1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
/ / Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
DOVE AUDIO, INC.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
2
DOVE AUDIO, INC.
8955 BEVERLY BOULEVARD
WEST HOLLYWOOD, CALIFORNIA 90048
____________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 30, 1996
____________
To the Shareholders of Dove Audio, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Dove Audio, Inc., a California corporation (the
"Company"), will be held at Dove Audio, Inc., 8955 Beverly Boulevard, West
Hollywood, California 90048 on October 30, 1996, at 9:00 a.m., local time, for
the following purposes:
1. To approve an amendment to the Company's Articles of
Incorporation to change the name of the Company to "Dove
Entertainment, Inc.";
2. To approve an amendment to the Company's Bylaws to provide
that the size of the Board of Directors (subject to vacancy
from time to time) of the Company shall be not less than five
(5) or more than nine (9), with the exact number of directors
to be initially fixed at seven (7), subject to modification
from time to time, within the limits specified, by approval of
the Board of Directors (the "Board");
3. To elect directors;
4. To approve an amendment to the Company's 1994 Stock Incentive
Plan (the "Plan") (i) to increase the maximum number of shares
of Common Stock which may be granted under the Plan to 750,000
shares, (ii) to impose a limit on the maximum grant of options
and stock appreciation rights that can be granted to any
individual under the Plan to 250,000 shares per calendar year,
and (iii) to make certain other changes to the Plan in
accordance with new Rules enacted under Section 16 of the
Securities Exchange Act of 1934 and Section 162(m) of the
Internal Revenue Code of 1986 and other changes, each of which
is described or set forth herein;
5. To approve and ratify the appointment of KPMG Peat Marwick LLP
as the Company's independent accountants for the fiscal year
ending December 31, 1996; and
6. To consider and act upon such other business as may properly
come before the meeting or any adjournment(s) thereof.
Information concerning these matters, including the names of the
nominees for election to the Board, is set forth in the attached Proxy
Statement, which is part of this Notice.
The Board of Directors has fixed September 9, 1996 as the record date
for determination of shareholders entitled to notice of and to vote at the
Annual Meeting. Accordingly, only those shareholders of record at the close of
business on that date are entitled to vote at the Annual Meeting or any
adjournment(s) thereof.
The Board urges that all shareholders of record exercise their right
to vote at the meeting personally or by proxy.
Your proxy will continue in full force and effect unless and until you
revoke such proxy prior to the vote to which such proxy pertains. You may
revoke your proxy by a writing delivered to the Company stating that the proxy
is revoked, or by a subsequently dated proxy executed by you, or by attending
the meeting and voting in person. The dates
3
set forth on the proxy cards presumptively determine the order of execution,
regardless of the postmark dates on the envelopes in which they are mailed.
By Order of the Board of Directors
Michael Viner
President and Chief Executive Officer
October __, 1996
Los Angeles, California
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN (DO
NOT PRINT) YOUR NAME AND DATE THE ENCLOSED PROXY CARD(S) AS PROMPTLY AS
POSSIBLE AND RETURN IT (THEM) IN THE ENCLOSED PRE-ADDRESSED ENVELOPE. IF YOU
RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT
NAMES OR AT DIFFERENT ADDRESSES, EACH PROXY CARD SHOULD BE COMPLETED AND
RETURNED.
4
DOVE AUDIO, INC.
8955 BEVERLY BOULEVARD
WEST HOLLYWOOD, CALIFORNIA 90048
--------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 30, 1996
--------------
This Proxy Statement is furnished to the shareholders in connection
with the solicitation by the Board of Directors of Dove Audio, Inc., a
California corporation (the "Company"), of proxies for use at the Annual
Meeting of Shareholders of the Company (the "Annual Meeting") to be held at
Dove Audio, Inc., 8955 Beverly Boulevard, West Hollywood, California, on
October 30, 1996 at 9:00 a.m., local time, and any postponements and
adjournment(s) thereof.
The Company's principal executive offices are located at 8955 Beverly
Boulevard, West Hollywood, California 90048 and its telephone number is (310)
786-1600.
This Proxy Statement, the accompanying Notice of Annual Meeting, the
accompanying proxy card(s) and the Company's 1995 Annual Report to Shareholders
(the "Annual Report") are being first mailed to shareholders of the Company on
or about October __, 1996. The costs of preparing, assembling and mailing
the foregoing will be paid by the Company. The Company will pay brokers or
other persons holding stock in their names or the names of their nominees for
the expenses of forwarding soliciting material to their principals. The
Company may use the services of its directors, officers and other regular
employees to solicit proxies personally or by telephone. The Annual Report is
not to be regarded as proxy soliciting material or as a communication by means
of which any solicitation of proxies is to be made.
VOTING
The accompanying proxy will be voted in accordance with the
instructions contained thereon. In the absence of such instructions, the
persons designated as proxies in the accompanying proxy card(s) will vote: For
approval of the amendment to the Company's Articles of Incorporation, for
approval of the amendment to the Company's Bylaws, for the election of the
Director nominees listed herein (the "Nominees"), for approval of the amendment
of the Company's 1994 Stock Incentive Plan, for the ratification of KPMG Peat
Marwick LLP as the Company's independent accountants for the fiscal year ending
December 31, 1996 and, in their discretion, as to any other business that may
properly come before the Annual Meeting or any postponement(s) and
adjournment(s) thereof. The Board does not know of any other business to be
brought before the Annual Meeting.
Each duly executed proxy will continue in full force and effect unless
and until revoked by the person executing it prior to the vote pursuant
thereto. Such revocation may be effected by a writing delivered to the Company
to the attention of the Corporate Secretary at the address indicated above
stating that the proxy is revoked by a subsequently dated proxy, duly executed
by or on behalf of the person executing the prior proxy and presented at the
Annual Meeting, or by attending the Annual Meeting and voting in person.
1
5
GENERAL INFORMATION
The Board has fixed September 9, 1996 as the record date (the "Record
Date") for the determination of shareholders entitled to notice of and to vote
at the Annual Meeting or any postponement(s) or adjournment(s) thereof. At the
close of business on the Record Date, 5,313,240 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), held by 119 holders
of record, were outstanding and entitled to vote at the Annual Meeting. The
Common Stock is the only class of stock of the Company entitled to vote at the
Annual Meeting.
Shareholders who own shares registered in different names or at
different addresses will receive more than one proxy card. A shareholder must
sign and return each of the proxy cards received to ensure that all of the
shares owned by such shareholder are represented at the Annual Meeting.
The presence at the meeting, in person or by proxy, of the holders of
a majority of the shares of Common Stock entitled to vote at the Annual Meeting
will constitute a quorum. With respect to the election of directors, the seven
(7) nominees receiving the highest number of affirmative votes will be elected.
Abstentions and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority to vote the relevant shares as to particular
matters and has not received voting instructions from the beneficial owner with
respect to a particular item) are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulations of the votes cast on proposals presented to the
shareholders and have the same legal effect as a vote against a particular
proposal (other than the election of directors). Broker non-votes are not
taken into account for purposes of determining whether a proposal has been
approved by the requisite shareholder vote.
Each share of Common Stock entitles the holder thereof to one vote on
each matter to be voted on at the Annual Meeting. However, in the election of
directors, a shareholder may cumulate his votes for one or more nominees, but
only if the names of nominees were placed in nomination prior to the voting and
any shareholder has given notice at the meeting prior to the voting of his
intention to so cumulate his votes. If any one shareholder has given such
notice, all shareholders may cumulate their votes in such election of
directors. If the voting for directors is conducted by cumulative voting, each
share will be entitled to a number of votes equal to the number of directors to
be elected, which votes may be cast for a single nominee or distributed between
or among two or more nominees in such proportions as the shareholder or proxy
deems fit.
Proposal 1
AMENDMENT OF ARTICLES OF INCORPORATION
On April 22, 1996, the Board approved an amendment to Article I of the
Company's Articles of Incorporation to change the name of the Company to "Dove
Entertainment, Inc." The Company filed a fictitious name certificate to do
business as Dove Entertainment, Inc. on December 6, 1995. Amendment of the
Articles of Incorporation is subject to the affirmative approval by holders of
a majority of the shares of Common Stock outstanding on the Record Date. With
the diversification of the Company beyond its traditional historical business
of the production of audio books, including the Company's expansion in the
areas of the publication of printed books, the production of television
programming and the distribution of feature films, among other areas, the Board
believes it is desirable to change the Company's name to be more reflective of
the Company's overall business. The text of the Amendment is set forth on
Exhibit A to this Proxy Statement.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPROVAL OF THE AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION.
2
6
Proposal 2
AMENDMENT OF BYLAWS
On April 22, 1996, the Board approved an amendment to Article III,
Section 2 of the Company's Bylaws to provide that the number of directors of
the Company shall be not less than five (5) or more than nine (9), with the
exact number of directors to be initially fixed at seven (7), subject to
modification from time to time, within the limits specified, by approval of the
Board of Directors. Currently, the Board size may be set by the Board within a
range of four (4) to seven (7) directors. As the Company has expanded through
acquisition and raising of additional capital, it has become necessary and
desirable to expand the size of the Board. The Board has nominated a slate of
seven (7) directors for election at this Annual Meeting.
Accordingly, it is necessary to amend the Bylaws to expand the
permitted size of the Board, within a minimum and maximum range permitted by
the California Corporation Code. Amendment of the Bylaws as set forth herein
requires the affirmative vote of a majority of the outstanding shares of Common
Stock represented and voting at the Annual Meeting. The text of the Amendment
is set forth on Exhibit B to this Proxy Statement.
THE BOARD OF DIRECTORS STRONGLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THE APPROVAL OF THE AMENDMENT OF THE COMPANY'S BYLAWS.
Proposal 3
ELECTION OF DIRECTORS
Directors of the Company are elected annually by the shareholders to
serve for a term of one year or until their successors are duly elected and
qualified. As of the date hereof, the Board consists of six (6) members with
one vacancy. The seven (7) nominees of management for election as directors are
set forth below. See "Management." Should any nominee become unavailable to
serve as a director before the election (which event is not anticipated), the
proxies may be voted for a substitute nominee selected by the Board or the
authorized number of directors may be reduced. If for any reason the authorized
number of directors is reduced, the proxies will be voted, in the absence of
instructions to the contrary, for the election of those nominees selected by the
persons designated as proxies in the accompanying proxy card(s). To the best of
the Company's knowledge, all nominees are and will be available to serve.
The following table sets forth the nominees, their ages and present
principal occupations or employment.
DIRECTOR NOMINEES
-----------------
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
Michael Viner 52 President, Chief Executive Officer and Director
Gerald Leider 63 Producer of Feature Films; Chairman of the Board and Director
Deborah Raffin 43 Executive Vice President, Secretary and Director
Freddie Fields*+ 72 Film producer; President and Chief Executive Officer of
The Fields Company; and Director
James Belasco*+ 60 Professor, San Diego State University; Consultant, Management
Development Associates and Director
Robert Dilenschneider 53 President of The Dilenschneider Group
Steven Mayer 36 President and Managing Director of Aries Capital Group LLC
* Denotes membership on Stock Option Committee.
+ Denotes membership on Audit Committee.
3
7
Mr. Viner and Ms. Raffin have been directors of the Company since its
inception in 1985. Mr. Fields has been a director of the Company since 1986.
Mr. Belasco has been a director of the Company since being named to fill a
vacancy on the Board in April 1995. Mr. Leider has been a director since June
1995. None of the nominees is related by blood
or marriage to one another or to an executive officer of the Company, except
for Mr. Viner and Ms. Raffin who are each other's spouse.
Pursuant to the placement agent agreement entered into by the Company
in December 1995 in connection with a private placement, the Company agreed that
the placement agent, Whale Securities Co., L.P., and its successors will have
the right to designate a nominee for election, at its or their option, either as
a member or a non-voting advisor to the Board, and the Company agreed to use its
reasonable best efforts to cause such nominee to be elected and continue in
office until December 14, 1997. The Company believes that this right has been
orally waived but has been advised by such placement agent, which has designated
Steven Mayer as its nominee, that it does not believe that any such waiver is in
effect. In addition, until December 1, 1999, the managing underwriter of the
Company's initial public offering, Joseph Stevens & Company, L.P., has the right
to designate either one member of the Board or a person to attend and observe
meetings of the Board. Steven Mayer has been designated to serve on the Board
by Joseph Stevens & Company, L.P.
Pursuant to the Four Point Entertainment, Inc. acquisition agreement
entered into by the Company in April 1996, the Company agreed to use its best
efforts to appoint Shukri Ghalayini to the Board. In June 1996, Mr.
Ghalayini's employment with the Company terminated. The Company believes that
Mr. Ghalayini's right to be on the Board has terminated and he is not being
nominated to serve on the Board.
Each of the Company's directors is elected annually by the
shareholders. The Company has agreed to reimburse each Board member's travel
expenses and the Company's 1994 Stock Incentive Plan provides for an automatic
grant of option to purchase 5,000 shares of Common Stock to each of the outside
directors. In addition, the Company has granted 10,000 options outside the plan
to each of the non-employee board members for such members' service to the Board
during the last year. Directors who are also executive officers of the Company
do not receive any additional compensation for serving as members of the Board
or any committee thereof.
During the 1995 fiscal year, there were meetings of the Board
and meetings of the Option Committee. All other action of the Board and
Option Committee was taken pursuant to unanimous written consents. Each
then-current director attended the meetings of the Board and the Option
Committee held during the period for which he was a director or for which he
served as an Option Committee member. There were no meetings of the Audit
Committee apart from meetings of the entire Board of Directors.
MICHAEL VINER is the President and Chief Executive Officer, and was
co-founder of the Company in 1985. Mr. Viner also produces films for the
Company's film division and, in addition, has produced various other television
programs, movies and miniseries and feature films. Mr. Viner is the author of
365 Ways You Can Save The Earth, Final Exit for Cats and the Company's Final
Exit for Barney. Mr. Viner's professional activities prior to founding Dove
include producing records for hit artists such as Sammy Davis, Jr. (platinum
record Candy Man), Frank Sinatra, George Burns and Hank Williams, Jr. Mr.
Viner headed a division of MGM Records from 1971 to 1976, and he has also
produced two presidential inaugurals.
DEBORAH RAFFIN is the co-founder and Executive Vice President of the
Company and President of the Dove Kids and Dove Multimedia divisions. She has
been a director of the Company since its founding and has served as Secretary
since March 1995. Ms. Raffin oversees the entire audio book department and is
involved in producing, directing, casting, new media ventures, acquisitions,
new interactive books, tapes and computer programs, films and other Company
projects. Ms. Raffin also continues to star in films. These include Touched
By Love, Noble House and Haywire. She also co-produced and starred in the
recent highly-rated CBS movie-of-the-week based on LaVyrle Spencer's
bestselling novel, Home Song. Ms. Raffin is currently co-producing Family
Blessings, another film based on a Spencer novel. In 1993, she received a
Grammy Award as producer for the Dove Kids audio, Audrey Hepburn's Enchanted
Tales.
4
8
FREDDIE FIELDS has been a director of the Company since 1986. He is
the President and Chief Executive Officer of the Fields Company (f.k.a. the
Field Organization, Inc.) and Chairman of the Fields + Hellman Company, Inc.
Each of these companies produces motion picture and television presentations.
Mr. Fields produced the Academy Award-winning film Glory, the film Crimes of the
Heart, which received multiple Academy Award nominations, Looking for Mr.
Goodbar, American Gigolo and executive produced the nationally-syndicated
television program, The Montel Williams Show. Mr. Fields founded Creative
Management Associates (now known as ICM), a leading international talent agency,
and served as president of two major motion picture studios, Metro-Goldwyn-Mayer
and United Artists. Mr. Fields is a director of Network Event Theater Inc.,
a start-up satellite distribution company, and a member of the Los Angeles
Sports and Entertainment Commission.
JAMES BELASCO, a director of the Company since June 1995, has been a
Professor of Management at San Diego State University since 1971. Mr. Belasco
also provides business consulting services through his affiliation with
Management Development Associates and is the author of such books as Teaching
The Elephant to Dance, Empowering Change in Your Organization and Flight of
The Buffalo, Soaring to Excellence.
GERALD LEIDER has been a director of the Company since June, 1995 and
Chairman of the Board of Directors since June 12, 1996. Mr. Leider is a
producer of feature films for theatrical, television and cable distribution and
serves as a part-time consultant to the Company through his management company.
Mr. Leider is a past Co-Chairman of the Caucus for Producers, Writers and
Directors and, until recently, was Chairman and Chief Executive Officer of ITC
Entertainment Group, a worldwide film and television production and distribution
company. Mr. Leider has held several positions with Warner Bros. Television and
was Executive Vice President in charge of foreign production. Mr. Leider was
educated at Syracuse University and Bristol University, England where he was a
Fullbright Scholar.
ROBERT L. DILENSCHNEIDER has been President of The Dilenschneider
Group, a public relations firm he founded in 1991. Prior to such time, Mr.
Dilenschneider served as president and chief executive officer of Hill and
Knowlton, Inc. Mr. Dilenschneider serves as a director of Cross Country
Healthcare Personnel and SafeCare Services, Inc., is a member of the board of
governors of the American Red Cross and a member of the advisory boards of The
New York Hospital-Cornell Medical Center and the College of Business
Administration at the University of Notre Dame. Further, he is a member of the
board of trustees of the American Health Foundation and the Institute for
International Education. Mr. Dilenschneider has also published such books as
Power and Influence and A Briefing for Leaders.
STEVEN F. MAYER is currently the president and managing director of
Aries Capital Group, LLC, a private investment firm. From April 1992 until June
1994, when he left to co-found Aries Capital Group, Mr. Mayer was an investment
banker with Apollo Advisors, L.P. ("Apollo") and Lion Advisors, L.P. ("Lion"),
affiliated private investment firms. Prior to that time, Mr. Mayer was a lawyer
with Sullivan & Cromwell specializing in mergers, acquisitions, divestitures,
leveraged buyouts and corporate finance. While at Apollo and Lion, Mr. Mayer was
responsible for equity and debt investments in a wide range of industries,
including the aluminum, apparel, automobile parts manufacturing, bedding, cable
television, cosmetics, environmental services, furniture distribution,
homebuilding, hotel, plastics, radio, real estate, retail and textile
industries. Mr. Mayer is a current or former member of the Boards of Directors
of Mednet, MPC Corporation, a publicly traded managed prescription care company,
Chicago Pizza & Brewery, Inc., a restaurant company, Electropharmacology, Inc.,
a publicly traded medical device manufacturer, BDK Holdings, Inc., a textile
manufacturer, Roland International Corporation, a real estate holding company
and The Greater LA Fund, a non-profit investment group affiliated with Rebuild
LA. In addition, Mr. Mayer has served as the chairman or a member of numerous
creditors' committees. Mr. Mayer is a graduate of Princeton University and
Harvard Law School.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
FOR THE ELECTION OF THE SEVEN (7) PERSONS NOMINATED FOR DIRECTOR HEREIN.
MANAGEMENT
EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES
5
9
Executive officers are elected by and serve at the discretion of the
Board, subject to the rights, if any, of the executive officer under any
contract of employment. Michael Viner and Deborah Raffin are spouses; no other
family relationships exist between or among any of the executive officers of
the Company.
The following table contains certain biographical information with
respect to the executive officers of the Company, other than executive officers
whose biographical information is set forth above under the heading "Director
Nominees."
NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------
Simon Baker 32 Chief Financial Officer
Ronald M. Ziskin 44 Chief Operating Officer of Dove Four Point
SIMON BAKER joined the Company as Chief Financial Officer on March 1,
1996. From 1986 to 1996 Mr. Baker was with Bank of America where he served as a
Vice President of Corporate Finance. Mr. Baker has extensive international
finance experience and was a Vice President in Bank of America's London-based
corporate finance group for six years prior to joining the Entertainment and
Media Industries Group in Los Angeles in 1992. Mr. Baker graduated from Oxford
University where he holds a Master's Degree in Politics, Philosophy and
Economics.
RONALD M. ZISKIN is the Chief Operating Officer of the Company's Dove
Four Point subsidiary. Mr. Ziskin co-founded and served as President of Four
Point Entertainment, Inc. From 1984 to April 1996, Mr. Ziskin optioned,
developed and executive produced "American Gladiators", and created the
successful franchises of "Haunted Lives" and "Dead Ghosts" prime time specials
for CBS and UPN. Mr. Ziskin has also produced and executive produced the Fox
prime time drama "Likely Suspects," the "Sandblast" franchise for MTV and "The
Gordon Elliott Show" pilot for CBS/20th TV.
OTHER SIGNIFICANT EMPLOYEES
WILLIAM A. SHIELDS is President of Worldwide Sales and Marketing for
Dove International and is involved in all aspects of acquisition, sales,
marketing and distribution of the feature and television product that Dove
produces. Mr. Shields is also Chairman of the American Film Export Association
(AFEA), a member of the Board of Directors of AFMA and sits on its executive
committee. Mr. Shields is also a member of the Motion Picture Academy of
America and is on the Board of Directors of the Friars Club of Los Angeles.
Previously, Mr. Shields was President and Chief Executive Officer of
Trans Atlantic Entertainment and two time Chairman of the American Film
Marketing Association (AFMA).
STEVE SOLOWAY, age 36, is the Company's General Counsel and Vice
President of Business Affairs. He joined the Company in March 1995, having
been in private practice concentrating on business, contract and entertainment
litigation matters for over ten years.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
for services in all capacities to the Company for the years ended December 31,
1995, 1994 and 1993, respectively, of the Company's Chief Executive Officer and
compensation for the year-ended December 31, 1995 of the Company's Secretary
(no other executive officer of the Company received compensation in excess of
$100,000 during the fiscal years ended December 31, 1995, 1994 and 1993):
Securities
Name and Fiscal Underlying All Other
Principal Position Year Salary Bonus Options/SARs Compensation
- - - ------------------ ---- ------ ----- ------------ ------------
Michael Viner 1995 $230,000 $ -- ---- 12,497(5)(6)
Chairman & Chief 1994 $200,000 -- 250,000(1) 34,955(2)
Executive Officer 1993 $100,000 -- ---- 19,777(3)(4)
Deborah Raffin 1995 $115,000 -- ---- 11,522(5)
Executive Vice
President, Secretary
and Director
6
10
(1) An option to purchase 250,000 shares of Common Stock for $.01 per
share granted jointly to Mr. Viner and Ms. Raffin in September 1994 in
satisfaction of, among other things, compensation previously deferred
by them.
(2) Includes approximately $22,655 consisting of an automobile allowance,
automobile insurance and expenses incidental to operation of an
automobile.
(3) Includes (i) $14,195 consisting of an automobile allowance, automobile
insurance and expenses incidental to operation of an automobile, and
(ii) $5,582 consisting of health insurance premiums and reimbursement
of medical expenses incurred which were not reimbursed under such
insurance.
(4) Does not include $1,730 in life insurance premiums paid in fiscal 1992
on a policy covering Mr. Viner's life during fiscal 1993. The Company
and Ms. Raffin are equal beneficiaries under such policy.
(5) Includes $11,522 paid to Ms. Raffin and $12,497 paid to Mr. Viner for
an automobile allowance, automobile insurance and expenses incidental
to the operation of an automobile. This amount does not include
compensation paid to Mr. Viner and Ms. Raffin for production and
acting services related to the making of Home Song. (See "Certain
Relationships and Related Transactions.")
(6) Does not include $4,010 in life insurance premiums paid in fiscal 1995
on a policy covering Mr. Viner's life during fiscal 1995. The Company
and Ms. Raffin are equal beneficiaries under such policy.
EMPLOYMENT AGREEMENTS
As of January 1, 1993, the Company entered into employment agreements
with Mr. Viner and Ms. Raffin which expire in December 1999. Mr. Viner and Ms.
Raffin may terminate such agreements upon 30 days written notice to the Company.
The agreements provide for aggregate compensation of no less than $275,000 per
year with certain provisions, including an indemnification and benefits such as
health insurance and an automobile allowance. In addition, Mr. Viner and Ms.
Raffin are entitled to an annual salary increase and bonus subject to certain
limitations agreed upon with the underwriter of the Initial Public Offering at
the discretion of the Board. The Board approved an annual salary increase for
the principal shareholders/officers to a combined total of $345,000 per year for
1995 and to a combined total of $600,000 per year for 1996.
The Company has entered into a three-year employment agreement with
Ronald M. Ziskin as Chief Operating Officer of Dove Four Point. Mr. Ziskin
receives annual base salary of $200,000, annual advances against producer fees
of $100,000 per year and customary fringe benefits.
OPTION/SAR GRANTS IN 1995
There were no stock options or SARs granted to named executive
officers during 1995.
OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table provides certain information concerning the
exercise of stock options and shows the number of shares covered by both
exercisable and non-exercisable stock options held as of December 31, 1995.
Also shown are values for "in-the-money" options, which represent the positive
difference between the exercise price of such options and the price of the
Common Stock at year end.
7
11
AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
Shares acquired Value
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable ($) Unexercisable ($)
- - - ---- ----------- ------------ ----------- ------------- --------------- -----------------
Michael Viner --(1) -- 250,000 (2) --- 3,216,250 (3)
(1) Does not include option exercised in April 1995 to purchase 214,113
shares of the Company's Series A Preferred Stock issued in connection
with the IPO to Mr. Viner and Ms. Raffin in repayment of certain amounts
owed to them by the Company. See "Certain Relationships and Related
Transactions."
(2) Held jointly by Mr. Viner and Ms. Raffin.
(3) Based on a closing price of $12.875 per share of Common Stock on
December 29, 1995, the last trading day of fiscal 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 1, 1996
concerning the shares of Common Stock beneficially owned by each shareholder
known to the Company to own beneficially more than five percent (5%) of the
outstanding shares of Common Stock, by each director and director nominee and
the Chief Executive Officer, and by all executive officers and directors as a
group. Unless otherwise specified, the address of each beneficial owner listed
below is 8955 Beverly Boulevard, West Hollywood, California 90048.
Amount and Nature
of Beneficial Percentage of
Name of Beneficial Owner Ownership Outstanding Shares
- - - ------------------------ ---------------------------- ------------------
Michael Viner 1,613,311 (1)(2) 39.6%
Deborah Raffin 1,613,311 (1)(2) 39.6%
Sidney Sheldon 611,913 11.5%
Freddie Fields 2,000 (3) *
Norton Herrick
James Belasco 1,000 (4) *
Gerald Leider 1,000 (5) *
Robert Dilenschneider --- *
Gary Matus --- *
Steven Mayer(6) --- *
All current directors and executive officers
as a group (eight individuals) 2,123,424 (2)(3)(4)(5) 39.6%
* Less than 1%.
(1) All of such shares are jointly held by Mr. Viner and Ms. Raffin as
community property.
(2) Includes (i) Mr. Viner's and Ms. Raffin's option to purchase 250,000
shares of Common Stock at an exercise price of $.01 per share and (ii)
214,113 shares of Common Stock issuable upon conversion of the Preferred
Shares acquired by Mr. Viner and Ms. Raffin in April 1995. Excludes
options to purchase 50,000 shares of Common Stock at an exercise price of
$3.50 per share issued to each of Mr. Viner and Ms. Raffin in September
1996.
(3) Includes (i) 1,000 shares of Common Stock issuable to Mr. Fields upon
exercise of a currently exercisable option at an exercise price of $6.00
per share and (ii) 1,000 shares of Common Stock issuable to Mr. Fields
8
12
upon exercise of an option at an exercise price of $6.00 per share,
which becomes exercisable in November 1996.
(4) Includes 1,000 shares of Common Stock issuable to Mr. Belasco upon
exercise of a currently exercisable option, exercisable at $9.75 per
share.
(5) Includes 1,000 shares of Common Stock issuable to Mr. Leider upon
exercise of a currently exercisable option, exercisable at $7.38 per
share. Excludes nonvested options, including options to purchase 50,000
shares of Common Stock exercisable at $3.50 per share granted in
September 1996.
(6) Mr. Mayer has been retained by the Company pursuant to a consulting
agreement dated as of September 13, 1996, subject to termination by
either party on 30 days notice, under which he received options to
purchase 10,000 shares of Common Stock exercisable at $3.75 per share.
Under such agreement, Mr. Mayer may receive additional stock
consideration in the event of consummation of a transaction introduced or
facilitated by him.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995, the Company made payments totaling $66,000 to Michael Viner
for the business rental of a condominium owned by Mr. Viner. The business
rental is $2,000 per month on a month-to-month basis, and the balance of the
monies paid to Mr. Viner in 1995 represents the settlement of amounts owed by
the Company to Mr. Viner for previous years which were not paid.
During 1995, the Company entered into two executive service agreements
and an actor's television motion picture agreement with Mr. Viner, Ms. Raffin
and Mr. Leider. These agreements provide for compensation of $150,000,
$100,000 and $25,000 for Mr. Viner, Ms. Raffin and Mr. Leider, respectively,
for acting and production services relating to the making of Home Song.
In September 1996, the Company entered into a reimbursement agreement
with Michael Viner and Deborah Raffin in connection with their providing or
agreeing to provide personal guarantees of certain Company obligations. The
Company agreed to immediately reimburse or provide cash collateral to Michael
Viner and Deborah Raffin upon the occurrence and during the continuation of
certain events of default relating to the guaranteed obligations or upon the
occurrence of certain other "Events" (including a change in control of the
Company) as defined in the Company's 1994 Stock Incentive Plan. The Company
further agreed that should Michael Viner or Deborah Raffin terminate their
employment agreement following the occurrence of an "Event" or material breach
of their employment agreements, the Company would remain obligated to continue
to pay them their base compensation and other benefits due for the balance of
their employment terms, together with reimbursement of any excise tax payable
with respect to such compensation. Upon any such termination, such executives
would be free to establish, invest in or be employed by any business, whether or
not in competition with the Company. Under the agreement, the Company also
granted to Michael Viner, in the first instance, and Deborah Raffin,
secondarily, a right of first refusal in the event of certain asset sales
outside the ordinary course of business by Dove or any of its subsidiaries in
the next three years.
Proposal 4
AMENDMENT OF 1994 STOCK INCENTIVE PLAN
The Company's 1994 Stock Incentive Plan (the "Plan") was designed to
encourage executive officers, other key employees and certain third parties to
acquire a proprietary interest in the Company and thereby align their interests
with those of the shareholders, to continue their employment or work with the
Company and to render superior performance during such period.
On April 22, 1996, the Board approved an amendment to the Company's 1994
Stock Incentive Plan (the "Plan") to increase the number of shares of Common
Stock available for option grant under the Plan from an aggregate of 400,000
shares to an aggregate of 750,000 shares (in each case, subject to adjustment
in the event of stock splits, combinations or similar circumstances).
Amendment of the Plan is subject to the affirmative approval of a majority of
the outstanding shares of Common Stock represented and voting at the Annual
Meeting.
At September 10, 1996, 289,999 shares had been granted and were
outstanding under the Plan. The Board took such action to increase
the Plan because it believes that a stock incentive program is an important
factor in attracting, retaining and motivating key employees and certain third
parties who will dedicate their maximum productive efforts toward the
advancement of the Company. The Board believes that the proposed amendment
furthers these objectives by assuring continuing availability of stock
incentives in the appropriate circumstances and permitting flexibility in
compensation awards.
In general, Section 162(m) of the Code imposes an annual $1,000,000
limit on the tax deduction that the Company may take for compensation paid
to certain top executives, including salary, bonuses, and the "spread" on
nonqualified stock options, unless the compensation meets the requirements for
an option. To comply with the requirements that apply to stock options and stock
appreciation rights, [the Board has approved] an amendment to the Plan imposing
and increasing the limit on the maximum number of options or stock appreciation
rights which may be granted to a participant in one calendar year to 250,000
shares. A limit on the maximum number of shares is required to comply with tax
provisions related to the Plan. The Board believes this to be an appropriate
maximum because it will allow the Committee flexibility in attracting and
retaining high quality personnel.
9
13
Finally, because of legislative revisions to Employee Benefit Plan
Exemptive Rules Under Section 16 of the Securities Exchange Act of 1934, as
amended, the Board has approved certain amendments to the Plan, which
modifications will comport with changes made in the Rules. These prescribed
changes include, among others, the elimination of certain prohibitions on
exercise during the six months following the date of grant and the replacement
of the "disinterested director" requirement for committee within "non-employee
director".
The text of the Amendment is set forth on Exhibit C to this Proxy
Statement.
Plan Summary
The Plan authorizes the granting of stock incentive awards ("Awards") to
qualified officers, employee directors, key employees and third parties
providing valuable services to the Company, e.g., independent contractors,
consultants and advisors to the Company. At September 10, 1996, 94,999
shares had been granted and were outstanding under the Plan. The Plan is
administered by a committee appointed by the Board and consisting of two or
more members, each of whom must be disinterested (the "Committee"). The
Committee determines the number of shares to be covered by an Award, the term
and exercise price, if any, of the Award and other terms and provisions of
Awards; members of the Committee receive formula awards.
Awards can be Stock Options ("Options"), Stock Appreciation Rights
("SARs"), Performance Share Awards ("PSAs") and Restricted Stock Awards
("RSAs"). The number and kind of shares available under the Plan are subject
to adjustment in certain events. Shares relating to Options or SARs which are
not exercised, shares relating to RSAs which do not vest and shares relating to
PSAs which are not issued will again be available for issuance under the Plan.
An Option may be an incentive stock option ("ISO") or a nonqualified
Option. The exercise price for Options is to be determined by the Committee,
but in the case of an ISO is not to be less than fair market value on the date
the Option is granted (110% of fair market value in the case of an ISO granted
to any person who owns more than 10% of the Common Stock). The award agreement
may provide for "cashless" exercise and payment. Subject to early termination
or acceleration provisions, an Option is exercisable, in whole or in part, from
the date specified in the related award agreement (which any be six months
after the date of grant) until the expiration date determined by the Committee.
An SAR is the right to receive payment based on the appreciation in the
fair market value of Common Stock from the date of grant to the date of
exercise. In its discretion, the Committee any grant an SAR concurrently with
the grant of an Option. An SAR is only exercisable at such time, and to the
extent, that the related Option is exercisable. Upon exercise of an SAR, the
holder receives for each share with respect to which the SAR is exercised an
amount equal to the difference between the exercise price under the related
Option and the fair market value of a share of Common Stock on the date of
exercise of the SAR. The Committee in its discretion may pay the amount in
cash, shares of Common Stock, or a combination thereof.
An RSA is an award of a fixed number of shares of Common Stock subject
to restrictions. The Committee specifies the prices, if any, the recipient
must pay for such shares. Shares included in an RSA may not be sold, assigned,
transferred, pledged or otherwise disposed of or encumbered until they have
vested. These restrictions may not terminate earlier than six months after the
award date. The recipient is entitled to dividend and voting rights pertaining
to such RSA shares even though they have not vested, so long as such shares
have not been forfeited.
A PSA is an award of a fixed number of shares of Common Stock, the
issuance of which is contingent upon the attainment of such performance
objectives, and the payment of such consideration, if any, as is specified by
the Committee. Issuance shall in any case not earlier than six months after
the award date.
To date, no SAR, RSA or PSA awards have been granted by the Company.
10
14
The options granted under the Plan are not transferable other than by
will or the laws of descent and distribution. Unexercised options generally
lapse 3 months after termination of employment other than be reason of
retirement, disability or death in which case it terminates one year
thereafter.
The Plan provides for anti-dilution adjustments which are applicable in
the event of a reorganization, merger, combination recapitalization,
reclassification, stock dividend, stock split or reverse stock split; however,
no such adjustment need be made if it determined that the adjustment may result
in the receipt of federal taxable income to optionees or the holders of Common
Stock or other classes of the Company's securities. Upon the dissolution or
liquidation of the Company, or upon a reorganization, merger or consolidation
of the Company as a result of which the Company is not the surviving entity,
the Plan shall terminate, and any outstanding awards shall terminate and be
forfeited unless assumed by the successor corporation.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" APPROVAL OF THE AMENDMENTS
TO THE 1994 STOCK INCENTIVE PLAN
Proposal 5
INDEPENDENT ACCOUNTANTS
On July 24, 1995, Ernst & Young LLP, successor to Kenneth Leventhal &
Company, resigned as the Company's independent accountants. Kenneth Leventhal
& Company audited the Company's 1992, 1993 and 1994 financial statements and
effective June 1, 1995 was merged into Ernst & Young LLP. In connection with
the Company's fiscal year ended December 31, 1994, there were no disagreements
with Kenneth Leventhal & Company on any manner of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to their satisfaction, would have caused them to make
reference to the subject matter of the disagreement in connection with the
Company's Report on Form 8-K filed July 26, 1995.
The audit reports of Kenneth Leventhal & Company on the consolidated
financial statements of the Company for the fiscal year ended December 31, 1994
did not contain any adverse opinion or disclaimer of opinion, nor was it
qualified or modified as to uncertainty, audit scope, or accounting principles.
The Company engaged KPMG Peat Marwick LLP as its principal accountants as
of September 18, 1995.
Upon recommendation of the Board, the Company has appointed KPMG Peat
Marwick LLP as the Company's independent certified public accountants for the
fiscal year ending December 31, 1996.
Services provided to the Company by KPMG Peat Marwick LLP during fiscal
year 1995 included the examination of the Company's consolidated financial
statements, tax return preparation and certain additional accounting services
provided in connection with acquisition and securities matters.
In the event shareholders do not approve the appointment of KPMG Peat
Marwick LLP as the Company's independent accountants for the forthcoming fiscal
year, such appointment will be reconsidered by the Board.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting to respond to appropriate questions and to make such statements as they
may desire.
11
15
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT
OF KPMG PEAT MARWICK LLP
AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
SHAREHOLDERS' PROPOSALS FOR THE 1997 ANNUAL MEETING OF SHAREHOLDERS
A proper proposal submitted by a shareholder for presentation at the
Company's 1997 Annual Meeting and received at the Company's executive offices
no later than July 1, 1997 will be included in the Company's proxy
statement and form of proxy relating to the 1997 Annual Meeting.
OTHER MATTERS
The Board is not aware of any matter to be acted upon at the Annual
Meeting other than those described in this Proxy Statement. Unless otherwise
directed, all shares represented by the persons named in the accompanying proxy
will be voted in favor of the proposals described in this Proxy Statement. If
any other matter properly comes before the meeting, however, the proxy holders
will vote thereon in accordance with their best judgment.
MISCELLANEOUS
SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires executive officers and directors, and persons who beneficially own
more than ten percent (10%) of the Company's stock, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Executive officers, directors and greater than ten percent
(10%) beneficial owners are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent (10%) beneficial
owners have been satisfied with the exception of the late filing of one Form 4
Report by Michael Viner, President and Chief Executive Officer with respect to
two transactions.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
The Company files each year with the SEC an Annual Report on Form 10-KSB
as prescribed by the rules of the SEC. Copies of the 10-KSB will be provided,
without charge, to any shareholder of the Company. Written requests for a copy
of the 10-KSB should be directed to Dove Audio, Inc., 8955 Beverly Boulevard,
West Hollywood, California 90048.
12
16
EXHIBIT A
AMENDMENT NUMBER 1 TO ARTICLES OF INCORPORATION
OF DOVE AUDIO, INC.
1. Article I is stricken from the Articles of Incorporation of the
corporation and amended to read as follows:
"The name of the corporation is Dove Entertainment, Inc."
13
17
EXHIBIT B
AMENDMENT NUMBER 1 TO
BYLAWS OF DOVE AUDIO, INC.
ARTICLE III, SECTION 2 OF THE CORPORATION'S BYLAWS SHALL BE STRICKEN AND
AMENDED TO READ AS FOLLOWS:
Section 2. Number and Qualifications. The size of the Board of
Directors of the corporation shall be not less than five (5) nor more than nine
(9), subject to vacancies from time to time. The exact number of directors
within the limits specified shall be seven (7) until changed by an amendment to
these bylaws duly adopted by the board of directors or by the shareholders.
Such indefinite number may be changed, or a definite number fixed without
provision for an indefinite number, by an amendment to these bylaws duly
adopted by the vote or written consent of the shareholders provided, however,
that a bylaw reducing the minimum number of directors to a number less than
five (5) cannot be adopted if the votes cast against its adoption at a meeting
or the shares not consenting in the case of action by written consent are equal
to more than 16-2/3% of the outstanding shares entitled to vote. No amendment
may change the stated maximum number of authorized directors to a number
greater than two times the stated minimum number of directors minus one.
14
18
EXHIBIT C
FIRST AMENDMENT
TO THE
DOVE AUDIO, INC. 1994 STOCK INCENTIVE PLAN
FIRST
The Plan is hereby renamed the "Dove Entertainment, Inc. 1994
Stock Incentive Plan," and all references to "Dove Audio, Inc." in the Plan are
hereby amended to refer to "Dove Entertainment, Inc."
SECOND
The definition of "Committee" in Section 1.1(i) of the Plan is
hereby amended in its entirety, to read as follows:
(i) "Committee" shall mean either a committee appointed by the
Board, consisting of two or more members, each of whom is a Non-
Employee Director, or the entire Board if each member is a Non-Employee
Director (except as otherwise permitted under Rule 16b-3 promulgated
under the Exchange Act). If there are two or more members of the Board
who are
15
19
"outside directors" within the meaning of Section 162(m) of the Code and
the regulations promulgated thereunder, then the Committee shall consist
only of such members.
THIRD
Section 1.1 of the Plan is hereby amended by deleting the
definition of "Disinterested" in Section 1.1(m) in its entirety, and the
remaining subsections of Section 1.1 are hereby renumbered accordingly, to the
extent necessary.
FOURTH
Section 1.1 of the Plan is hereby amended by adding the
following definition thereto as Section 1.1(r), and the remaining subsections
are hereby renumbered accordingly, to the extent necessary :
(r) "Non-Employee Director" shall mean a Non-Employee Director
within the meaning of the applicable regulatory requirements promulgated
under Section 16 of the Exchange Act.
FIFTH
Section 2.3 of the plan is hereby amended in its entirety to
read as follows:
Awards my be granted only to Eligible Persons. An
Eligible Person who has been granted an Award may, if otherwise
eligible, be granted additional Awards if the Committee shall so
determine.
Section 2.4 of the Plan is hereby amended in its entirety, to
read as follows:
2.4 Stock Subject to the Plan
The stock to be offered under this Plan shall be
shares of the Corporation's authorized but unissued Common
Stock. The aggregate amount of Common Stock that may be issued
or transferred pursuant to Awards granted under this Plan shall
not exceed 250,000 shares (750,000, effective as of October 30,
1996), subject to adjustment as set forth in Section 7.2;
provided that any Stock Appreciation Rights granted concurrently
in accordance with Section 4.1 are not subject to the foregoing
limitation. If an Option and any Stock Appreciation Right shall
lapse or terminate without having been exercised in full, or any
Common Stock subject to a Restricted Stock Award shall not vest
or any
16
20
Common Stock subject to a Performance Share Award shall not have
been transferred, the unpurchased or nontransferred shares
subject thereto shall again be available for purposes of this
Plan; provided, however, that the counting of shares subject to
Awards granted under the Plan against the number of shares
available for further Awards shall in all cases conform to the
requirements of Rule 16b-3 under the Exchange Act; and provided,
further, that with respect to any Option and any Stock
Appreciation Right granted to any Eligible Person who is a
"covered employee," as defined in Section 162(m) of the Code and
the regulations promulgated thereunder, that is canceled, the
number of shares subject to such Option and Stock Appreciation
Right shall continue to count against the maximum number of
shares which may be the subject of Options and Stock
Appreciation Rights granted to such Eligible Person. For
purposes of the preceding sentence, if, after grant, the
exercise price of an Option and/or the base amount of any Stock
Appreciation Right is reduced, such reduction shall be treated
as a cancellation of such Option and Stock Appreciation Right
and the grant of a new Option and Stock Appreciation Right (if
any), and both the cancellation of the Option and Stock
Appreciation Right and the new Option and Stock Appreciation
Right shall reduce the maximum number of shares for which
Options and Stock Appreciation Rights may be granted to the
holder of such Option and Stock Appreciation Right, to the
extent required by Section 162(m) of the Code and the
regulations promulgated thereunder.
SIXTH
The first sentence of Section 2.5 of the Plan is hereby amended
in its entirety, to read as follows:
Subject to the express provisions of the Plan, the Committee
shall determine from the class of Eligible Persons those individuals to
whom Awards under the Plan shall be granted, the terms of Awards (which
need not be identical) and the number of shares of Common Stock subject
to each Award; provided, however, that no Eligible Person may be granted
Options and Stock Appreciation Rights relating in the aggregate to more
than 250,000 shares of Common Stock (subject to adjustment as provided
in Section 7.2) in any calendar year; and provided, further, that any
shares of Common Stock relating to Stock Appreciation Rights granted
concurrently with one or more Options in accordance with Section 4.1
shall only be counted once for purposes of such limit.
17
21
SEVENTH
The first sentence of Section 3.4 of the Plan is hereby amended
in its entirety, to read as follows:
Except as otherwise provided in Section 7.4, an Option may
become exercisable, in whole or in part, on the date or dates specified
in the Award Agreement, and thereafter shall remain exercisable until
the expiration or earlier termination of such Option.
EIGHTH
Section 4.2(d) of the Plan is hereby amended in its entirety, to
read as follows:
(d) A Stock Appreciation Right granted independently of any
Option shall be exercisable pursuant to the terms of the Award
Agreement.
NINTH
The second sentence of Section 5.1 of the Plan is hereby amended
in its entirety, to read as follows:
Each Restricted Stock Award Agreement shall specify the number
of shares of Common Stock to be issued to the Participant, the date of
such issuance, the price, if any, to be paid for shares and the
restrictions imposed on such shares.
TENTH
The second sentence of Section 6.1 of the Plan is hereby amended
in its entirety, to read as follows:
A Performance Share Award Agreement shall specify the number of
shares of Common Stock subject to the Performance Share Award, the
price, if any, to be paid for such shares by the Participant and the
conditions upon which issuance to the Participant shall be based.
18
22
ELEVENTH
The first sentence of Section 7.4 of the Plan is hereby amended
in its entirety, to read as follows:
Unless prior to an Event the Committee determines that, upon its
occurrence, there shall be no acceleration of Awards or determines those
Awards which shall be accelerated and the extent to which they shall be
accelerated upon the occurrence of an Event (i) each Option and each
Stock Appreciation Right shall become immediately exercisable to the
full extent theretofore not exercisable, (ii) Restricted Stock shall
immediately vest free of restrictions, and (iii) the number of shares
covered by each Performance Share Award shall be issued to the
Participant.
TWELFTH
Section 7.7(b) of the Plan is hereby amended in its entirety, to
read as follows:
(b) If an amendment would (i) materially increase the benefits
accruing to Participants within the meaning of Rule 16b-3(a) under the
Exchange Act or any successor thereto, (ii) increase the aggregate
number of shares which may be issued under this Plan or to any
individual, (iii) modify the requirements of eligibility for
participation in this Plan, or (iv) require shareholder approval in
order to qualify Options and Stock Appreciation Rights as
"performance-based compensation," within the meaning of Section 162(m)
of the Code and the regulations promulgated thereunder, the amendment
shall be approved by the Board or the Committee and a majority of the
shareholders. If the provisions of Rule 16b-3 under the Exchange Act or
any successor thereto or Section 162(m) of the Code and the regulations
promulgated thereunder are amended after the effective date of this Plan
to permit the
19
23
amendment of stock option plans without compliance with the shareholder
approval requirements then set forth therein, the foregoing restrictions
on the ability of the Board and the Committee to amend the Plan shall
terminate to the extent such approval is no longer required thereunder
(or under any other applicable law or regulation), and the Board and
the Committee shall thereafter be empowered to amend the Plan without
regard to the terminated restrictions in appropriate circumstances.
20
24
EXHIBIT 4.1
DOVE AUDIO, INC.
1994 STOCK INCENTIVE PLAN
25
TABLE OF CONTENTS
Page
----
I. DEFINITIONS............................................................ 1
1.1 Definitions................................................. 1
II. THE PLAN............................................................... 4
2.1 Purpose..................................................... 4
2.2 Administration.............................................. 5
2.3 Participation............................................... 5
2.4 Stock Subject to the Plan................................... 6
2.5 Grant of Awards............................................. 6
2.6 Exercise of Awards.......................................... 7
III. OPTIONS................................................................ 7
3.1 Grants...................................................... 7
3.2 Option Price................................................ 9
3.3 Option Period............................................... 10
3.4 Exercise of Options......................................... 10
3.5 Limitations on Grant of Incentive Stock
Options .................................................... 11
3.6 Additional Rights........................................... 11
IV. STOCK APPRECIATION RIGHTS.............................................. 12
4.1 Grants...................................................... 12
4.2 Exercise of Stock Appreciation Rights....................... 12
4.3 Payment..................................................... 13
V. RESTRICTED STOCK AWARDS................................................ 14
5.1 Grants...................................................... 14
5.2 Restrictions................................................ 14
VI. PERFORMANCE SHARE AWARDS............................................... 15
6.1 Grants...................................................... 15
VII. OTHER PROVISIONS....................................................... 15
7.1 Rights of Eligible Persons, Participants and
Beneficiaries............................................... 15
7.2 Adjustments Upon Changes in Capitalization.................. 16
7.3 Termination of Employment................................... 17
7.4 Acceleration of Awards...................................... 18
7.5 Government Regulations...................................... 19
7.6 Tax Withholding............................................. 19
7.7 Amendment, Termination and Suspension....................... 20
-i-
26
TABLE OF CONTENTS (Continued)
7.8 Privileges of Stock Ownership; Nondistributive
Intent...................................................... 21
7.9 Effective Date of the Plan.................................. 21
7.10 Term of the Plan............................................ 21
7.11 Governing Law............................................... 21
-ii-
27
DOVE AUDIO, INC.
1994 Stock Incentive Plan
I. DEFINITIONS.
1.1 Definitions.
(a) "Award" shall mean an Option, which may be designated
as a Nonqualified Stock Option or an Incentive Stock Option, a Stock
Appreciation Right, a Restricted Stock Award or Performance Share Award, in each
case granted under this Plan.
(b) "Award Agreement" shall mean a written agreement
setting forth the terms of an Award.
(c) "Award Date" shall mean the date upon which the
Committee took the action granting an Award or such later date as is prescribed
by the Committee.
(d) "Award Period" shall mean the period beginning on an
Award Date and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive the
benefits specified under this Plan in the event of a Participant's death.
(f) "Board" shall mean the Board of Directors of the
Corporation.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(h) "Commission" shall mean the Securities and Exchange
Commission.
(i) "Committee" shall mean either a committee appointed by
the Board and consisting of two or more members, each of whom is a director and
Disinterested or the entire Board, if each member is Disinterested (except as
otherwise permitted under Rule 16b-3 promulgated under the Exchange Act). If
there are two or more members of the Board who are "outside directors" within
the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder, then the Committee shall consist only of such members.
Notwithstanding anything to the
28
contrary herein, no person may be a member of the Committee if such person has
received an Award hereunder for the period of one year prior to serving on the
Committee, and no member of the ommittee may receive an Award hereunder while
serving on the Committee, other than in accordance with Section 3.1(b).
(j) "Common Stock" shall mean the Common Stock of
the Corporation.
(k) "Company" shall mean, collectively, the Corporation
and its Subsidiaries.
(l) "Corporation" shall mean Dove Audio, Inc., a
California corporation, and its successors.
(m) "Disinterested" shall mean disinterested within the
meaning of the applicable regulatory requirements promulgated under Section 16
of the Exchange Act.
(n) "Eligible Person" shall mean an employee, director,
officer or key employee of the Company or any other person who, in the opinion
of the Committee, is rendering valuable services to the Company, including,
without limitation, as an independent contractor, outside consultant or advisor
to the Company.
(o) "Event" shall mean any of the following:
(1) Approval by the shareholders of the
Corporation of the dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the
Corporation of an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not
Subsidiaries, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity are, or are to
be, owned by former shareholders of the Corporation;
(3) Approval by the shareholders of the
Corporation of the sale of substantially all of the Corporation's
business and/or assets to a person or entity which is not a
Subsidiary; or
-2-
29
(4) A Change in Control. A "Change in Control"
shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation
representing 35% or more of the combined voting power of the
Corporation's then outstanding securities; or (B) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for
election by the Corporation's shareholders, of each new Board member
was approved by a vote of at least three-fourths of the Board members
then still in office who were Board members at the beginning of such
period.
(p) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(q) "Fair Market Value" shall mean (i) if the stock is
listed or admitted to trade on a national securities exchange, the closing price
of the stock on the Composite Tape, as published in The Wall Street Journal, of
the principal national securities exchange on which the stock is so listed or
admitted to trade, on such date, or, if there is no trading of the stock on such
date, then the closing price of the stock as quoted on such Composite Tape on
the next preceding date on which there was trading in such stock; (ii) if the
stock is not listed or admitted to trade on a national securities exchange, the
last price for the stock on such date, as furnished by the National Association
of Securities Dealers, Inc. ("NASD") through the NASDAQ National Market
Reporting System or a similar organization if the NASD is no longer reporting
such information; (iii) if the stock is not listed or admitted to trade on a
national securities exchange and is not reported on the National Market
Reporting System, the average of the closing bid and asked prices for the stock
on such date, as reported or furnished by the NASDAQ; (iv) if the stock is not
listed or admitted to trade on a national securities exchange, is not reported
on the National Market Reporting System and if bid and asked prices for the
stock are not reported or furnished by the NASDAQ or a similar organization, the
values established by the Committee for purposes of granting Options under the
Plan.
-3-
30
(r) "Incentive Stock Option" shall mean an option which is
designated as an incentive stock option within the meaning of Section 422 of the
Code, the award of which contains such provisions as are necessary to comply
with that section.
(s) "Nonqualified Stock Option" shall mean an option which
is designated a Nonqualified Stock Option.
(t) "Option" shall mean an option to purchase Common Stock
under this Plan. An option shall be designated by the Committee as a
Nonqualified Stock Option or an Incentive Stock Option.
(u) "Participant" shall mean an Eligible Person,
who has been awarded an Award.
(v) "Performance Share Award" shall mean an award of
shares of Common Stock, issuance of which is contingent upon attainment of
performance objectives specified by the Committee.
(w) "Personal Representative" shall mean the person or
persons who, upon the disability or incompetence of a Participant, shall have
acquired on behalf of the Participant by legal proceeding or otherwise the power
to exercise the rights and receive the benefits specified in this Plan.
(x) "Plan" shall mean Dove Audio, Inc. 1994 Stock
Incentive Plan.
(y) "Restricted Stock" shall mean those shares of Common
Stock issued pursuant to a Restricted Stock Award which are subject to the
restrictions set forth in the related Award Agreement.
(z) "Restricted Stock Award" shall mean an award of a
fixed number of shares of Common Stock to the Participant subject, however, to
payment of such consideration, if any, and such forfeiture provisions, as are
set forth in the Award Agreement.
(aa) "Retirement" shall mean retirement as defined in
termination of employment with the Company pursuant to the Company's retirement
policy, as in effect from time to time.
-4-
31
(bb) "Securities Act" shall mean the Securities Act of
1933, as amended.
(cc) "Stock Appreciation Right" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, determined as provided in Section 4.3(a).
(dd) "Subsidiary" shall mean any corporation or other
entity fifty percent or more of whose outstanding voting stock or voting power
is beneficially owned directly or indirectly by the Corporation.
(ee) "Tax-Offset Bonus" shall mean a bonus payable
pursuant to a disqualifying disposition of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option, determined as provided in Section 3.6.
(ff) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
II. THE PLAN.
2.1 Purpose.
The purpose of this Plan is to promote the success of the
Company by providing an additional means to attract and retain key personnel
through added long term incentives for high levels of performance and for
significant efforts to improve the financial performance of the Company by
granting Awards.
2.2 Administration.
(a) This Plan shall be administered by the Committee.
Action of the Committee with respect to the administration of this Plan shall be
taken pursuant to a majority vote or the written consent of a majority of its
members. In the event action by the Committee is taken by written consent, the
action shall be deemed to have been taken at the time specified in the consent
or, if none is specified, at the time of the last signature. The Committee may
delegate administrative functions (other than functions which are required to be
performed by the Committee pursuant to requirements promulgated under Section 16
-5-
32
of the Exchange Act and Section 162(m) of the Code) to individuals who are
officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the
Committee shall have the authority to construe and interpret this Plan and any
agreements defining the rights and obligations of the Company and Participants
under this Plan, to further define the terms used in this Plan, to prescribe,
amend and rescind rules and regulations relating to the administration of this
Plan, to determine the duration and purposes of leaves of absence which may be
granted to Participants without constituting a termination of their employment
for purposes of this Plan and to make all other determinations necessary or
advisable for the administration of this Plan. The determinations of the
Committee on the foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Corporation,
any Subsidiary, the Board or the Committee relating to this Plan shall be within
the absolute discretion of that entity or body and shall be conclusive and
binding upon all persons. No member of the Board or Committee, or officer of the
Corporation or Subsidiary, shall be liable for any such action or inaction of
the entity or body, of another person or, except in circumstances involving bad
faith, of himself or herself. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their absolute discretion
in matters related to this Plan.
(d) Subject to the requirements of Section 1.1(i), the
Board, at any time it so desires, may increase or decrease the number of members
of the Committee, may remove from membership on the Committee all or any portion
of its members, and may appoint such person or persons as it desires to fill any
vacancy existing on the Committee, whether caused by removal, resignation or
otherwise.
2.3 Participation.
Awards may be granted only to Eligible Persons. An
Eligible Person who has been granted an Award may, if otherwise eligible, be
granted additional Awards if the Committee shall so determine. Members of the
Committee shall not be eligible to receive Awards, other than in accordance with
Section 3.1(b).
2.4 Stock Subject to the Plan.
-6-
33
The stock to be offered under this Plan shall be shares of
the Corporation's authorized but unissued Common Stock. The aggregate amount of
Common Stock that may be issued or transferred pursuant to Awards granted under
this Plan shall not exceed 400,000 shares, subject to adjustment as set forth in
Section 7.2; provided that any Stock Appreciation Rights granted concurrently in
accordance with Section 4.1 are not subject to the foregoing limitation. If an
Option and any Stock Appreciation Right shall lapse or terminate without having
been exercised in full, or any Common Stock subject to a Restricted Stock Award
shall not vest or any Common Stock subject to a Performance Share Award shall
not have been transferred, the unpurchased or nontransferred shares subject
thereto shall again be available for purposes of this Plan; provided, however,
that the counting of shares subject to Awards granted under the Plan against the
number of shares available for further Awards shall in all cases conform to the
requirements of Rule 16b-3 under the Exchange Act; and provided, further, that
with respect to any Option and any Stock Appreciation Right granted to any
Eligible Person who is a "covered employee" as defined in Section 162(m) of the
Code and the regulations promulgated thereunder that is canceled, the number of
shares subject to such Option and Stock Appreciation Right shall continue to
count against the maximum number of shares which may be the subject of Options
and Stock Appreciation Rights granted to such Eligible Person. For purposes of
the preceding sentence, if, after grant, the exercise price of an Option and/or
the base amount of any Stock 6 Appreciation Right is reduced, such reduction
shall be treated as a cancellation of such Option and Stock Appreciation Right
and the grant of a new Option and Stock Appreciation Right (if any), and both
the cancellation of the Option and Stock Appreciation Right and the new Option
and Stock Appreciation Right shall reduce the maximum number of shares for which
Options and Stock Appreciation Rights may be granted to the holder of such
Option and Stock Appreciation Right.
2.5 Grant of Awards.
Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those individuals
to whom Awards under the Plan shall be granted, the terms of Awards (which need
not be identical) and the number of shares of Common Stock subject to each
Award. Each Award shall be subject to the terms and conditions set forth in the
Plan and such other terms and conditions established by the
-7-
34
Committee as are not inconsistent with the purpose and provisions of the Plan.
The grant of an Award is made on the Award Date.
2.6 Exercise of Awards.
An Option or Stock Appreciation Right shall be deemed to
be exercised when the Secretary of the Corporation receives written notice of
such exercise from the Participant, together with payment of the purchase price
made in accordance with Section 3.2(a), except to the extent payment may be
permitted to be made following delivery of written notice of exercise in
accordance with Section 3.2(b). Notwithstanding any other provision of this
Plan, the Committee may impose, by rule and in Award Agreements, such conditions
upon the exercise of Awards (including, without limitation, conditions limiting
the time of exercise to specified periods) as may be required to satisfy
applicable regulatory requirements, including, without limitation, Rule 16b-3
(or any successor rule) promulgated by the Commission pursuant to the Exchange
Act.
III. OPTIONS.
3.1 Grants.
(a) One or more Options may be granted to any Eligible
Person other than members of the Committee. Each Option so granted shall be
designated by the Committee as either a Nonqualified Stock Option or an
Incentive Stock Option. Members of the Committee shall be granted Options in
accordance with Section 3.1(b).
(b) Notwithstanding any other provision of the Plan,
effective on November 1, 1994 and on each subsequent date a director who is not
also an employee of the Company is appointed, elected or, commencing in 1995,
re-elected to the Board, such director will automatically be granted a
Nonqualified Stock Option, having a duration of ten years, to purchase 5,000
shares of Common Stock for a purchase price per share equal to the Fair Market
Value of the Common Stock on the date of grant, to vest as to twenty percent
(20%) of such shares on each of the first five (5) anniverseries of the date of
grant. The purchase price of any shares purchased pursuant to any such Option
shall be paid in full at the time of each purchase in cash or by certified or
-8-
35
cashier's check payable to the order of the Corporation. Notwithstanding
anything to the contrary contained in Section 7.2 or 7.4, each such Option shall
be adjusted and shall accelerate, respectively, in the following events:
(i) If the outstanding shares of Common Stock
are increased, decreased or changed into, or exchanged for, a
different number or kind of shares or securities of the
Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination,
recapitalization, reclassification, stock split, stock dividend,
stock consolidation or otherwise, an appropriate adjustment
shall be made in the number and kind of shares that may be
issued pursuant to each Option. Any such adjustment, however,
shall be made without change in the total payment, if any,
applicable to the portion of the Option not exercised but with a
corresponding adjustment in the price for each share.
(ii) Upon the dissolution or liquidation of the
Corporation, or upon a reorganization, merger or consolidation
of the Corporation with one or more corporations as a result of
which the Corporation is not the surviving corporation, any such
Option then outstanding shall terminate and be forfeited. In the
event the Options terminate as aforesaid in connection with such
a dissolution, liquidation, reorganization, merger or
consolidation, the holder of any such Option shall be entitled
to receive from the Corporation cash in an amount equal to the
excess of (A) the Fair Market Value (determined on the basis of
the amount received by shareholders in connection with such
transaction) of the shares of Common Stock subject to the
portion of the Option not theretofore exercised (whether or not
the Option is then exercisable pursuant to its terms or
otherwise), over (B) the aggregate purchase price which would be
payable for such shares upon the exercise of the Option.
(iii) In adjusting Options to reflect the
changes described in this Section 3.1(b) or in determining that
no such adjustment is necessary, the Committee shall make only
such adjustment as shall be necessary to maintain the
proportionate interest of the holder and preserve the value of
the respective Option and may rely upon the advice of
independent counsel and accountants of the Corporation,
-9-
36
and the determination of the Committee shall be conclusive. No
fractional shares of stock shall be issued under this Plan on
account of any such adjustment.
(iv) Upon the occurrence of an Event, each such
Option shall become immediately exercisable to the full extent
theretofore not exercisable. Acceleration of Awards shall comply
with applicable regulatory requirements, including, without
limitation, Rule 16b-3 promulgated by the Commission pursuant to
the Exchange Act.
All or any part of any remaining unexercised
Options granted pursuant to this Section 3.1(b) may be exercised (after approval
of the Plan by shareholders of the Corporation but in no event during the
six-month period commencing on the later of the date of grant or the date of
such shareholder approval) in the event of the holder's cessation of service as
a director of the Company due to the holder's death, during the period beginning
on the date of death and ending 12 months thereafter, but in no event after the
expiration of the term of the Option. Any Option granted pursuant to this
Section 3.1(b), to the extent unexercised, shall terminate immediately upon the
holder's ceasing to serve as a director of the Company due to Total Disability,
except that the holder or the holder's Personal Representative shall have 12
months following such cessation of service to exercise any unexercised Option
that the holder could have exercised on the day on which such service
terminated; provided that such exercise must be accomplished prior to the
expiration of the term of such Option. Any Option granted pursuant to this
Section 3.1(b), to the extent unexercised, shall terminate immediately upon the
holder's ceasing to serve as a director of the Company (for reasons other than
Total Disability or death), except that the holder shall have three months from
the date of such cessation of service to exercise any unexercised Option that he
or she could have exercised on the day on which such service terminated;
provided that such exercise must be accomplished prior to the expiration of the
term of such Option. Notwithstanding the preceding, if the service as a director
of any holder of an Option granted pursuant to this Section 3.1(b) shall be
terminated because of the holder's (a) fraud or intentional misrepresentation,
or (b) embezzlement, misappropriation or conversion of assets or opportunities
of the Company, then all such unexercised Options of the holder shall
terminate immediately upon such holder's ceasing to serve as a
director.
-10-
37
Subject to the limitations of Section 7.7, this
award formula may be amended from time to time by the Board with respect to
timing and amount; provided that such formula will not be modified to provide an
award in excess of Options to acquire 5,000 shares of Common Stock per year; and
provided, further, that the provisions of this Section 3.1(b) shall not be
amended more than once every six months, other than to comport with changes in
the Code or the Employee Retirement Income Security Act of 1974, as amended (and
to such extent, if any, as it may be applicable to the Plan) or the rules and
regulations thereunder.
3.2 Option Price.
(a) The purchase price per share of the Common Stock
covered by each Option shall be determined by the Committee, but in the case of
Incentive Stock Options shall not be less than 100% (110% in the case of a
Participant who owns more than 10% of the total combined voting power of all
classes of stock of the Company) of the Fair Market Value of the Common Stock on
the date the Incentive Stock Option is granted. The purchase price of any shares
purchased shall be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash, or by certified or cashier's
check payable to the order of the Corporation; (ii) if authorized by the
Committee or specified in the Option being exercised, by a promissory note made
by the Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee but at a rate of interest at least equal to the
imputed interest specified under Section 483 or Section 1274, whichever is
applicable, of the Code, and secured by the Common Stock issuable upon exercise
in compliance with applicable law (including, without limitation, state
corporate law and federal margin requirements); or (iii) by shares of Common
Stock of the Corporation already owned by the Participant; provided, however,
the Committee may in its absolute discretion limit the Participant's ability to
exercise an Option by delivering shares, and any shares delivered which were
initially acquired upon exercise of a stock option must have been owned, or
deemed to have been owned, by the Participant at least six months as of the date
of delivery. Shares of Common Stock used to satisfy the exercise price of an
Option shall be valued at their Fair Market Value on the date of exercise.
(b) In addition to the payment methods described in
subsection (a), the Option may provide that the Option can be
-11-
38
exercised and payment made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Corporation the amount of sale or loan proceeds necessary to pay the exercise
price and, unless otherwise disallowed by the Committee, any applicable tax
withholding under Section 7.6. The Corporation shall not be obligated to deliver
certificates for the shares unless and until it receives full payment of the
exercise price therefor.
3.3 Option Period.
Each Option and all rights or obligations thereunder shall
expire on such date as shall be determined by the Committee, but not later than
10 years after the Award Date of an Incentive Stock Option or 10 years and one
day after the Award Date of a Nonqualified Stock Option, and shall be subject to
earlier termination as hereinafter provided.
3.4 Exercise of Options.
Except as otherwise provided in Section 7.4, an Option may
become exercisable, in whole or in part, on the date or dates specified in the
Award Agreement which date(s) shall not be earlier than six months after the
later of (i) the Award Date, or (ii) the date of shareholder approval of the
Plan pursuant to Section 7.9, and thereafter shall remain exercisable until the
expiration or earlier termination of the Participant's Option. The Committee
may, at any time after grant of the Option and from time to time, increase the
number of shares purchasable at any time so long as the total number of shares
subject to the Option is not increased. No Option shall be exercisable except in
respect of whole shares, and fractional share interests shall be disregarded.
Not less than 100 shares of Common Stock may be purchased at one time unless the
number purchased is the total number at the time available for purchase under
the terms of the Option.
3.5 Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the
Award Date) of the Common Stock for which Incentive Stock Options may first
become exercisable by any Participant during any calendar year under this Plan
(other than as a result of acceleration pursuant to Section 7.4 or 7.2),
together with that of common stock subject to incentive stock options first
-12-
39
exercisable by such Participant under any other plan of the Corporation or any
Subsidiary, shall not exceed $100,000; to the extent such limitation is exceeded
as a result of acceleration, Options shall be treated as Nonqualified Stock
Options.
(b) There shall be imposed in the Award Agreement relating
to Incentive Stock Options such terms and conditions as are required in order
that the Option be an "incentive stock option" as that term is defined in
Section 422 of the Code.
(c) No Incentive Stock Option may be granted to any person
who, at the time the Incentive Stock Option is granted, owns shares of stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation or any Subsidiary, unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to the
Option and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
(d) No Incentive Stock Option may be granted to any person
who is not an employee of the Company.
3.6 Additional Rights.
In its discretion the Committee may, in the Award
Agreement, provide for a Tax-Offset Bonus to any Participant who elects to make
a disqualifying disposition (as defined in Section 422(a)(1) of the Code) of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option. The
Tax-Offset Bonus shall be in the form of a cash payment equal to a percentage of
the difference between the exercise price and the lesser of (i) the Fair Market
Value on the date of exercise of the Common Stock with respect to which the
disqualifying disposition occurs, or (ii) the amount realized from such
disqualifying disposition. Such percentage shall be set out in the Award
Agreement and shall be designed to offset the impact of additional taxes which
result from the disqualifying disposition. Notwithstanding the preceding
sentence, the Committee may reserve the right to from time to time change the
percentage applicable with respect to the Award Agreement.
-13-
40
IV. STOCK APPRECIATION RIGHTS.
4.1 Grants.
In its discretion, the Committee may grant Stock
Appreciation Rights concurrently with the grant of Options. A Stock Appreciation
Right shall extend to all or a portion of the shares covered by the related
Option. A Stock Appreciation Right shall entitle the Participant who holds the
related Option, upon exercise of the Stock Appreciation Right and surrender of
the related Option, or portion thereof, to the extent the Stock Appreciation
Right and related Option each were previously unexercised, to receive payment of
an amount determined pursuant to Section 4.3. Any Stock Appreciation Right
granted in connection with an Incentive Stock Option shall contain such
terms as may be required to comply with the provisions of Section 422 of the
Code and the regulations promulgated thereunder. In its discretion, the
Committee may also grant Stock Appreciation Rights independently of any Option
subject to such conditions as the Committee may in its absolute discretion
provide.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right granted concurrently
with an Option shall be exercisable only at such time or times, and to the
extent, that the related Option shall be exercisable and only when the Fair
Market Value of the stock subject to the related Option exceeds the exercise
price of the related Option.
(b) In the event that a Stock Appreciation Right granted
concurrently with an option is exercised, the number of shares of Common Stock
subject to the related Option shall be charged against the maximum amount of
Common Stock that may be issued or transferred pursuant to Awards under this
Plan. The number of shares subject to the Stock Appreciation Right and the
related Option of the Participant shall be reduced by such number of shares.
(c) If a Stock Appreciation Right granted concurrently
with an Option extends to less than all the shares covered by the related Option
and if a portion of the related Option is thereafter exercised, the number of
shares subject to the unexercised Stock Appreciation Right shall be reduced only
if and to the extent that the remaining number of shares covered by such related
Option is less than the remaining number of shares
-14-
41
subject to such Stock Appreciation Right. The number of shares subject to
unexercised Stock Appreciation Rights may also be reduced proportionately.
(d) A Stock Appreciation Right granted independently of
any Option shall be exercisable pursuant to the terms of the Award Agreement but
in no event earlier than six months after the later of (i) the Award Date, or
(ii) the date of shareholder approval of the Plan pursuant to Section 7.9.
(e) In order to achieve the Plan's objective of
encouraging ownership of the Common Stock, the Committee may require that Stock
Appreciation Rights can only be exercised if the Participant uses all or a
portion of any cash received upon exercise of the Stock Appreciation Right to
concurrently exercise all or a portion of the Option he or she holds.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and
surrender of an exercisable portion of the related Option, the Participant shall
be entitled to receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise
price per share of Common Stock under the related Option from the Fair
Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right, by
(ii) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) The Committee, in its sole discretion, may settle the
amount determined under paragraph (a) above solely in cash, solely in shares of
Common Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in cash, provided that
the Committee shall have determined that such exercise and payment are
consistent with applicable law. In any event, cash shall be paid in lieu of
fractional shares. Absent a determination to the contrary, all Stock
Appreciation Rights shall be settled in cash as soon as practicable after
exercise. Notwithstanding the foregoing, the Committee may, in the Award
Agreement, determine
-15-
42
the maximum amount of cash or stock or a combination thereof which may be
delivered upon exercise of a Stock Appreciation Right.
(c) Upon exercise of a Stock Appreciation Right granted
independently of any Option, the Participant shall be entitled to receive
payment in cash of an amount based on a percentage, specified in the Award
Agreement, of the difference obtained by subtracting the Fair Market Value per
share of Common Stock on the Award Date from the Fair Market Value per share of
Common Stock on the date of exercise of the Stock Appreciation Right.
(d) Notwithstanding any other provision of the Plan or of
the Stock Appreciation Rights, for purposes of determining the amount specified
in subsection (a) in the case of a holder of Stock Appreciation Rights who is a
director or officer of the Company subject to Section 16(b) of the Exchange Act,
the Committee, in its sole discretion, may designate a single Fair Market Value
per share with respect to all such holders who exercise Stock Appreciation
Rights during any single ten-day period specified in Rule 16b-3(e)(3) under the
Exchange Act; provided, however, that the Fair Market Value per share designated
by the Committee during any such period shall in no event be greater than the
highest Fair Market Value per share on any day during such period or less than
the lowest Fair Market Value per share on any day during such period.
V. RESTRICTED STOCK AWARDS.
5.1 Grants.
Subject to Section 2.4, the Committee may, in its
discretion, grant one or more Restricted Stock Awards to any Eligible Person.
Each Restricted Stock Award Agreement shall specify the number of shares of
Common Stock to be issued to the Participant, the date of such issuance, the
price, if any, to be paid for such shares by the Participant and the
restrictions imposed on such shares, which restrictions shall not terminate
earlier than six months after the later of (i) the Award Date, or (ii) the date
of shareholder approval of the Plan pursuant to Section 7.9. Shares of
Restricted Stock shall be evidenced by a stock certificate registered only in
the name of the Participant, which stock certificate shall bear a legend making
appropriate
-16-
43
reference to the restrictions imposed and shall be held by the Corporation until
the restrictions on such shares shall have lapsed and those shares shall have
thereby vested.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock
Awards may not be sold, assigned, transferred, pledged or otherwise disposed of
or encumbered, either voluntarily or involuntarily, until such shares have
vested.
(b) Participants receiving Restricted Stock shall be
entitled to voting rights for the shares issued even though they are not vested;
provided that such rights shall terminate immediately as to any forfeited
Restricted Stock; and provided further that any dividends declared and paid on
the shares issued but not yet vested shall be retained for the benefit of the
Participant, to be paid to the Participant when and if such shares vest or
returned to the Corporation immediately as to any forfeited Restricted Stock.
(c) In the event that the Participant shall have paid cash
in connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned upon a forfeiture (with
or without an earnings factor).
VI. PERFORMANCE SHARE AWARDS.
6.1 Grants.
The Committee may, in its discretion, grant
Performance Share Awards to Eligible Persons based upon such factors as the
Committee shall determine. A Performance Share Award Agreement shall specify the
number of shares of Common Stock subject to the Performance Share Award, the
price, if any, to be paid for such shares by the Participant and the conditions
upon which issuance to the Participant shall be based, which issuance shall not
be earlier than six months after the later of (i) the Award Date, or (ii) the
date of shareholder approval of the Plan pursuant to Section 7.9.
VII. OTHER PROVISIONS.
-17-
44
7.1 Rights of Eligible Persons, Participants and
Beneficiaries.
(a) Status as an Eligible Person shall not be construed as
a commitment that any Award will be made under this Plan to an Eligible Person
or to Eligible Persons generally.
(b) Nothing contained in this Plan (or in Award Agreements
or in any other documents related to this Plan or to Awards) shall confer upon
any Eligible Person or Participant any right to continue in the employ of the
Company or constitute any contract or agreement of employment, or interfere in
any way with the right of the Company to reduce such person's compensation or to
terminate the employment of such Eligible Person or Participant, with or without
cause, but nothing contained in this Plan or any document related thereto shall
affect any other contractual right of any Eligible Person or Participant.
(c) Amounts payable pursuant to an Award shall be paid
only to the Participant or, in the event of the Participant's death, to the
Participant's Beneficiary or, in the event of the Participant's Total
Disability, to the Participant's Personal Representative or, if there is none,
to the Participant. Other than by will or the laws of descent and distribution,
or pursuant to a "qualified domestic relations order" as defined by the Code, no
benefit payable under, or interest in, this Plan or in any Award shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge and any such attempted action shall be void and no
such benefit or interest shall be, in any manner, liable for, or subject to,
debts, contracts, liabilities, engagements or torts of any Eligible Person,
Participant or Beneficiary. The Committee shall disregard any attempted
transfer, assignment or other alienation prohibited by the preceding sentence
and shall pay or deliver such cash or shares of Common Stock in accordance with
the provisions of this Plan.
(d) No Participant, Beneficiary or other person
shall have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock) of the Company by reason of any Award granted
hereunder. Neither the provisions of this Plan (or of any documents related
hereto), nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between
-18-
45
the Company and any Participant, Beneficiary or other person. To the extent that
a Participant, Beneficiary or other person acquires a right to receive an Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
7.2 Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are
increased, decreased or changed into, or exchanged for, a different number or
kind of shares or securities of the Corporation through a reorganization or
merger in which the Corporation is the surviving entity, or through a
combination, recapitalization, reclassification, stock split, stock dividend,
stock consolidation or otherwise, an appropriate adjustment shall be made in the
number and kind of shares that may be issued pursuant to Awards. A corresponding
adjustment to the consideration payable with respect to Awards granted prior to
any such change and to the price, if any, paid in connection with Restricted
Stock Awards or Performance Share Awards shall also be made. Any such
adjustment, however, shall be made without change in the total payment, if any,
applicable to the portion of the Award not exercised but with a corresponding
adjustment in the price for each share. Corresponding adjustments shall be made
with respect to Stock Appreciation Rights based upon the adjustments made to the
Options to which they are related or, in the case of Stock Appreciation Rights
granted independently of any Option, based upon the adjustments made to Common
Stock. Corresponding adjustments may also be made in particular stock grants
with respect to extraordinary cash dividends.
(b) Upon the dissolution or liquidation of the
Corporation, or upon a reorganization, merger or consolidation of the
Corporation with one or more corporations as a result of which the Corporation
is not the surviving corporation, the Plan shall terminate, and any outstanding
Awards shall terminate and be forfeited. Notwithstanding the foregoing, the
Committee may provide in writing in connection with, or in contemplation of, any
such transaction for any or all of the following alternatives (separately or in
combinations): (i) for the assumption by the successor corporation of the Awards
theretofore granted or the substitution by such corporation for such Awards of
awards covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; (ii) for the continuance of the
-19-
46
Plan by such successor corporation in which event the Plan and the Awards shall
continue in the manner and under the terms so provided; or (iii) for the payment
in cash or shares of Common Stock in lieu of and in complete satisfaction of
such Awards.
(c) In adjusting Awards to reflect the changes described
in this Section 7.2, or in determining that no such adjustment is necessary, the
Committee may rely upon the advice of independent counsel and accountants of the
Corporation, and the determination of the Committee shall be conclusive. No
fractional shares of stock shall be issued under this Plan on account of any
such adjustment.
7.3 Termination of Employment.
(a) If the Participant's employment by the Company
terminates for any reason other than Retirement, death or Total Disability, the
Participant shall have, subject to earlier termination pursuant to or as
contemplated by Section 3.3, three months (or up to one year if so determined by
the Committee in the grant or otherwise) from the date of termination of
employment to exercise any Option to the extent it shall have become exercisable
on that date, and any Option not exercisable on that date shall terminate.
Notwithstanding the preceding sentence, in the event the Participant is
discharged for cause as determined by the Committee in its sole discretion, all
Options shall lapse immediately upon such termination of employment.
(b) If the Participant's employment by the Company
terminates as a result of Retirement or Total Disability, the Participant or
Participant's Personal Representative, as the case may be, shall have, subject
to earlier termination pursuant to or as contemplated by Section 3.3, 12 months
from the date of termination of employment (or 3 months from the date of
termination of employment as a result of Retirement, with respect to an
Incentive Stock Option) to exercise any Option to the extent it shall have
become exercisable by that date, and any Option not exercisable on that date
shall terminate.
(c) If the Participant's employment by the Company
terminates as a result of death while the Participant is employed by the Company
or during the 12 month period referred to in subsection (b) above, the
Participant's Option shall be exercisable by the Participant's Beneficiary,
subject to earlier termination pursuant to or as contemplated by Section 3.3,
during
-20-
47
the 12-month period or such shorter period as is provided in the Award Agreement
following the Participant's death, as to all or any part of the shares of Common
Stock covered thereby, including all shares as to which the Option would not
otherwise be exercisable.
(d) Each Stock Appreciation Right granted concurrently
with an Option shall have the same termination provisions and exercisability
periods as the Option to which it relates. The termination provisions and
exercisability periods of any Stock Appreciation Right granted independently of
an Option shall be established in accordance with Section 4.2(d). The
exercisability period of a Stock Appreciation Right shall not exceed that
provided in Section 3.3 or in the related Award Agreement and the Stock
Appreciation Right shall expire at the end of such exercisability period.
(e) In the event of termination of employment with the
Company for any reason, (i) shares of Common Stock subject to the Participant's
Restricted Stock Award shall be forfeited in accordance with the provisions of
the related Award Agreement to the extent such shares have not become vested on
that date; and (ii) shares of Common Stock subject to the Participant's
Performance Share Award shall be forfeited in accordance with the provisions of
the related Award Agreement to the extent such shares have not been issued or
become issuable on that date.
(f) In the event of termination of employment with the
Company for any reason, other than discharge for cause, the Committee may, in
its discretion, increase the portion of the Participant's Award available to the
Participant, or Participant's Beneficiary or Personal Representative, as the
case may be, upon such terms as the Committee shall determine.
(g) If an entity ceases to be a Subsidiary, such action
shall be deemed for purposes of this Section 7.3 to be a termination of
employment of each employee of that entity.
(h) Upon forfeiture of a Restricted Stock Award pursuant
to this Section 7.3, the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, shall transfer to the Corporation the
portion of the Restricted Stock Award not vested at the date of termination of
employment, without payment of any consideration by the Company for such
transfer unless the Participant paid a purchase price in which
-21-
48
case repayment, if any, of that price shall be governed by the Award Agreement.
Notwithstanding any such transfer to the Corporation, or failure, refusal or
neglect to transfer, by the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, such non-vested portion of any Restricted
Stock Award shall be deemed transferred automatically to the Corporation on the
date of termination of employment. The Participant's original acceptance of the
Restricted Stock Award shall constitute his or her appointment of the
Corporation and each of its authorized representatives as attorney(s)-in-fact to
effect such transfer and to execute such documents as the Corporation or such
representatives deem necessary or advisable in connection with such transfer.
7.4 Acceleration of Awards.
Unless prior to an Event the Committee determines that,
upon its occurrence, there shall be no acceleration of Awards or determines
those Awards which shall be accelerated and the extent to which they shall be
accelerated, upon the occurrence of an Event (i) each Option and each Stock
Appreciation Right shall become immediately exercisable to the full extent
theretofore not exercisable, (ii) Restricted Stock shall immediately vest free
of restrictions and (iii) the number of shares covered by each Performance Share
Award shall be issued to the Participant; provided, however, that Awards shall
not in any event be so accelerated to a date less than six months after the
later of (i) the Award Date, or (ii) the date of shareholder approval of the
Plan pursuant to Section 7.9. Acceleration of Awards shall comply with
applicable regulatory requirements, including, without limitation, Rule 16b-3
promulgated by the Commission pursuant to the Exchange Act and Section 422 of
the Code.
7.5 Government Regulations.
This Plan, the granting of Awards under this Plan and the
issuance or transfer of shares of Common Stock (and/or the payment of money)
pursuant thereto are subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency
(including, without limitation, interpretive letters of the Commission) which
may, in the opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Without limiting the generality of the foregoing, no
Awards may be granted under this
-22-
49
Plan, and no shares shall be issued by the Corporation, nor cash payments made
by the Corporation, pursuant to or in connection with any such Award, unless and
until, in each such case, all legal requirements applicable to the issuance or
payment have, in the opinion of counsel to the Corporation, been complied with.
In connection with any stock issuance or transfer, the person acquiring the
shares shall, if requested by the Corporation, give assurances satisfactory to
counsel to the Corporation in respect of such matters as the Corporation may
deem desirable to assure compliance with all applicable legal requirements.
7.6 Tax Withholding.
(a) Upon the disposition by a Participant or other person
of shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of Section
422 of the Code, or upon the exercise of a Nonqualified Stock Option or a Stock
Appreciation Right, the vesting of a Restricted Stock Award, the payment of a
Performance Share Award, payment pursuant to a Stock Appreciation Right or
payment of a Tax-Offset Bonus, the Company shall have the right to (i) require
such Participant or other person to pay by cash, or certified or cashier's check
payable to the Company, the amount of any taxes which the Company may be
required to withhold with respect to such transactions or (ii) deduct from
amounts paid in cash the amount of any taxes which the Company may be required
to withhold with respect to such cash amounts. The above notwithstanding, in any
case where a tax is required to be withheld in connection with the issuance or
transfer of shares of Common Stock under this Plan, the Participant may elect,
pursuant to such rules as the Committee may establish, to have the Company
reduce the number of such shares issued or transferred by the appropriate number
of shares to accomplish such withholding; provided, the Committee may impose
such conditions on the payment of any withholding obligation as may be required
to satisfy applicable regulatory requirements, including, without limitation,
Rule 16b-3 promulgated by the Commission pursuant to the Exchange Act.
(b) The Committee may, in its discretion, permit a loan
from the Company to a Participant (other than a member of the Committee) in the
amount of any taxes which the Company may be required to withhold with respect
to shares of Common Stock received pursuant to a transaction described in
subsection (a) above. Such a loan will be for a term, at a rate of interest and
-23-
50
pursuant to such other terms and rules as the Committee may establish.
7.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan (or any part hereof). In addition, the
Committee may, from time to time, amend or modify any provision of this Plan
and, with the consent of the Participant, make such modifications of the terms
and conditions of such Participant's Award as it shall deem advisable. The
Committee, with the consent of the Participant, may also amend the terms of any
Option to provide that the Option price of the shares remaining subject to the
original Award shall be reestablished at a price not less than 100% of the Fair
Market Value of the Common Stock on the effective date of the amendment. No
modification of any other term or provision of any Option which is amended in
accordance with the foregoing shall be required, although the Committee may, in
its discretion, make such further modifications of any such Option as are not
inconsistent with or prohibited by the Plan. No Awards may be granted during any
suspension of this Plan or after its termination.
(b) If an amendment would (i) materially increase the
benefits accruing to Participants within the meaning of Rule 16b-3(a) under the
Exchange Act or any successor thereto, (ii) increase the aggregate number of
shares which may be issued under this Plan or to any individual, or (iii) modify
the requirements of eligibility for participation in this Plan, the amendment
shall be approved by the Board or the Committee and by a majority of the
shareholders.
(c) In the case of Awards issued before the effective date
of any amendment, suspension or termination of this Plan, such amendment,
suspension or termination of the Plan shall not, without specific action of the
Board or the Committee and the consent of the Participant, in any way modify,
amend, alter or impair any rights or obligations under any Award previously
granted under the Plan.
-24-
51
7.8 Privileges of Stock Ownership; Nondistributive
Intent.
A Participant shall not be entitled to the privilege of
stock ownership as to any shares of Common Stock not actually issued to him.
Upon the issuance and transfer of shares to the Participant, unless a
registration statement is in effect under the Securities Act, relating to such
issued and transferred Common Stock and there is available for delivery a
prospectus meeting the requirements of Section 10 of the Securities Act, the
Common Stock may be issued and transferred to the Participant only if he
represents and warrants in writing to the Corporation that the shares are being
acquired for investment and not with a view to the resale or distribution
thereof. No shares shall be issued and transferred unless and until there shall
have been full compliance with any then applicable regulatory requirements
(including those of exchanges upon which any Common Stock of the Corporation may
be listed).
7.9 Effective Date of the Plan.
This Plan shall be effective upon approval by the
shareholders of the Corporation by the vote of the holders of a majority of the
stock of the Corporation voting at a meeting of such holders in person or by
proxy; except that this Plan is adopted and approved by the Board effective
October 1, 1994 to permit the grant of Awards prior to the approval of the Plan
by the shareholders of the Corporation as aforesaid. In the event that this Plan
is not approved by the shareholders of the Corporation as aforesaid, this Plan
and any Awards granted hereunder shall be void and of no force or effect.
7.10 Term of the Plan.
Unless previously terminated by the Board, this Plan shall
terminate at the close of business on October 1, 2004, and no Awards shall be
granted under it thereafter, but such termination shall not affect any Award
theretofore granted.
7.11 Governing Law.
Except as required by Delaware corporate law, this Plan
and the documents evidencing Awards and all other related documents shall be
governed by, and construed in accordance with, the laws of the State of
California. If any provision shall be
-25-
52
held by a court of competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue to be fully effective.
-26-
53
DOVE AUDIO, INC.
8955 BEVERLY BOULEVARD
WEST HOLLYWOOD, CALIFORNIA 90048
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DOVE AUDIO, INC.
The undersigned hereby appoints Michael Viner and Deborah Raffin, and each of
them, acting singly or jointly, as Proxies, each with the power to appoint his
or her substitute, and hereby authorizes each of them to represent and to vote
as designated below, all the shares of Common Stock of Dove Audio, Inc. held of
record by the undersigned on September 9, 1996, at the Annual Meeting of
Shareholders of Dove Audio, Inc. to be held on October 30, 1996 and any
postponements or adjournments thereof.
The Board unanimously recommends a vote FOR each of the items below.
1. Amendment of Articles of Incorporation to change the name of the Company
to Dove Entertainment, Inc.
/ / FOR / / AGAINST / / ABSTAIN
2. Amendment of the Bylaws to expand the size of Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
3. Election of Directors:
/ / FOR all nominees listed below (except as marked to / / WITHHOLD AUTHORITY to vote for the nominees
the contrary below) listed below
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW
Michael Viner Deborah Raffin Steven F. Mayer Freddie Fields
James Belasco Gerald Leider Gary Matus
4. Amendment of 1994 Stock Incentive Plan to increase shares subject to the
Plan, to provide for a maximum grant per individual of 200,000 shares and
to make certain changes to the Plan to comport with new rules enacted
under Section 16 of the Securities Exchange Act of 1934.
/ / FOR / / AGAINST / / ABSTAIN
5. Ratification of the appointment of KPMG Peat Marwick LLP as independent
accountants for fiscal 1996:
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting and any and all
postponements and adjournments thereof.
PLEASE DATE, SIGN ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS INDICATED; HOWEVER,
IF NO INSTRUCTIONS ARE GIVEN, THE PROXIES WILL VOTE THE SHARES ON SPECIFIED
MATTERS AS RECOMMENDED BY THE BOARD OF DIRECTORS AND IN THEIR DISCRETION ON
MATTERS DESCRIBED IN ITEM 6.
54
(continued on reverse side)
THIS PROXY when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted on specific matters as recommended by the Board of Directors and in their
discretion on the matters described in Item 7.
Date: _____________, 1996
-------------------------
Signature
-------------------------
Signature (if held
jointly)
IMPORTANT: Please sign
exactly as your name or
names are set forth on
this proxy. When shares
are held jointly, both
holders should sign. When
signing as attorney,
executor or
administrator, or trustee
or guardian, please give
your full title as such.
If a corporation, please
sign in full the
corporate name by an
authorized officer. If a
partnership, please sign
in the partnership's name
by an authorized person.
Do you plan to attend the
meeting?
/ / YES / / NO
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
A STAMPED AND ADDRESSED ENVELOPE HAS BEEN PROVIDED FOR YOUR USE.