Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report 114 508K
2: EX-4.(F) Credit Agreement 148 416K
3: EX-10.(A) Long-Term Management Incentive Plan 18 63K
4: EX-10.(B) Long-Term Management Incentive Plan 18 62K
5: EX-10.(U) Stock Purchase Agreement 53 173K
6: EX-11 Computation of Net Earnings Per Share 2± 13K
7: EX-21 Subsidiaries of the Registrant 13 72K
8: EX-23.(A) Consent of Independent Accountants 1 7K
9: EX-24 Power of Attorney 8 18K
10: EX-27 Financial Data Schedule 1 8K
EX-10.(B) — Long-Term Management Incentive Plan
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VIACOM INC.
1994 LONG-TERM MANAGEMENT INCENTIVE PLAN
(as amended and restated through April 27, 1995 and
as further amended and restated through November 1, 1996)
ARTICLE I
GENERAL
Section 1.1 Purpose.
The purpose of the Viacom Inc. 1994 Long-Term Incentive Plan (the "Plan")
is to benefit and advance the interests of Viacom Inc., a Delaware corporation
(the "Company"), and its subsidiaries by rewarding certain key employees of the
Company and its subsidiaries for their contributions to the financial success of
the Company and thereby motivate them to continue to make such contributions in
the future.
Section 1.2 Definitions.
As used in the Plan, the following terms shall have the following
meanings:
(a) "Agreement" shall mean the written agreement governing a Grant under
the Plan, in a form approved by the Committee, which shall contain terms and
conditions not inconsistent with the Plan and which shall incorporate the Plan
by reference.
(b) "Appreciation Value" shall mean the excess, if any, of the Value of a
Phantom Share on the applicable Valuation Date or date of termination of
employment or of the Participant's death, retirement or Permanent Disability (as
described in Section 4.5(a) hereof), as the case may be, over the Initial Value
of such Phantom Share.
(c) "Beneficiary" or "Beneficiaries" shall mean the person(s) designated
by the Participant pursuant to the provisions of the Agreement to receive
payments pursuant to such Agreement upon the Participant's death. If no
Beneficiary is so designated by the Participant or if no Beneficiary is living
at the time such a payment is due pursuant to such Agreement, payments shall be
made to the estate of the Participant. The Agreement shall provide the
Participant with the right to change the designated Beneficiaries from time to
time by written instrument executed by the Participant and filed with the
Committee in accordance with such rules as may be specified by the Committee. No
such written designation shall be effective unless received by the Committee
prior to the date of death of the Participant.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Class B Common Stock" shall mean the shares of Class B Common Stock,
par value $0.01 per share, of the Company.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any successor law thereto.
(g) "Committee" shall mean the Senior Executive Compensation Committee of
the Board (or such other Committee as may be appointed by the Board) except that
(i) the number of directors on the Committee shall be not less than two and (ii)
each member of the Committee shall be a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act.
(h) "Date of Grant" shall mean the date of the Grant of the Stock Options,
Stock Appreciation Rights, Restricted Shares and/or Phantom Shares as set forth
in the applicable Agreement.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, including any successor law thereto.
(j) "Fair Market Value" of a share of Class B Common Stock on a given date
shall be the closing price of a share of the Class B Common Stock on the
American Stock Exchange or such other national securities exchange as may be
designated by the Committee, or, in the event that the Class B Common Stock is
not listed for trading on a national securities exchange but is quoted on an
automated quotation system, the average closing bid per share of the Class B
Common Stock on such automated quotation system or, in the event that the Class
B Common Stock is not quoted on any such system, the average of the closing bid
prices per share of the Class B Common Stock as furnished by a professional
marketmaker making a market in the Class B Common Stock designated by the
Committee.
(k) "Grant" shall mean a grant under the Plan which may consist of a grant
of Stock Options, Stock Appreciation Rights, Restricted Shares or Phantom Shares
or a combination of any of the above.
(l) "Initial Value" shall mean the value of a Phantom Share as specified
by the Committee as of the Date of Grant or the Value of a Phantom Share
calculated as of the Date of Grant or such earlier date as the Committee may
determine; provided, however, that in no event shall the Initial Value be less
than 50% of the Value of the relevant Phantom Share as of the Date of Grant.
(m) "Outstanding Phantom Share" shall mean a Phantom Share granted to a
Participant for which the Valuation Date has not yet occurred.
(n) "Outstanding Stock Option" shall mean a Stock Option granted to a
Participant which has not yet been exercised and which has not yet expired in
accordance with its terms.
(o) "Participant" shall mean any employee who has met the eligibility
requirements set forth in Section 1.4 hereof and to whom an outstanding Grant
has been made under the Plan.
(p) "Permanent Disability" shall have the same meaning as such term or a
similar term has in the long-term disability policy maintained by the Company or
a subsidiary thereof for the Participant and in effect on the date of the onset
of the Participant's Permanent Disability, unless the Committee determines
otherwise, in its discretion, and sets forth an alternative definition in the
applicable Agreement.
(q) "Phantom Share" shall mean a contractual right granted to a
Participant pursuant to Article IV, to receive an amount equal to the
Appreciation Value at such time, and subject to such terms and conditions, as
are set forth in the Plan and the applicable Agreement.
(r) "Restricted Share" shall mean a share of Class B Common Stock granted
to a Participant pursuant to Article III, which is subject to the restrictions
set forth in Section 3.3 hereof, and subject to such other terms and conditions
as are set forth in the Plan and the applicable Agreement.
(s) "Retirement" shall mean the resignation or termination of employment
after attainment of an age required for payment of an immediate pension pursuant
to the terms of any qualified retirement plan maintained by the Company or a
subsidiary in which the Participant participates; provided, however, that no
resignation or termination prior to a Participant's 60th birthday shall be
deemed a retirement unless the Committee so determines in its sole discretion.
(t) "Stock Appreciation Right" shall mean a contractual right granted to a
Participant pursuant to Article II, to receive an amount determined in
accordance with Section 2.5 of the Plan.
(u) "Stock Option" shall mean a contractual right granted to a Participant
pursuant to Article II, to purchase Class B Common Stock at such time and price,
and subject to such other terms and conditions, as are set forth in the Plan and
the applicable Agreement. Stock Options may be "Incentive Stock Options" within
the meaning of Section 422 of the Code or "Non-Qualified Stock Options" which do
not meet the requirements of such Code section.
(v) "Termination for Cause" shall mean a termination of employment with
the Company or any of its subsidiaries which, as determined by the Committee, is
by reason of (i) "cause" as such term or a similar term is defined in any
employment agreement applicable to the Participant, or (ii) if there is no such
employment agreement or if such employment agreement contains no such term, (x)
a failure or refusal by a Participant to substantially perform a material duty
of such Participant's employment, (y) the commission by the Participant of a
felony or the perpetration by the Participant of a dishonest act or common law
fraud against the Company or any subsidiary thereof, or (z) any other act or
omission which is materially injurious to the financial condition or business
reputation of the Company or any subsidiary thereof.
(w) "Valuation Date" shall mean the date on which the Appreciation Value
of a Phantom Share shall be measured and fixed in accordance with Section 4.2(a)
hereof.
(x) The "Value" of a Phantom Share shall be determined by reference to the
"average Fair Market Value" of a share of Class B Common Stock. The "average
Fair Market Value" on a given date of a share of Class B Common Stock shall be
determined over the 30-day period ending on such date or such other period as
the Committee may decide shall be applicable to a Grant of Phantom Shares,
determined by dividing (i) by (ii), where (i) shall equal the sum of the Fair
Market Values on each day that the Class B Common Stock was traded and a closing
price was reported on such national securities exchange or on such automated
quotation system or by such marketmaker, as the case may be, during such period,
and (ii) shall equal the number of days on which the Class B Common Stock was
traded and a closing price was reported on such national securities exchange or
on such automated quotation system or by such marketmaker, as the case may be,
during such period.
(y) To "vest" a Stock Option, Stock Appreciation Right, Restricted Stock
or Phantom Share held by a Participant shall mean to render such Stock Option,
Stock Appreciation Right, Restricted Share or Phantom Share nonforfeitable,
except where, with respect to Stock Options, Stock Appreciation Rights and
Phantom Shares, a Participant's employment ends because of a Termination for
Cause.
Section 1.3 Administration of the Plan.
The Plan shall be administered by the Committee which shall adopt such
rules as it may deem appropriate in order to carry out the purpose of the Plan.
All questions of interpretation, administration and application of the Plan
shall be determined by a majority of the members of the Committee then in
office, except that the Committee may authorize any one or more of its members,
or any officer of the Company, to execute and deliver documents on behalf of the
Committee. The determination of such majority shall be final and binding to all
matters relating to the
Plan. The Committee shall have authority to select Participants from among the
class of eligible persons specified in Section 1.4 below and to determine the
number of Stock Options, Stock Appreciation Rights, Restricted Shares or Phantom
Shares (or combination thereof) to be granted to each Participant.
Section 1.4 Eligible Persons.
Grants may be awarded only to key employees of the Company or one of its
subsidiaries. An individual shall not be deemed an employee for purposes of the
Plan unless such individual receives compensation from either the Company or a
subsidiary of the Company for services performed as an employee of the Company
or any of its subsidiaries.
Section 1.5 Class B Common Stock Subject to the Plan.
The total aggregate number of shares of Class B Common Stock that may be
distributed under the Plan (whether reserved for issuance upon grant of Stock
Options or Stock Appreciation Rights or granted as Restricted Shares) shall be
10,000,000, subject to adjustment pursuant to Section 5.2 hereof. The shares of
Class B Common Stock shall be made available from authorized but unissued Class
B Common Stock or from Class B Common Stock issued and held in the treasury of
the Company. The delivery of shares of Class B Common Stock upon exercise of a
Stock Option or Stock Appreciation Right in any manner and the vesting of
Restricted Shares shall result in a decrease in the number of shares which
thereafter may be issued for purposes of this Section 1.5, by the number of
shares as to which the Stock Option or Stock Appreciation Right is exercised or
by the number of Restricted Shares which vest. Shares of Class B Common Stock
with respect to which Stock Options and Stock Appreciation Rights expire, are
cancelled without being exercised or are otherwise terminated may be regranted
under the Plan. Restricted Shares that are forfeited for any reason shall not be
deemed granted for purposes of this Section 1.5 and may thereafter be regranted
under the Plan.
Section 1.6 Limit on Annual Grants to Participants.
The maximum aggregate number of (i) shares of Class B Common Stock that
may be distributed under the Plan (whether reserved for issuance upon grant of
Stock Options or Stock Appreciation Rights or granted as Restricted Shares) and
(ii) Phantom Shares that may be granted under the Plan during any calendar year
to any Participant at the level of Senior Vice President of the Company or above
is 1,000,000.
Section 1.7 Agreements.
Each Agreement (i) shall state the Date of Grant and the name of the
Participant, (ii) shall specify the terms of the Grant, (iii) shall be signed by
the Participant and a person designated by the Committee, (iv) shall incorporate
the Plan by reference and (v) shall be delivered to the Participant. The
Agreement shall contain such other terms and conditions as are required by the
Plan and, in addition, such other terms not inconsistent with the Plan as the
Committee may deem advisable.
ARTICLE II
PROVISIONS APPLICABLE TO STOCK OPTIONS
Section 2.1 Grants of Stock Options.
The Committee may from time to time grant to eligible employees Stock
Options on the terms and conditions set forth in the Plan and on such other
terms and conditions as are not inconsistent with the purposes and provisions of
the Plan, as the Committee, in its discretion, may from time to time determine.
Each Agreement covering a Grant of Stock Options shall specify the number of
Stock Options granted, the exercise price of such Stock Options, whether such
Stock Options are Incentive Stock Options or Non-Qualified Stock Options and the
period during which such Stock Options may be exercised.
Section 2.2 Exercise Price.
The Committee shall establish the per share exercise price at the time any
Stock Option is granted at such amount as the Committee shall determine, except
that such exercise price shall not be less than 50% of the Fair Market Value of
a share of Class B Common Stock subject to the Option on the Date of Grant and
that, with respect to an Incentive Stock Option, such exercise price shall not
be less than 100% of the Fair Market Value of a share of Class B Common Stock on
the Date of Grant. The exercise price will be subject to adjustment in
accordance with the provisions of Article 5.2 of the Plan.
Section 2.3 Exercise of Stock Options.
(a) Exercisability. Stock Options shall be exercisable only to the extent
the Participant is vested therein. A Participant shall vest in Stock Options
over such time and in such increments as the Committee shall determine and
specify in a
vesting schedule set forth in the applicable Agreement. The Committee may,
however, in its sole discretion, accelerate the time at which a Participant
vests in his Stock Options.
(b) Option Period. For each Stock Option granted, the Committee shall
specify the period during which the Stock Option may be exercised; provided,
however, that anything in the Plan or in the applicable Agreement to the
contrary notwithstanding:
(i) Earliest Exercise Date. No Stock Option granted under the Plan
shall be exercisable until six months after the Date of Grant thereof.
(ii) Latest Exercise Date. No Stock Option granted under the Plan
shall be exercisable after the tenth anniversary of the Date of Grant
thereof.
(iii) Registration Restrictions. A Stock Option shall not be
exercisable, no transfer of shares of Class B Common Stock shall be made
to any Participant, and any attempt to exercise a Stock Option or to
transfer any such shares shall be void and of no effect, unless and until
(A) a registration statement under the Securities Act of 1933, as amended,
has been duly filed and declared effective pertaining to the shares of
Class B Common Stock subject to such Stock Option, and the shares of Class
B Common Stock subject to such Stock Option have been duly qualified under
applicable Federal or state securities or blue sky laws or (B) the
Committee, in its sole discretion, determines, or the Participant, upon
the request of the Committee, provides an opinion of counsel satisfactory
to the Committee, that such registration or qualification is not required
as a result of the availability of an exemption from registration or
qualification under such laws. Without limiting the foregoing, if at any
time the Committee shall determine, in its sole discretion, that the
listing, registration or qualification of the shares of Class B Common
Stock subject to such Stock Option under any Federal or state law or on
any securities exchange or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in
connection with, delivery or purchase of such shares pursuant to the
exercise of a Stock Option, such Stock Option shall not be exercised in
whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
(c) Exercise in the Event of Termination of Employment, Retirement, Death
or Permanent Disability.
(i) Termination other than for Cause, Retirement, Death or Permanent
Disability. In the event that (A) the Participant ceases to be an employee
of the Company or any of its subsidiaries by reason of the
voluntary termination by the Participant, the termination by the Company
or any of its subsidiaries other than for Cause or the Participant's
Retirement, his Outstanding Stock Options may be exercised to the extent
then exercisable until the earlier of three months after the date of such
termination or Retirement (or such longer period, not in excess of the
longer of six months after the date of such termination or Retirement or
the second anniversary of the Date of Grant of such Stock Options, as may
be determined by the Committee, in its discretion) or the expiration of
such Stock Options, (B) a Participant dies during a period during which
his Stock Options could have been exercised by him, his Outstanding Stock
Options may be exercised to the extent exercisable at the date of death by
the person who acquired the right to exercise such Stock Options by will
or the laws of descent and distribution until the earlier of one year
after such death (or such longer period as may be determined by the
Committee, in its discretion, prior to the expiration of such one-year
period) or the expiration of such Stock Options, and (C) the Permanent
Disability of the Participant occurs, the Participant may exercise his
Outstanding Stock Options to the extent exercisable upon date of the onset
of such Permanent Disability until the earlier of one year after such date
(or such longer period not in excess of two years after such date as may
be determined by the Committee, in its discretion) or the expiration of
such Stock Options. Upon the occurrence of an event described in clauses
(A), (B) or (C) of this Section 2.2(c)(i), all rights with respect to
Stock Options that are not vested as of such event will be relinquished.
(ii) Termination for Cause. If a Participant's employment with the
Company or any of its subsidiaries ends because of a Termination for
Cause, then unless the Committee, in its discretion, determines otherwise,
all Outstanding Stock Options, whether or not then vested, shall terminate
effective as of the date of such termination.
(iii) Maximum Exercise Period. Anything in this Section 2.3 to the
contrary notwithstanding, no Stock Option shall be exercisable after the
earlier to occur of (A) the expiration of the option period set forth in
the applicable Agreement or (B) the tenth anniversary of the Date of Grant
thereof.
Section 2.4 Payment of Purchase Price Upon Exercise.
Every share purchased through the exercise of a Stock Option shall be paid
for in full at the time of exercise in cash or, in the discretion of the
Committee, in shares of Class B Common Stock or other securities of the Company
designed by the Committee or in a combination of cash, shares or such other
securities.
Section 2.5 Stock Appreciation Rights.
The Committee may grant Stock Appreciation Rights only in tandem with a
Stock Option, either at the time of Grant or by amendment at any time prior to
the exercise, expiration or termination of such Stock Option. Each Stock
Appreciation Right shall be subject to the same terms and conditions as the
related Stock Option and shall be exercisable only at such times and to such
extent as the related Stock Option is exercisable. A Stock Appreciation Right
shall entitle the holder to surrender to the Company the related Stock Option
unexercised and receive from the Company in exchange therefor an amount equal to
the excess of the Fair Market Value of the shares of Class B Common Stock
subject to such Stock Option, determined as of the day preceding the surrender
of such Stock Option, over the Stock Option aggregate exercise price. Such
amount shall be paid in cash or, in the discretion of the Committee, in shares
of Class B Common Stock or other securities of the Company designated by the
Committee or in a combination of cash, shares or such other securities.
ARTICLE III
PROVISIONS APPLICABLE TO RESTRICTED SHARES
Section 3.1 Grants of Restricted Shares.
The Committee may from time to time grant to eligible employees Restricted
Shares on the terms and conditions set for in the Plan and on such other terms
and conditions as are not inconsistent with the purposes and provisions of the
Plan, as the Committee, in its discretion, may from time to time determine. Each
Agreement covering a Grant of Restricted Shares shall specify the number of
Restricted Shares granted and the vesting schedule (as provided for in Section
3.2 hereof) for such Restricted Shares.
Section 3.2 Vesting.
The Committee shall establish the vesting schedule applicable to
Restricted Shares granted hereunder, which vesting schedule shall specify the
period of time and the increments in which a Participant shall vest in the Grant
of Restricted Shares; provided, however, that no such Restricted Share shall
vest until six months after the Date of Grant thereof.
Section 3.3 Rights and Restrictions Governing Restricted Shares.
As of the Date of Grant of Restricted Shares, one or more certificates
representing the appropriate number of shares of Class B Common Stock granted to
a Participant shall be registered in his name but shall be held by the Company
for the account of the Participant. The Participant shall have all rights of a
holder as to such shares of Class B Common Stock (including, to the extent
applicable, the right to receive dividends and to vote), subject to the
following restrictions: (a) the Participant shall not be entitled to delivery of
certificates representing such shares of Class B Common Stock until such shares
have vested; (b) none of the Restricted Shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of until such shares have
vested; and (c) except as otherwise provided in Section 3.6 below, all unvested
Restricted Shares shall be immediately forfeited upon a Participant's
termination of employment with the Company for any reason or the Participant's
death, Retirement or Permanent Disability.
Section 3.4 Adjustment with Respect to Restricted Shares.
Any other provision of the Plan to the contrary notwithstanding, the
Committee may, in its discretion, at any time accelerate the date or dates on
which Restricted Shares vest.
Section 3.5 Delivery of Restricted Shares.
On the date on which Restricted Shares vest, all restrictions contained in
the Agreement covering such Restricted Shares and in the Plan shall lapse as to
such Restricted Shares and one or more stock certificates for the appropriate
number of shares of Common Stock, free of the restrictions set forth in the Plan
and applicable Agreement, shall be delivered to the Participant or such shares
shall be credited to a brokerage account if the Participant so directs;
provided, however, that such certificates shall bear such legends as the
Committee, in its sole discretion, may determine to be necessary or advisable in
order to comply with applicable Federal or state securities laws.
Section 3.6 Termination of Employment, Retirement, Death or Permanent
Disability.
In the event that (i) the Participant's employment with the Company or any
of its subsidiaries ends by reason of voluntary termination by the Participant,
termination by the Company or any of its subsidiaries other than for Cause,
termination by the Company or any of its subsidiaries for Cause or the
Participant's retirement, or (ii) the Participant's death or Permanent
Disability, prior to the date or dates on which Restricted Shares vest, the
Participant shall forfeit all unvested Restricted Shares as of the date of such
event, unless, other than in the case of a termination by the Company or its
subsidiaries for Cause, the Committee
determines that the circumstances in the particular case so warrant and provides
that some or all of such Participant's unvested Restricted Shares shall vest as
of the date of such event, in which case certificates representing such shares
shall be delivered, in accordance with Section 3.5 above, to the Participant or
in the case of the Participant's death, to the person or persons who acquired
the right to receive such certificates by will or the laws of descent and
distribution.
ARTICLE IV
PROVISIONS APPLICABLE TO PHANTOM SHARES
Section 4.1 Grants of Phantom Shares.
The Committee may from time to time grant to eligible employees Phantom
Shares, the value of which is determined by reference to a share of Class B
Common Stock, on the terms and conditions set forth in the Plan and on such
other terms and conditions as are not inconsistent with the purposes and
provisions of the Plan as the Committee, in its discretion, may from time to
time determine. Each Agreement covering a Grant of Phantom Shares shall specify
the number of Phantom Shares granted, the Initial Value of such Phantom Shares,
the Valuation Dates, the number of Phantom Shares whose Appreciation Value shall
be determined on each such Valuation Date, any applicable vesting schedule (as
provided for in Section 4.3 hereof) for such Phantom Shares, and any applicable
limitation on payment (as provided for in Section 4.4 hereof) for such Phantom
Shares.
Section 4.2 Appreciation Value.
(a) Valuation Dates; Measurement of Appreciation Value. The Committee
shall provide in the Agreement for one or more Valuation Dates on which the
Appreciation Value of the Phantom Shares granted pursuant to the Agreement shall
be measured and fixed, and shall designate in the Agreement the number of such
Phantom Shares whose Appreciation Value is to be calculated on each such
Valuation Date. Unless otherwise determined by the Committee, each Valuation
Date shall be December 15 and no Valuation Date shall occur later than the year
in which the eighth (8th) anniversary of the Date of Grant occurs.
(b) Payment of Appreciation Value. Except as otherwise provided in Section
4.5 hereof, and subject to the limitation contained in Section 4.4 hereof, the
Appreciation Value of a Phantom Share shall be paid to a Participant in cash in
a lump sum as soon as practicable following the Valuation Date applicable to
such Phantom Share.
Section 4.3 Vesting.
The Committee may, in its discretion, provide in the Agreement that
Phantom Shares granted thereunder shall vest (subject to such terms and
conditions as the Committee may provide in the Agreement) over such period of
time, not in excess of five years from the Date of Grant, as may be specified in
a vesting schedule contained therein.
Section 4.4 Limitation on Payment.
The Committee may, in its discretion, establish and set forth in the
Agreement a maximum dollar amount payable under the Plan for each Phantom Share
granted pursuant to such Agreement.
Section 4.5 Termination of Employment, Death, Retirement or Permanent
Disability.
(a) Voluntary Termination, Termination by the Company Other Than for
Cause, Death, Retirement or Permanent Disability. If, before the occurrence of
one or more Valuation Dates applicable to the Participant's Outstanding Phantom
Shares, (i) the Participant's employment with the Company or any of its
subsidiaries ends by reason of the voluntary termination by the Participant, the
termination by the Company or any of its subsidiaries other than for Cause or
the Participant's Retirement or (ii) the Participant's death or Permanent
Disability occurs, then, unless the Committee, in its discretion, determines
otherwise, the Appreciation Value of each Outstanding Phantom Share as to which
the Participant's rights are vested as of the date of such event shall be the
lesser of (x) the Appreciation Value of such Phantom Share calculated as of the
date of such event or (y) the Appreciation Value of such Phantom Share
calculated as of the originally scheduled Valuation Date applicable thereto.
Unless the Committee, in its discretion, determines otherwise, the Appreciation
Value so determined for each such vested Outstanding Phantom Share shall then be
payable to the Participant or the Participant or the Participant's Beneficiary
following the originally scheduled Valuation Date applicable thereto in
accordance with Section 4.2(b) hereof. Upon the occurrence of an event described
in this Section 4.5(a), all rights with respect to Phantom Shares that are not
vested as of such date will be relinquished.
(b) Termination for Cause. If a Participant's employment with the Company
or any of its subsidiaries ends because of a Termination for Cause, then, unless
the Committee, in its discretion, determines otherwise, all Outstanding Phantom
Shares, whether or not vested, and any and all rights to the payment of
Appreciation Value with respect to such Outstanding Phantom Shares shall be
forfeited effective as of the date of such termination.
ARTICLE V
EFFECT OF CERTAIN CORPORATE CHANGES AND CHANGES IN CONTROL
Section 5.1 Effect of Reorganization.
In the event that (i) the Company is merged or consolidated with another
corporation, (ii) one person becomes the beneficial owner of more than fifty
percent (50%) of the issued and outstanding equity securities of the Company
(for purposes of this Section 5.1, the terms "person" and "beneficial owner"
shall have the meanings assigned to them in Section 13(d) of the Exchange Act),
(iii) all or substantially all of the assets of the Company are acquired by
another corporation, person or entity (each such event in (i) or (ii) or any
other similar event or series of events which results in an event described in
(i), (ii) or (iii), being hereinafter referred to as a "Reorganization Event")
or (iv) the Board shall propose that the Company enter into a Reorganization
Event, then the following shall apply:
(a) With respect to Stock Options and Stock Appreciation Rights
granted pursuant to Article II hereof and with respect to Restricted
Shares granted pursuant to Article III hereof, the Committee shall take
one of the following actions, the choice of which being in its sole
discretion, unless, in the case of any Participant, the Participant agrees
otherwise: (i) cause the surviving entity or new owner, as the case may
be, to agree to adopt the Plan and maintain it, with respect to all
Outstanding Stock Options, Stock Appreciation Rights and Restricted
Shares, in accordance with the terms in effect as of the date of the
Reorganization Event, and to agree to adopt the related Agreements and to
continue to effect their respective terms as such terms were in effect as
of the date of the Reorganization Event, except that equitable adjustments
shall be made, if appropriate, to reflect the relative values of the Class
B Common Stock immediately prior to and following the occurrence of the
Reorganization Event; (ii) cause the surviving entity or new owner, as the
case may be, to grant new stock options and stock appreciation rights, if
applicable, (the "Substitute Options"), in substitution for the
unexercised Stock Options and Stock Appreciation Rights as of the date of
the Reorganization Event or to award new restricted shares (the "New
Restricted Shares") in substitution for the unvested Restricted Shares, as
of the date of the Reorganization Event; provided, however, that such
Substitute Options or such New Restricted Shares, as the case may be,
shall have a value, as of the date of such Reorganization Event, equal to
the value of such unexercised Stock Options and Stock Appreciation Rights
or such unvested Restricted Shares as of such date; (iii) solely with
respect to Outstanding Stock Options, provide for the payment upon
termination or
cancellation of Outstanding Stock Options of an amount in cash or
securities equal to the excess, if any, of the aggregate Fair Market Value
of the Class B Common Stock subject to such Stock Options at the time of
such termination or cancellation over the aggregate exercise price of such
Stock Options; or (iv) advance the dates upon which all Outstanding Stock
Options, Stock Appreciation Rights and Restricted Shares vest;
(b) With respect to Phantom Shares granted pursuant to Article IV
hereof, the Committee shall take one of the following actions, the choice
of which being in its sole discretion, unless, in the case of any
Participant, the Participant agrees otherwise: (i) cause the surviving
entity or new owner, as the case may be, to agree to adopt the Plan and to
maintain it, with respect to all Outstanding Phantom Shares under the Plan
as of the date of the Reorganization Event, in accordance with the terms
in effect as of the date of the Reorganization Event, and to agree to
adopt the related Agreements and to continue in effect their respective
terms as such terms were in effect as of the date of the Reorganization
Event, except that (A) the Plan and related Agreements may be modified to
utilize the stock of such surviving entity or new owner, in lieu of the
Class B Common Stock, to measure the Value of the Phantom Shares, if
equitable adjustments are made to reflect the relative values of such
stock immediately prior to the occurrence of the Reorganization Event or
(B) if the Class B Common Stock continues to be utilized to measure the
Value of the Phantom Shares, equitable adjustments are to be made to
reflect the relative values of such stock immediately prior to and
following the Reorganization Event, if appropriate; or (ii) determine the
Appreciation Value of the Phantom Shares by reference to the consideration
to be paid for the Class B Common Stock in such Reorganization Event, and
modify the Plan and the related Agreements, if appropriate, to provide
that when and if the Participant is entitled to a payment under the
provisions of the Plan and related Agreement (including, without
limitation, the provisions regarding vesting, payment, limitation on
payment and employment requirements) as they were in effect prior to the
proposal of the Reorganization Event, such payment shall be computed on
the basis of such Appreciation Value as so determined.
Notwithstanding the provisions of Sections 5.1(a) and 5.1(b) above, in the
event that the effect of the provisions contained therein should become a
material impediment, either from a financial point of view or otherwise, to the
consummation of a proposed Reorganization Event, the Committee may take such
action as it deems equitable and appropriate to provide each Participant with a
benefit equivalent to that which he would have been entitled had such event not
occurred. Further, for the purposes of the first sentence of this Section 5.1,
no event or series of events involving National Amusements, Inc., the Company or
any of their respective subsidiaries or affiliates shall be deemed to be a
Reorganization Event unless such event or series of events results in there
being no class of equity
securities of the Company which is publicly traded. Any action taken by the
Committee may be made conditional upon the consummation of the applicable
Reorganization Event. Further, in the event that a division or subsidiary of the
Company is acquired by another corporation, person, or entity, the Company is
reorganized, dissolved or liquidated, an event or series of events involving a
corporate restructuring not described in the first sentence of this Section
occurs, or the Board shall propose that the Company enter into any such
transaction, event or series of events, then the Committee will take such
action, if any, as it, in its sole discretion, deems equitable or appropriate to
provide each Participant with a benefit equivalent to that which he would have
been entitled had such event not occurred.
Section 5.2 Dilution and Other Adjustments.
In the event of a stock dividend or split, issuance or repurchase of stock
or securities convertible into or exchangeable for shares of stock, grants of
options, warrants or rights (other than pursuant to the Plan) to purchase stock,
recapitalization, combination, exchange or similar change affecting the Class B
Common Stock, the Committee shall, in its discretion, make any or all of the
following adjustments to provide each Participant with a benefit equivalent to
that which he would have been entitled had such event not occurred: (i) adjust
the number of shares of Class B Common Stock subject to any Stock Options or
Stock Appreciation Rights or the number of Restricted Shares or Phantom Shares
granted to each Participant, (ii) adjust the exercise price of the shares of
Class B Common Stock subject to such Stock Options or Stock Appreciation Rights
or the Initial Value of such Phantom Shares, and (iii) make any other
adjustments, or take such action, as the Committee, in its discretion, deems
appropriate. Such adjustments shall be conclusive and binding for all purposes.
In the event of a change in the Class B Common Stock which is limited to a
change in the designation thereof to "Capital Stock" or other similar
designation, or to a change in the par value thereof, or from par value to no
par value, without increase or decrease in the number of issued shares, the
shares resulting from any such change shall be deemed to be Class B Common Stock
within the meaning of the Plan.
ARTICLE VI
MISCELLANEOUS
Section 6.1 No Rights to Grants or Continued Employment.
No employee shall have any claim or right to receive Grants under the
Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any employee any right to be retained by the Company or any of its
subsidiaries.
Section 6.2 Restriction on Transfer.
The rights of a Participant with respect to Stock Options, Stock
Appreciation Rights, Restricted Shares or Phantom Shares shall not be
transferable by the Participant to whom such Stock Options, Stock Appreciation
Rights, Restricted Shares or Phantom Shares are granted, otherwise than by will
or the laws of descent and distribution.
Section 6.3 Tax Withholding.
The Company or a subsidiary thereof, as appropriate, shall have the right
to deduct from all payments made under the Plan to a Participant or to a
Participant's Beneficiary any Federal, state or local taxes required by law to
be withheld with respect to such payments. The Committee, in its discretion, may
require, as a condition to the exercise of any Stock Option or Stock
Appreciation Right, that a Participant pay an additional amount in cash equal to
the amount of any Federal, state or local taxes owed by the Participant as a
result of such exercise.
Section 6.4 Stockholder Rights.
No Grant under the Plan shall entitle a Participant or Beneficiary to any
rights of a holder of shares of Class B Common Stock, except as provided in
Article III with respect to Restricted Shares or upon the delivery of share
certificates to a Participant upon exercise of a Stock Option or upon the
delivery of share certificates in settlement of a Stock Appreciation Right.
Section 6.5 No Restriction on Right of Company to Effect Corporate Changes.
The Plan shall not affect in any way the right or power of the Company or
its stockholders to make or authorize any or all adjustments, recapitalization,
reorganization or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of stock
or of options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stock whose rights are superior to or affect the
Class B Common Stock or the rights thereof or which are convertible into or
exchangeable for Class B Common Stock, or the dissolution or liquidation or the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
Section 6.6 Source of Payments.
The general funds of the Company shall be the sole source of cash
settlements of Stock Appreciation Rights under the Plan and payments of
Appreciation Value, and the Company shall not have any obligation to establish
any separate fund or trust or other segregation of assets to provide for
payments under
the Plan. Nothing contained in this Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and a Participant or any other
person. To the extent person acquires any rights to receive payments hereunder
from the Company, such rights shall be no greater than those of an unsecured
creditor.
ARTICLE VII
AMENDMENT AND TERMINATION
The Board may at any time and from time to time alter, amend, suspend or
terminate the Plan in whole or in part; provided, however, that any amendment
which must be approved by the stockholders of the Company in order to maintain
the continued qualification of the Plan under Rule 16b-3 under the Exchange Act
shall not be effective unless and until such stockholder approval has been
obtained in compliance with such rule. No termination or amendment of the Plan
may, without the consent of the Participant to whom a grant has been made,
adversely affect the rights of such Participant in the Stock Options, Stock
Appreciation Rights, Restricted Shares or Phantom Shares covered by such Grant.
Unless previously terminated pursuant to this Article VII, the Plan shall
terminate on the fifth anniversary of the Effective Date (as defined below), and
no further Grants may be awarded hereunder after such date.
ARTICLE VIII
INTERPRETATION
Section 8.1 Governmental Regulations.
The Plan, and all Grants hereunder, shall be subject to all applicable
rules and regulations of governmental or other authorities.
Section 8.2 Headings.
The headings of sections and subsections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.
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Section 8.3 Governing Law.
The Plan and all rights hereunder shall be construed in accordance with
and governed by the laws of the State of Delaware.
ARTICLE IX
EFFECTIVE DATE AND STOCKHOLDER APPROVAL
The Plan shall be effective as of May 26, 1994 (the "Effective Date") and
stockholder approval shall be sought at the first annual meeting of stockholders
following such date. In the event that stockholder approval is not obtained on
or before the date of such annual meeting, the Plan and all Grants thereunder
shall be void ab initio and of no effect. No Stock Option or Stock Appreciation
Right shall be exercisable, no Restricted Share shall vest and no Appreciation
Value shall be paid with respect to a Phantom Share until the date of such
stockholder approval.
Dates Referenced Herein and Documents Incorporated by Reference
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