restrictions as the Committee may determine.
Such restrictions shall be set forth in the applicable Stock Option Agreement
and shall apply in addition to any restrictions that may apply to holders of
Shares generally.
SECTION 7. PAYMENT FOR SHARES.
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(a) GENERAL RULE. The entire Exercise Price of Shares issued under the
Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided in Subsections (b) and
(c) below.
(b) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part with Shares which have already been
owned by the Optionee or the Optionee's representative for any time period
specified by the Committee and which are surrendered to the Company in good form
for transfer. Such Shares shall be valued at their Fair Market Value on the date
when the new Shares are purchased under the Plan.
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(c) CASHLESS EXERCISE. To the extent that a Stock Option Agreement so
provides, payment may be made all or in part by delivery (on a form prescribed
by the Committee) of an irrevocable direction to a securities broker to sell
Shares and to deliver all or part of the sale proceeds to the Company in payment
of the aggregate Exercise Price.
SECTION 8. ADJUSTMENT OF SHARES.
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(a) GENERAL. In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of a dividend payable
in a form other than Shares in an amount that has a material effect on the value
of Shares, a combination or consolidation of the outstanding Stock into a lesser
number of Shares, a recapitalization, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of
(i) the number of Shares available for future grants under Section 5, (ii) the
number of Shares covered by each outstanding Option or (iii) the Exercise Price
under each outstanding Option.
(b) REORGANIZATIONS. In the event that the Company is a party to a
merger or reorganization, outstanding Options shall be subject to the agreement
of merger or reorganization.
(c) RESERVATION OF RIGHTS. Except as provided in this Section 8, an
Optionee shall have no rights by reason of (i) any subdivision or consolidation
of shares of stock of any class, (ii) the payment of any dividend or (iii) any
other increase or decrease in the number of shares of stock of any class. Any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an Option. The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its
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capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
SECTION 9. LEGAL REQUIREMENTS.
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Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares complies with (or is exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock exchange on which the
Company's securities may then be listed.
SECTION 10. NO EMPLOYMENT RIGHTS.
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No provision of the Plan, nor any Option granted under the Plan, shall
be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to
terminate any person's Service at any time and for any reason.
SECTION 11. DURATION AND AMENDMENTS.
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(a) TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on the date of its adoption by the Board of Directors. The Plan shall
terminate automatically ten (10) years after its initial effective date of the
Plan, and may be terminated on any earlier date pursuant to Subsection (b)
below.
(b) RIGHT TO AMEND OR TERMINATE THE PLAN. The Board of Directors may
amend, suspend or terminate the Plan at any time and from time to time. Rights
and obligations under any Option granted before amendment of the Plan shall not
be materially altered, or impaired
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adversely, by such amendment, except with consent of the person to whom the
Option was granted. An amendment of the Plan shall be subject to the approval of
the Company's stockholders only to the extent required by applicable laws,
regulations or rules.
(c) EFFECT OF AMENDMENT OR TERMINATION. No Shares shall be issued or
sold under the Plan after the termination thereof, except upon exercise of an
Option granted prior to such termination. The termination of the Plan, or any
amendment thereof, shall not affect any Option previously granted under the
Plan.
SECTION 12. EXECUTION.
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To record the adoption of the Plan by the Board of Directors, the
Company has caused its authorized officer to execute the same as of December 11,
1997.
McCLATCHY NEWSPAPERS, INC.
By /s/ KAROLE MORGAN-PRAGER
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As Its Secretary
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