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.(A) — Long-Term Management Incentive Plan
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VIACOM INC.
1989 LONG-TERM MANAGEMENT INCENTIVE PLAN
(as amended and restated through April 23, 1990,
as further 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. 1989 Long-Term Management 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 termination date (in the event
of a termination of employment as described in Section 2.5(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) "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any successor law thereto.
(f) "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 of the Exchange Act.
(g) "Common Stock" shall mean Voting Common Stock and the Non-Voting
Common Stock.
(h) "Date of Grant" shall mean the date of the Grant of the Phantom
Shares, Stock Options, Stock Appreciation Rights and/or Restricted 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 Common Stock on a given date shall
be the closing price of a share of Voting Common Stock or Non-Voting Common
Stock, as the case may be, on the American Stock Exchange or such other national
securities exchange as may be designated by the Committee or, in the event that
the applicable class of Common Stock is not listed for trading on a national
securities exchange but is quoted on an automated quotation system, the average
closing bid price per share of such class of Common Stock on such automated
quotation system or, in the event that such class of Common Stock is not quoted
on any such system, the average of the closing bid prices per share of such
class of Common Stock as furnished by a professional marketmaker making a market
in such class of Common Stock designated by the Committee.
(k) "Grant" shall mean a grant under the Plan which may consist of a grant
of Phantom Shares, Stock Options, Stock Appreciation Rights or Restricted Shares
or a combination of any of the above.
(I) "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) "Non-Voting Common Stock" shall mean the shares of non-voting Common
Stock, par value $0.01 per share, of the Company.
(n) "Outstanding Phantom Share" shall mean a Phantom Share granted to a
Participant for which the Valuation Date has not yet occurred.
(o) "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.
(p) "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.
(q) "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
Participant's termination of employment with the Company or any subsidiary
thereof, unless the Committee determines otherwise, in its discretion, and sets
forth an alternative definition in the applicable Agreement.
(r) "Phantom Share" shall mean a contractual right granted to a
Participant pursuant to Article II, 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.
(s) "Restricted Share" shall mean a share of Voting Common Stock or
Non-Voting Common Stock granted to a Participant pursuant to Article IV, which
is subject to the restrictions set forth in Section 4.3 hereof, and subject to
such other terms and conditions as are set forth in the Plan and the applicable
Agreement.
(t) "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.
(u) "Stock Appreciation Right" shall mean a contractual right granted to a
Participant pursuant to Article III, to receive an amount determined in
accordance with Section 3.5 of the Plan.
(v) "Stock Option" shall mean a contractual right granted to a Participant
pursuant to Article III, to purchase Common Stock (which may be Voting Common
Stock, Non-Voting Common Stock or both) 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 422A of the Code or "Nonqualified Stock Options" which do not meet the
requirements of such Code section.
(w) "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.
(x) "Termination of Employment" shall mean the termination of a
Participant's employment with the Company or any of its subsidiaries.
(y) "Valuation Date" shall mean the date on which the Appreciation Value
of a Phantom Share shall be measured and fixed in accordance with Section 2.2(a)
hereof.
(z) The "Value" of a Phantom Share shall be determined by reference to the
"average Fair Market Value" of a share of Voting Common Stock, Non-Voting Common
Stock or combination thereof, as specified by the Committee and set forth in the
applicable Agreement. The "average Fair Market Value" on a given date of a share
of Voting Common Stock or Non-Voting Common Stock, as the case may be, 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 applicable class of 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 applicable
class of 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.
(aa) To "vest" a Phantom Share, Stock Option, Stock Appreciation Right or
Restricted Share held by a Participant shall mean to render such Phantom Share,
Stock Option, Stock Appreciation Right or Restricted Share nonforfeitable,
except where, with respect to Phantom Shares, Stock Options and Stock
Appreciation Rights, a Participant's employment ends because of a Termination
for Cause.
(bb) "Voting Common Stock" shall mean the shares of voting Common Stock,
par value $0.01 per share, of the Company.
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 in 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 Phantom Shares, Stock Options, Stock
Appreciation Rights or Restricted 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 and 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 Phantom Shares and Common Stock Subject to the Plan.
The total aggregate number of (i) Phantom Shares that may be granted under
the Plan and (ii) shares of Common Stock that may be distributed under the Plan
(whether granted as Restricted Shares or reserved for distribution upon grant of
Stock Options or Stock Appreciation Rights) shall be 7,000,000, subject to
adjustment pursuant to Section 5.2 hereof. The shares of Common Stock shall be
made available from authorized but unissued Common Stock or from Common Stock
issued and held in the treasury of the Company and may be either shares of
Voting Common Stock or Non-Voting Common Stock, as shall be determined by the
Committee. The delivery of shares of Common Stock upon exercise of a Stock
Option or Stock Appreciation Right in any manner and the vesting of Restricted
Shares or the payment of Appreciation
Value with respect to Phantom 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 and the number of
Phantom Shares for which such payment is made. Phantom Shares and 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.
Shares of 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. Any Phantom Share for
which the Value is determined by reference to the combined Fair Market Values of
a share of Voting Common Stock and a share of Non-Voting Common Stock shall be
counted as two Phantom Shares for purposes of this Section 1.5.
Section 1.6 Agreements.
Each Agreement (i) shall state the Date of Grant, the name of the
Participant and the Participant's employing company, (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 PHANTOM SHARES
Section 2.1 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 Voting
Common Stock, Non-Voting Common Stock or combination thereof (as determined by
the Committee), 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 2.3 hereof) for such Phantom Shares, and any applicable
limitation on payment (as provided for in Section 2.4 hereof) for such Phantom
Shares.
Section 2.2 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
2.5 hereof, and subject to the limitation contained in Section 2.4 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 2.3 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 2.4 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 2.5 Employment Requirement.
(a) Death, Retirement, Permanent Disability, Voluntary Termination or
Termination by the Company Other Than for Cause. If the employment of a
Participant terminates before the occurrence of one or more Valuation Dates
applicable to the Participant's Outstanding Phantom Shares for reason of such
Participant's death, Retirement or Permanent Disability, voluntary termination
by the Participant or termination by the Company or any of its subsidiaries
other than for Cause, 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 termination date shall be the
lesser of (i) the Appreciation Value of such Phantom Share calculated as of such
date of termination or (ii) 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's
Beneficiary following the originally scheduled Valuation Date applicable thereto
in accordance with Section 2.2(b) hereof. Upon a termination described in this
Section 2.5(a), all rights with respect to Phantom Shares that are not vested as
of such termination 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 III
PROVISIONS APPLICABLE TO STOCK OPTIONS
Section 3.1 Grants of Stock Options.
The Committee may from time to time grant to eligible employees Stock
Options to purchase 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 Stock Options
shall specify the number of Stock Options granted, whether the shares of Common
Stock subject to the Option shall be shares of Voting Common Stock, Non-Voting
Common Stock or a combination thereof, the exercise price of such Stock Options,
whether such Stock Options are Incentive Stock Options or Nonqualified Stock
Options and the period during which such Stock Options may be exercised.
Section 3.2 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 the class of 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 the class of 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 3.3 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 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 Common
Stock subject to such Stock Option, and the shares of 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 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.
(i) Termination other than for Cause. No Stock Option will be
exercisable after the Participant ceases to be an employee of the Company
or any of its subsidiaries except that (A) if such employment terminates
by reason of such Participant's Retirement, voluntary termination by the
Participant or termination by the Company or any of its subsidiaries other
than for Cause, 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 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) if 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) if such
employment terminates by reason of Permanent Disability, the Participant
may exercise his Outstanding Stock Options to the extent exercisable upon
his last day of employment until the earlier of one year after such
termination of employment (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 a termination
described in clauses (A), (B) or (C) of this Section 3.3(c)(i), all rights
with respect to Stock Options that are not vested as of such termination
date 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 3.3 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 3.4 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, unless the Agreement covering
such Stock Option expressly provides to the contrary or the Committee, in its
discretion,
determines otherwise, in shares of Voting Common Stock, Non-Voting Common Stock
or other securities of the Company designated by the Committee or in a
combination of cash, shares of Common Stock or such other securities.
Section 3.5 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 Voting Common Stock and/or
Non-Voting 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 Voting Common Stock, Non-Voting Common Stock or other
securities of the Company designated by the Committee or in a combination of
cash, shares or such other securities.
ARTICLE IV
PROVISIONS APPLICABLE TO RESTRICTED SHARES
Section 4.1 Grants of Restricted Shares.
The Committee may from time to time grant to eligible employees Restricted
Shares 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 Restricted Shares shall specify the number of
Restricted Shares granted and the vesting schedule (as provided for in Section
4.2 hereof) for such Restricted Shares.
Section 4.2 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 4.3 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 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 Common Stock, including the right to receive
dividends and to vote (to the extent applicable) such shares of Common Stock,
subject to the following restrictions: (a) the Participant shall not be entitled
to delivery of certificates representing such shares of 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 4.6 below, all unvested
Restricted Shares shall be immediately forfeited upon a Participant's
termination of employment with the Company for any reason.
Section 4.4 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 4.5 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 4.6 Termination of Employment.
If the employment of a Participant terminates for any reason
(Participant's death, Retirement or Permanent Disability, voluntary termination
by the Participant, termination by the Company or any of its subsidiaries other
than for Cause or termination by the Company or any of its subsidiaries for
Cause) prior to the date or dates on which Restricted Shares vest, the
Participant shall forfeit all unvested Restricted Shares as of the date of
termination, unless, in the case of a termination other than 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 termination, in which case certificates representing such
shares shall be delivered, in accordance with Section 4.5 above, to the
Participant or, in the case of death, to the person or persons who acquired the
right to receive such certificates by will or the laws of descent and
distribution.
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), (ii) or (iii) 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 Phantom Shares granted pursuant to Article II 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 Voting Common Stock or Non-Voting Common Stock (or
combination thereof), 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 Voting Common
Stock or Non-Voting Common Stock (or combination thereof) 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 Voting Common Stock or Non-Voting Common Stock, as the case may be,
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;
(b) with respect to Stock Options and Stock Appreciation Rights granted
pursuant to Article III hereof and with respect to Restricted 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 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 in 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 Voting Common Stock
or Non-Voting Common Stock (or combination thereof) 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 Voting Common Stock or
Non-Voting Common Stock (or combination thereof) 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.
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 or 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 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 Voting
Common Stock or Non-Voting Common Stock, as the case may be, 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 Phantom
Shares, Restricted Shares or shares of Voting Common Stock or Non-Voting Common
Stock, as the case may be, subject to any Stock Options or Stock Appreciation
Rights granted to each Participant, (ii) adjust the Initial Value of such
Phantom Shares, or the exercise price of the shares of Voting Common Stock or
Non-Voting Common Stock, as the case may be, subject to such Stock Options or
Stock Appreciation Rights, 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 Voting Common Stock or Non-Voting Common Stock, as the case may be, 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 Voting Common
Stock or Non-Voting Common Stock, as the case may be, 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 Phantom Shares, Stock Options,
Stock Appreciation Rights or Restricted Shares shall not be transferable by the
Participant to whom such Phantom Shares, Stock Options, Stock Appreciation
Rights or Restricted 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 Common Stock, except as provided in Article IV
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 stocks whose rights are superior to or affect the Common Stock or the
rights thereof or which are convertible into or exchangeable for 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 payments of
Appreciation Value and cash settlements of Stock Appreciation Rights under the
Plan, 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 any 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 of 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 Phantom Shares, Stock
Options, Stock Appreciation Rights or Restricted 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.
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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.
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 August 1, 1989 (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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