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EXHIBIT 10.17
CAPSTAR BROADCASTING CORPORATION
1997 STOCK OPTION PLAN
1. Purpose.
Capstar Broadcasting Corporation, a Delaware corporation (herein,
together with its successors, referred to as the "Company"), by means of this
1997 Stock Option Plan (the "Plan"), desires to afford certain individuals and
key employees of the Company and any parent corporation or subsidiary
corporation thereof now existing or hereafter formed or acquired (such parent
and subsidiary corporations sometimes referred to herein as "Related Entities")
who are responsible for the continued growth of the Company an opportunity to
acquire a proprietary interest in the Company, and thus to create in such
persons an increased interest in and a greater concern for the welfare of the
Company and any Related Entities. As used in the Plan, the terms "parent
corporation" and "subsidiary corporation" shall mean, respectively, a
corporation within the definition of such terms contained in Sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code").
The stock options described in Sections 6 and 7 (the "Options"), and
the shares of Common Stock (as hereinafter defined) acquired pursuant to the
exercise of such Options are a matter of separate inducement and are not in
lieu of any salary or other compensation for services.
2. Administration.
The Plan shall be administered by the Option Committee, or any
successor thereto, of the Board of Directors of the Company (the "Board of
Directors"), or by any other committee appointed by the Board of Directors to
administer this Plan (the "Committee"); provided, the entire Board of Directors
may act as the Committee if it chooses to do so. The number of individuals
that shall constitute the Committee shall be determined from time to time by a
majority of all the members of the Board of Directors, and, unless that
majority of the Board of Directors determines otherwise, shall be no less than
two individuals; provided, however, that unless the Plan and the Options
granted thereunder otherwise comply with Rule 16b-3 (or any successor rule)
under the Exchange Act (or any successor law) the Committee shall be composed
of either (a) the entire Board of Directors or (b) persons who are
"Non-Employee Directors under Rule 16b-3. A majority of the Committee shall
constitute a quorum (or if the Committee consists of only two members, then
both members shall constitute a quorum), and subject to the provisions of
Section 5, the acts of a majority of the members present at any meeting at
which a quorum is present, or acts approved in writing by all members of the
Committee, shall be the acts of the Committee.
The members of the Committee shall serve at the pleasure of the Board
of Directors, which shall have the power, at any time and from time to time, to
remove members from or add members to the Committee. Removal from the
Committee may be with or without cause. Any individual serving as a member of
the Committee shall have the right to resign from membership in the Committee
by written notice to the Board of Directors. The Board of Directors, and not
the remaining members of the Committee, shall have the power and authority to
fill vacancies on the Committee, however caused. The Board of Directors shall
promptly fill any vacancy that causes the
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number of members of the Committee to be below two or, if the Company has a
class of equity securities registered pursuant to Section 12 of the Exchange
Act, any other number that Rule 16b-3 may require from time to time.
3. Shares Available.
Subject to the adjustments provided in Section 10, the maximum
aggregate number of shares of Class A Common Stock, par value $0.01 per share,
of the Company ("Common Stock") in respect of which Options may be granted for
all purposes under the Plan shall be 9,000,000 shares. If, for any reason, any
shares as to which Options have been granted cease to be subject to purchase
thereunder, including the expiration of such Option, the termination of such
Option prior to exercise, or the forfeiture of such Option, such shares shall
thereafter be available for grants under the Plan. Options granted under the
Plan may be fulfilled in accordance with the terms of the Plan with (i)
authorized and unissued shares of the Common Stock, (ii) issued shares of such
Common Stock held in the Company's treasury, or (iii) issued shares of Common
Stock reacquired by the Company in each situation as the Board of Directors or
the Committee may determine from time to time.
4. Eligibility and Bases of Participation.
Grants of Incentive Options (as hereinafter defined) and Non-Qualified
Options (as hereinafter defined) may be made under the Plan, subject to and in
accordance with Section 6, to Key Employees. As used herein, the term "Key
Employee" shall mean any employee of the Company or any Related Entity,
including officers and directors of the Company or any Related Entity who are
also employees of the Company or any Related Entity, who is regularly employed
on a salaried basis and who is so employed on the date of such grant, whom the
Committee identifies as having a direct and significant effect on the
performance of the Company or any Related Entity.
Grants of Non-Qualified Options may be made, subject to and in
accordance with Section 7, to any Eligible Non-Employee. As used herein, the
term "Eligible Non-Employee" shall mean any person or entity of any nature
whatsoever, specifically including an individual, a firm, a company, a
corporation, a partnership, a trust, or other entity (collectively, a
"Person"), that the Committee designates as eligible for a grant of Options
pursuant to this Plan because such Person performs bona fide consulting,
advisory, or other services for the Company or any Related Entity (other than
services in connection with the offer or sale of securities in a
capital-raising transaction) and the Board of Directors or the Committee
determines that the Person has a direct and significant effect on the financial
development of the Company or any Related Entity.
The adoption of this Plan shall not be deemed to give any Person a
right to be granted any Options.
Notwithstanding any other provision of this Plan to the contrary, with
respect to the grant of any Options to any Key Employee or Eligible
Non-Employee, the Committee shall first determine the number of shares in
respect of which Options are to be granted to such Key Employee or Eligible
Non-Employee and shall then cause to be granted to such Key Employee or
Eligible Non-Employee an Option exercisable for such shares. The exercise
price per share of Common Stock under each
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Option shall be fixed by the Committee at the time of grant of the Option and
shall equal at least 100% of the Fair Market Value of a share of Common Stock
on the date of grant.
5. Authority of Committee.
Subject to and not inconsistent with the express provisions of the
Plan, the Code and, if applicable, Rule 16b-3, the Committee shall have plenary
authority to:
a. determine the Key Employees and Eligible Non-Employees to whom
Options shall be granted, the time when such Options shall be
granted, the number of shares covered by the Options, the
purchase price or exercise price under each Option, the
period(s) during which such Options shall be exercisable
(whether in whole or in part, including whether such Options
shall become immediately exercisable upon the consummation of a
"Sale of the Company" or a "Qualifying Public Offering"), the
restrictions to be applicable to Options and all other terms
and provisions thereof (which need not be identical);
b. require, if determined necessary or appropriate by the
Committee in order to comply with Rule 16b-3, as a condition
to the granting of any Option, that the Person receiving such
Option agree not to sell or otherwise dispose of such Option,
any Common Stock acquired pursuant to such Option, or any other
"derivative security" (as defined by Rule 16a-l(c) under the
Exchange Act) for a period of six months following the later of
the date of the grant of such Option or (ii) the date when the
exercise price of such Option is fixed if such exercise price
is not fixed at the date of grant of such Option, or for such
other period as the Committee may determine;
c. provide an arrangement through registered broker-dealers
whereby temporary financing may be made available to an
optionee by the broker-dealer, under the rules and regulations
of the Board of Governors of the Federal Reserve, for the
purpose of assisting the optionee in the exercise of an Option,
such authority to include the payment by the Company of the
commissions of the broker-dealer;
d. provide the establishment of procedures for an optionee (i) to
have withheld from the total number of shares of Common Stock
to be acquired upon the exercise of an Option that number of
shares having a Fair Market Value which, together with such
cash as shall be paid in respect of fractional shares, shall
equal the aggregate exercise price under such Option for the
number of shares then being acquired (including the shares to
be so withheld), and (ii) to exercise a portion of an Option by
delivering that number of shares of Common Stock already owned
by such optionee having an aggregate Fair Market Value which
shall equal the partial Option exercise price and to deliver
the shares thus acquired by such optionee in payment of shares
to be received pursuant to the exercise of additional portions
of such Option, the effect of which shall be that such optionee
can in sequence utilize such newly acquired shares in payment
of the exercise price of the entire Option, together with such
cash as shall be paid in respect of fractional shares;
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e. provide (in accordance with Section 13 or otherwise) the
establishment of a procedure whereby a number of shares of
Common Stock or other securities may be withheld from the
total number of shares of Common Stock or other securities to
be issued upon exercise of an Option to meet the obligation of
withholding for income, social security and other taxes
incurred by an optionee upon such exercise or required to be
withheld by the Company or a Related Entity in connection
with such exercise;
f. prescribe, amend, modify and rescind rules and regulations
relating to the Plan;
g. make all determinations permitted or deemed necessary,
appropriate or advisable for the administration of the Plan,
interpret any Plan or Option provision, perform all other
acts, exercise all other powers, and establish any other
procedures determined by the Committee to be necessary,
appropriate, or advisable in administering the Plan or for the
conduct of the Committee's business. Any act of the Committee,
including interpretations of the provisions of the Plan or any
Option and determinations under the Plan or any Option shall be
final, conclusive and binding on all parties.
The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee or any Person to whom it has delegated duties as aforesaid may employ
one or more Persons to render advice with respect to any responsibility the
Committee or such Person may have under the Plan. The Committee may employ
attorneys, consultants, accountants, or other Persons and the Committee, the
Company, and its officers and directors shall be entitled to rely upon the
advice, opinions, or valuations of any such Persons. No member or agent of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan and all members and
agents of the Committee shall be fully protected by the Company in respect of
any such action, determination or interpretation.
6. Stock Options for Key Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant incentive stock options pursuant to Section 422 of
the Code ("Incentive Options"), to grant non-qualified stock options (options
which do not qualify under Section 422 of the Code) ("Non-Qualified Options"),
and to grant both types of Options to Key Employees. No Incentive Option shall
be granted pursuant to this Plan after the earlier of ten years from the date
of adoption of the Plan or ten years from the date of approval of the Plan by
the stockholders of the Company. Notwithstanding anything in this Plan to the
contrary, Incentive Options may be granted only to Key Employees. The terms
and conditions of the Options granted under this Section 6 shall be determined
from time to time by the Committee; provided, however, that the Options granted
under this Section 6 shall be subject to all terms and provisions of the Plan
(other than Section 7), including the following:
a. Option Exercise Price. Subject to Section 4, the Committee
shall establish the Option exercise price at the time any
Option is granted at such amount as the Committee shall
determine; provided, that in the case of an Incentive Option
granted
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to a person who, at the time such Incentive Option is
granted, owns shares of the Company or any Related Entity which
possess more than 10% of the total combined voting power of all
classes of shares of the Company or of any Related Entity, the
option exercise price shall not be less than 110% of the Fair
Market Value per share of Common Stock at the date the Option
is granted. The Option exercise price shall be subject to
adjustment in accordance with the provisions of Section 10 of
the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of such
exercise. Such price shall be payable in cash or by any other
means acceptable to the Committee, including delivery of the
Company of shares of Common Stock owned by the optionee or by
the delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares
delivered to or withheld by the Company in payment of the
Option exercise price shall be valued at the Fair Market Value
of the Common Stock on the day preceding the date of the
exercise of the Option.
c. Continuation of Employment. Each Incentive Option shall
require the optionee to remain in the continuous employ of the
Company or any Related Entity from the date of grant of the
Incentive Option until no more than three months prior to the
date of exercise of the Incentive Option.
d. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as the
Committee may determine at the time of the grant. No Option by
its terms shall be exercisable after the expiration of ten
years from the date of grant of the Option, unless, as to any
Non-Qualified Option, otherwise expressly provided in such
Option; provided, however, that no Incentive Option granted to
a person who, at the time such Option is granted, owns stock of
the Company, or any Related Entity, possessing more than 10% of
the total combined voting power of all classes of stock of the
Company, or any Related Entity, shall be exercisable after the
expiration of five years from the date such Option is granted.
e. Death. If any optionee's employment with the Company or a
Related Entity terminates due to the death of such optionee,
the estate of such optionee, or a Person who acquired the right
to exercise such Option by bequest or inheritance or by reason
of the death of the optionee, shall have the right to exercise
such Option in accordance with its terms at any time and from
time to time within 180 days after the date of death unless a
longer period is expressly provided in such Option or a shorter
period is established by the Committee pursuant to Section 8
(but in no event after the expiration date of such Option).
f. Disability. If the employment of any optionee terminates
because of his Disability (as defined in Section 18), such
optionee or his legal representative shall have the right to
exercise the Option in accordance with its terms at any time
and from time to time within 180 days after the date of such
termination unless a longer period is expressly provided in
such Option or a shorter period is established by the Committee
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pursuant to Section 8 (but not after the expiration date of the
Option); provided, however, that in the case of an Incentive
Option, the optionee or his legal representative shall in any
event be required to exercise the Incentive Option within one
year after termination of the optionee's employment due to his
Disability.
g. Termination for Cause. Unless an optionee's Option expressly
provides otherwise, such optionee shall immediately forfeit all
rights under his Option, except as to the shares of stock
already purchased thereunder, if the employment of such
optionee with the Company or a Related Entity is terminated by
the Company or any Related Entity for Good Cause (as defined
below). The determination that there exists Good Cause for
termination shall be made by the Option Committee (unless
otherwise agreed to in writing by the Company and the
optionee).
h. Voluntary Termination; Other Termination of Employment. If the
employment of an optionee with the Company or a Related Entity
terminates for any reason (including if such optionee
voluntarily terminates employment with or without consent of
the Company or any Related Entity) other than those specified
in subsections 6(e), (f) or (g) above, such optionee shall have
the right to exercise his Option in accordance with its terms,
within 30 days after the date of such termination, unless a
longer period is expressly provided in such Option or a shorter
period is established by the Committee pursuant to Section 8
(but not after the expiration date of the Option); provided,
that no Incentive Option shall be exercisable more than three
months after such termination.
i. Maximum Exercise. The aggregate Fair Market Value of stock
(determined at the time of the grant of the Option) with
respect to which Incentive Options are exercisable for the
first time by an optionee during any calendar year under all
plans of the Company and any Related Entity shall not exceed
$100,000.
7. Stock Option Grants to Eligible Non-Employees.
Subject to the express provisions of this Plan, the Committee shall
have the authority to grant Non-Qualified Options to Eligible Non-Employees.
The terms and conditions of the Options granted under this Section 7 shall be
determined from time to time by the Committee; provided, however, that the
Options granted under this Section 7 shall be subject to all terms and
provisions of the Plan (other than Section 6), including the following:
a. Option Exercise Price. Subject to Section 4, the Committee
shall establish the Option exercise price at the time any
Non-Qualified Option is granted at such amount as the
Committee shall determine. The Option exercise price shall be
subject to adjustment in accordance with the provisions of
Section 10 of the Plan.
b. Payment. The price per share of Common Stock with respect to
each Option exercise shall be payable at the time of
such exercise. Such price shall be payable in cash or by any
other means acceptable to the Committee, including delivery to
the Company
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of shares of Common Stock owned by the optionee or by the
delivery or withholding of shares pursuant to a procedure
created pursuant to Section 5.d. of the Plan. Shares
delivered to or withheld by the Company in payment of the
Option exercise price shall be valued at the Fair Market Value
of the Common Stock on the day preceding the date of the
exercise of the Option.
c. Exercisability of Stock Option. Subject to Section 8, each
Option shall be exercisable in one or more installments as
the Committee may determine at the time of the grant. No
Option shall be exercisable after the expiration of ten years
from the date of grant of the Option, unless otherwise
expressly provided in such Option.
d. Death. If the retention by the Company or any Related Entity
of the services of any Eligible Non-Employee terminates
because of his death, the estate of such optionee, or a Person
who acquired the right to exercise such Option by bequest or
inheritance or by reason of the death of the optionee, shall
have the right to exercise such Option in accordance with its
terms, at any time and from time to time within 180 days after
the date of death unless a longer period is expressly provided
in such Option or a shorter period is established by the
Committee pursuant to Section 8 (but in no event after the
expiration date of such Option).
e. Disability. If the retention by the Company or any Related
Entity of the services of any Eligible Non-Employee
terminates because of his Disability, such optionee or his
legal representative shall have the right to exercise the
Option in accordance with its terms at any time and from time
to time within 180 days after the date of the optionee's
termination unless a longer or shorter period is expressly
provided in such Option or established by the Committee
pursuant to Section 8 (but not after the expiration of the
Option).
f. Termination for Cause; Voluntary Termination. If the retention
by the Company or any Related Entity of the services of any
Eligible Non-Employee is terminated (i) for Good Cause, (ii)
as a result of removal of the optionee from office as a
director of the Company or of any Related Entity for cause by
action of the stockholders of the Company or such Related
Entity in accordance with the by-laws of the Company or such
Related Entity, as applicable, and the corporate law of the
Jurisdiction of incorporation of the Company or such Related
Entity, or (iii) as a result of the voluntarily termination by
optionee of optionee's service without the consent of the
Company or any Related Entity, then such optionee shall
immediately forfeit his rights under his Option except as to
the shares of stock already purchased. The determination that
there exists Good Cause for termination shall be made by the
Option Committee (unless otherwise agreed to in writing by the
Company and the optionee).
g. Other Termination of Relationship. If the retention by the
Company or any Related Entity of the services of any
Eligible Non-Employee terminates for any reason other than
those specified in subsections 7(d), (e) or (f) above, such
optionee shall have the
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right to exercise his or its Option in accordance with its
terms within 30 days after the date of such termination,
unless a longer period is expressly provided in such Option or
a shorter period is established by the Committee pursuant to
Section 8 (but not after the expiration date of the Option).
h. Ineligibility for Other Grants. Any Eligible Non-Employee who
receives an Option pursuant to this Section 7 shall be
ineligible to receive any Options under any other Section of
the Plan.
8. Change of Control; Sale of the Company.
If (i) a Change of Control or a Sale of the Company shall occur, (ii)
the Company shall enter into an agreement providing for a Change of Control or
a Sale of the Company, or (iii) any member of the HMC Group shall enter into an
agreement providing for a Sale of the Company, then the Committee may declare
any or all Options outstanding under the Plan to be exercisable in full at such
time or times as the Committee shall determine, notwithstanding the express
provisions of such Options. Each Option accelerated by the Committee pursuant
to the preceding sentence shall terminate, notwithstanding any express
provision thereof or any other provision of the Plan, on such date (not later
than the stated exercise date) as the Committee shall determine; provided,
however, that such termination shall not occur prior to the date on which the
Option becomes fully exercisable pursuant to such acceleration.
9. Purchase Option.
a. Except as otherwise expressly provided in any particular
Option, if (i) any optionee's employment (or, in the case of
any Option granted under Section 7, the optionee's
relationship) with the Company or a Related Entity terminates
for any reason at any time or (ii) a Change of Control occurs,
the Company (and/or its designees) shall have the option (the
"Purchase Option") to purchase, and if the option is exercised,
the optionee (or the optionee's executor or the administrator
of the optionee's estate, in the event of the optionee's death,
or the optionee's legal representative in the event of the
optionee's incapacity) (hereinafter, collectively with such
optionee, the "Grantor") shall sell to the Company and/or its
assignee(s), all or any portion (at the Company's option) of
the shares of Common Stock and/or Options held by the Grantor
(such shares of Common Stock and Options collectively being
referred to as the "Purchasable Shares"), subject to the
Company's compliance with the conditions hereinafter set
forth.
b. The Company shall give notice in writing to the Grantor of the
exercise of the Purchase Option within one year from the date
of the termination of the optionee's employment or engagement
or such Change of Control. Such notice shall state the number
of Purchasable Shares to be purchased and the determination of
the Board of Directors of the Fair Market Value per share of
such Purchasable Shares. If no notice is given within the
time limit specified above, the Purchase Option shall terminate.
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c. The purchase price to be paid for the Purchasable Shares
purchased pursuant to the Purchase Option shall be, in the
case of any Common Stock, the Fair Market Value per share as
of the date of the notice of exercise of the Purchase Option
times the number of shares being purchased, and in the case of
any Option, the Fair Market Value per share times the number of
vested shares subject to such Option which are being purchased,
less the applicable per share Option exercise price. The
purchase price shall be paid in cash. The closing of such
purchase shall take place at the Company's principal executive
offices within ten days after the purchase price has been
determined. At such closing, the Grantor shall deliver or
shall cause to be delivered to the purchasers the certificates
or instruments evidencing the Purchasable Shares being
purchased, duly endorsed (or accompanied by duly executed stock
powers) and otherwise in good form for delivery, against
payment of the purchase price by check of the purchasers). In
the event that, notwithstanding the foregoing, the Grantor
shall have failed to obtain the release of any pledge or other
encumbrance on any Purchasable Shares by or upon the scheduled
closing date (at the option of the purchasers), the closing
shall nevertheless occur on such scheduled closing date, with
the cash purchase price being reduced to the extent of all
unpaid indebtedness for which such Purchasable Shares are then
pledged or encumbered.
d. To assure the enforceability of the Company's rights under this
Section 9, each certificate or instrument representing Common
Stock or an Option held by him or it shall bear a conspicuous
legend in substantially the following form:
THE SHARES (REPRESENTED BY THIS CERTIFICATE] [ISSUABLE
PURSUANT TO THIS AGREEMENT] ARE SUBJECT TO AN OPTION TO
REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY'S 1997
STOCK OPTION PLAN AND A STOCK OPTION AGREEMENT ENTERED INTO
PURSUANT THERETO. A COPY OF SUCH OPTION PLAN AND OPTION
AGREEMENT ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY AT
ITS PRINCIPAL EXECUTIVE OFFICES.
The Company's rights under this Section 9 shall terminate upon the
consummation of a Qualifying Public Offering.
10. Adjustment of Shares.
Unless otherwise expressly provided in a particular Option, in the
event that, by reason of any merger, consolidation, combination, liquidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares or other like
change in capital structure of the Company (collectively, a "Reorganization"),
the Common Stock is substituted, combined, or changed into any cash, property,
or other securities, or the shares of Common Stock are changed into a greater
or lesser number of shares of Common Stock, the number and/or kind of shares
and/or interests subject to an Option and the per share price or value thereof
shall be appropriately adjusted by the Committee to give appropriate effect to
such Reorganization, such that the Option shall thereafter be exercisable for
such securities, cash, and/or other property
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as would have been received in respect of the Common Stock subject to the
Option had the Option been exercised in full immediately prior to such event.
Any fractional shares or interests resulting from such adjustment shall be
eliminated. Notwithstanding the foregoing, (i) each such adjustment with
respect to an Incentive Option shall comply with the rules of Section 424(a) of
the Code, and (ii) in no event shall any adjustment be made which would render
any Incentive Option granted hereunder other than an "incentive stock option"
for purposes of Section 422 of the Code.
In the event the Company is not the surviving entity of a
Reorganization and, following such Reorganization, any optionee will hold
Options issued pursuant to this Plan which have not been exercised, canceled,
or terminated in connection therewith, the Company shall cause such Options to
be assumed (or canceled and replacement Options of equivalent value issued) by
the surviving entity or a Related Entity.
11. Assignment or Transfer.
a. Except as otherwise expressly provided in any Nonqualified
Option, no Option granted under the Plan or any rights or
interests therein shall be assignable or transferable by an
optionee except by will or the laws of descent and
distribution, and during the lifetime of an optionee, Options
granted to him or her hereunder shall be exercisable only by
the optionee or, in the event that a legal representative has
been appointed in connection with the Disability of an
optionee, such legal representative.
b. At least ninety (90) days prior to selling, pledging,
hypothecating, transferring or otherwise disposing ("Transfer")
of any interest in Common Stock issued upon exercise of an
Option, the optionee proposing such Transfer shall deliver a
written notice (the "Sale Notice") to the Company. The
Sale Notice will disclose in reasonable detail the identity of
the prospective transferee(s) and the terms and conditions of
the proposed transfer. Such optionee (and such optionee's
transferees) shall not consummate any such Transfer until
ninety (90) days after the Sale Notice has been delivered to
the Company, unless the Company has notified such optionee in
writing that it will not exercise its rights under this Section
11.b. (The date of the first to occur of such events is
referred to herein as the "Authorization Date"). The Company
or its designee may elect to purchase all (but not less than
all) of the shares of Common Stock to be Transferred upon the
same terms and conditions as those set forth in the Sale Notice
("Right of First Refusal") by delivering a written notice of
such election to such optionee within thirty (30) days after
the receipt of the Sale Notice by the Company (the "Election
Notice"). If the Company has not elected to purchase all of
the shares of Common Stock specified in the Sale Notice, such
optionee may Transfer the shares of Common Stock to the
prospective transferee(s) as specified in the Sale Notice, at a
price and on terms no more favorable to the transferee(s)
thereof than specified in the Sale Notice, during the 90-day
period immediately following the Authorization Date and in the
event of any such Transfer of shares the provisions of the Plan
(including, without limitation, the provisions of this Section
11) shall no longer apply to the shares thus transferred. Any
Option Shares not so transferred within such 90-day period must
be reoffered to the
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Company in accordance with the provisions of this Section 11.b.
The Right of First Refusal will not apply with respect
to Transfers of such shares of Common Stock (i) by will or
pursuant to applicable laws of descent and distribution or (ii)
among the optionee's family group; provided that the
restrictions contained in this Section 11.b. will continue to
be applicable to the shares of Common Stock after any such
Transfer and provided further that the transferees of such
shares of Common Stock have agreed in writing to be bound by
the terms and provisions of this Plan and the applicable Option
Agreement as each may be amended from time to time. In
addition, upon any transfer to a member of the optionee's
family group, the optionee shall be required to give notice to
the Company and as a condition to such Transfer to a member of
the optionee's family group, the optionee will maintain all
voting control over all of the shares of Common Stock. The
optionee's, "family group" means the optionee's spouse and
lineal descendants (whether natural or adopted) and any trust
solely for the benefit of the optionee and/or the optionee's
spouse and/or lineal descendants. In addition, with the prior
approval of the Committee, notwithstanding the provisions of
this Section 11.b., an optionee may pledge such shares of
Common Stock creating a security interest therein; provided,
that the pledgee agrees in writing to be bound, and that such
shares of Common Stock remain bound, by the terms and
provisions of this Plan and the applicable Option Agreement, as
each may be amended from time to time. The rights and
obligations pursuant to this Section 11.b. hereof will
terminate upon the consummation of a Qualified Public Offering.
To assure the enforceability of the Company's rights under this
Section 11.b., each certificate or instrument
representing Common Stock or an Option held by him or it shall
bear a conspicuous legend in substantially the following form:
THE SHARES [REPRESENTED BY THIS CERTIFICATE] [ISSUABLE PURSUANT
TO THIS AGREEMENT] ARE SUBJECT TO A RIGHT OF FIRST REFUSAL
PROVIDED UNDER THE COMPANY'S 1997 STOCK OPTION PLAN AND A STOCK
OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF SUCH
OPTION PLAN AND OPTION AGREEMENT ARE AVAILABLE UPON WRITTEN
REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.
12. Compliance with Securities Laws.
The Company shall not in any event be obligated to file any
registration statement under the Securities Act or any applicable state
securities law to permit exercise of any option or to issue any Common Stock in
violation of the Securities Act or any applicable state securities law. Each
optionee (or, in the event of his death or, in the event a legal representative
has been appointed in connection with his Disability, the Person exercising the
Option) shall, as a condition to his right to exercise any Option, deliver to
the Company an agreement or certificate containing such representations,
warranties and covenants as the Company may deem necessary or appropriate to
12
ensure that the issuance of shares of Common Stock pursuant to such exercise is
not required to be registered under the Securities Act or any applicable state
securities law.
Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED
FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF
UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER,
SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
13. Withholding Taxes.
By acceptance of the Option, the optionee will be deemed to (i) agree
to reimburse the Company or Related Entity by which the optionee is employed
for any federal, state, or local taxes required by any government to be
withheld or otherwise deducted by such corporation in respect of the optionee's
exercise of all or a portion of the Option; (ii) authorize the Company or any
Related Entity by which the optionee is employed to withhold from any cash
compensation paid to the optionee or in the optionee's behalf, an amount
sufficient to discharge any federal, state, and local taxes imposed on the
Company, or the Related Entity by which the optionee is employed, and which
otherwise has not been reimbursed by the optionee, in respect of the optionee's
exercise of all or a portion of the Option; and (iii) agree that the Company
may, in its discretion, hold the stock certificate to which the optionee is
entitled upon exercise of the Option as security for the payment of the
aforementioned withholding tax liability, until cash sufficient to pay that
liability has been accumulated, and may, in its discretion, effect such
withholding by retaining shares issuable upon the exercise of the Option having
a Fair Market Value on the date of exercise which is equal to the amount to be
withheld.
14. Costs and Expenses.
The costs and expenses of administering the Plan shall be borne by the
Company and shall not be charged against any Option nor to any employee
receiving an Option.
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15. Funding of Plan.
The Plan shall be unfunded. The Company shall not be required to make
any segregation of assets to assure the payment of any Option under the Plan.
16. Other Incentive Plans.
The adoption of the Plan does not preclude the adoption by appropriate
means of any other incentive plan for employees.
17. Effect on Employment.
Nothing contained in the Plan or any agreement related hereto or
referred to herein shall affect, or be construed as affecting, the terms of
employment of any Key Employee except to the extent specifically provided
herein or therein. Nothing contained in the Plan or any agreement related
hereto or referred to herein shall impose, or be construed as imposing, an
obligation on (i) the Company or any Related Entity to continue the employment
of any Key Employee, and (ii) any Key Employee to remain in the employ of the
Company or any Related Entity.
18. Definitions.
In addition to the terms specifically defined elsewhere in the Plan, as
used in the Plan, the following terms shall have the respective meanings
indicated:
a. "Affiliate" shall mean, as to any Person, a Person that
directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with,
such Person.
b. "Authorization Date" shall have the meaning set forth in
Section 11.b. hereof.
c. "Board of Directors" shall have the meaning set forth in
Section 2 hereof.
d. "Change of Control" shall mean the first to occur of the
following events: (i) any sale, lease, exchange, or other
transfer (in one transaction or series of related transactions)
of all or substantially all of the assets of the Company
(including, the capital stock or assets of its operating
subsidiaries) to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "Group"),
other than one or more members of the HMC Group, (ii) a
majority of the Board of Directors of the Company shall
consist of Persons who are not Continuing Directors; or (iii)
the acquisition by any Person or Group (other than one or more
members of the HMC Group), together with their associates and
Affiliates, of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the
ordinary voting power for the election of directors of the
Company.
e. "Code" shall have the meaning set forth in Section 1 hereof.
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f. "Committee" shall have the meaning set forth in Section 2
hereof.
g. "Common Stock" shall have the meaning set forth in Section 3
hereof.
h. "Company" shall have the meaning set forth in Section 1 hereof.
i. "Continuing Director" shall mean, as of the date of
determination, any Person who (i) was a member of the
Board of Directors of the Company on the date of adoption of
this Plan, (ii) was nominated for election or elected to the
Board of Directors of the Company with the affirmative vote of
a majority of the Continuing Directors who were members of such
Board of Directors at the time of such nomination or election,
or (iii) is a member of the HMC Group.
j. "Designated Date" means the first date on which each of the
following conditions shall have been met: (i) the
Company shall have consummated a Qualifying Public Offering and
(ii) the Company shall have ceased to be an Equity Fund
Company.
k. "Disability" shall mean permanent disability as defined under
the appropriate provisions of the long-term disability plan
maintained for the benefit of employees of the Company or any
Related Entity who are regularly employed on a salaried basis
unless another meaning shall be agreed to in writing by the
Committee and the optionee; provided, however, that in the
case of an Incentive Option "disability" shall have the meaning
specified in Section 22(e)(3) of the Code.
l. "Election Notice" shall have the meaning set forth in Section
11.b. hereof.
m. "Eligible Non-Employee" shall have the meaning set forth in
Section 4 hereof.
n. "Equity Fund Company" means any Person in which one or more
Equity Fund Investment Vehicles own(s), directly or
indirectly, more than 10% of the fully-diluted common stock or
has an unrecovered investment of $1,000,000 or more, and each
Subsidiary thereof.
o. "Equity Fund Investment Vehicle" means HMTF/CH Holdings, L.P.,
Hicks, Muse, Tate & Furst Equity Fund II, L.P., Hicks, Muse,
Tate & Furst Equity Fund III, L.P., or any other similar
investment entity formed by Hicks, Muse, Tate & Furst
Incorporated.
p. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
q. "Fair Market Value", shall, as it relates to the Common Stock,
mean the average of the high and low prices of such Common
Stock as reported on the principal national securities
exchange on which the shares of Common Stock are then listed on
the date specified herein, or if there were no sales on such
date, on the next preceding day on which there were sales, or
if such Common Stock is not listed on a national securities
15
exchange, the last reported bid price in the over-the-counter
market, or if such shares are not traded in the
over-the-counter market, the per share cash price for which all
of the outstanding Common Stock could be sold to a willing
purchaser in an arms length transaction (without regard to
minority discount, absence of liquidity, or transfer
restrictions imposed by any applicable law or agreement) at the
date of the event giving rise to a need for a determination.
Except as may be otherwise expressly provided in a particular
Option, Fair Market Value shall be determined in good faith by
the Committee.
r. "Good Cause", with respect to any Key Employee, shall mean
(unless another definition is agreed to in writing by
the Company and the optionee) termination by action of the
Board of Directors because of: (A) the optionee's conviction
of, or plea of nolo contendere to, a felony or a crime
involving moral turpitude; (B) the optionee's personal
dishonesty, incompetence, willful misconduct, willful violation
of any law, rule, or regulation (other than minor traffic
violations or similar offenses) or breach of fiduciary duty
which involves personal profit; (C) the optionee's commission
of material mismanagement in the conduct of his duties as
assigned to him by the Board of Directors or the optionee's
supervising officer or officers of the Company or any Related
Entity; (D) the optionee's willful failure to execute or comply
with the policies of the Company or any Related Entity or his
stated duties as established by the Board of Directors or the
optionee's supervising officer or officers of the Company or
any Related Entity, or the optionee's intentional failure to
perform the optionee's stated duties; or (E) substance abuse or
addiction on the part of the optionee. "Good Cause", with
respect to any Eligible Non-Employee, shall mean (unless
another definition is agreed to in writing by the Company and
the optionee) termination by action of the Board of Directors
because of: (A) the optionee's conviction of, or plea of nolo
contendere to, a felony or a crime involving moral turpitude;
(B) the optionee's personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule, or regulation
(other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (C)
the optionee's commission of material mismanagement in
providing services to the Company or any Related Entity; (D)
the optionee's willful failure to comply with the policies of
the Company in providing services to the Company or any Related
Entity, or the optionee's intentional failure to perform the
services for which the optionee has been engaged; (E) substance
abuse or addiction on the part of the optionee; or (F) the
optionee's willfully making any material misrepresentation or
willfully omitting to disclose any material fact to the board
of directors of the Company or any Related Entity with respect
to the business of the Company or any Related Entity.
Notwithstanding the foregoing, in the case of each optionee
listed on Schedule A hereto, who as of the effective date of
the Plan, has an employment agreement with the Company or any
Related Entity that contains a definition of "Good Cause" (or
any similar definition), then during the term of such
employment agreement the definition contained in such
employment agreement shall be the applicable definition of
"Good Cause" under the Plan as to such optionee.
16
s. "Grantor" has the meaning set forth in Section 9 hereof.
t. "Hicks Muse Company" shall mean any Person in which the HMC
Group beneficially owns more than 25% of the fully-diluted
common stock or has an unrecovered investment of $1,000,000 or
more, and each Subsidiary thereof.
u. "HMC Group" shall mean Hicks, Muse, Tate & Furst Incorporated,
its Affiliates and their respective employees, officers, and
directors (and members of their respective families and
trusts for the primary benefit of such family members).
v. "Incentive Options" shall have the meaning set forth in Section
6 hereof.
w. The term "included" when used herein shall mean "including, but
not limited to".
x. "Key Employee" shall have the meaning set forth in Section 4
hereof.
y. "Marketable Securities" shall mean securities (i) of a class or
series listed or traded on the New York Stock Exchange,
American Stock Exchange, or NASDAQ National Market and (ii)
which, as a matter of law, shall at the time of
acquisition be (or which at the date of acquisition are legally
committed to become within six months after the date of
acquisition) freely saleable in unlimited quantities by the HMC
Group to the public, either pursuant to an effective
registration statement under the Securities Act as amended
(including a current prospectus which is available for
delivery) or without the necessity of such registration.
z. "Non-Qualified Options" shall have the meaning set forth in
Section 6 hereof.
ai. "Options" shall have the meaning set forth in Section 1 hereof.
aii. "Person" shall have the meaning set forth in Section 4 hereof,
aiii. "Plan" shall have the meaning set forth in Section 1 hereof.
aiv. "Purchasable Shares" shall have the meaning set forth in
Section 9 hereof.
av. "Purchase Option" shall have the meaning set forth in Section 9
hereof.
avi. "Qualifying Public Offering" shall mean a firm commitment
underwritten public offering of Common Stock for cash
and the shares of Common Stock registered under the Securities
Act are listed on a national securities exchange or traded on
the NASDAQ National Market; provided, however, that such a
public offering shall not constitute a "Qualifying Public
Offering" unless the aggregate proceeds to the Company (prior
to deducting any underwriters' discounts and commissions) from
such offering and any similar prior public offerings exceed
$10 million.
17
avii. "Related Entities" shall have the meaning set forth in Section
1 hereof.
aviii. "Reorganization" shall have the meaning set forth in Section 10
hereof.
aix. "Right of First Refusal" shall have the meaning set forth in
Section 11.b. hereof.
ax. "Rule 16b-3" shall mean Rule 16b-3 as amended, or other
applicable rules, under Section 16(b) of the Exchange Act.
axi. "Sale of the Company" shall mean the first to occur of (i) any
sale, lease, exchange, or other transfer (in one transaction
or series of related transactions) of all or substantially all
of the assets of the Company to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act,
other than one or more members of the HMC Group (a "Clause 1
Event"), (ii) the Company's ceasing to be a Hicks Muse Company
in a transaction or series of related transactions initiated
or agreed to by the HMC Group (other than the distribution by
one or more Equity Fund Investment Vehicles, following a
Qualifying Public Offering, of equity securities of the
Company to the investors in such Equity Fund Investment
Vehicle(s)) (a "Clause 2 Event"), or (iii) the consummation of
a transaction or series of related transactions initiated or
agreed to by the HMC Group pursuant to which the HMC Group
receives, in respect of its shares of Common Stock, cash and/or
which have an aggregate value equal to at least 75%; of the
total value of all Common Stock owned by the HMC Group
immediately prior to such transaction, as determined by the
Board of Directors in good faith (a "Clause 3 Event");
provided, however, that the occurrence of a Clause 1 Event, a
Clause 2 Event or a Clause 3 Event on any date after the
Designated Date shall not constitute a "Sale of the Company".
axii. "Sale Notice" shall have the meaning set forth in Section 11.b
hereof.
axiii. "Securities Act" shall mean the Securities Act of 1933, as
amended.
axiiii. "Subsidiary" shall mean, with respect to any Person, any other
Person of which such first Person owns or has the power to
vote, directly or indirectly, securities representing a
majority of the votes ordinarily entitled to be cast for the
election of directors or other governing Persons.
axiv. "Transfer" shall have the meaning set forth in Section 11.b.
hereof.
19. Amendment of Plan.
The Board of Directors shall have the right to amend, modify, suspend
or terminate the Plan at any time; provided, that no amendment shall be made
which shall increase the total number of shares of the Common Stock which may
be issued and sold pursuant to Options granted under the Plan or decrease the
minimum Option exercise price in the case of an Incentive Option, or modify the
provisions of the Plan relating to eligibility with respect to Incentive
Options unless such
18
amendment is made by or with the approval of the stockholders. The Board of
Directors shall have the right to amend the Plan and the Options outstanding
thereunder, without the consent or joinder of any optionee or other Person, in
such manner as may be determined necessary or appropriate by the Board of
Directors in order to cause the Plan and the Options outstanding thereunder (i)
to qualify as "incentive stock options" within the meaning of Section 422 of
the Code, (ii) to comply with Rule 16b-3 (or any successor rule) under the
Exchange Act (or any successor law) and the regulations (including any
temporary regulations) promulgated thereunder, or (iii) to comply with Section
162(m) of the Code (or any successor section) and the regulations (including
any temporary regulations) promulgated thereunder. Except as provided above,
no amendment, modification, suspension or termination of the Plan shall alter
or impair any Options previously granted under the Plan, without the consent of
the holder thereof.
20. Effective Date.
The Plan shall become effective on June 19, 1997, the date on which it
was approved by the Board of Directors of the Company and the stockholders of
the Company.