<PAGE>
As filed with the Securities and Exchange Commission on March 31, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
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 Identification
incorporation or organization) Number)
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, Pennsylvania 19004
----------------------------------------------------
(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
225 City Line Avenue
Suite 200
Bala Cynwyd, Pennsylvania 19004
----------------------------------------------------------
(Name and address of agent for service)
(888) 438-7488
-----------------------------------------
(Telephone number, including area code,
of agent for service)
<PAGE>
Copies to:
Ted S. Lodge, Esq. Michael B. Jordan, Esq.
Scott A. Blank, Esq. Diana McCarthy, Esq.
Pegasus Communications Corporation Drinker Biddle & Reath LLP
c/o Pegasus Communications Management Company One Logan Square
225 City Line Avenue 18th & Cherry Streets
Suite 200 Philadelphia, Pennsylvania 19103
Bala Cynwyd, Pennsylvania 19004
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of Securities To Amount To Be Offering Price Per Aggregate Offering Amount of Registration
Be Registered Registered (1) Share (2) Price (2) Fee (2)(3)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, 3,750,000 $130.688 $318,043,959.94 $83,963.61
par value $.01 per share
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents 750,000 shares registered under the Pegasus Communications
Restricted Stock Plan (the "Restricted Stock Plan") and 3,000,000 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 filing of the 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. 600,000 additional shares in the aggregate were registered on
a Registration Statement filed on May 18, 1998 (File No. 333-52755) under
the Plans. Pursuant to this Registration Statement, 2,433,614 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 2,433,614 shares of Class A Common Stock being
newly registered under the Plans hereby were based, for the 322,500 shares
of Class A Common Stock subject to currently outstanding stock options, on
the maximum exercise prices of: $80.875 per share for 310,000 shares;
$35.813 per share for 2,500 shares; $40.875 per share for 10,000 shares; and
$41.50 per share for 10,000 shares. For the remaining 2,111,114 shares, the
proposed maximum offering price per share, the proposed maximum aggregate
offering price and the amount of the registration fee for were based on the
average of the high and low sales prices of the Class A Common Stock as
reported on the Nasdaq National Market on March 30, 2000.
(3) Paid by wire transfer.
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EXPLANATORY NOTE
A Registration Statement on Form S-8 (File No. 333-22845) 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 May 15, 1998, Pegasus filed a Registration Statement (File No.
333-52755) to increase the number of shares that may be granted under the
Restricted Stock Plan 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.
On April 23, 1999, subject to stockholder approval, the Board of
Directors approved an amendment to the Stock Option Plan to increase the maximum
number of shares of Class A Common Stock that may be granted under the Stock
Option Plan from 970,000 to 1,300,000. These amendments were subsequently
approved by the stockholders at the annual meeting dated June 10, 1999.
On February 18, 2000, 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 350,000 to 750,000 and
to increase the maximum number of shares of Class A Common Stock that may be
granted under the Stock Option Plan from 1,300,000 to 3,000,000. These
amendments were subsequently approved by the stockholders at a special meeting
held on March 22, 2000.
This Registration Statement is being filed to (i) register the
additional 403,614 and 2,030,000 shares of Class A Common Stock that are
issuable under the Restricted Stock Plan and Stock Option Plan, respectively,
and (ii) to include as exhibits the amended and restated Restricted Stock Plan
effective as of December 18, 1998, the amended and restated Stock Option Plan
effective as of April 23, 1999, the amendment to the Restricted Stock Plan
effective as of March 22, 2000 and the amendment to the Stock Option Plan
effective as of March 22, 2000. Pursuant to general instruction E to Form S-8,
the Registrant incorporates by reference herein the contents of the two earlier
Registration Statements (File No. 333-22845) and (File No. 333-52755).
Item 8. Exhibits.
Exhibit 4(a) The Company's Amended and Restated Certificate of Incorporation
(incorporated by reference herein to Exhibit 3.1 to the
Company's Form 10-Q dated August 13, 1999).
Exhibit 4(b) Amendment to the Company's Amended and Restated Certificate of
Incorporation (incorporated by reference herein to Exhibit 3.2
to the Company's Registration Statement on Form S-3 dated March
28, 2000 (File No. 333-33432)).
Exhibit 4(c) The Company's Restricted Stock Plan (as Amended and Restated
Effective as of December 18, 1998).
Exhibit 4(d) The Company's 1996 Stock Option Plan (as Amended and Restated
Effective as of April 23, 1999).
3
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Exhibit 4(e) Amendment to the Company's Restricted Stock Plan (Effective as
of March 22, 2000).
Exhibit 4(f) Amendment to the Company's 1996 Stock Option Plan (Effective as
of March 22, 2000).
Exhibit 5(a) Opinion of Drinker Biddle & Reath LLP.
Exhibit 23(a) Consent of PricewaterhouseCoopers LLP.
Exhibit 23(b) Consent of KPMG LLP.
Exhibit 23(c) Consent of Drinker Biddle & Reath LLP (included in the opinion
filed as Exhibit 5(a)).
Exhibit 24(a) Powers of Attorney (included in Signatures and Powers of
Attorney).
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<PAGE>
EXHIBIT INDEX
Exhibit 4(a) The Company's Amended and Restated Certificate of Incorporation
(incorporated by reference herein to Exhibit 3.1 to the
Company's Form 10-Q dated August 13, 1999).
Exhibit 4(b) Amendment to the Company's Amended and Restated Certificate of
Incorporation (incorporated by reference herein to Exhibit 3.2
to the Company's Registration Statement on Form S-3 dated March
28, 2000 (File No. 333-33432)).
Exhibit 4(c) The Company's Restricted Stock Plan (as Amended and Restated
Effective as of December 18, 1998).
Exhibit 4(d) The Company's 1996 Stock Option Plan (as Amended and Restated
Effective as of April 23, 1999).
Exhibit 4(e) Amendment to the Company's Restricted Stock Plan (Effective as
of March 22, 2000).
Exhibit 4(f) Amendment to the Company's 1996 Stock Option Plan (Effective as
of March 22, 2000).
Exhibit 5(a) Opinion of Drinker Biddle & Reath LLP.
Exhibit 23(a) Consent of PricewaterhouseCoopers LLP.
Exhibit 23(b) Consent of KPMG LLP.
Exhibit 23(c) Consent of Drinker Biddle & Reath LLP (included in the opinion
filed as Exhibit 5(a)).
Exhibit 24(a) Powers of Attorney (included in Signatures and Powers of
Attorney).
1
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SIGNATURES
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 Bala Cynwyd, Pennsylvania, on this 31st day of March, 2000.
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, M. Kasin Smith 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 and March 31, 2000
- -------------------------------------------- Chairman of the Board
Marshall W. Pagon
(Principal Executive Officer)
/s/ M. Kasin Smith Vice President and Acting Chief March 31, 2000
- -------------------------------------------- Financial Officer
M. Kasin Smith
(Principal Financial and Accounting Officer)
Director March 31, 2000
- --------------------------------------------
Michael C. Brooks
/s/ Harry F. Hopper, III Director March 31, 2000
- --------------------------------------------
Harry F. Hopper, III
/s/ James J. McEntee, III Director March 31, 2000
- --------------------------------------------
James J. McEntee, III
Director March 31, 2000
- --------------------------------------------
Mary C. Metzger
/s/ William P. Phoenix Director March 31, 2000
- --------------------------------------------
William P. Phoenix
</TABLE>
1
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<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Riordan B. Smith Director March 31, 2000
- --------------------------------------------
Riordan B. Smith
/s/ Robert N. Verdecchio Director March 31, 2000
- --------------------------------------------
Robert N. Verdecchio
/s/ Donald W. Weber Director March 31, 2000
- --------------------------------------------
Donald W. Weber
</TABLE>
2
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EXHIBIT 4(c)
PEGASUS COMMUNICATIONS
RESTRICTED STOCK PLAN
---------------------
(As Amended and Restated Effective As of December 18, 1998)
SECTION 1
Purpose
This Pegasus Communications Restricted Stock Plan is intended to
provide a means whereby PCC may, through the grant of Common 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. With respect to Discretionary Awards and Profit Sharing Awards made
after December 31, 1998, a Grantee may elect to receive an Option to purchase
Common Stock in lieu of a grant of Common Stock subject to vesting requirements.
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 described in
Section 13(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 and Discretionary Awards to Officers, 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.
(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 Pegasus
operations before management fees, depreciation, amortization (other than
amortization of film contracts), and incentive compensation (including
contributions under the Plan and the Savings Plan).
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(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) "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 Internal Revenue Code of 1986, as amended, and which is designated as
an ISO in the Award Agreement.
(p) "Management Committee" shall mean the committee authorized by the
Board to administer the Plan with respect to all Awards other than Special
Recognition Awards and Discretionary Awards to Officers.
(q) "NQSO" shall mean an option which, at the time such option is
granted, does not meet the definition of an ISO, whether or not it is designated
as an NQSO in the Award Agreement.
(r) "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.
(s) "Option" shall mean an ISO or an NQSO granted to an employee in
lieu of Common Stock subject to a vesting schedule, pursuant to the employee's
election under Section 8(a).
(t) "PCC" shall mean Pegasus Communications Corporation.
(u) "Pegasus" shall mean Pegasus Communications Holdings, Inc. and its
direct and indirect subsidiaries, whether in corporate, partnership or any other
form.
(v) "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.
(w) "Plan Administrator" shall mean -
(1) With respect to Special Recognition Awards and
Discretionary Awards to Officers, the Committee; and
(2) With respect to all other Awards, the Management
Committee.
(x) "Profit-Sharing Awards" shall mean the formula awards described in
Section 6(b).
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(y) "Rollover Matching Contributions" shall have the meaning set forth
in Article I of the Savings Plan.
(z) "Salary" shall have the meaning set forth in Article I of the
Savings Plan.
(aa) "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.
(bb) "Special Recognition Awards" shall mean the awards described in
Section 6(a).
(cc) "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 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.
(dd) "Year Over Year Increase in Company-Wide Location Cash Flow" shall
have the meaning set forth in Article I of the Savings Plan.
(ee) "Years of Vesting Service" shall have the meaning set forth in
Article I of the Savings Plan; provided, however, that a Grantee shall not
complete a Year of Vesting Service for purposes of this Plan until the last day
of the 12-month computation period in which such Year is being measured.
SECTION 3
Administration
The Plan shall be administered as follows:
(a) Special Recognition Awards and Discretionary Awards to Officers.
With respect to Special Recognition Awards and Discretionary Awards to Officers,
the Plan shall be administered:
(1) By a committee, which shall consist solely of not fewer
than two directors of PCC who shall be appointed by, and shall serve at
the pleasure of, the Board, taking into consideration the rules under
Section 16(b) of the Securities Exchange Act of 1934 and the
requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended; or
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(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 and Discretionary
Awards to Officers 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 and
Discretionary Awards under the Plan, to grant Special Recognition Awards and
Discretionary Awards to Officers on behalf of PCC, and to set the date of grant
and the other terms of such Awards. The Committee shall also have full authority
to make certain determinations with respect to an Option granted pursuant to an
Officer's election, as described in Section 8.
(b) All Other Awards. With respect to all Awards other than Special
Recognition Awards and Discretionary Awards to Officers, the Plan shall be
administered by the Management Committee. With respect to Special Recognition
Awards and Discretionary 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 such Awards under the Plan, to grant
such Awards on behalf of PCC, and to set the date of grant and the other terms
of such Awards. The Management Committee shall also have full authority to make
certain determinations with respect to an Option granted pursuant to the
election of an employee who is not an Officer, as described in Section 8.
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, except as provided in Section 8 (regarding Options).
(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:
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(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
(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.
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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). Except
as provided in Section 8(c), 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 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 -
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(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
(C) The Fair Market Value of a share of Common Stock.
(d) Discretionary Awards. The Plan Administrator, 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).
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.
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SECTION 8
Election To Receive Option in Lieu of Common Stock Subject to
Vesting Requirements
(a) Election. An employee may elect to receive all or any portion of a
Discretionary Award and/or Profit-Sharing Award granted after December 31, 1998
in the form of an Option described in this Section 8 in lieu of Common Stock
subject to vesting requirements. Such an election shall be made before the date
of grant in accordance with procedures established by the Plan Administrator or
its delegate. In no event, however, may an employee elect to receive Options for
more than 50,000 shares of Common Stock (as adjusted pursuant to Section 9)
under this Section 8 in any calendar year. If an Option is cancelled, the shares
of Common Stock covered by the cancelled Option shall be counted against the
maximum number of shares for which Options may be granted to a single employee.
(b) Date of Grant. The date of grant for an Option granted pursuant to
a Grantee's election under Section 8(a) shall be the date such Award would have
been made under Section 4 absent such an election.
(c) Number of Shares Subject to Option. The number of shares of Common
Stock subject to an Option granted pursuant to a Grantee's election under
Section 8(a) shall be equal to the total number of shares of Common Stock which
would have been covered by the Grantee's Award (determined pursuant to Section
6(b) or (d), as applicable) absent an election pursuant to Section 8(a),
multiplied by (i) the percentage of the Award the Grantee has elected to have
paid in the form of an Option, and (ii) a conversion factor. The conversion
factor shall be determined pursuant to a valuation formula established by the
Plan Administrator or its delegate.
(d) Type of Option. Each Option granted under this Section 8 shall,
unless the Code otherwise requires or the Plan Administrator otherwise
determines, be an ISO, provided shareholder approval of the Plan (as amended and
restated) is obtained within 12 months after December 18, 1998. The aggregate
Fair Market Value of the Common Stock with respect to which ISOs are exercisable
for the first time by an employee during any calendar year (counting ISOs under
this Plan and incentive stock options under any stock option plan of Pegasus)
shall not exceed $100,000. If an Option intended as an ISO is granted to an
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. The
annual limits set forth above for ISOs shall not apply to NQSOs.
(e) Terms and Conditions of Options. Options granted under this Section
8 in lieu of Common Stock subject to vesting requirements shall include
expressly or by reference the following terms and conditions -
(1) Number of Shares. The Option shall state the number of shares
of Common Stock to which the Option pertains.
(2) Price. The Option price of each Option granted under this
Section 8 shall be the higher of 100 percent (110 percent in
the case of an ISO granted to a more-than-10-percent
shareholder, as provided in Section 8(e)(10)) of the Fair
Market Value of the optioned shares of Common Stock, or the par
value thereof.
(3) Term. Subject to earlier termination as provided in Section
8(e)(5), (6) and (7) and in Section 9 hereof, the term of each
Option granted under this Section 8 shall be ten years (five
years in the case of an ISO granted to a more-than-ten-percent
shareholder, as discussed in Section 8(e)(10)) from the date of
grant, or such lesser term as the Plan Administrator, in its
sole discretion, shall permit the Grantee to elect on or before
the date of grant.
8
<PAGE>
(4) Exercise. Each Option granted under this Section 8 shall become
exercisable in accordance with the following schedule:
Percentage of Shares
Subject to Options
Years of Vesting Service That Are Exercisable
------------------------ --------------------
Fewer than 2 0
2 but fewer than 3 34%
3 but fewer than 4 an additional 33%
4 or more an additional 33%
If the Grantee has completed four or more Years of Vesting Service on
the date of grant, the Option shall be fully exercisable on the date of
grant.
Notwithstanding the foregoing, an Option granted under this
Section 8 shall become fully exercisable upon the Grantee's death or
Disability while in the employ of Pegasus. In addition, the Plan
Administrator may accelerate the exercise date of any outstanding
Option, 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 Pegasus 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 (or payment as soon
as practicable after the exercise, in the case of an exercise
arrangement described in paragraph (C) below). 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 -
(A) in cash or its equivalent;
(B) in shares of Common Stock previously acquired by the
Grantee; provided that (i) if such shares of Common Stock were
acquired through the exercise of an ISO and are used to pay
the Option price for an ISO, such shares 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 on the date of exercise, (ii) if such shares
of Common Stock were acquired through the exercise of an NQSO
(and are used to pay the Option price for an ISO or an NQSO)
or acquired through the exercise of an ISO (and are used to
pay the Option price for an NQSO), such shares have been held
by the Grantee for a period of not less than six months on the
date of exercise, and (iii) if such shares of Common Stock
were acquired through the vesting of a restricted stock award,
such shares shall have vested in the Grantee at least six
months prior to the date of exercise;
9
<PAGE>
(C) by delivering a properly executed notice of exercise of
the Option to Pegasus and a broker, with irrevocable
instructions to the broker promptly to deliver to Pegasus the
amount of sale or loan proceeds necessary to pay the exercise
price of the Option; or
(D) in any combination of (A), (B) and (C) 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 Section 2(m), with reference to 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.
(5) Termination of Employment. If a Grantee's employment by Pegasus
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 shares with respect to
which the Grantee could have exercised it on the date of such
termination, by the Grantee any time prior to the earliest of (i) the
expiration date specified in such Option, (ii) three months after such
termination of employment, or (iii) termination of such Option under
Section 9.
(6) Exercise upon Disability of Grantee. If a Grantee becomes
Disabled during his employment and prior to the expiration date fixed
for his Option, such Option may be exercised, to the extent of the
number of shares with respect to which the Grantee could have exercised
it on the date of such termination by the Grantee at any time prior to
the earliest of (i) the expiration date specified in such Option, (ii)
one year after such termination of employment, or (iii) termination of
such Option under Section 9. In the event of the Grantee's legal
disability, such Option may be exercised by the Grantee's legal
representative.
(7) Exercise upon Death of Grantee. If a Grantee dies during his
employment, and prior to the expiration date fixed for his Option, or
if a Grantee whose employment is terminated for any reason, dies
following his termination of employment but prior to the earliest of
(A) the expiration date fixed for his Option, (B) the expiration of the
period determined under paragraphs (5) and (6) above, or (C) 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 Grantee could have exercised it on the date of his
death, by the Grantee'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 Grantee. Such post-death
exercise may occur at any time prior to the earliest of (i) the
expiration date specified in such Option, (ii) one year after the date
of death, or (iii) termination of such Option under Section 9.
(8) Non-Transferability. No Option granted under this Section 8
shall be assignable or transferable by the Grantee other than by will
or by the laws of descent and distribution. During the lifetime of the
Grantee, all Options granted under this Section 8 shall be exercisable
only by the Grantee, or, in the event of the Grantee's legal
disability, by the Grantee's guardian or legal representative. If the
Grantee is married at the time of exercise and if the Grantee so
requests at the time of exercise, the certificate or certificates shall
be registered in the name of the Grantee and the Grantee's spouse,
jointly, with right of survivorship.
10
<PAGE>
(9) Withholding and Use of Shares to Satisfy Tax Obligations. The
obligation of PCC 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 granted
under this Section 8 is subject to the withholding requirements of
applicable federal tax law, the Grantee may 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 exercise (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 tax withholding requirements. Shares
of Common Stock shall be valued, for purposes of this paragraph, at
their fair market value determined under Section 2(m), with reference
to the date the amount attributable to the exercise of the Option is
includable in income by the Grantee under the Code (the "Determination
Date"), rather than the date of grant.
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 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.
(10) Ten Percent Shareholder. If an employee owns more than ten
percent of the total combined voting power of all shares of stock of
Pegasus at the time an ISO is granted to him (taking into account the
attribution rules of Section 424(d) of the Internal Revenue Code of
1986, as amended), the Option price for the ISO shall be 110 percent of
the Fair Market Value of the optioned shares of Common Stock on the
date the ISO is granted, and such ISO, by its terms, shall 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.
(f) Application of Funds. The proceeds received 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 PCC 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.
SECTION 9
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
be adjusted to reflect any stock dividend, stock split, share combination, or
similar change in the capitalization of PCC. The maximum number of shares with
respect to which Options may be granted to any employee in any calendar year (as
stated in Section 8(a)) 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 be adjusted, as may be deemed appropriate by the
Plan Administrator, to reflect any stock dividend, stock split, spin-off, share
combination, or similar change in the capitalization of PCC; provided, however,
that no such adjustment shall be made to an outstanding ISO if such adjustment
would constitute a modification under section 424(h) of the Internal Revenue
Code of 1986, as amended, unless the Grantee consents to such adjustment. 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 or the exercise of outstanding Options (as well as the Option
price), 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.
11
<PAGE>
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; provided, however, that, in the event of a proposed corporate
transaction, the Plan Administrator may terminate all or a portion of the
outstanding Options if it determines that such termination is in the best
interests of PCC. If the Plan Administrator desires to terminate outstanding
Options, the Plan Administrator 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 8(e), the Plan
Administrator, in its discretion, may accelerate, in whole or in part, the date
on which any or all Options become exercisable.
The Plan Administrator 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 does not constitute a "modification" under
section 424(h) of the Internal Revenue Code of 1986, as amended, unless the
Option holder consents to the change.
SECTION 10
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;
(b) Any amendment for which shareholder approval is required under the
rules of an exchange or market on which Common Stock is listed;
(c) Any amendment which would change the class of employees eligible to
receive ISOs; and
(d) Any amendment requiring shareholder approval pursuant to Treas.
Reg.ss.1.162-27(e)(4)(iv) or any successor thereto (to the extent compliance
with section 162(m) of the Internal Revenue Code of 1986, as amended, is
desired).
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.
The approval of shareholders must be (i) 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 (ii) 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.
12
<PAGE>
SECTION 11
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 11, 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 12
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 December 18, 1998.
SECTION 13
Miscellaneous
(a) Issuance and Delivery of Certificates. This Section 13(a) shall not
apply to the portion of any Award with respect to which the Grantee has made an
election to receive an Option pursuant to Section 8(a). 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 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 an Award is granted (other than
shares for which the Grantee has made an election pursuant to Section 8(a) to
receive an Option), 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.
With respect to the portion of any Award for which the Grantee has made
an election under Section 8(a), the Option issued pursuant thereto shall not
entitle the holder thereof to any rights as a stockholder of PCC prior to the
exercise of such Option and the issuance of the shares pursuant thereto.
13
<PAGE>
(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.
(f) Non-Transferability. This Section 13(f) shall not apply to the
portion of an Award with respect to which the Grantee has made an election to
receive an Option pursuant to Section 8(a). 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.
14
<PAGE>
(h) Withholding and Use of Shares to Satisfy Tax Obligations. This
Section 13(h) shall not apply to the portion of an Award with respect to which
the Grantee made an election to receive an Option pursuant to Section 8(a). 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 value, determined under Section 2(m), with
reference to 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.
15
<PAGE>
EXHIBIT 4(d)
PEGASUS COMMUNICATIONS 1996
STOCK OPTION PLAN
(As Amended and Restated Effective As of April 23, 1999)
- -------------------------------------------------------------------------------
WHEREAS, Pegasus Communications Corporation amended and restated the
Pegasus Communications 1996 Stock Option Plan effective December 18, 1998;
WHEREAS, Pegasus Communications Corporation, in accordance with
resolutions adopted by the Board of Directors on April 23, 1999, desires to
amend and restate the Plan (i) to increase the number of shares of Class A
Common Stock available thereunder to 1,300,000, (ii) to provide that options may
be granted to employees who are not executive officers by a management
committee, and (iii) to change certain provisions regarding 100-share options
granted (or to be granted) to full-time employees;
NOW THEREFORE, effective as of April 23, 1999, the Pegasus
Communications 1996 Stock Option Plan is hereby amended and restated to read as
follows:
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 Employees and
Non-employee Directors (as defined in Section 3), attract and retain such
individuals and motivate them to exercise their best efforts on behalf of the
Company and of any Related Company. 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.
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 20); and (ii) the term "NQSO"
shall mean an option which, at the time such option is granted, does not meet
the definition of ISO, whether or not it is designated as a nonqualified stock
option in the Option Agreement.
2. Administration. The Plan shall be administered as follows:
(a) Executive Officers and Non-employee Directors. With respect to
options granted to executive officers of Pegasus and Non-employee Directors, the
Plan shall be administered:
(1) By a committee, which shall consist solely of not fewer than
two directors of the Company who shall be appointed by, and shall serve at the
pleasure of, the Board of Directors of the Company (the "Board"), taking into
consideration the rules under Section 16(b) of the Securities Exchange Act of
1934 (the "Exchange Act") and the requirements of section 162(m) of the Code; or
(2) In the event a committee has not been established in
accordance with Section 2(a)(1), or cannot be constituted to vote on the grant
of an Option, by the entire Board;
<PAGE>
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.
(b) Employees Who Are Not Executive Officers. With respect to
options granted to Employees (as defined in Section 3) who are not executive
officers, the Plan shall be administered by a management committee, the members
of which shall be appointed by, and shall serve at the pleasure of, the Board.
(c) In General. The administrator of the Plan, whether it be the
committee under Section 2(a) or the committee under Section 2(b), shall
hereinafter be referred to as the "Committee," with respect to the eligible
individuals for which the particular committee serves as administrator. Each
member of the Committee, while serving as such, shall be deemed to be acting in
his capacity as a director or employee of the Company. Except as provided in
Section 8 (regarding formula grants to employees other than executive officers),
the Committee shall have full authority, subject to the terms of the Plan, to
select the 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 a Non-employee
Director shall not be eligible to receive an ISO under the Plan. The Committee
may correct any defect, supply any omission and reconcile any 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 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. All employees of the Company or a Related Company
(including any directors who also are officers) ("Employees") shall be eligible
to receive Options under the Plan. 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 an
Employee or a Non-employee Director under the Plan. An 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 1,300,000 shares of Class A common stock of the Company ("Common
Stock"); provided, however, that no 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 provided
in Section 9. Shares issuable under the Plan may be authorized but unissued
shares or reacquired shares, and the Company may purchase shares required for
this purpose, from time to time, if it deems such purchase to be advisable.
2
<PAGE>
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 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. Annual Limit. The aggregate fair market value (determined under
Section 7(b)) of the Common Stock with respect to which ISOs are exercisable for
the first time by an 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 an 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. The annual limits set forth above for ISOs shall not apply to
NQSOs.
6. Granting of Discretionary 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 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 an Employee or a
Non-employee Director shall be granted an Option, the type of Option to be
granted to an 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 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 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.
7. Terms and Conditions of Discretionary Options. Options granted
pursuant to Section 6 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. Each Option granted under Section 6 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
Section 7(i)) of the fair market value of the optioned shares of Common Stock,
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
over-the-counter market on the last business day prior to the date of grant on
which Common Stock traded.
(c) Term.
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(1) ISOs. Subject to earlier termination as provided in Section
7(e), (f), and (g) and in Section 10, the term of each ISO granted under Section
6 shall be not more than ten years (five years in the case of a
more-than-10-percent shareholder, as discussed in Section 7(i)) from the date of
grant.
(2) NQSOs. Subject to earlier termination as provided in Section
7(e), (f), and (g) and in Section 10, the term of each NQSO granted under
Section 6 shall be not more than ten years from the date of grant.
(d) Exercise. Options granted under Section 6 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 Option, 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 (or payment as soon as practicable after the exercise, in
the case of an exercise arrangement approved by the Committee and described in
paragraph (2)(C) below). 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 (i) if such shares of Common Stock were acquired through
the exercise of an ISO and are used to pay the Option price for ISOs, such
shares have been held by the 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, (ii)
if such shares of Common Stock were acquired through the exercise of an NQSO
(and are used to pay the Option price of an ISO or NQSO) or acquired through the
exercise of an ISO (and are used to pay the Option price of an NQSO), such
shares have been held by the Optionee for a period of not less than six months
on the date of exercise, and (iii) if such shares of Common Stock were acquired
through the vesting of a restricted stock award, such shares shall have vested
in the Optionee at least six months prior to 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;
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(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 (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 Section 7(b), with reference to
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 an 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 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 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.
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(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 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 granted under Section 6 shall be
assignable or transferable by the Optionee other than by will or by the laws of
descent and distribution. During the lifetime of the Optionee, an ISO shall be
exercisable only by the Optionee, or in the event of the Optionee's legal
disability, by the Optionee's guardian or legal representative. Except as
provided in an Optionee's Option Agreement, such limits on assignment, transfer
and exercise shall also apply to NQSOs. 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) Ten Percent Shareholder. If the 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 (taking into
account the attribution rules of section 424(d) of the Code), the Option price
for the ISO shall be not less than 110 percent of the fair market value (as
determined under Section 7(b)) of the optioned shares of Common Stock on the
date the ISO is granted, and such ISO, by its terms, shall 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.
(j) 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 granted under Section 6
is subject to the withholding requirements of applicable federal tax law, the
Committee, in its discretion, may permit or require the 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 tax withholding requirements. Shares of Common
Stock shall be valued, for purposes of this paragraph, at their fair market
value determined under Section 7(b), with reference to the date the amount
attributable to the exercise of the Option is includable in income by the
Employee under section 83 of the Code (the "Determination Date"), rather than
the date of grant.
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 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.
(k) Loans. If an Optionee who is granted an Option under Section 6
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.
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8. Formula Grants to Full-Time Employees Who Are Not Executive
Officers.
(a) Grant. Each full-time Employee who is not an executive officer
of the Company or a Related Company shall be granted an Option to purchase 100
shares of Common Stock as provided in this Section 8. Such Option shall be
granted on the later of (i) December 18, 1998, or (ii) the date the Employee
becomes a full-time Employee (as a result of hire or a change in status from
part-time to full-time Employee). No Employee shall receive more than one Option
grant under this Section 8.
(b) Type of Option. Each Option granted under this Section 8 on
December 18, 1998 shall be an NQSO. Each Option granted under this Section 8
after December 18, 1998 shall, unless the Code otherwise requires or the
Committee otherwise determines, be an ISO.
(c) Terms and Conditions of Formula Options. Options granted under
this Section 8 shall include expressly or by reference the following terms and
conditions -
(1) Number of Shares. The Option shall state the number of
shares of Common Stock to which the Option pertains.
(2) Price. The Option price of each Option granted under this
Section 8 shall be the higher of 100 percent (110 percent in the case of an ISO
granted to a more-than-10-percent shareholder, as provided in Section 7(i)) of
the fair market value (as defined in Section 7(b)) of the optioned shares of
Common Stock, or the par value thereof.
(3) Term. Subject to earlier termination as provided in Section
8(c)(5), (6) and (7) and in Section 10 hereof, the term of each Option granted
under this Section 8 shall be ten years (five years in the case of an ISO
granted to a more-than-ten-percent shareholder, as discussed in Section 7(i)
above) from the date of grant.
(4) Exercise. Effective April 22, 1999, each Option granted
under this Section 8 shall become fully exercisable on the earliest of (i) the
date the Optionee completes one Year of Service, (ii) the first anniversary of
the date the Option is granted if the Optionee is then in the employ of the
Company or a Related Company, or (iii) on the Optionee's death or disability (as
defined in section 22(e)(3) of the Code) while in the employ of the Company or a
Related Company. In addition, the Committee may accelerate the exercise date of
any outstanding Option, in its discretion, if it deems such acceleration to be
desirable. For purposes of this Section 8(c)(4), Year of Vesting Service shall
have the meaning set forth in Article I of (I) the Pegasus Communications
Savings Plan, as it may be amended from time to time, if the Employee is an
eligible employee thereunder or (II) the Pegasus Communications Puerto Rico
Savings Plan, as it may be amended from time to time, if the Employee is an
eligible employee thereunder; provided, however, that an Employee shall not
complete a Year of Vesting Service for purposes of this Plan until the last day
of the 12-month computation period in which such Year is being measured.
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 (or payment as soon as practicable after the exercise, in
the case of an exercise arrangement described in paragraph (C) below). 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.
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The Option price shall be payable -
(A) in cash or its equivalent;
(B) in shares of Common Stock previously acquired by the
Optionee; provided that (i) if such shares of Common Stock were acquired through
the exercise of an ISO and are used to pay the Option price for ISOs, such
shares have been held by the 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, (ii)
if such shares of Common Stock were acquired through the exercise of an NQSO
(and used to pay the Option price for ISOs or NQSOs) or acquired through the
exercise of an ISO (and used to pay the Option price for NQSOs), such shares
have been held by the Optionee for a period of not less than six months on the
date of exercise, and (iii) if such shares of Common Stock were acquired through
the vesting of a restricted stock award, such shares shall have vested in the
Optionee at least six months prior to the date of exercise;
(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; or
(D) in any combination of (A), (B) and (C) 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 Section 7(b), with
reference to 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.
(5) Termination of Employment. If an Employee's employment by
the Company (and Related Companies) 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 shares
with respect to which the Optionee could have exercised it on the date of such
termination, by the Optionee at any time prior to the earliest of (i) the
expiration date specified in such Option, (ii) three months after such
termination of employment, or (iii) termination of such Option under Section 10.
(6) Exercise upon Disability of Optionee. If an Optionee becomes
disabled (within the meaning of section 22(e)(3) of the Code) during his
employment and prior to the expiration date fixed for his Option, 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 by the
Optionee at any time prior to the earliest of (i) the expiration date specified
in such Option, (ii) one year after such termination of employment, or (iii)
termination of such Option under Section 10. In the event of the Optionee's
legal disability, such Option may be exercised by the Optionee's legal
representative.
(7) Exercise upon Death of Optionee. If an Optionee dies during
his employment, and prior to the expiration date fixed for his Option, or if an
Optionee whose employment is terminated for any reason, dies following his
termination of employment but prior to the earliest of (A) the expiration date
fixed for his Option, (B) the expiration of the period determined under
paragraphs (5) and (6) above, or (C) 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, 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 earliest of (i) the expiration date specified
in such Option, (ii) one year after the date of death, or (iii) termination of
such Option under Section 10.
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(8) Non-Transferability. No Option granted under this Section 8
shall be assignable or transferable by the Optionee other than by will or by the
laws of descent and distribution. During the lifetime of the Optionee, all
Options granted under this Section 8 shall be exercisable only by the Optionee,
or, in the event of the Optionee's legal disability, by the Optionee's 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.
(9) 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 granted under this
Section 8 is subject to the withholding requirements of applicable federal tax
law, the Employee may 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 tax
withholding requirements. Shares of Common Stock shall be valued, for purposes
of this paragraph, at their fair market value determined under Section 7(b),
with reference to the date the amount attributable to the exercise of the Option
is includable in income by the Employee under section 83 of the Code (the
"Determination Date"), rather than the date of grant.
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 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.
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 Employee under the Plan (as stated in Section 4 hereof), the
number of shares subject to an Option to be granted under Section 8, 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 be
adjusted, as may be deemed appropriate by the Committee, to reflect any stock
dividend, stock split, spin-off, share combination, or similar change in the
capitalization of the Company; provided, however, that no such adjustment shall
be made to an outstanding ISO if such adjustment would constitute a modification
under section 424(h) of the Code, unless the Optionee consents to such
adjustment. 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),
the surviving or successor corporation shall assume each outstanding Option or
substitute a new option for each outstanding Option; 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) and Section
8(c)(4), the Committee, in its discretion, may accelerate, in whole or in part,
the date on which any or all Options become exercisable.
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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 does 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.
(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.
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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) -
(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 (to the
extent compliance with section 162(m) of the Code is desired).
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 (or unless and until such
Option shall have been granted under Section 8), 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 an Employee, the Company and
any Related Company shall have the right, in its discretion but subject to any
employment contract entered into with the Employee, to retire the 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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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 amended and restated Plan shall become
effective on April 22, 1999; provided, however, that if shareholders do not
approve (in the manner described in Section 12(b) hereof) the expansion of the
class of employees who are eligible to receive ISOs hereunder, on or before
December 17, 1999, any ISOs granted hereunder to Employees who are not executive
officers of the Company or a Related Company shall be null and void and no
additional ISO shall be granted hereunder to an Employee who is not an executive
officer of the Company or Related Company.
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 Employees and
Non-employee Directors under, the Plan and Options granted thereunder.
20. 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, and be bound by, an Option
Agreement as soon as practicable after the grant of an Option.
12
<PAGE>
21. 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.
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 options, 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(k) (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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<PAGE>
EXHIBIT 4(e)
AMENDMENT TO THE PEGASUS COMMUNICATIONS RESTRICTED STOCK PLAN
(Effective As of March 22, 2000)
WHEREAS, Pegasus Communications Corporation (the "Company") amended and
restated the Pegasus Communications Restricted Stock Plan (the "Plan") generally
effective as of December 18, 1998;
WHEREAS, Section 10 of the Plan provides that the Company may amend the
Plan;
WHEREAS, the Company desires to amend the Plan to increase the number
of shares of Class A common stock of the Company available for awards under the
Plan;
NOW, THEREFORE, effective upon obtaining requisite shareholder
approval, the first sentence of Section 5 of the Plan is amended to read as
follows:
SECTION 5
Stock
The number of shares of Common Stock that may be subject to Awards
under the Plan shall be 750,000 shares, subject to adjustment as hereinafter
provided.
<PAGE>
EXHIBIT 4(f)
AMENDMENT TO THE PEGASUS COMMUNICATIONS 1996 STOCK OPTION PLAN
(Effective As of March 22, 2000)
WHEREAS, Pegasus Communications Corporation (the "Company") amended and
restated the Pegasus Communications 1996 Stock Option Plan (the "Plan")
effective April 23, 1999;
WHEREAS, Section 12 of the Plan provides that the Company may amend the
Plan;
WHEREAS, the Company desires to amend the Plan (i) to increase the
number of shares of Class A common stock of the Company ("Common Stock") that
may be subject to options under the Plan; and (ii) to increase the number of
shares of Common Stock that may be subject to options granted to any employee
over the life of the Plan;
NOW, THEREFORE, the Plan is amended as follows:
1. The first sentence of Section 4 is amended to read as follows,
effective on the date requisite shareholder approval of this Amendment is
obtained;
4. Stock. Options may be granted under the Plan to purchase up
to a maximum of 3,000,000 shares of Class A common stock of the Company
("Common Stock"); provided, however, that no Employee shall receive
Options for more than 1,000,000 shares of the Company's Common Stock
over the life of the Plan.
<PAGE>
Drinker Biddle & Reath LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103
March 31, 2000
Pegasus Communications Corporation
c/o Pegasus Communications Management Company
225 City Line Avenue
Suite 200
Bala Cynwyd, PA 19004
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 Registration Statement on
Form S-8 under the Securities Act of 1933 (the "Registration Statement")
relating to 2,433,614 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").
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 on the part 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 law of
the United States and the Delaware General Corporation Law.
<PAGE>
Pegasus Communications Corporation
Page 2
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 Securities 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
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 11, 2000, relating to the
financial statements and financial statement schedules, which appears in Pegasus
Communications Corporation's Annual Report on Form 10-K for the year ended
December 31, 1999.
/s/ PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 31, 2000
<PAGE>
Exhibit 23 (b)
CONSENT OF KPMG LLP
The Board of Directors
Golden Sky Holdings, Inc.
We consent to the incorporation by reference in the registration statement on
Form S-8 of Pegasus Communications Corporation of our report dated February 14,
2000, with respect to the consolidated balance sheets of Golden Sky Holdings,
Inc. as of December 31, 1998 and 1999, and the related consolidated statements
of operations, stockholders' equity (deficit), and cash flows for each of the
years in the three-period ended December 31, 1999, which report appears in the
Form S-4 of Pegasus Communications Corporation dated February 25, 2000.
KPMG LLP
Kansas City, Missouri
March 31, 2000
