<PAGE>
As filed with the Securities and Exchange Commission on May 15, 1998
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
PEGASUS COMMUNICATIONS CORPORATION
---------------------------------------------------
(Exact name of issuer as specified in its charter)
Delaware 51-0374669
- ----------------------------- -----------------------------
(state or other jurisdiction of (IRS Employer Indentifi-
incorporation or organization) cation Number)
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
PEGASUS COMMUNICATIONS RESTRICTED STOCK PLAN
PEGASUS COMMUNICATIONS 1996 STOCK OPTION PLAN
----------------------------------------------
(Full title of the plans)
Marshall W. Pagon, President and Chief Executive Officer
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
--------------------------------------------------
(Name and address of agent for service)
(610) 341-1801
--------------------------------------
(Telephone number, including area code,
of agent for service)
Copies to:
<TABLE>
<CAPTION>
<S> <C>
Ted S. Lodge, Esq. Michael B. Jordan, Esq.
Pegasus Communications Corporation Scott A. Blank, Esq.
c/o Pegasus Communications Management Company Drinker Biddle & Reath LLP
5 Radnor Corporate Center, Suite 454 1100 Philadelphia National Bank Building
100 Matsonford Road 1345 Chestnut Street
Radnor, Pennsylvania 19087 Philadelphia, Pennsylvania 19107
</TABLE>
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Proposed Proposed
Titles of Amount Maximum Maximum
Securities To Be Offering Aggregate Amount of
To Be Regis- Price Offering Registration
Registered tered Per Share Price Fee
- ---------- ------- ------------ ------------- ------------
Class A 1,316,386 $ (2) $ (2) $4,267.45 (2) (3)
Common shares (1)
Stock,
par value
$.01 per
share
</TABLE>
(1) Represents 346,386 shares registered under the Pegasus Communications
Restricted Stock Plan (the "Restricted Stock Plan") and 970,000 shares
registered under the Pegasus Communications 1996 Stock Option Plan (the
"Stock Option Plan" and together with the Restricted Stock Plan, the
"Plans"). On the original filing of this Registration Statement on Form
S-8 (File No. 333-22845) on March 5, 1997, 266,386 and 450,000 shares of
Class A Common Stock were registered under the Restricted Stock Plan and
Stock Option Plan, respectively. Pursuant to this Post-Effective
Amendment No. 1, 600,000 additional shares in the aggregate are being
registered under the Plans. Pursuant to Rule 416(a), this Registration
Statement also registers such indeterminate number of additional shares
as may become issuable under the Plans in connection with share splits,
share dividends or similar transactions.
(2) Calculated pursuant to Rule 457(h). The proposed maximum offering price
per share, the proposed maximum aggregate offering price and the amount
of the registration fee for the 600,000 shares of Class A Common Stock
being newly registered under the Plans hereby were based, for the 10,000
shares of Class A Common Stock subject to currently outstanding stock
options, on the maximum exercise price of $21.375 per share, and, for the
remaining 590,000 shares, on the average of the high and low sales prices
of the Class A Common Stock as reported on the Nasdaq National Market on
May 13, 1998.
(3) Paid by wire transfer.
<PAGE>
EXPLANATORY NOTE
A Registration Statement on Form S-8 (File No. 333-22845) (the
"Registration Statement") was filed on March 5, 1997 to register 266,386
shares of Class A Common Stock that are issuable under the Pegasus
Communications Restricted Stock Plan (the "Restricted Stock Plan") and 450,000
shares issuable upon the exercise of options that may be granted under the
Pegasus Communications 1996 Stock Option Plan (the "Stock Option Plan" and
together with the Restricted Stock Plan, the "Plans").
On December 31, 1997, subject to stockholder approval, the Board of
Directors approved amendments to the Restricted Stock Plan and the Stock
Option Plan to increase the number of shares that may be granted under the
Restricted Stock Plan from 270,000 to 350,000 and to increase the maximum
number of shares of Class A Common Stock that may be granted under the Stock
Option Plan from 450,000 to 970,000. Stockholder approval was thereafter
obtained at a special meeting of stockholders held on April 27, 1998.
This Post-Effective Amendment No. 1 to the Registration Statement is
being filed to (i) register the additional 80,000 and 520,000 shares of Class
A Common Stock that are issuable under the Restricted Stock Plan and the Stock
Option Plan, respectively, and (ii) to include as exhibits the amended
Restricted Stock Plan and the amended Stock Option Plan. Pursuant to general
instruction E to Form S-8, the Registrant incorporates by reference herein the
contents of the Registration Statement.
Item 8. Exhibits.
Exhibit 4(c) The Company's Restricted Stock Plan (as
Amended and Restated Effective as of April 27, 1998).
Exhibit 4(d) The Company's 1996 Stock Option Plan (as Amended and
Restated Effective as of April 27, 1998).
Exhibit 5(a) Opinion of Drinker Biddle & Reath LLP.
Exhibit 23(a) Consent of Coopers & Lybrand L.L.P.
Exhibit 23(b) Consent of Drinker Biddle & Reath LLP (included in
their opinion filed as Exhibit 5(a)).
Exhibit 24(a) Powers of Attorney (included in Signatures and Powers
of Attorney).
-1-
<PAGE>
SIGNATURES AND POWERS OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned thereunto
duly authorized, at Radnor, Pennsylvania, on this 15th day of May, 1998.
PEGASUS COMMUNICATIONS CORPORATION
By: /s/ Marshall W. Pagon
-------------------------------
Marshall W. Pagon,
Chief Executive Officer and President
Each person whose signature appears below hereby constitutes and appoints
Marshall W. Pagon, Robert N. Verdecchio and Ted S. Lodge as his or her
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him or her, in any and all capacities, to sign any or all
amendments or post-effective amendments to this Registration Statement, and to
file the same, with exhibits thereto and other documents in connection
therewith, granting unto each of such attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary in connection with such matters and hereby ratifying and confirming
all that each of such attorneys-in-fact and agents or his substitutes may do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------- ------------------ -------------
<S> <C> <C>
/s/ Marshall W. Pagon President, Chief Executive Officer May 15, 1998
- ------------------------------------ and Chairman of the Board
Marshall W. Pagon
(Principal Executive Officer)
/s/ Robert N. Verdecchio Senior Vice President, Chief May 15, 1998
- ------------------------------------ Financial Officer, Assistant
Robert N. Verdecchio Secretary and Director
(Principal Financial
and Accounting Officer)
</TABLE>
-2-
<PAGE>
/s/ Michael C. Brooks Director May 15, 1998
- ------------------------------------
Michael C. Brooks
/s/ Harry F. Hopper III Director May 15, 1998
- ------------------------------------
Harry F. Hopper III
/s/ James J. McEntee, III Director May 15, 1998
- ------------------------------------
James J. McEntee, III
/s/ Mary C. Metzger Director May 15, 1998
- ------------------------------------
Mary C. Metzger
/s/ Riordan B. Smith Director May 15, 1998
- ------------------------------------
Riordon B. Smith
/s/ Donald W. Weber Director May 15, 1998
- ------------------------------------
Donald W. Weber
-3-
<PAGE>
EXHIBIT INDEX
Exhibit 4(c) The Company's Restricted
Stock Plan (as Amended and
Restated Effective as of April
27, 1998).
Exhibit 4(d) The Company's 1996 Stock
Option Plan (as Amended and
Restated Effective as of April
27, 1998).
Exhibit 5(a) Opinion of Drinker Biddle & Reath LLP.
Exhibit 23(a) Consent of Coopers & Lybrand L.L.P.
-4-
<PAGE>
EXHIBIT 4(c)
PEGASUS COMMUNICATIONS
RESTRICTED STOCK PLAN
(As Amended and Restated Effective As of April 27, 1998)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
SECTION 1 - Purpose............................................................................................. 1
SECTION 2 - Definitions......................................................................................... 1
(a) "Awards"...................................................................................... 1
(b) "Award Agreement"............................................................................. 1
(c) "Board"....................................................................................... 1
(d) "Business Unit Location Cash Flow"............................................................ 1
(e) "Code"........................................................................................ 1
(f) "Committee"................................................................................... 1
(g) "Common Stock"................................................................................ 1
(h) "Company Matching Contributions".............................................................. 2
(i) "Company-Wide Location Cash Flow"............................................................. 2
(j) "Disability".................................................................................. 2
(k) "Discretionary Awards"........................................................................ 2
(l) "Excess Awards"............................................................................... 2
(m) "Fair Market Value"........................................................................... 2
(n) "Grantee"..................................................................................... 2
(o) "Management Committee"........................................................................ 2
(p) "Officers".................................................................................... 2
(q) "PCC"......................................................................................... 2
(r) "Pegasus"..................................................................................... 2
(s) "Plan"........................................................................................ 2
(t) "Plan Administrator".......................................................................... 2
(u) "Profit-Sharing Awards"....................................................................... 3
(v) "Rollover Matching Contributions"............................................................. 3
(w) "Salary"...................................................................................... 3
(x) "Savings Plan"................................................................................ 3
(y) "Special Recognition Awards".................................................................. 3
(z) "Year Over Year Increase in Business Unit Location Cash Flow"................................. 3
(aa) "Year Over Year Increase in Company-Wide Location Cash Flow".................................. 3
(ab) "Years of Vesting Service".................................................................... 4
SECTION 3 - Administration...................................................................................... 4
(a) Special Recognition Awards to Officers and Discretionary Awards............................... 4
(b) All Other Awards.............................................................................. 4
(c) In General.................................................................................... 5
SECTION 4 - Eligibility......................................................................................... 5
(a) Special Recognition Awards.................................................................... 5
(b) Profit-Sharing Awards......................................................................... 5
(c) Excess Awards................................................................................. 6
(d) Discretionary Awards.......................................................................... 6
SECTION 5 - Stock............................................................................................... 6
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 6 - Amount of Award..................................................................................... 7
(a) Special Recognition Awards.................................................................... 7
(b) Profit-Sharing Awards......................................................................... 7
(c) Excess Awards................................................................................. 8
(d) Discretionary Awards.......................................................................... 8
SECTION 7 - Vesting............................................................................................. 9
(a) Special Recognition Awards.................................................................... 9
(b) Awards Others than Special Recognition Awards................................................. 9
(c) Forfeiture.................................................................................... 9
SECTION 8 - Capital Adjustments................................................................................. 10
SECTION 9 - Amendment or Discontinuance of the Plan............................................................. 10
SECTION 10 - Termination of Plan................................................................................ 11
SECTION 11 - Effective Date..................................................................................... 11
SECTION 12 - Miscellaneous...................................................................................... 11
(a) Issuance and Delivery of Certificates......................................................... 11
(b) Rights as a Shareholder....................................................................... 12
(c) Award Agreement............................................................................... 12
(d) Governing Law................................................................................. 12
(e) Rights........................................................................................ 12
(f) Non-Transferability........................................................................... 13
(g) Listing and Registration of Shares............................................................ 13
(h) Withholding and Use of Shares to Satisfy Tax Obligations...................................... 13
(i) Indemnification of Board and Plan Administrator............................................... 14
</TABLE>
ii
<PAGE>
PEGASUS COMMUNICATIONS
RESTRICTED STOCK PLAN
(As Amended and Restated Effective As of April 27, 1998)
SECTION 1
Purpose
This Pegasus Communications Restricted Stock Plan is intended to provide
a means whereby PCC may, through the grant of stock subject to vesting
requirements to employees of Pegasus, attract and retain such individuals and
motivate them to exercise their best efforts on behalf of Pegasus.
SECTION 2
Definitions
Whenever the following terms are used in this Plan, they shall have the
meanings specified below, unless the context clearly indicates to the
contrary:
(a) "Awards" shall mean Special Recognition Awards,
Profit-Sharing Awards, Excess Awards and Discretionary Awards.
(b) "Award Agreement" shall mean the written document
escribed in Section 12(c) evidencing Awards made pursuant to the Plan.
(c) "Board" shall mean the Board of Directors of PCC.
(d) "Business Unit Location Cash Flow" shall mean income
from the business unit's operations before management fees, depreciation,
amortization (other than amortization of film contracts), and incentive
compensation (including contributions under the Plan and the Savings Plan).
(e) "Code" shall mean, as applicable, the Internal Revenue
Code of 1986, as amended, or the Puerto Rico Internal Revenue Code of 1994, as
amended.
(f) "Committee" shall mean the administrator of the Plan
with respect to Special Recognition Awards to Officers and Discretionary
Awards, which shall be a committee of the Board or the Board, in accordance
with Section 3(a).
(g) "Common Stock" shall mean Class A common stock of PCC.
<PAGE>
(h) "Company Matching Contributions" shall have the meaning
set forth in Article I of the Savings Plan.
(i) "Company-Wide Location Cash Flow" shall mean income from
egasus operations before management fees, depreciation, amortization (other
than amortization of film contracts), and incentive compensation (including
contributions under the Plan and the Savings Plan).
(j) "Disability" shall have the meaning set forth in Article
I of the Savings Plan.
(k) "Discretionary Awards" shall mean the discretionary
awards described in Section 6(d).
(l) "Excess Awards" shall mean the formula awards described
in Section 6(c).
(m) "Fair Market Value" shall mean the closing price of the
Common Stock on a registered securities exchange or on an over-the-counter
market on the last business day prior to the date of grant on which Common
Stock traded.
(n) "Grantee" shall mean an individual who has received an
Award under the Plan.
(o) "Management Committee" shall mean the committee
authorized by the Board to administer the Plan with respect to all Awards other
than Special Recognition Awards to Officers and Discretionary Awards.
(p) "Officers" shall mean employees who are officers, within
the meaning of Rule 16a- 1(f) under the Securities Exchange Act of 1934, or
any successor thereto.
(q) "PCC" shall mean Pegasus Communications Corporation.
(r) "Pegasus" shall mean Pegasus Communications Holdings,
Inc. and its direct and indirect subsidiaries, whether in corporate,
partnership or any other form.
(s) "Plan" shall mean the Pegasus Communications Restricted
Stock Plan, as set forth in this document and as it may be amended from time
to time.
(t) "Plan Administrator" shall mean --
(1) With respect to Special Recognition Awards to
Officers and Discretionary Awards, the Committee; and
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<PAGE>
(2) With respect to all other Awards, the Management
Committee.
(u) "Profit-Sharing Awards" shall mean the formula awards
described in Section 6(b).
(v) "Rollover Matching Contributions" shall have the meaning
set forth in Article I of the Savings Plan.
(w) "Salary" shall have the meaning set forth in Article I
of the Savings Plan.
(x) "Savings Plan" shall mean, as applicable, the Pegasus
Communications Savings Plan, effective January 1, 1996, and as it may be
amended from time to time, or the Pegasus Communications Puerto Rico Savings
Plan, effective October 1, 1996, and as it may be amended from time to time.
(y) "Special Recognition Awards" shall mean the
discretionary awards described in Section 6(a).
(z) "Year Over Year Increase in Business Unit Location Cash
Flow" shall mean, with respect to any year, the excess of the Business Unit
Location Cash Flow for such year over the Business Unit Location Cash Flow for
the preceding year, determined on a pro forma basis by the Board of Directors
or a committee thereof. For purposes of determining the excess of the Business
Unit Location Cash Flow in the first calendar year in which a business unit
becomes a business unit of Pegasus ("Year 1") over the Business Unit Location
Cash Flow for the preceding year ("Year 0"), the Business Unit Location Cash
Flow attributable to the period in Year 1 during which the business unit was a
business unit of Pegasus shall be compared to the business unit's income --
before management fees, depreciation, amortization (other than amortization of
film contracts), and incentive compensation (including contributions under any
qualified or nonqualified plan) -- from non-Pegasus operations during the same
period in Year 0. For purposes of determining the excess of the Business Unit
Location Cash Flow for the succeeding year ("Year 2") over the Business Unit
Location Cash Flow for Year 1, the Business Unit Location Cash Flow
attributable to the period in Year 1 during which the business unit was a
business unit of Pegasus shall be compared to the Business Unit Location Cash
Flow during the same period in Year 2.
(aa) "Year Over Year Increase in Company-Wide Location
Cash Flow" shall have the meaning set forth in Article I of the Savings Plan.
-3-
<PAGE>
(ab) "Years of Vesting Service" shall have the meaning
set forth in Article I of the Savings Plan.
SECTION 3
Administration
The Plan shall be administered as follows:
(a) Special Recognition Awards to Officers and Discretionary Awards. With
respect to Special Recognition Awards to Officers and
Discretionary Awards, the Plan shall be administered:
(1) By a committee, which shall consist of not fewer than two
non-employee directors (within the meaning of Rule 16b-3(b)(3) (or any
successor thereto) under the Securities Exchange Act of 1934) of PCC who shall
be appointed by, and shall serve at the pleasure of, the Board, or
(2) In the event a committee has not been established in accordance
with paragraph 1, by the entire Board; provided, however, that a member of the
Board shall not participate in a vote approving an Award to himself or herself
to the extent provided under the laws of the State of Delaware governing
corporate self-dealing.
The Plan Administrator with respect to Special Recognition Awards to Officers
and Discretionary Awards shall hereinafter be referred to as the "Committee."
Each member of the Committee, while serving as such, shall be deemed to be
acting in his capacity as a director of PCC.
The Committee shall have full authority, upon consideration of
recommendations by the Management Committee and subject to the terms of the
Plan, to select the Officers to be granted Special Recognition Awards under
the Plan, to select the employees to be granted Discretionary Awards under the
Plan, to grant Special Recognition Awards to Officers and Discretionary Awards
to employees on behalf of PCC, and to set the date of grant and the other
terms of such Awards.
(b) All Other Awards. With respect to all Awards other than Special
Recognition Awards to Officers and Discretionary Awards, the Plan shall be
administered by the Management Committee. With respect to Special Recognition
Awards to employees who are not Officers, the Management Committee shall have
full authority, subject to the terms of the Plan, to select the employees to
be granted Special
-4-
<PAGE>
Recognition Awards under the Plan, to grant Special Recognition Awards on
behalf of PCC, and to set the date of grant and the other terms of such
Awards.
The terms and conditions of Profit-Sharing Awards and Excess Awards
are intended to be fixed in advance. Consequently, Profit-Sharing Awards and
Excess Awards shall be as set forth in Sections 6(b) and 6(c), respectively,
of the Plan, and the Management Committee shall not have any discretionary
authority with respect thereto.
(c) In General. The Plan Administrator may correct any defect, supply
any omission and reconcile any inconsistency in the Plan and in any Award
granted hereunder to the extent it shall deem desirable. The Plan
Administrator also shall have the authority to establish such rules and
regulations, not inconsistent with the provisions of the Plan, for the proper
administration of the Plan, and to amend, modify, or rescind any such rules
and regulations, and to make such determinations, and interpretations under,
or in connection with, the Plan, as it deems necessary or advisable. All such
rules, regulations, determinations, and interpretations shall be binding and
conclusive upon PCC, its stockholders and all employees, and upon their
respective legal representatives, beneficiaries, successors, and assigns and
upon all other persons claiming under or through any of them.
No member of the Board, the Committee or the Management Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Award granted under it.
SECTION 4
Eligibility
More than one Award may be granted to an employee who is eligible to
receive an Award under the Plan. Employees shall be eligible to receive Awards
as follows:
(a) Special Recognition Awards. All employees of Pegasus shall be
eligible to receive Special Recognition Awards.
(b) Profit-Sharing Awards. A General Manager, Department Manager or
Corporate Manager shall be eligible to receive a Profit-Sharing Award with
respect to a year if:
(1) He is not an Officer on the date the Award is
made; and
-5-
<PAGE>
(2) He is employed by Pegasus as a Manager on:
(A) June 30 of the year for which the
Profit-Sharing Award is made; and
(B) The date the Profit-Sharing Award is made.
(c) Excess Awards. A Participant in the Savings Plan shall be
eligible to receive an Excess Award if contributions on his behalf under the
Savings Plan are limited by certain limitations imposed by the Code, as
described in Section 6(c), and he is employed by Pegasus on the date the
Excess Award is made.
(d) Discretionary Awards. All employees of Pegasus shall be eligible
to receive Discretionary Awards.
Special Recognition Awards and Profit-Sharing Awards shall be made as
soon as practicable after the financial information necessary for determining
the amount of the Award is available (absent extraordinary circumstances, on
or before the March 31 following the year for which the Award is made). Excess
Awards shall be made as soon as practicable after the availability of the
information required to determine whether contributions under the Savings Plan
on behalf of a Participant with respect to a year are limited (absent
extraordinary circumstances, on or before the March 15 following the Savings
Plan year for which such contribution is limited).
SECTION 5
Stock
The number of shares of Common Stock that may be subject to Awards
under the Plan shall be 350,000 shares, subject to adjustment as hereinafter
provided. Common Stock issuable under the Plan may be authorized but unissued
shares or reacquired shares, and PCC may purchase shares required for this
purpose, from time to time, if it deems such purchase to be advisable.
Any Common Stock subject to an Award which is forfeited shall
continue to be available for the granting of Awards under the Plan.
-6-
<PAGE>
SECTION 6
Amount of Award
(a) Special Recognition Awards. The Plan Administrator, in its sole
discretion, shall determine the amount of the annual Special Recognition
Award, if any, to be made on behalf of an eligible employee described in
Section 4(a); provided, however, that the Fair Market Value of the Common
Stock covered by the annual Special Recognition Awards for any year to all
employees in the aggregate, determined as of the date the Awards are granted,
shall not exceed the sum of (1) five percent of the Year Over Year Increase in
Company-Wide Location Cash Flow, plus (2) the Year Over Year Increase in
Company-Wide Location Cash Flow which could have been awarded as a Special
Recognition Award in the preceding year, and was not. Special Recognition
Awards may be granted for consistency (awarded to a team of employees),
initiative (a team or individual award), problem solving (a team or individual
award), and individual excellence.
(b) Profit-Sharing Awards. An annual Profit-Sharing Award of Common
Stock shall be made to each eligible employee described in Section 4(b). The
number of shares of Common Stock covered by an annual Profit-Sharing Award
shall be determined as follows --
(1) General Managers. The number of shares of Common Stock covered
by the annual Profit-Sharing Award to each eligible employee who is a
General Manager shall equal the quotient of (A) six percent of the
Year Over Year Increase in Business Unit Location Cash Flow of the
General Manager's business unit, divided by (B) the Fair Market Value
of a share of Common Stock.
(2) Department Managers. The number of shares of Common Stock
covered by an annual Profit-Sharing Award to Department Managers in a
business unit in the aggregate shall equal the quotient of (A) six
percent of the Year Over Year Increase in Business Unit Location Cash
Flow of the Department Manager's business unit, divided by (B) the
Fair Market Value of a share of Common Stock. Such shares shall be
allocated, per capita, to each eligible employee who is a Department
Manager in the business unit; provided, however, that the shares
allocated to any Department Manager pursuant to an annual
Profit-Sharing Award shall not exceed the shares that would have been
allocated to the Department Manager if all Department Manager
positions in the business
-7-
<PAGE>
unit were filled on June 30 of the year for which the Profit-Sharing
Award is being made and the date the Profit-Sharing Award is made.
Any shares that may not be allocated on account of the limitation set
forth in the previous sentence shall not be subject to the annual
Profit-Sharing Award for the year in which such limitation applies.
(3) Corporate Managers. The number of shares of Common Stock
covered by an annual Profit-Sharing Award to eligible employees who
are Corporate Managers in the aggregate shall equal the quotient of
(A) three percent of the Year Over Year Increase in Company-Wide
Location Cash Flow, divided by (B) the Fair Market Value of a share
of Common Stock. Such shares shall be allocated to each eligible
employee who is a Corporate Manager in the same proportion that such
Corporate Manager's Salary for such year bears to the total Salary of
all Corporate Managers entitled to a Profit-Sharing Award for such
year.
(c) Excess Awards. The number of shares of Common Stock covered by an
Excess Award made on behalf of an eligible employee described in Section 4(c)
with respect to any year shall equal the quotient of --
(1) The sum of --
(A) Company Matching Contributions which were not
contributed to the Savings Plan on the eligible employee's
behalf for such year because of any Code provision that limits
such contributions, plus
(B) Rollover Matching Contributions which were not
contributed to the Savings Plan on the eligible employee's
behalf for such year because of any Code provision that limits
such contributions; divided by
(2) The Fair Market Value of a share of Common Stock.
(d) Discretionary Awards. The Committee, in its sole discretion,
shall determine the amount of the Discretionary Award, if any, to be made on
behalf of an eligible employee described in Section 4(d).
-8-
<PAGE>
SECTION 7
Vesting
(a) Special Recognition Awards. A Grantee shall be 100% vested in a
Special Recognition Award made on or after April 30, 1998 on the date such
Award is made. A Grantee shall be 100% vested in a Special Recognition Award
made before April 30, 1998 on April 30, 1998 to the extent such Award has not
been forfeited or become fully vested prior to April 30, 1998.
(b) Awards Other than Special Recognition Awards.
(1) Death, Disability. A Grantee shall be 100% vested in his
Profit-Sharing Awards, Excess Awards and Discretionary Awards under
the Plan when he --
(A) Incurs a Disability; or
(B) Dies.
(2) Vesting Schedule. Except as otherwise provided in paragraph
(1), a Grantee shall be 100% vested in his Profit-Sharing Awards,
Excess Awards and Discretionary Awards under the Plan in accordance
with the following schedule --
Percentage of Shares
Subject to Awards
Years of Vesting Service That Are 100% Vested
------------------------ --------------------
Fewer than 2 0
2 but fewer than 3 34
3 but fewer than 4 67
4 or more 100
(c) Forfeiture. Any shares of Common Stock covered by a
Grantee's Awards that are not vested pursuant to subsection (a) or subsection
(b) shall be immediately forfeited upon the Grantee's voluntary or involuntary
termination of employment by Pegasus.
-9-
<PAGE>
SECTION 8
Capital Adjustments
The number of shares which may be issued under the Plan, and the
number of shares of Common Stock issuable upon the vesting of outstanding
Awards shall, subject to the provisions of section 424(a) of the Internal
Revenue Code of 1986, as amended, be adjusted, to reflect any stock dividend,
stock split, share combination, or similar change in the capitalization of
PCC. In the event any such change in capitalization cannot be reflected in a
straight mathematical adjustment of the number of shares issuable upon the
vesting of outstanding Awards, the Plan Administrator shall make such
adjustments as are appropriate to reflect most nearly such straight
mathematical adjustment. Such adjustments shall be made only as necessary to
maintain the proportionate interests of Grantees and preserve, without
exceeding, the value of Awards.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations issued thereunder as, for example, a merger,
consolidation, acquisition of property or stock, separation, reorganization,
or liquidation), each outstanding Award shall be assumed by the surviving or
successor corporation.
SECTION 9
Amendment or Discontinuance of the Plan
At any time and from time to time, the Board may suspend or terminate
the Plan or amend it, and the Plan Administrator may amend any outstanding
Awards, in any respect whatsoever, except that the following amendments shall
require the approval of shareholders:
(a) Any amendment which would increase the number of shares of Common
Stock authorized under the Plan; and
(b) Any amendment for which shareholder approval is required under
the rules of an exchange or market on which Common Stock is listed.
Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall materially impair the rights of any holder of an outstanding
Award without the consent of such holder.
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<PAGE>
The approval of shareholders must be (i) by the written consent of
the holders of at least a majority of the shares of PCC entitled to vote, or
(ii) by the affirmative vote of the holders of at least a majority of the
shares present, or represented, and entitled to vote at a duly held meeting of
the shareholders of PCC.
SECTION 10
Termination of Plan
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
September 29, 2006, and no Awards hereunder shall be granted thereafter.
Nothing contained in this Section 10, however, shall terminate or affect the
continued existence of rights created under Awards issued hereunder and
outstanding on September 29, 2006 which by their terms extend beyond such
date.
SECTION 11
Effective Date
This Plan became effective on September 30, 1996 (the date the Plan
was adopted by the Board). As amended and restated, this Plan shall become
effective as of February 1, 1996.
SECTION 12
Miscellaneous
(a) Issuance and Delivery of Certificates. Upon the granting of an
Award, (i) PCC shall issue certificates in the name of the Grantee (or the
Grantee and the Grantee's spouse -- see subsection (f)) representing the
Common Stock subject to the Award. Any shares of Common Stock in which the
Grantee is not vested on the date the Award is granted shall bear a legend
indicating that they are subject to the terms of the Plan and the Award
Agreement and that they may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of except in accordance with the terms of
the Plan and the Award Agreement. Upon issuance of such certificates, the
Grantee shall immediately execute a stock power or other instrument of
transfer, appropriately endorsed in blank, to be held with the certificates by
PCC pursuant to the terms of the Plan and the Award Agreement with respect to
shares of Common Stock in which the Grantee is
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not vested on the date the Award is granted. Only full shares shall be issued,
and any fractional shares which might otherwise be issuable pursuant to an
Award shall be forfeited.
(b) Rights as a Shareholder. With respect to any shares of Common
Stock in which the Grantee is not vested on the date the Award is granted, the
Grantee shall be entitled to receive dividends paid on such shares, shall have
the right to vote such shares, and shall have all other shareholder's rights
with respect to such shares, except that (i) the Grantee will not be entitled
to delivery of the stock certificate, (ii) PCC will retain custody of the
Common Stock, and (iii) the shares subject to Awards will revert to PCC in
accordance with Section 7(c) to the extent not vested on the Grantee's
voluntary or involuntary termination of employment by Pegasus.
(c) Award Agreement. Awards under the Plan shall be evidenced by
written documents in such form as the Plan Administrator shall, from time to
time, approve, which Award Agreements shall contain such provisions, not
inconsistent with the provisions of the Plan, as the Plan Administrator shall
deem advisable. Each Grantee shall enter into, and be bound by the terms of,
the Award Agreement.
(d) Governing Law. The Plan, and the Award Agreements entered into
and Awards granted thereunder, shall be governed by the Code provisions to the
extent applicable. Otherwise, the operation of, and the rights of eligible
individuals under, the Plan, the Award Agreements, and the Awards shall be
governed by applicable federal law and otherwise by the laws of the State of
Delaware.
(e) Rights. Neither the adoption of the Plan nor any action of the
Board or the Plan Administrator shall be deemed to give any individual any
right to be granted an Award, or any other right hereunder, unless and until
the Plan Administrator shall have granted such individual an Award, and then
his rights shall be only such as are provided by the Plan and the Award
Agreement.
Further, notwithstanding any provisions of the Plan or any Award
Agreement with a Grantee, but subject to any employment agreement, Pegasus
shall have the right, in its discretion, to retire an employee at any time
pursuant to its retirement rules or otherwise to terminate his employment at
any time for any reason whatsoever.
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(f) Non-Transferability. Except as otherwise provided in any Award
Agreement, Awards which have not vested shall not be assignable or
transferable by the Grantee otherwise than by will or by the laws of descent
and distribution. If a Grantee is married on the date an Award is granted, and
if the Grantee so requests, the certificate or certificates issued shall be
registered in the name of the Grantee and the Grantee's spouse, jointly, with
right of survivorship.
(g) Listing and Registration of Shares. Each Award shall be subject
to the requirement that, if at any time the Plan Administrator shall
determine, in its discretion, that the listing, registration, or qualification
of the Common Stock covered thereby upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the granting of such Award or the vesting of Common Stock thereunder, or
that action by PCC or by the Grantee should be taken in order to obtain an
exemption from any such requirement, no shares of Common Stock shall be
received pursuant to an Award, unless and until such listing, registration,
qualification, consent, approval, or action shall have been effected,
obtained, or taken under conditions acceptable to the Plan Administrator.
Without limiting the generality of the foregoing, each Grantee or his legal
representative or beneficiary may also be required to give satisfactory
assurance that shares received pursuant to an Award will be held as an
investment and not with a view to distribution, and certificates representing
such shares may be legended accordingly.
(h) Withholding and Use of Shares to Satisfy Tax Obligations. The
obligation of PCC to deliver Common Stock pursuant to any Award shall be
subject to applicable federal, state and local tax withholding requirements.
If the vesting of any Award is subject to the withholding
requirements of applicable federal tax law, the Plan Administrator, in its
discretion, may permit or require the Grantee to satisfy the federal, state
and local withholding tax, in whole or in part, by electing to have PCC
withhold shares of Common Stock subject to the Award (or by returning
previously acquired shares of Common Stock to PCC). PCC may not withhold
shares in excess of the number necessary to satisfy the minimum federal, state
and local income tax withholding requirements. Shares of Common Stock shall be
valued, for purposes of this paragraph, at their Fair Market
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Value, but as of the date the amount attributable to the vesting of the Award
is includable in income by the Grantee under the Code (the "Determination
Date").
If shares of Common Stock acquired by the exercise of an incentive
stock option (within the meaning of section 422 of the Internal Revenue Code
as of 1986, as amended, or any successor thereto) are used to satisfy the
withholding requirement described above, such shares of Common Stock must have
been held by the Grantee for a period of not less than the holding period
described in section 422(a)(1) of the Internal Revenue Code of 1986, as
amended, as of the Determination Date.
The Plan Administrator shall adopt such withholding rules as it deems
necessary to carry out the provisions of this paragraph.
(i) Indemnification of Board and Plan Administrator. Without limiting
any other rights of indemnification which they may have from Pegasus, the
members of the Board, the Committee and the Management Committee shall be
indemnified by PCC against all costs and expenses reasonably incurred by them
in connection with any claim, action, suit, or proceeding to which they or any
of them may be a party by reason of any action taken or failure to act under,
or in connection with, the Plan, or any Award granted thereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by legal counsel selected by PCC) or paid by them in satisfaction of
a judgment in any such action, suit, or proceeding, except a judgment based
upon a finding of willful misconduct or recklessness on their part. Upon the
making or institution of any such claim, action, suit, or proceeding, the
Board, Committee or Management Committee member shall notify PCC in writing,
giving PCC an opportunity, at its own expense, to handle and defend the same
before such Board, Committee or Management Committee member undertakes to
handle it on his own behalf.
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EXHIBIT 4(d)
PEGASUS COMMUNICATIONS 1996
STOCK OPTION PLAN
(As Amended and Restated Effective As of April 27, 1998)
<PAGE>
Table of Contents
1. Purpose............................................................... 1
2. Administration........................................................ 2
3. Eligibility........................................................... 3
4. Stock................................................................. 3
5. Granting of Options................................................... 4
6. Annual Limit.......................................................... 5
7. Terms and Conditions of Options....................................... 5
8. Option Agreements -- Other Provisions................................. 11
9. Capital Adjustments................................................... 12
10. Certain Corporate Transactions........................................ 12
11. Change in Control..................................................... 13
12. Amendment or Termination of the Plan.................................. 14
13. Absence of Rights..................................................... 15
14. Indemnification of Board and Committee................................ 16
15. Application of Funds.................................................. 16
16. Shareholder Approval.................................................. 16
17. No Obligation to Exercise Option...................................... 17
18. Termination of Plan................................................... 17
19. Governing Law......................................................... 17
20. Special Provisions Regarding Digital Television Services, Inc..........17
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PEGASUS COMMUNICATIONS 1996
STOCK OPTION PLAN
(As Amended and Restated Effective As of April 27, 1998)
--------------------------------
WHEREAS, Pegasus Communications Corporation, a Delaware corporation,
desires to award incentive and nonqualified stock options to certain of its
officers and directors who are not officers;
NOW THEREFORE, effective September 30, 1996, the Pegasus
Communications 1996 Stock Option Plan is hereby adopted under the following
terms and conditions:
1. Purpose. This Pegasus Communications 1996 Stock Option Plan (the
"Plan") is intended to provide a means whereby Pegasus Communications
Corporation (the "Company") may, through the grant of incentive stock options
and nonqualified stock options (collectively, the "Options") to Key Employees
and Non-employee Directors (as defined in Section 3), attract and retain such
Key Employees and Non-employee Directors and motivate them to exercise their
best efforts on behalf of the Company and of any Related Company.
For purposes of granting incentive stock options under the Plan, a
"Related Company" shall mean either a "subsidiary corporation" of the Company,
as defined in section 424(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), or the "parent corporation" of the Company, as defined in
section 424(e) of the Code. For purposes of granting non-qualified stock
options under the Plan, a "Related Company" shall mean Pegasus Communications
Holdings, Inc. or any of its direct or indirect subsidiaries, whether in
corporate, partnership or any other form.
<PAGE>
Further, as used in the Plan, (i) the term "ISO" shall mean an option
which, at the time such option is granted, qualifies as an incentive stock
option within the meaning of section 422 of the Code and is designated as an
ISO in the "Option Agreement" (as defined in Section 8 hereof); and (ii) the
term "NQSO" shall mean an option which, at the time such option is granted,
does not qualify as an ISO, and is designated as a nonqualified stock option
in the Option Agreement (as defined in Section 8 hereof).
2. Administration. The Plan shall be administered:
(a) By a committee, which shall consist of not fewer than two
non-employee directors (within the meaning of Rule 16b-3(b)(3) under the
Securities Exchange Act of 1934 (the "Exchange Act"), or any successor
thereto) of the Company who are also outside directors (within the meaning of
Treas. Reg. ss.1.162-27(e)(3), or any successor thereto) of the Company, who
shall be appointed by, and shall serve at the pleasure of, the Board of
Directors of the Company (the "Board"); or
(b) In the event a committee has not been established in accordance
with subsection (a), or cannot be constituted to vote on the grant of an
Option (for example, because of state laws governing corporate self-dealing),
by the entire Board;
provided, however, that a member of the Board shall not
participate in a vote approving the grant of an Option to himself or herself
to the extent provided under the laws of the State of Delaware governing
corporate self-dealing.
The administrator of the Plan shall hereinafter be referred to as the
"Committee." Each member of the Committee, while serving as such, shall be
deemed to be acting in his capacity as a director of the Company.
The Committee shall have full authority, subject to the terms of the
Plan, to select the Key Employees and Non-employee Directors to be granted
Options under the Plan, to grant Options on behalf of the Company, and to set
the date of grant and the other terms of such Options; provided, however, that
Non-employee Directors shall not be eligible to receive ISOs under the Plan.
The Committee may correct any defect, supply any omission and reconcile any
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inconsistency in this Plan and in any Option granted hereunder in the manner
and to the extent it deems desirable. The Committee also shall have the
authority to establish such rules and regulations, not inconsistent with the
provisions of the Plan, for the proper administration of the Plan, to amend,
modify, or rescind any such rules and regulations, and to make such
determinations, and interpretations under, or in connection with, the Plan, as
it deems necessary or advisable. All such rules, regulations, determinations,
and interpretations shall be binding and conclusive upon the Company, its
shareholders and all Key Employees and Non-employee Directors, upon their
respective legal representatives, beneficiaries, successors, and assigns, and
upon all other persons claiming under or through any of them.
No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
3. Eligibility. The class of employees who shall be eligible to
receive Options under the Plan shall be the executive officers of the Company
or a Related Company (including any directors who also are officers) ("Key
Employees"). Directors of the Company or a Related Company who are not
employees ("Non-employee Directors") shall be eligible to receive NQSOs (and
not ISOs) under the Plan. More than one Option may be granted to a Key
Employee or a Non-employee Director under the Plan. A Key Employee or Non-
employee Director who has been granted an Option under the Plan shall
hereinafter be referred to as an "Optionee."
4. Stock. Options may be granted under the Plan to purchase up to a
maximum of 970,000 shares of Class A common stock of the Company ("Common
Stock"); provided, however, that no Key Employee shall receive Options for
more than 550,000 shares of the Company's Common Stock over the life of the
Plan. However, both limits in the preceding sentence shall be subject to
adjustment as hereinafter provided. Shares issuable under the Plan may be
authorized but unissued shares or reacquired shares, and the Company may
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purchase shares required for this purpose, from time to time, if it deems such
purchase to be advisable.
If any Option granted under the Plan expires or otherwise terminates
for any reason whatsoever (including, without limitation, the Optionee's
surrender thereof) without having been exercised, the shares subject to the
unexercised portion of the Option shall continue to be available for the
granting of Options under the Plan as fully as if the shares had never been
subject to an Option; provided, however, that (i) if an Option is cancelled,
the shares of Common Stock covered by the cancelled Option shall be counted
against the maximum number of shares specified above for which Options may be
granted to single Key Employee, and (ii) if the exercise price of an Option is
reduced after the date of grant, the transaction shall be treated as a
cancellation of the original Option and the grant of a new Option for purposes
of such maximum.
5. Granting of Options. From time to time until the expiration or
earlier suspension or discontinuance of the Plan, the Committee may, on behalf
of the Company, grant to Key Employees and Non-employee Directors under the
Plan such Options as it determines are warranted; provided, however, that
grants of ISOs and NQSOs shall be separate and not in tandem, and further
provided that Non-employee Directors shall not be eligible to receive ISOs
under the Plan. In making any determination as to whether a Key Employee or a
Non-employee Director shall be granted an Option, the type of Option to be
granted to a Key Employee, the number of shares to be covered by the Option,
and other terms of the Option, the Committee shall take into account the
duties of the Key Employee or the Non-employee Director, his present and
potential contributions to the success of the Company or a Related Company,
the tax implications to the Company and the Key Employee of any Option
granted, and such other factors as the Committee shall deem relevant in
accomplishing the purposes of the Plan. Moreover, the Committee may provide in
the Option that said Option may be exercised only if certain conditions, as
determined by the Committee, are fulfilled.
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<PAGE>
6. Annual Limit
(a) ISOs. The aggregate fair market value (determined under Section
7(b) hereof as of the date the ISO is granted) of the Common Stock with
respect to which ISOs are exercisable for the first time by a Key Employee
during any calendar year (counting ISOs under this Plan and incentive stock
options under any other stock option plan of the Company or a Related Company)
shall not exceed $100,000. If an Option intended as an ISO is granted to a Key
Employee and the Option may not be treated in whole or in part as an ISO
pursuant to the $100,000 limitation, the Option shall be treated as an ISO to
the extent it may be so treated under the limitation and as an NQSO as to the
remainder. For purposes of determining whether an ISO would cause the
limitation to be exceeded, ISOs shall be taken into account in the order
granted.
(b) NQSOs. The annual limits set forth above for ISOs shall not apply
to NQSOs.
7. Terms and Conditions of Options. Options granted pursuant to the
Plan shall include expressly or by reference the following terms and
conditions, as well as such other provisions not inconsistent with the
provisions of this Plan and, for ISOs granted under this Plan, the provisions
of section 422(b) of the Code, as the Committee shall deem desirable --
(a) Number of Shares. The Option shall state the number of shares of
Common Stock to which the Option pertains.
(b) Price. The Option shall state the Option price which shall be
determined and fixed by the Committee in its discretion but shall not be less
than the higher of 100 percent (110 percent in the case of an ISO granted to a
more-than-10-percent shareholder, as provided in paragraph (j) below) of the
fair market value of the optioned shares of Common Stock on the date the
Option is granted, or the par value thereof.
The fair market value of a share of Common Stock shall be the closing
price of the Common Stock on a registered securities exchange or on an
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over-the-counter market on the last business day prior to the date of grant on
which Common Stock traded.
(c) Term
(1) ISOs. Subject to earlier termination as provided in paragraphs
(e), (f), and (g) below and in Section 10 hereof, the term of each ISO shall
be not more than 10 years (five years in the case of a more-than-10- percent
shareholder, as discussed in paragraph (j) below) from the date of grant.
(2) NQSOs. Subject to earlier termination as provided in paragraphs
(e), (f), and (g) below and in Section 10 hereof, the term of each NQSO shall
be not more than ten years from the date of grant.
(d) Exercise. Options shall be exercisable in such installments and
on such dates, as the Committee may specify. The Committee may accelerate the
exercise date of any outstanding Options, in its discretion, if it deems such
acceleration to be desirable.
Any exercisable Options may be exercised at any time up to the
expiration or termination of the Option. Exercisable Options may be exercised,
in whole or in part and from time to time, by giving written notice of
exercise to the Company at its principal office, specifying the number of
shares to be purchased and accompanied by payment in full of the aggregate
Option exercise price for such shares. Only full shares shall be issued under
the Plan, and any fractional share which might otherwise be issuable upon
exercise of an Option granted hereunder shall be forfeited.
The Option price shall be payable --
(1) in cash or its equivalent;
(2) in the case of an ISO, if the Committee in its discretion
causes the Option Agreement so to provide, and in the case of an NQSO, if the
Committee in its discretion so determines at or prior to the time of exercise,
then --
(A) in shares of Common Stock previously acquired by the
Optionee; provided that if such shares of Common Stock were acquired
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<PAGE>
through the exercise of an ISO and are used to pay the Option price for ISOs,
such shares have been held by the Key Employee for a period of not less than
the holding period described in section 422(a)(1) of the Code on the date of
exercise;
(B) in Company Common Stock newly acquired by the Optionee upon
exercise of such Option (which shall constitute a disqualifying disposition in
the case of an Option which is an ISO);
(C) by delivering a properly executed notice of exercise of the
Option to the Company and a broker, with irrevocable instructions to the
broker promptly to deliver to the Company the amount of sale or loan proceeds
necessary to pay the exercise price of the Option;
(D) if the Optionee is designated as an "eligible participant," and
if the Optionee thereafter so requests, (i) the Company will loan the Optionee
the money required to pay the exercise price of the Option; (ii) any such loan
to an Optionee shall be made only at the time the Option is exercised; and
(iii) the loan will be made on the Optionee's personal negotiable demand
promissory note, bearing interest at the lowest rate which will avoid
imputation of interest under section 7872 of the Code, and including such
other terms as the Committee prescribes; or
(E) in any combination of subparagraphs (1), (2)(A), (2)(B), (2)(C)
and (2)(D) above.
In the event the Option price is paid, in whole or in part, with
shares of Common Stock, the portion of the Option price so paid shall be equal
to the aggregate fair market value (determined under paragraph (b) above, but
as of the date of exercise of the Option, rather than the date of grant) of
the Common Stock so surrendered in payment of the Option price.
(e) Termination of Employment or Board Membership. If a Key
Employee's employment by the Company (and Related Companies) or a Non-employee
Director's membership on the Board is terminated by either party prior to the
expiration date fixed for his Option for any reason other than death or
disability, such Option may be exercised, to the extent of the number of
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<PAGE>
shares with respect to which the Optionee could have exercised it on the date
of such termination, or to any greater extent permitted by the Committee, by
the Optionee at any time prior to the earlier of (i) the expiration date
specified in such Option, or (ii) an accelerated expiration date determined by
the Committee, in its discretion, and set forth in the Option Agreement;
except that, subject to Section 10 hereof, such accelerated expiration date
shall not be earlier than the date of the termination of the Key Employee's
employment or the Non-employee Director's Board membership, and in the case of
ISOs, such accelerated expiration date shall not be later than three months
after such termination of employment.
(f) Exercise upon Disability of Optionee. If an Optionee becomes
disabled (within the meaning of section 22(e)(3) of the Code) during his
employment or membership on the Board and, prior to the expiration date fixed
for his Option, his employment or membership on the Board is terminated as a
consequence of such disability, such Option may be exercised, to the extent of
the number of shares with respect to which the Optionee could have exercised
it on the date of such termination, or to any greater extent permitted by the
Committee, by the Optionee at any time prior to the earlier of (i) the
expiration date specified in such Option, or (ii) an accelerated termination
date determined by the Committee, in its discretion, and set forth in the
Option Agreement; except that, subject to Section 10 hereof, such accelerated
termination date shall not be earlier than the date of the Optionee's
termination of employment or Board Membership by reason of disability, and in
the case of ISOs, such accelerated termination date shall not be later than
one year after such termination of employment. In the event of the Optionee's
legal disability, such Option may be exercised by the Optionee's legal
representative.
(g) Exercise upon Death of Optionee. If an Optionee dies during his
employment or Board Membership, and prior to the expiration date fixed for his
Option, or if an Optionee whose employment or Board membership is terminated
for any reason, dies following his termination of employment or
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<PAGE>
Board membership but prior to the earliest of (i) the expiration date fixed
for his Option, (ii) the expiration of the period determined under paragraphs
(e) and (f) above, or (iii) in the case of an ISO, three months following
termination of employment, such Option may be exercised, to the extent of the
number of shares with respect to which the Optionee could have exercised it on
the date of his death, or to any greater extent permitted by the Committee, by
the Optionee's estate, personal representative or beneficiary who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee. Such post-death exercise may occur at any time prior to
the earlier of (i) the expiration date specified in such Option or (ii) an
accelerated termination date determined by the Committee, in its discretion,
and set forth in the Option Agreement; except that, subject to Section 10
hereof, such accelerated termination date shall not be later than three years
after the date of death.
(h) Non-Transferability. No ISO and (except as otherwise provided in
any Option Agreement) no NQSO shall be assignable or transferable by the
Optionee other than by will or by the laws of descent and distribution, and
during the lifetime of the Optionee, shall be exercisable only by him or by
his guardian or legal representative. If the Optionee is married at the time
of exercise and if the Optionee so requests at the time of exercise, the
certificate or certificates shall be registered in the name of the Optionee
and the Optionee's spouse, jointly, with right of survivorship.
(i) Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any shares covered by his Option until the
issuance of a stock certificate to him for such shares.
(j) Ten Percent Shareholder. If the Key Employee owns more than 10
percent of the total combined voting power of all shares of stock of the
Company or of a Related Company at the time an ISO is granted to him, the
Option price for the ISO shall be not less than 110 percent of the fair market
value (as determined under paragraph (b) above) of the optioned shares of
Common Stock on the date the ISO is granted, and such ISO, by its terms, shall
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not be exercisable after the expiration of five years from the date the ISO is
granted. The conditions set forth in this paragraph shall not apply to NQSOs.
(k) Listing and Registration of Shares. Each Option shall be subject
to the requirement that, if at any time the Committee shall determine, in its
discretion, that the listing, registration, or qualification of the shares of
Common Stock covered thereby upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection with, the
granting of such Option or the purchase of shares of Common Stock thereunder,
or that action by the Company or by the Optionee should be taken in order to
obtain an exemption from any such requirement, no such Option may be
exercised, in whole or in part, unless and until such listing, registration,
qualification, consent, approval, or action shall have been effected,
obtained, or taken under conditions acceptable to the Committee. Without
limiting the generality of the foregoing, each Optionee or his legal
representative or beneficiary may also be required to give satisfactory
assurance that shares purchased upon exercise of an Option are being purchased
for investment and not with a view to distribution, and certificates
representing such shares may be legended accordingly.
(l) Withholding and Use of Shares to Satisfy Tax Obligations. The
obligation of the Company to deliver shares of Common Stock upon the exercise
of any Option shall be subject to applicable federal, state and local tax
withholding requirements.
If the exercise of any Option is subject to the withholding
requirements of applicable federal tax law, the Committee, in its discretion,
may permit or require the Key Employee to satisfy the federal, state and local
withholding tax, in whole or in part, by electing to have the Company withhold
shares of Common Stock subject to the exercise (or by returning previously
acquired shares of Common Stock to the Company). The Company may not withhold
shares in excess of the number necessary to satisfy the minimum federal, state
and local income tax withholding requirements. Shares of Common Stock shall
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be valued, for purposes of this paragraph, at their fair market value under
paragraph (b) above, but as of the date the amount attributable to the
exercise of the Option is includable in income by the Key Employee under
section 83 of the Code (the "Determination Date").
If shares of Common Stock acquired by the exercise of an ISO are used
to satisfy the withholding requirement described above, such shares of Common
Stock must have been held by the Key Employee for a period of not less than
the holding period described in section 422(a)(1) of the Code as of the
Determination Date.
The Committee shall adopt such withholding rules as it deems
necessary to carry out the provisions of this paragraph.
(m) Loans. If an Optionee is designated as an "eligible participant"
by the Committee at the date of grant in the case of an ISO, or at or after
the date of grant in the case of an NQSO, and if the Optionee thereafter so
requests, the Company will loan the Optionee the money required to satisfy any
regular income tax obligations (as opposed to alternative minimum tax
obligations) resulting from the exercise of any Options. Any loan or loans to
an Optionee shall be made only at the time any such tax resulting from such
exercise is due. The Committee, in its discretion, may require an affidavit
from the Optionee specifying the amount of the tax required to be paid and the
date when such tax must be paid. The loan will be made on the Optionee's
personal, negotiable, demand promissory note, bearing interest at the lowest
rate which will avoid imputation of interest under section 7872 of the Code,
and including such other terms as the Committee prescribes.
8. Option Agreements -- Other Provisions. Options granted under the
Plan shall be evidenced by written documents ("Option Agreements") in such
form as the Committee shall from time to time approve, and containing such
provisions not inconsistent with the provisions of the Plan (and, for ISOs
granted pursuant to the Plan, not inconsistent with section 422(b) of the
Code), as the Committee shall deem advisable. The Option Agreements shall
specify whether the Option is an ISO or NQSO. Each Optionee shall enter into,
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and be bound by, an Option Agreement as soon as practicable after the grant of
an Option.
9. Capital Adjustments. The number of shares which may be issued
under the Plan, the maximum number of shares with respect to which Options may
be granted to any Optionee under the Plan, as stated in Section 4 hereof, and
the number of shares issuable upon exercise of outstanding Options under the
Plan (as well as the Option price per share under such outstanding Options)
shall, subject to the provisions of section 424(a) of the Code, be adjusted,
as may be deemed appropriate by the Committee, to reflect any stock dividend,
stock split, share combination, or similar change in the capitalization of the
Company. In the event any such change in capitalization cannot be reflected in
a straight mathematical adjustment of the number of shares issuable upon the
exercise of outstanding Options (and a straight mathematical adjustment of the
exercise price thereof), the Committee shall make such adjustments as are
appropriate to reflect most nearly such straight mathematical adjustment. Such
adjustments shall be made only as necessary to maintain the proportionate
interest of Optionees, and preserve, without exceeding, the value of Options.
10. Certain Corporate Transactions. In the event of a corporate
transaction (as that term is described in section 424(a) of the Code and the
Treasury Regulations issued thereunder as, for example, a merger,
consolidation, acquisition of property or stock, separation, reorganization,
or liquidation), each outstanding Option shall be assumed by the surviving or
successor corporation; provided, however, that, in the event of a proposed
corporate transaction, the Committee may terminate all or a portion of the
outstanding Options if it determines that such termination is in the best
interests of the Company. If the Committee decides to terminate outstanding
Options, the Committee shall give each Optionee holding an Option to be
terminated not less than seven days' notice prior to any such termination, and
any Option which is to be so terminated may be exercised (if and only to the
extent that it is then exercisable) up to, and including the date immediately
preceding such termination. Further, as provided in Section 7(d) hereof, the
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Committee, in its discretion, may accelerate, in whole or in part, the date on
which any or all Options become exercisable.
The Committee also may, in its discretion, change the terms of any
outstanding Option to reflect any such corporate transaction, provided that,
in the case of ISOs, such change would not constitute a "modification" under
section 424(h) of the Code, unless the Option holder consents to the change.
11. Change in Control.
(a) Full Vesting. Notwithstanding any other provision of this Plan,
all outstanding Options shall become fully vested and exercisable upon a
Change in Control.
(b) Definitions. The following definitions shall apply for purposes
of this Section --
(1) "Change in Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company to any
"person" (as such term is used in section 13(d)(3) of the Exchange Act) other
than the Principal or his Related Parties, (ii) the adoption of a plan
relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above)
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time, upon the happening of an event or otherwise), of more of the
voting stock of the Company than is "beneficially owned" (as defined above) at
such time by the Principal and his Related Parties, or (iv) the first day on
which a majority of the members of the Board are not Continuing Directors.
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(2) "Continuing Directors" means, as of any date of
determination, any member of the Board who (i) was a member of the Board on
September 30, 1996, or (ii) was nominated for election or elected to the Board
with approval of a majority of the Continuing Directors who were members of
the Board at the time of such nomination or election.
(3) "Person" shall have the meaning set forth in the
indenture dated July 7, 1995, by and among Pegasus Media & Communications,
Inc., certain of its subsidiaries, and First Union National Bank and Trustee.
(4) "Principal" means Marshall W. Pagon.
(5) "Related Party" means (A) any immediate family member of
the Principal or (B) any trust, corporation, partnership or other entity, more
than 50% of the voting equity interests of which are owned directly or
indirectly by, and which is controlled by, the Principal and/or such other
Persons referred to in the immediately preceding clause (A). For purposes of
this definition, (i) "immediate family member" means spouse, parent, step-
parent, child, sibling or step-sibling, and (ii) "control," as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control. In addition, the
Principal's estate shall be deemed to be a Related Party until such time as
such estate is distributed in accordance with the Principal's will or
applicable state law.
12. Amendment or Termination of the Plan
(a) In General. The Board, pursuant to a written resolution, from
time to time may suspend or terminate the Plan or amend it, and the Committee
may amend any outstanding Options in any respect whatsoever; except that,
without the approval of the shareholders (given in the manner set forth in
paragraph (b) below) --
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(1) the class of employees eligible to receive ISOs shall
not be changed;
(2) the maximum number of shares of Common Stock with
respect to which Options may be granted under the Plan shall not be increased,
except as permitted under Section 9 hereof;
(3) the duration of the Plan under Section 18 hereof with
respect to any ISOs granted hereunder shall not be extended; and
(4) no amendment requiring shareholder approval pursuant to
Treas. Reg. ss. 1.162-27(e)(4)(vi) or any successor thereto may be made.
Notwithstanding the foregoing, no such suspension,
discontinuance or amendment shall materially impair the rights of any holder
of an outstanding Option without the consent of such holder.
(b) Manner of Shareholder Approval. The approval of
shareholders must be effected --
(1) By a method and in a degree that would be treated as
adequate under applicable state law in the case of an action requiring
shareholder approval (i.e., an action on which shareholders would be entitled
to vote if the action were taken at a duly held shareholders' meeting); or
(2) By a majority of the votes cast at a duly held
shareholders' meeting at which a quorum representing a majority of all
outstanding voting stock is, either in person or by proxy, present and voting
on the Plan.
13. Absence of Rights. Neither the adoption of the Plan nor any
action of the Board or the Committee shall be deemed to give any individual
any right to be granted an Option, or any other right hereunder, unless and
until the Committee shall have granted such individual an Option, and then his
rights shall be only such as are provided by the Option Agreement.
Any Option under the Plan shall not entitle the holder thereof to
any rights as a stockholder of the Company prior to the exercise of such Option
and the issuance of the shares pursuant thereto. Further, notwithstanding any
provisions of the Plan or the Option Agreement with a Key
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Employee, the Company and any Related Company shall have the right, in its
discretion but subject to any employment contract entered into with the Key
Employee, to retire the Key Employee at any time pursuant to its retirement
rules or otherwise to terminate his employment at any time for any reason
whatsoever.
14. Indemnification of Board and Committee. Without limiting any
other rights of indemnification which they may have from the Company and any
Related Company, the members of the Board and the members of the Committee
shall be indemnified by the Company against all costs and expenses reasonably
incurred by them in connection with any claim, action, suit, or proceeding to
which they or any of them may be a party by reason of any action taken or
failure to act under, or in connection with, the Plan, or any Option granted
thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action,
suit, or proceeding, except a judgment based upon a finding of willful
misconduct or recklessness on their part. Upon the making or institution of
any such claim, action, suit, or proceeding, the Board or Committee member
shall notify the Company in writing, giving the Company an opportunity, at its
own expense, to handle and defend the same before such Board or Committee
member undertakes to handle it on his own behalf. The provisions of this
Section shall not give members of the Board or the Committee greater rights
than they would have under the Company's by-laws or Delaware law.
15. Application of Funds. The proceeds received by the Company from
the sale of Common Stock pursuant to Options granted under the Plan shall be
used for general corporate purposes. Any cash received in payment for shares
upon exercise of an Option shall be added to the general funds of the Company
and shall be used for its corporate purposes. Any Common Stock received in
payment for shares upon exercise of an Option shall become treasury stock.
16. Shareholder Approval. This Plan shall become effective on
September 30, 1996 (the date the Plan was adopted by the Board); provided,
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however, that if the Plan is not approved by the shareholders, in the manner
described in Section 12(b) hereof, within 12 months before or after the date
the Plan was adopted by the Board, ISOs granted hereunder shall be null and
void and no additional Options shall be granted hereunder.
17. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon an Optionee to exercise such Option.
18. Termination of Plan. Unless earlier terminated as provided in the
Plan, the Plan and all authority granted hereunder shall terminate absolutely at
12:00 midnight on September 29, 2006, which date is within 10 years after the
date the Plan was adopted by the Board, or the date the Plan was approved by the
shareholders of the Company, whichever is earlier, and no Options hereunder
shall be granted thereafter. Nothing contained in this Section, however, shall
terminate or affect the continued existence of rights created under Options
issued hereunder, and outstanding on the date set forth in the preceding
sentence, which by their terms extend beyond such date.
19. Governing Law. The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of
Delaware shall govern the operation of, and the rights of Key Employees and
Non-employee Directors under, the Plan and Options granted thereunder.
20. Special Provisions Regarding Digital Television Services, Inc..
Digital Television Services, Inc. ("DTS") became a wholly-owned subsidiary of
the Company by means of the merger (the "Merger") of a wholly-owned subsidiary
of the Company into DTS pursuant to the Agreement and Plan of Merger dated
January 8, 1998 (the "Merger Agreement") among the Company, DTS, Pegasus DTS
Merger Sub, Inc. and certain stockholders of the Company and DTS. Section 2.12
of the Merger Agreement provides that the Company will assume certain
outstanding DTS options specified therein. Section 2.12 of the Merger Agreement
also provides that such DTS options will be replaced with options (the
"Replacement Options") to purchase the number of shares of Common Stock equal to
the "conversion ratio" (as defined in the Merger Agreement) times the number of
shares of DTS common stock issuable upon the exercise of such op-
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tions, for an exercise price equal to the exercise price applicable to such
options divided by the "conversion ratio."
Each Replacement Option shall be exercisable under the Plan in
accordance with the terms of the agreement entered into between the Company and
the holder of the Replacement Option (the "Replacement Agreement"), the terms of
which shall govern in the event of any conflict with the provisions of the Plan.
The following provisions of the Plan shall not apply to the Replacement
Options:
(i) Section 11 ("Change in Control");
(ii) Section 7(d)(2)(D) (regarding payment of exercise price with the
proceeds of a loan from the Company); and
(iii) Section 7(m) (regarding payment of income tax obligations with
the proceeds of a loan from the Company).
In addition, any provision of the Plan that would provide an additional
benefit (within the meaning of section 424(a)(2) of the Code and Treasury
Regulations thereunder) shall not apply to the Replacement Options.
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EXHIBIT 5(a)
[Drinker Biddle & Reath LLP letterhead]
May 15, 1998
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
Suite 454, 5 Radnor Corporate Center
100 Matsonford Road
Radnor, Pennsylvania 19087
Re: Pegasus Communications Corporation
Securities and Exchange Commission
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Pegasus Communications Corporation (the
"Company") in connection with the preparation and filing with the Securities and
Exchange Commission of the Company's Post-Effective Amendment No. 1 to
Registration Statement on Form S-8 under the Securities Act of 1933 (the
"Registration Statement") relating to 1,316,386 shares of Class A Common Stock
of the Company, par value $0.01 per share (the "Shares"), issuable pursuant to
its Restricted Stock Plan (the Restricted Stock Plan"), or upon the exercise of
options granted under the Company's 1996 Stock Option Plan (the "Stock Option
Plan," and, together with the Restricted Stock Plan, the "Plans").
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In this capacity, we have reviewed originals or copies, certified or
otherwise identified to our satisfaction, of the Company's Certificate of
Incorporation, its By-laws, resolutions of its Board of Directors, the Plans,
and such other documents and corporate records as we have deemed appropriate for
the purpose of giving this opinion.
Based upon the foregoing and consideration of such questions of law as
we have deemed relevant, we are of the opinion that the issuance of the Shares
by the Company either (i) pursuant to the Restricted Stock Plan or (ii) upon the
exercise of stock options properly granted under the Stock Option Plan has been
duly authorized by the necessary corporate action of the Board of Directors of
the Company and such Shares, upon payment therefore, if applicable, in
accordance with the terms of the Restricted Stock Plan, or upon exercise of such
options and payment therefor in accordance with the terms of the Stock Option
Plan, will be validly issued, fully paid and nonassessable by the Company.
The opinions expressed herein are limited to the federal laws of the
United States and the Delaware General Corporation Law.
We consent to the use of this opinion as an exhibit to the Registration
Statement. This does not constitute a consent under Section 7 of the Securi-
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ties Act of 1933 since we have not certified any part of the Registration
Statement and do not otherwise come within the categories of persons whose
consent is required under Section 7 or the rules and regulations of the
Securities and Exchange Commission.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
DRINKER BIDDLE & REATH LLP
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EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 1 to Registration Statement of Pegasus Communications Corporation and
subsidiaries on Form S-8 (File No. 333-22845) of our report dated February 26,
1998, on our audits of the consolidated financial statements and financial
statement schedule of Pegasus Communications Corporation and subsidiaries as of
December 31, 1997 and 1996, and for the years ended December 31, 1997, 1996
and 1995.
/s/ COOPERS & LYBRAND L.L.P.
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2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 13, 1998
5
