As filed with the Securities and Exchange Commission on March 18, 1997.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
METRO NETWORKS, INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0505148
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2800 Post Oak Boulevard, Suite 4000
Houston, Texas 77056
(Address of Principal Executive Offices) (Zip Code)
Metro Networks, Inc. 1996 Incentive Stock Option Plan
Metro Networks, Inc. 1996 Employee Stock Purchase Plan
Nonqualified Stock Option Grants
(Full title of the plans)
David I. Saperstein
Chief Executive Officer
Metro Networks, Inc.
2800 Post Oak Boulevard, Suite 4000
Houston, Texas 77056
(Name and address of agent for service)
(713) 407-6000
(Telephone number, including area code, of agent for service)
With a copy to:
Neil A. Torpey, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
Telephone: (212) 318-6000
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================================
Proposed
Proposed Maximum
Maximum Aggregate
Amount to be Offering Offering Price Amount of
Title of Securities to be Registered Registered Price Per Share (1) Registration Fee
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, Par Value $.01.................. 2,530,000(2) (1) $52,240,000 $15,830
===========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act of 1933, as amended. The
Proposed Maximum Offering Price is based on the aggregate of: (a) an
exercise price of $16.00 per share with respect to 540,000 shares issuable
upon exercise of options granted under the 1996 Incentive Stock Option Plan
(the "1996 Plan"), (b) an exercise price based on the average of the high
and low prices as reported on the Nasdaq Stock Market's National Market
("Nasdaq National Market") on March 12, 1997 of $22.00 per share with
respect to 460,000 shares issuable upon exercise of options to be granted
under the 1996 Plan, (c) an exercise price based on the average of the high
and low prices as reported on the Nasdaq National Market on March 12 of
$22.00 per share with respect to 1,500,000 shares issuable upon exercise of
options to be granted under the 1996 Employee Stock Purchase Plan (the "ESP
Plan"), and (d) an exercise price of $16.00 per share with respect to 30,000
shares issuable upon exercise of nonqualified stock options granted to
certain directors.
(2) Includes 1,000,000 shares to be issued pursuant to the 1996 Plan, 1,500,000
shares to be issued pursuant to the ESP Plan and 30,000 shares to be issued
pursuant to certain nonqualified stock options granted to certain directors.
In addition to such shares, this Registration Statement covers an
indeterminate number of additional shares which may become subject to
options as a result of the adjustment provisions of the plans and
agreements. The registration fee is calculated only on the stated number of
shares.
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<PAGE>
EXPLANATORY NOTE
This Registration Statement is intended to register (i) shares to be
issued and sold pursuant to the Metro Networks, Inc. 1996 Incentive Stock Option
Plan (the "1996 Plan"), (ii) shares to be issued and sold pursuant to the Metro
Networks, Inc. 1996 Employee Stock Purchase Plan (the "ESP Plan") and (iii)
shares to be issued and sold pursuant to nonqualified stock options (the
"Options") issued to certain directors of the Registrant. Pursuant to the Note
to Part I of Form S-8, the plan information specified by Part I of Form S-8 to
be contained in a Section 10(a) prospectus to be distributed to each optionee is
not being filed with the Securities and Exchange Commission. Part II contains
Information Required in the Registration Statement pursuant to Part II of Form
S-8.
ii
<PAGE>
PART II(1)
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following information filed with the Securities and Exchange
Commission (the "Commission") is incorporated herein by reference:
1. The Registrant's Prospectus filed October 16, 1996 pursuant to Rule
424(b) of the Securities Act of 1933, as amended (the "Securities Act").
2. The Registrant's Quarterly Report on Form 10-Q filed on November 13,
1996, pursuant to Section 13(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
3. The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A, as amended, filed on
October 18, 1996, pursuant to the Exchange Act.
In addition, all documents filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents with the Commission. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities.
Not applicable; the class of securities to be offered is registered
under Section 12 of the Exchange Act.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL") and
Article EIGHTH of the Registrant's Certificate of Incorporation provide for
indemnification of the Registrant's directors and officers in a variety of
circumstances which may include liabilities under the Securities Act of 1933.
Article EIGHTH provides that unless otherwise determined by the Board of
Directors of the Registrant,
- ----------
(1) Information required by Part I of Form S-8 to be contained in a Section
10(a) prospectus to be distributed to each optionee is omitted from this
Registration Statement in accordance with Rule 428 promulgated under the
Securities Act of 1933, as amended, and the Note to Part I of Form S-8.
II-1
<PAGE>
the Registrant shall indemnify to the full extent permitted by the laws of
Delaware, as from time to time in effect, the persons described in Section 145
of the DGCL.
The general effect of the provisions in the Registrant's Amended and
Restated Certificate of Incorporation and the DGCL is to provide that the
Registrant shall indemnify its directors and officers against all liabilities
and expenses actually and reasonably incurred in connection with the defense or
settlement of any judicial or administrative proceedings in which they have
become involved by reason of their status as corporate directors or officers, if
they acted in good faith and in the reasonable belief that their conduct was
neither unlawful (in the case of criminal proceedings) nor consistent with the
best interests of the Registrant. With respect to legal proceedings by or in the
right of the Registrant in which a director of officer is adjudged liable for
improper performance of his duty to the Registrant or another enterprise which
such person served in a similar capacity at the request of the Registrant,
indemnification is limited by such provisions that amount which is permitted by
the court.
The Registrant maintains officers' and directors' liability insurance
which will insure against liabilities that officers and directors of the
Registrant may incur in such capacities.
The Underwriting Agreement dated October 16, 1996 by and among the
Registrant, certain controlling persons of the Registrant and the Underwriters
(as defined therein) provides for indemnification of the directors and officers
of the Registrant signing the Registration Statement (as defined therein) and
certain controlling persons of the Registrant against certain liabilities,
including those arising under the Securities Act in certain instances, of the
Underwriters.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The exhibits filed as part of this Registration Statement are as
follows:
Exhibit No. Description
----------- -----------
4.1 Amended and Restated Certificate of Incorporation of the
Registrant.(*)
4.2 Amended and Restated By-laws of the Registrant.(*)
4.3 Form of Common Stock Certificate.(*)
4.4 Form of Series A Convertible Preferred Stock Certificate.(*)
4.5 1996 Incentive Stock Option Plan.(*)
4.6 1996 Employee Stock Purchase Plan.
4.7 Form of Nonqualified Stock Option Agreement.
II-2
<PAGE>
Exhibit No. Description
----------- -----------
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Paul, Hastings, Janofsky & Walker LLP (contained
in Exhibit 5.1).
24.1 Power of Attorney (contained on the Signature Page of this
Registration Statement).
- ----------
(*) Incorporated by reference to the Registrant's Registration Statement on Form
S-1, Registration No. 333-6311, originally filed with the Securities and
Exchange Commission on June 22, 1996, and declared effective (as amended) on
October 16, 1996.
Item 9. Undertakings.
The undersigned Registrant hereby undertakes:
A. (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement.
Provided, however, that paragraphs (a) (1) (i) and (a) (1) (ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed or furnished to the Commission
by the Registrant pursuant to Section 13 or Section 15 (d) of the Exchange Act
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered
II-3
<PAGE>
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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, in the City of New York, State of New York, on March 18, 1997.
METRO NETWORKS, INC.
(Registrant)
By: /s/ David I. Saperstein
------------------------------------
David I. Saperstein
Chairman and Chief Executive Officer
II-5
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David I. Saperstein, Shane E. Coppola and
Gary L. Worobow, with full power to act without the other, and each of them, as
his true and lawful attorney- or attorneys-in-fact and agent or agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
pre- or post-effective amendments) to the Registration Statement, and to file
the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission and any other regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ David I. Saperstein Chairman and Chief Executive March 18, 1997
- -------------------------- Officer (Principal Executive
DAVID I. SAPERSTEIN Officer)
/s/ Curtis H. Coleman* Senior Vice President, Chief March 18, 1997
- -------------------------- Financial Officer and Director
CURTIS H. COLEMAN (Principal Accounting and
Financial Officer)
/s/ Charles I. Bortnick* President and Director March 18, 1997
- --------------------------
CHARLES I. BORTNICK
/s/ Shane E. Coppola* Executive Vice President and March 18, 1997
- -------------------------- Director
SHANE E. COPPOLA
/s/ Gary L. Worobow* Senior Vice President, General March 18, 1997
- -------------------------- Counsel, Secretary and Director
GARY L. WOROBOW
__________________________ Director
JAMES A. ARCARA
__________________________ Director
ROBERT M. MIGGINS
__________________________ Director
DENNIS F. HOLT
* by David I. Saperstein as attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
No. Description Page No.
- ------- ----------- ----------
4.1 Amended and Restated Certificate of Incorporation of the
Registrant.(*)
4.2 Amended and Restated By-laws of the Registrant.(*)
4.3 Form of Common Stock Certificate.(*)
4.4 Form of Series A Convertible Preferred Stock
Certificate.(*)
4.5 1996 Incentive Stock Option Plan.(*)
4.6 1996 Employee Stock Purchase Plan.
4.7 Form of Nonqualified Stock Option Agreement.
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Paul, Hastings, Janofsky & Walker (included in
Exhibit 5.1).
24.1 Power of Attorney (included on the Signature Page).
- ----------
(*) Incorporated by reference to the Registrant's Registration Statement on Form
S-1, Registration No. 333-6311, originally filed with the Securities and
Exchange Commission on June 22, 1996, and declared effective (as amended) on
October 16, 1996.
METRO NETWORKS, INC.
EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the Employee Stock
Purchase Plan of Metro Networks, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company through accumulated payroll deductions. It is the intention
of the Company to have the Plan qualify as an "Employee Stock Purchase Plan"
under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan, accordingly, shall be construed so as to extend and
limit participation in a manner consistent with the requirements of that Section
of the Code.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Committee" shall have the meaning set forth therefor in
Section 13(a) of the Plan.
(d) "Common Stock" shall mean the Common Stock, par value
$.001 per share, of the Company.
(e) "Company" shall mean Metro Networks, Inc., a Delaware
corporation.
(f) "Compensation" shall mean gross earnings exclusive of
bonus compensation.
(g) "Designated Subsidiaries" shall mean the Subsidiaries
which have been designated by the Board or the Committee from time to time in
its sole discretion as eligible to participate in the Plan.
(h) "Employee" shall mean any individual who is an employee of
the Company or a Designated Subsidiary for purposes of tax withholding under the
Code whose customary employment with the Company or any Designated Subsidiary is
at least twenty (20) hours per week and more than five (5)
<PAGE>
months in any calendar year. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the Company. Where the period
of leave exceeds 90 days and the individual's right to reemployment is not
guaranteed either by statute or by contract, the employment relationship will be
deemed to have terminated on the 91st day of such leave.
(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(j) "Enrollment Date" shall mean the first day of each
Offering Period.
(k) "Exercise Date" shall mean the last day of each Offering
Period.
(l) "Fair Market Value" shall mean the value of one (1) share
of Common Stock, determined as follows:
(1) If the shares are traded on a nationally recognized
exchange or the National Market System (the "NMS") of the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ"), the closing
price as reported for composite transactions on the date of valuation or, if no
sales occurred on that date, then the average of the highest bid and lowest ask
prices on such exchange or the NMS at the end of the day on such date;
(2) If the shares are not traded on an exchange or the
NMS but are otherwise traded over-the-counter, the average of the highest bid
and lowest asked prices quoted in the NASDAQ system as of the close of business
on the date of valuation, or, if on such day such security is not quoted in the
NASDAQ system, the average of the representative bid and asked prices on such
date in the domestic over-the-counter market as reported by the National
Quotation Bureau, Inc., or any similar successor organization; and
(3) If neither (1) nor (2) applies, the fair market
value as determined by the Board in good faith. Such determination shall be
conclusive and binding on all persons.
(m) "Offering Period" shall mean a period of approximately six
(6) months, commencing on the first Trading Day on or after January 1 and
terminating on the
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last Trading Day in the period ending the following June 30, or commencing on
the first Trading Day on or after July 1 and terminating on the last Trading Day
in the period ending the following December 31, during which an option granted
pursuant to the Plan may be exercised. The duration of Offering Periods may be
changed pursuant to Section 4 of this Plan.
(n) "Plan" shall mean this Metro Networks, Inc. Employee Stock
Purchase Plan.
(o) "Purchase Price" shall mean an amount equal to 95% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(p) "Reserves" shall mean the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(q) "Rule 16b-3" shall have the meaning set forth therefor in
Section 13(b) of the Plan.
(r) "Subsidiary" shall mean a corporation, domestic or
foreign, of which not less than 50% of the voting shares are held by the Company
or a Subsidiary, whether or not such corporation now exists or is hereafter
organized or acquired by the Company or a Subsidiary.
(s) "Trading Day" shall mean a day on which national stock
exchanges and the National Association of Securities Dealers Automated Quotation
(NASDAQ) System are open for trading.
3. Eligibility.
(a) Any Employee who shall be employed by the Company or a
Designated Subsidiary for at least one year on a given Enrollment Date shall be
eligible to participate in the Plan; provided, however, that all employees on
the effective date of the Company's initial public stock offering shall be
eligible to participate in the Plan on the first Enrollment Date.
(b) Any provisions of the Plan to the contrary
notwithstanding, no Employee shall be granted an option under the Plan (i) to
the extent, immediately after
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<PAGE>
the grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own capital stock of
the Company and/or hold outstanding options to purchase such stock possessing
five percent (5%) or more of the total combined voting power or value of all
classes of the capital stock of the Company or of any Subsidiary, or (ii) to the
extent such option permits his or her rights to purchase stock under all
employee stock purchase plans of the Company and its subsidiaries to accrue at a
rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock
(determined at the Fair Market Value of the shares at the time such option is
granted) for each calendar year in which such option is outstanding at any time.
4. Offering Periods. The Plan shall be implemented by consecutive
Offering Periods with a new Offering Period commencing on the first Trading Day
on or after January 1 and July 1 each year, or on such other date as the Board
or the Committee shall determine, and continuing thereafter until terminated in
accordance with Section 19 hereof. The Board or the Committee shall have the
power to change the duration of Offering Periods (including the commencement
dates thereof) with respect to future offerings.
5. Participation.
(a) An eligible Employee may become a participant in the Plan
by completing a subscription agreement authorizing payroll deductions in the
form of Exhibit A to this Plan and filing it with the Company's payroll office
prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the
first payroll following the Enrollment Date and shall end on the last payroll in
the Offering Period to which such authorization is applicable, unless sooner
terminated by the participant as provided in Section 10 hereof.
6. Payroll Deductions.
(a) At the time a participant files his or her subscription
agreement, he or she shall elect to have payroll deductions made on each payday
during the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each payday during the Offering Period,
and the aggregate of such payroll
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<PAGE>
deductions during the Offering Period shall not exceed ten percent (10%) of the
participant's Compensation during said Offering Period.
(b) All payroll deductions made for a participant shall be
credited to his or her account under the Plan and will be withheld in whole
percentages only. A participant may not make any additional payments into such
account.
(c) A participant may discontinue his or her participation in
the Plan as provided in Section 10 hereof, or may increase or decrease the rate
of his or her payroll deductions during the Offering Period by completing or
filing with the Company a new subscription agreement authorizing a change in
payroll deduction rate. The Board or the Committee may, in its discretion, limit
the number of participation rate changes during any Offering Period. The change
in rate shall be effective with the first full payroll period following five (5)
business days after the Company's receipt of the new subscription agreement
unless the Company elects to process a given change in participation more
quickly. A participant's subscription agreement shall remain in effect for
successive Offering Periods unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a
participant's payroll deductions may be decreased to 0% at such time during any
Offering Period which is scheduled to end during the current calendar year (the
"Current Offering Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Offering Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Offering Period equal $25,000. Payroll deductions
shall recommence at the rate provided in such participant's subscription
agreement at the beginning of the first Offering Period which is scheduled to
end in the following calendar year, unless terminated by the participant as
provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part,
or at the time some or all of the Company's Common Stock issued under the Plan
is disposed of, the participant must make adequate provision for the Company's
Federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the
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<PAGE>
option or the disposition of the Common Stock. At any time, the Company may, but
will not be obligated to, withhold from the participant's compensation the
amount necessary for the Company to meet applicable withholding obligations,
including any withholding required to make available to the Company any tax
deductions or benefits attributable to the sale or early disposition of Common
Stock by the Employee.
7. Grant of Option. On the Enrollment Date of each Offering Period,
each eligible Employee participating in such Offering Period shall be granted an
option to purchase on the Exercise Date of such Offering Period (at the
applicable Purchase Price) up to a number of shares of the Company's Common
Stock determined by dividing such Employee's payroll deductions accumulated
prior to such Exercise Date and retained in the Participant's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event shall
an Employee be permitted to purchase during each Offering Period more than a
number of Shares determined by dividing $25,000 by the Fair Market Value of a
share of the Company's Common Stock on the Enrollment Date, and provided further
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof. Exercise of the option shall occur as provided in Section 8
hereof, unless the participant has withdrawn pursuant to Section 10 hereof, and
the option shall expire at the end of the day on the last day of the Offering
Period.
8. Exercise of Option. Unless a participant withdraws from the Plan
as provided in Section 10 hereof, his or her option for the purchase of shares
will be exercised automatically on the Exercise Date, and the maximum number of
full shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares will be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the participant as provided in
Section 10 hereof. Any other monies left over in a participant's account after
the Exercise Date shall be returned to the participant. During a participant's
lifetime, a participant's option to purchase shares hereunder is exercisable
only by him or her.
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<PAGE>
9. Delivery. As promptly as practicable after each Exercise Date on
which a purchase of shares occurs, the Company shall arrange the delivery to
each participant, as appropriate, of a certificate representing the shares
purchased upon exercise of his or her option.
10. Withdrawal; Termination of Employment.
(a) A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan at any time by giving written notice to the
Company in the form of Exhibit B to this Plan. All of the participant's payroll
deductions credited to his or her account during such Offering Period will be
paid to such participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made during
such Offering Period. If a participant withdraws during any Offering Period,
payroll deductions will not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement.
(b) Upon a participant's ceasing to be an Employee (as defined
in Section 2(h) hereof), for any reason, including by virtue of him or her
having failed to remain an Employee of the Company for at least twenty (20)
hours per week during an Offering Period in which the Employee is a participant,
he or she will be deemed to have elected to withdraw from the Plan and the
payroll deductions credited to such participant's account during the then
current Offering Period but not yet used to exercise the option will be returned
to such participant or, in the case of his or her death, to the person or
persons entitled thereto under Section 14 hereof, and such participant's option
will be automatically terminated.
(c) A participant's withdrawal from an Offering Period will
not have any effect upon his or her eligibility to participate in any similar
plan which may hereafter be adopted by the Company or in succeeding Offering
Periods which commence after the termination of the Offering Period from which
the participant withdraws.
11. Interest. No interest shall accrue on the payroll deductions of
a participant in the Plan.
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<PAGE>
12. Stock.
(a) The maximum number of shares of the Company's Common Stock
which shall be made available for sale under the Plan shall be 1,500,000 shares,
subject to adjustment upon changes in capitalization of the Company as provided
in Section 18 hereof. If on a given Exercise Date the number of shares with
respect to which options are to be exercised exceeds the number of shares then
available under the Plan, the Company shall make a pro rata allocation of the
shares remaining available for purchase in as uniform a manner as shall be
practicable and as it shall determine to be equitable.
(b) The participant will have no interest or voting right in
shares covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan
will be registered in the name of the participant or in the name of the
participant and his or her spouse.
13. Administration.
(a) Administrative Body. The Plan shall be administered by the
Board or a committee of at least two members of the Board appointed by the Board
(the "Committee"). The Board or the Committee shall have full and exclusive
discretionary authority to construe, interpret and apply the terms of the Plan,
to determine eligibility and to adjudicate all disputed claims filed under the
Plan. Every finding, decision and determination made by the Board or the
Committee shall, to the full extent permitted by law, be final and binding upon
all parties.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection (a) of this Section 13, in the event that Rule 16b-3 promulgated
under the Exchange Act, or any successor provision ("Rule 16b-3"), provides
specific requirements for the administrators of plans of this type, the Plan
shall be only administered by such a body and in such a manner as shall comply
with the applicable requirements of Rule 16b-3.
14. Designation of Beneficiary.
(a) A participant may file a written designation of a
beneficiary who is to receive any shares
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<PAGE>
and cash, if any, from the participant's account under the Plan in the event of
such participant's death subsequent to an Exercise Date on which the option is
exercised but prior to delivery to such participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to exercise of the option. If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a beneficiary validly designated under the
Plan who is living at the time of such participant's death, the Company shall
deliver such shares and/or cash to the executor or administrator of the estate
of the participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
participant in the Plan. Statements of account will be given to participating
Employees at least annually, which statements will set forth the amounts of
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<PAGE>
payroll deductions, the Purchase Price, the number of shares purchased and the
remaining cash balance, if any.
18. Adjustments Upon Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the Reserves as well as the price per share
of Common Stock covered by each option under the Plan which has not yet been
exercised shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of outstanding shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration". Such
adjustment shall be made by the Board or the Committee, whose determination in
that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Offering Period will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board or the Committee.
(c) Merger or Asset Sale. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation in which the Company is not the
surviving entity, each option under the Plan shall be assumed or an equivalent
option shall be substituted by the successor corporation or a parent or
subsidiary of the successor corporation, in each case with the assumed or new
option containing such terms and provisions as shall be required substantially
to preserve the rights and benefits of all options held by participating
Employees during the then current Offering Period, unless the Board or the
Committee determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Offering Period then in progress by
setting a new Exercise Date (the "New Exercise Date") or to cancel each
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<PAGE>
outstanding right to purchase and refund all sums collected from participants
during the Offering Period then in progress. If the Board or the Committee
shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board or the
Committee shall notify each participant in writing, at least ten (10) business
days prior to the New Exercise Date, that the Exercise Date for his or her
option has been changed to the New Exercise Date and that his or her option will
be exercised automatically on the New Exercise Date, unless prior to such date
he or she has withdrawn from the Offering Period as provided in Section 10
hereof. For purposes of this Section, an option granted or assumed by a
successor corporation shall be deemed to substantially preserve the rights and
benefits of options held by participants if, following the sale of assets or
merger, the option confers the right to purchase, for each share of option stock
subject to the option immediately prior to the sale of assets or merger, the
consideration (whether stock, cash or other securities or property) received in
the sale of assets or merger by holders of Common Stock for each share of Common
Stock held on the effective date of the transaction (and if such holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the sale of assets or merger was
not solely common stock of the successor corporation or its parent (as defined
in Section 424(e) of the Code), the Board or the Committee may, with the consent
of the successor corporation and the participant, provide for the consideration
to be received upon exercise of the option to be solely common stock of the
successor corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock and the sale of assets or
merger.
The Board may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
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<PAGE>
19. Amendment or Termination.
(a) The Board may at any time and for any reason terminate or
amend the Plan. Except as provided in Section 18 hereof, no such termination may
affect options previously granted, provided that an Offering Period may be
terminated by the Board of Directors on any Exercise Date if the Board
determines that the termination of the Plan is in the best interests of the
Company and its stockholders. Except as provided in Section 18 hereof, no
amendment may make any change in any option theretofore granted which adversely
affects the rights of any participant. To the extent necessary to comply with
Rule 16b-3 or under Section 423 of the Code (or any successor rule or provision
or any other applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether
any participant's rights may be considered to have been "adversely affected,"
the Board (or the Committee) shall be entitled to change the Offering Periods
(subject to the provisions of the second sentence of Section 4), limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or the Committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, designated by the Company for the receipt thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be issued
with respect to an option unless the exercise of such option and the issuance
and delivery of
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<PAGE>
such shares pursuant thereto shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. Term of Plan. The Plan shall become effective upon its adoption
by the Board of Directors, subject to its approval by the stockholders of the
Company within twelve months. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19 hereof. The Plan was adopted by
the Board effective October 16, 1996.
23. Additional Restrictions of Rule 16b-3. The terms and conditions
of options granted hereunder to, and the purchase of shares by, persons subject
to Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 from
time to time to qualify for the maximum exemption from Section 16 the Exchange
Act with respect to Plan transactions.
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<PAGE>
Exhibit A
METRO NETWORKS, INC.
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
____ Original Application Enrollment Date:______
____ Change in Payroll Deduction Rate
____ Change of Beneficiary(ies)
1. _____________________________________ hereby elects to participate in the
Metro Networks, Inc. Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribes to purchase shares of the Company's Common
Stock in accordance with this Subscription Agreement and the Employee
Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of
_____% of my Compensation on each payday (not to exceed 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan.
(Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price
determined in accordance with the Employee Stock Purchase Plan. I
understand that if I do not withdraw from an Offering Period, any
accumulated payroll deductions will be used to automatically exercise my
option.
4. I have received a copy of the complete "Employee Stock Purchase Plan." I
understand that my participation in the Employee Stock Purchase Plan is in
all respects subject to the terms of the Plan. I understand that the grant
of the option by the Company under this Subscription Agreement may be
subject to obtaining stockholder approval of the Employee Stock Purchase
Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of
Exhibit A - Page 1
<PAGE>
(Employee or Employee and Spouse Only):
_______________________________________________.
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the
Offering Period during which I purchased such shares), I will be treated
for Federal income tax purposes as having received ordinary income at the
time of such disposition in an amount equal to the excess of the fair
market value of the shares at the time such shares were purchased by me
over the price which I paid for the shares. I hereby agree to notify the
Company in writing within 30 days after the date of any disposition of
shares and I will make adequate provision for Federal, state or other tax
withholding obligations, if any, which arise upon the disposition of the
Common Stock. The Company may, but will not be obligated to, withhold from
my compensation the amount necessary to meet any applicable withholding
obligation including any withholding necessary to make available to the
Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any time
after the expiration of the 2-year holding period, I understand that I
will be treated for Federal income tax purposes as having received
ordinary income only to the extent of an amount equal to the lesser of (1)
the excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2) 5%
of the fair market value of the shares on the first day of the Offering
Period. The remainder of any gain recognized on such disposition will be
taxed as capital gain. I understand that the foregoing description should
not be relied upon as definitive tax advice and that I am urged to consult
with a tax advisor with respect to the tax consequences of participation
in the plan.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Subscription Agreement is dependent upon
my eligibility to participate in the Employee Stock Purchase Plan.
Exhibit A - Page 2
<PAGE>
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan:
NAME: (Please print) ___________________________________________________________
(First) (Middle) (Last)
_____________________ _______________________________________________________
Relationship
_______________________________________________________
(Address)
NAME: (Please print) ___________________________________________________________
(First) (Middle) (Last)
_____________________ _______________________________________________________
Relationship
_______________________________________________________
(Address)
Employee's Social
Security Number: _______________________________________________________
Employee's Address: _______________________________________________________
_______________________________________________________
_______________________________________________________
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN
IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS
TERMINATED BY ME.
Dated: ________________ ______________________________________________________
Signature of Employee
______________________________________________________
Spouse's Signature
(If beneficiary other than spouse)
Exhibit A - Page 3
<PAGE>
Exhibit B
METRO NETWORKS, INC.
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Metro
Networks, Inc. Employee Stock Purchase Plan which began on ___________, 19__
(the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the participation in the Employee Stock Purchase Plan for the
Offering Period. He or she hereby directs the Company to pay to the undersigned
as promptly as practicable all the payroll deductions credited to his or her
account with respect to such Offering Period. The undersigned understands and
agrees that his or her option for such Offering Period will be automatically
terminated. The undersigned understands further that no further payroll
deductions will be made for the purchase of shares in the current
Offering-Period and the undersigned shall be eligible to participate in
succeeding Offering Periods only by delivering to the Company a new Subscription
Agreement.
Name and Address of Participant:
________________________________________________
________________________________________________
________________________________________________
Signature:
________________________________________________
Date: __________________________________________
Exhibit B
NONQUALIFIED STOCK OPTION AGREEMENT ("Agreement"), dated as of ___
day of ______________, between Metro Networks, Inc., a Delaware corporation (the
"Company"), and ________________ (the "Director").
W I T N E S S E T H :
WHEREAS, the Board of Directors (the "Board") has determined that it
is in the best interests of the Company and its stockholders to provide an
incentive for outside directors to serve as members of the Board; and
WHEREAS, to give effect to the foregoing, the Board believes it to
be in the best interests of the Company and its stockholders to grant to the
Director options (the "Options") to purchase shares of Common Stock of the
Company (the "Stock"), at the price and subject to the terms herein;
NOW, THEREFORE, IN CONSIDERATION of the promises and the mutual
covenants and agreements hereinafter set forth, the Company and the Director
agree as follows:
1. Option.
(a) Grant of Option. The Company hereby grants the Director an
Option to receive an aggregate of up to 10,000 shares of Stock, in accordance
with the terms and conditions of this Agreement.
(b) Exercise Period. Except as otherwise provided in this Agreement,
the Options granted hereunder shall become exercisable by the Director according
to the following schedule: one-third (1/3) on each of the first, second and
third anniversaries of the date of execution of this Agreement until all such
Options are exercisable; provided, however, that the right to exercise an Option
as to any fractional share of Stock shall be deemed the right to exercise an
Option as to a full share of Stock with appropriate adjustments made to the last
exercise period so that the total number of Options shall not exceed that
specified under paragraph (a) of Section 1 hereof.
(c) No Lapse of Exercise Power. Any Option which becomes exercisable
on a certain date but is not exercised in full on that date shall not lapse but
shall remain outstanding as to the unexercised portion and shall continue in
effect
<PAGE>
throughout the remainder of the Option Term (taking into account any early
termination of such Option Term which may be provided for under this Agreement).
(d) Option Term. An option which is not exercised
shall expire upon the earlier of:
(i) ten (10) years after the date such Option was granted;
(ii) three (3) months after the date the Director's membership
on the Board is terminated, unless such termination was the result of the
Director's death or disability;
(iii) one (1) year after the Director's death or disability;
and
(iv) any such earlier termination date as may be provided by
this Agreement.
The period commencing on the date hereof and concluding on the date of
termination as provided in this paragraph (d) shall be referred to herein as the
"Option Term".
(e) Option Price. The purchase price for each share of Stock subject
to the Option shall be $16.00 per share.
(f) Adjustments.
(i) Stock Splits and Dividends. Subject to any required action
by the Board and/or stockholders, the number of Shares covered by each
outstanding Option shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a subdivision or
consolidation of Shares or the payment of a stock dividend (but only if
paid in Shares), a stock split or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company.
(ii) Mergers. Subject to any required action by the Board
and/or stockholders, if the Company shall merge with another corporation
and the Company is the surviving corporation in such merger and under the
terms of such merger the Shares outstanding immediately prior to the
merger remain outstanding and unchanged, each outstanding Option shall
continue to apply to the Shares
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<PAGE>
subject thereto and shall also pertain and apply to any additional
securities and other property, if any, to which a holder of the number of
Shares subject to the Option would have been entitled as a result of the
merger.
(iii) Administrator. Adjustments under this Section 1(f) shall
be made by the Board or a committee appointed by the Board (the
"Committee"; the Board or the Committee, whichever shall be administering
the terms of this Agreement from time to time in the discretion of the
Board, referred to herein as the "Administrator"), whose determination as
to what adjustments shall be made, and the extent thereof, shall be final,
binding and conclusive. In computing any adjustment under this Section
1(f), any fractional Share which might otherwise become subject to an
Option shall be eliminated.
2. Limitations on Options.
(a) Sequential Exercise. Options granted to the Director may be
exercised in any order, so that the Director may exercise an Option if another
Option, granted to him at an earlier time, remains outstanding in whole or in
part.
(b) Non-transferability of Option. The Options may not be assigned
or transferred other than by will or by the laws of descent and distribution.
During the lifetime of the Director, the Options may be exercisable only by the
Director. Transfer of an Option by will or by the laws of descent and
distribution shall not be effective to bind the Company unless the Company shall
have been furnished with written notice thereof and an authenticated copy of the
will or such other evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the transferee of the terms and
conditions of such Option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, or the levy of any execution, attachment or similar process upon the
Option shall be null and void and without effect.
3. Method of Exercising Options. Options shall be exercised by a written
notice delivered to the Company at its principal office in Houston, Texas.
In the event the Company determines that it is required to withhold
state or Federal income tax as a result of the exercise of an Option, as a
condition to the exercise
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<PAGE>
thereof, the Director may be required to make arrangements satisfactory to the
Company to enable it to satisfy such withholding requirements. Payment of such
withholding requirements may be made, in the discretion of the Committee, (i) in
cash, (ii) by delivery of Shares registered in the name of the Director, or by
the Company not issuing such number of Shares subject to the Option, having a
Fair Market Value at the time of exercise equal to the amount to be withheld or
(iii) any combination of (i) and (ii) above.
4. Issuance of Optioned Stock.
(a) Issuance of Certificates. The Company shall not be required to
issue or deliver any certificate for Stock upon the exercise of any Option, or
any portion thereof, prior to fulfillment of each of the following applicable
conditions:
(i) The admission of such Stock to listing on all stock
exchanges or markets on which the Stock is then listed to the extent such
admission is necessary;
(ii) The completion of any registration or other qualification
of such Stock under any federal or state securities laws or under the
rulings or regulations of the Securities and Exchange Commission or any
other governmental regulatory body, which the Board shall in its sole
discretion deem necessary or advisable or the determination by the Board
in its sole discretion that no such registration or qualification is
required;
(iii) The obtaining of any approval or other clearance from
any federal or state governmental agency which the Board shall, in its
sole discretion, determine to be necessary or advisable; and
(iv) The lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may establish for
reasons of administrative convenience.
(b) Compliance with Securities and Other Laws. In no event shall the
Company be required to issue or deliver Stock pursuant to Options if in the
opinion of the Board the issuance thereof would constitute a violation by either
the Director or the Company of any provision of any law or regulation of any
governmental authority or any securities exchange. As a condition of any
issuance of Stock pursuant to Options, the Company may place legends on the
Stock, issue stop-transfer orders and require such agreements or
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<PAGE>
undertakings from the Director as the Company may deem necessary or advisable to
assure compliance with any such law or regulation, including, if the Company or
its counsel deems it appropriate, representations from the Director that he is
acquiring the Stock solely for investment and not with a view to distribution
and that no distribution of Stock acquired by him will be made unless registered
pursuant to applicable federal and state securities laws or unless, in the
opinion of counsel to the Company, such registration is unnecessary.
5. Option Rights in the Event of Certain Events.
(a) Rights in the Event of Sale, Merger or Other Reorganization of
Company.
(i) In the event of a merger or consolidation where the
Company is not the surviving corporation, and the agreement of merger or
consolidation does not provide for the substitution for the unexercised
portion of the Option of a new option on substantially the same terms
(including the exercise price thereof), or for the assumption of the
Option by the surviving corporation, or in the event of the sale or
transfer of assets, liquidation or dissolution and the plan of liquidation
or dissolution or agreement of sale does not make special provision for
the Option, the Director shall have the right immediately prior to the
effective date of such merger, consolidation, sale or transfer of assets,
liquidation or dissolution to exercise the Option in whole or in part
without regard to any installment provision contained in paragraph (b) of
Section 1 hereof. If not so exercised, the Option shall terminate at the
time of any such merger, consolidation, sale or transfer of assets,
liquidation or dissolution.
(ii) In no event, however, may any Option which becomes
exercisable pursuant to this paragraph (a) of Section 5, be exercised, in
whole or in part, later than the date specified in paragraph (d) of
Section 1 above.
(b) Termination of Employment. In the event that the Director's
service with the Company terminates, other than by reason of death or "Total and
Permanent Disability" or voluntary termination of service by the Director,
vesting of Options granted to the Director pursuant to paragraph (a) of Section
1 shall accelerate and such Options shall be fully exercisable by the Director
for a period which shall not exceed the earlier of the remaining Option Term or
three months from such termination of service, without regard to any
-5-
<PAGE>
installment provision contained in paragraph (b) of Section 1. At the expiration
of such three month period, or such earlier time as may be applicable, any such
Options which remain unexercised shall expire. For purposes hereof, "Total and
Permanent Disability" shall mean the inability of the Director to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than twelve
months.
(c) Total and Permanent Disability. If the Director's employment
with the Company is terminated on account of Total and Permanent Disability,
vesting of Options granted to the Director pursuant to paragraph (a) of Section
1 shall accelerate and such Options shall be fully exercisable by the Director
for a period which shall not exceed the earlier of the remaining Option Term or
one year from the date of such Director's disability, without regard to any
installment provision contained in paragraph (b) of Section 1. At the expiration
of such one year period, or such earlier time as may be applicable, any such
Options which remain unexercised shall expire.
(d) Death. If the Director's service with the Company is terminated
on account of death, vesting of Options granted to the Director pursuant to
paragraph (a) of Section 1 shall accelerate and such Options shall be fully
exercisable by the person or persons who shall have acquired the right, by will
or the laws of descent and distribution, to exercise his Options for a period
which shall not exceed the earlier of the remaining Option Term or one year from
the date of such Director's death, without regard to any installment provision
contained in paragraph (b) of Section 1. At the expiration of such one year
period, or such earlier time as may be applicable, any such Options which remain
unexercised shall expire.
6. Administration. The interpretation and construction by the
Administrator of any provisions of this Agreement shall be final. No member of
the Board or the Committee shall be liable for any action or determination made
in good faith with respect to the Options granted hereunder. All the members of
the Committee, of which there are at least two, are "Non-Employee Directors", as
such term is defined pursuant to Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended.
-6-
<PAGE>
7. Lock-Up Agreement. The Director agrees, if requested by the Company and
an underwriter of Common Stock (or other securities) of the Company, not to sell
or otherwise transfer or dispose of any Common Stock (or other securities) of
the Company held by the Director during the one hundred eighty (180) day period
following the effective date of a registration statement filed under the 1933
Act, as amended, without the prior consent of the Company or such underwriter,
as the case may be, provided that such agreement only applies to registration
statements including securities to be sold to the public in an underwritten
offering during the period ending on December 31, 2001.
8. Miscellaneous.
(a) Binding Effect. The Agreement shall be binding upon, and inure
to the benefit of the Company, Director, and their respective personal
representatives, successors and permitted assigns.
(b) Singular, Plural; Gender. Whenever used herein, except where the
context clearly indicates to the contrary, nouns in the singular shall include
the plural, and the masculine pronoun shall include the feminine gender.
(c) Headings. Headings of the Sections hereof are inserted for
convenience and reference and constitute no part of the Agreement.
(d) Rights as Stockholders. The Director or transferee of an Option
shall have no rights as a stockholder with respect to any Stock subject to such
Option prior to the purchase of such Stock by exercise of such Option as
provided herein.
(e) Applicable Law. This Agreement and the Options granted hereunder
shall be interpreted, administered and otherwise subject to the laws of the
State of Texas, except to the extent the General Corporation Law of the State
of Delaware shall govern.
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<PAGE>
IN WITNESS WHEREOF, the Company and the Director have executed this
Agreement as of the day and year first written above.
DIRECTOR METRO NETWORKS, INC.
_______________________________ _________________________________
Name: By:
Address:
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March 18, 1997
25383.75646
METRO NETWORKS, INC.
2800 Post Oak Boulevard
Suite 4000
Houston, Texas 77056
Dear Ladies and Gentlemen:
We are furnishing this opinion of counsel to Metro Networks, Inc., a
Delaware corporation (the "Company"), for filing as Exhibit 5.1 to the
Registration Statement on Form S-8 (the "Registration Statement") to be filed by
the Company on March 18, 1997 with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, relating to the issuance and sale by the
Company of up to 2,530,000 shares (the "Shares") of the Company's Common Stock,
par value $.001 per share, pursuant to the exercise of (i) stock options issued
or issuable under the Company's 1996 Incentive Stock Option Plan, (ii) stock
options issued or issuable under the Company's 1996 Employee Stock Purchase Plan
and (iii) stock options issued to certain non-employee directors under certain
non-qualified stock option agreements between such individuals and the Company.
In our capacity as counsel for the Company in connection with the
matters referred to above, we have examined the Amended and Restated Certificate
of Incorporation and Restated Bylaws of the Company, the Company's 1996
Incentive Stock Option Plan, the Company's 1996 Employee Stock Purchase Plan,
and the form of Nonqualified Stock Option Agreement of the Company, and the
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METRO NETWORKS, INC.
March 18, 1997
Page 2
originals or copies certified or otherwise identified, of records of corporate
action of the Company as furnished to us by the Company, certificates of public
officials and of representatives of the Company, statutes and other instruments
and documents, as a basis for the opinions hereinafter expressed.
Based upon our examination as aforesaid, we are of the opinion that
the Shares are duly authorized and, when purchased and paid for upon exercise of
options pursuant to applicable stock option plans and agreements described in
the Registration Statement, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion of counsel as
Exhibit 5.1 to the Registration Statement.
Very truly yours,
/s/ PAUL, HASTINGS, JANOFSKY &
WALKER LLP
CONSENT OF INDEPENDENT AUDITORS
The Stockholders and Board of Directors of
Metro Networks, Inc., and Subsidiaries:
We consent to incorporation by reference in the Registration Statement on Form
S-8 pertaining to the Metro Networks, Inc., 1996 Incentive Stock Option Plan,
the Metro Networks, Inc. 1996 Employee Stock Purchase Plan and certain
nonqualified stock options of our report dated June 13, 1996 relating to the
combined balance sheets of Metro Traffic Control, Inc., Metro Reciprocal, Inc.,
Metro Networks, Ltd. and Metro Video News, Inc. as of December 31, 1995 and
1994, and the related combined statements of operations, stockholder's
equity/partners capital and cash flows for each of the years in the three-year
period ended December 31, 1995 included in the S-1 filed by Metro Networks, Inc.
with the Securities and Exchange Commission on October 16, 1996.
/s/ KPMG Peat Marwick LLP
Houston, Texas
March 18, 1997
