<PAGE>
As filed with the Securities and Exchange Commission on July ____, 1998.
Registration No. 333-_______
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------------
SFX ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-977880
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
650 MADISON AVENUE
16TH FLOOR
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
SFX ENTERTAINMENT, INC.
1998 STOCK OPTION AND RESTRICTED STOCK PLAN
AND AN OPTION AGREEMENT
(Full title of the plan)
ROBERT F.X. SILLERMAN
EXECUTIVE CHAIRMAN
SFX ENTERTAINMENT, INC.
650 MADISON AVENUE
16TH FLOOR
NEW YORK, NEW YORK 10022
(212) 838-3100
(Name and address of agent for service)
with a copy to:
AMAR BUDARAPU
BAKER & MCKENZIE
1200 SMITH STREET, SUITE 1200
HOUSTON, TEXAS 77002
(713) 427-5000
------------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED (1) REGISTERED SHARE (2) PRICE (2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock, 2,006,500 Shares $48,375 $97,064,437.50 $28,634.01
par value $.01 per share
=========================================================================================================================
</TABLE>
(1) Shares of Class A common stock of SFX Entertainment, Inc. (the
"Company"), par value $.01 per share (the "Class A Common Stock"),
being registered hereby relate to the SFX Entertainment, Inc.'s 1998
Stock Option and Restricted Stock Plan (the "Plan") or an employee
stock option agreement. Pursuant to Rule 416 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), there are
also being registered such additional shares of Common Stock as may
become issuable pursuant to the anti-dilution provisions of the Plan
and that certain employee stock option agreement.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h) promulgated under the Securities Act
on the basis of the average of the high and low sale prices of the
Class A Common Stock on July 6, 1998, as reported on the Nasdaq
National Market.
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed below are hereby incorporated by reference into this
Registration Statement. All documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), prior to the filing of a
post-effective amendment to the Registration Statement which indicates that all
shares of Class A Common Stock offered hereunder have been sold or which
deregisters all shares then remaining unsold, shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of
filing of such documents.
(a) The Company's prospectus filed on June 30, 1998 pursuant to Rule
424(b) under the Securities Act (the "June 30, 1998 Prospectus");
(b) The Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1998; and
(c) The description of the Company's Common Stock as contained in the
Company's Registration Statement on Form 8-A filed April 13, 1998,
including all amendments and reports subsequently filed which
updated such description.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
The consolidated financial statements of the Company as of December 31,
1997, and for the year ended December 31, 1997; the consolidated financial
statements of Delsener/Slater Enterprises, Ltd. and Affiliated Companies
(Predecessor) as of December 31, 1996, and for the years ended December 31,
1995 and 1996; the consolidated financial statements of PACE Entertainment
Corporation and Subsidiaries as of September 30, 1996, and for the years ended
September 30, 1996 and 1995; the combined financial statements of Contemporary
Group as of December 31, 1996 and 1997, and for the years ended December 31,
1995, 1996 and 1997; the combined financial statements of SJS Entertainment
Corporation as of December 31, 1996 and 1997, and for the years ended December
31, 1996 and 1997; the combined financial statements of the Album Network, Inc.
and Affiliated Companies as of September 30, 1996 and 1997, and for the years
ended September 30, 1996 and 1997; the consolidated financial statements of BG
Presents, Inc. and Subsidiaries as of January 31, 1997 and 1998 and for the
years ended January 31, 1996, 1997 and 1998; the combined financial statements
of Concert/Southern Promotions and Affiliated Companies as of December 31,
1997, and for the years ended December 31, 1997; the combined financial
statements of Falk Associates Management Enterprises, Inc. as of December 31,
1996 and 1997, and for the years ended December 31, 1996 and 1997, and the
consolidated financial statements of Blackstone Entertainment LLC as of
December 31, 1996 and 1997 and for the years ended December 31, 1996 and 1997,
incorporated by reference from the June 30th Prospectus of the Company have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
reports thereon, and are incorporated by reference in reliance on such reports
given on the authority of such firm as experts in accounting and auditing.
Arthur Andersen LLP, independent public accountants, audited the following
financial statements (as set forth in their reports thereon), each incorporated
by reference in this Prospectus and the Registration Statement: the combined
financial statements of Connecticut Performing Arts, Inc. and Connecticut
Performing Arts Partners as of December 31, 1995 and 1996, and for the years
ended December 31, 1995 and 1996; the combined financial statements of Deer
Creek Partners, L.P. and Murat Centre, L.P. as of December 31, 1995 and
1996, and for the years ended December 31, 1995 and 1996; the consolidated
financial statements of PACE Entertainment Corporation and Subsidiaries
as of September 30, 1997, and for the year ended September 30, 1997; the
consolidated financial statements of Pavilion Partners as of September 30,
1997, and for the year ended September 30, 1997; the financial statements
of Riverport Performing Arts Centre, Joint Venture as of December 31, 1997
and 1996 and for the years ended December 31, 1997 and 1996, which are
incorporated by reference in reliance on such reports given on the
authority of such firm as experts in accounting and auditing.
The financial statements of Pavilion Partners for the year ended October
31, 1995, for the eleven months ended September 30, 1996 and as of September 30,
1996 incorporated by reference in this Prospectus and the Registration Statement
have been so incorporated by reference in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The Board expects to appoint Ernst & Young LLP as the Company's independent
auditors to audit the Company's consolidated financial statements.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") empowers
a Delaware corporation to indemnify any person who is, or is threatened to be
made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal administrative or investigative (other than
an action by or in the right of the corporation) by reason of the fact that the
person is or was an officer or director of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with the action,
suit or proceeding, provided that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses
which he actually and reasonably incurred in connection therewith.
The Company's Certificate of Incorporation (the "Company Certificate")
provides that no director of the Company will be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability:
o for any breach of the director's duty of loyalty to the Company or
its stockholders;
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
o under Section 174 of the DGCL; or
o for any transaction from which the director derived an improper
personal benefit.
II-1
<PAGE>
In addition to the circumstances in which a director of the Company is not
personally liable as set forth above, no director will be liable to the Company
or its stockholders to such further extent as permitted by any law enacted
after the date of the Company Certificate, including any amendment to the DGCL.
The Company Certificate requires the Company to indemnify any person who
was, is, or is threatened to be made a party to any action, suit or proceeding,
by reason of the fact that he (a) is or was a director or officer of the
Company or (b) is or was serving at the request of the Company as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise. This
indemnification is to be to the fullest extent permitted by the DGCL. The right
to indemnification will be a contract right and, as such, will run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Company or elects to continue to serve as a director
or officer of the Company while this provision of the Company Certificate is in
effect. The right to indemnification includes the right to be paid by the
Company for expenses incurred in defending any such action, suit or proceeding
in advance of its final disposition to the maximum extent permitted under the
DGCL. If a claim for indemnification or advancement of expenses is not paid in
full by the Company within 60 days after a written claim has been received by
the Company, the claimant may, at any time thereafter, bring suit against the
Company to recover the unpaid amount of the claim and, if successful in whole
or in part, expenses of prosecuting his claim. It will be a defense to any such
action that the requested indemnification or advancement of costs of defense
are not permitted under the DGCL, but the burden of proving this defense will
be on the Company. The rights described above do not exclude any other right
that any person may have or acquire under any statute, by-law, resolution of
stockholders or directors, agreement or otherwise.
The by-laws of the Company require the Company to indemnify its officers,
directors, employees and agents to the full extent permitted by the DGCL. The
by-laws also require the Company to pay expenses incurred by a director in
defending a civil or criminal action, suit or proceeding by reason of the fact
that he is/was a director (or was serving at the Company's request as a
director or officer of another corporation) in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director to repay the advance if it ultimately is determined that
the director is not entitled to be indemnified by the Company as authorized by
relevant sections of the DGCL. The indemnification and advancement of expenses
provided in the by-laws are not to be deemed exclusive of any other rights
provided by any agreement, vote of stockholders or disinterested directors or
otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
None.
ITEM 8. EXHIBITS.
The following are filed as exhibits to this Registration Statement:
Exhibit No. Description
- ----------- -----------
4.1 SFX Entertanment, Inc. 1998 Stock Option and Restricted Stock Plan*
4.2 Employee Stock Option Agreement*
5.1 Opinion of Baker & McKenzie*
23.1 Consent of Baker & McKenzie (see Exhibit 5)*
23.2 Consent of Ernst & Young LLP*
23.3 Consents of Arthur Andersen LLP*
23.4 Consent of PricewaterhouseCoopers LLP*
II-2
<PAGE>
24.1 Power of Attorney (included on the signature page of the
Registration Statement)*
- ----------------
* filed herewith
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(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 this 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 this
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this 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 with 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 this Registration Statement 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.
(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 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 or paid 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
II-3
<PAGE>
appropriate jurisdiction the question 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, New York, on this 7th day of July, 1998.
SFX ENTERTAINMENT, INC.
By: /s/ Howard J. Tytel
--------------------------------------
Howard J. Tytel
Executive Vice President and Secretary
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated. Each person
whose signature to this Registration Statement appears below hereby appoints
Robert F.X. Sillerman or Howard J. Tytel as his attorney-in-fact to sign on his
behalf, individually and in the capacities stated below, and to file (i) any
and all amendments and post-effective amendments to this Registration Statement
and (ii) any registration statement relating to the same offering pursuant to
Rule 462(b) under the Securities Act of 1933, which amendment or amendments or
registration statement may make such changes and additions as such
attorney-in-fact may deem necessary or appropriate.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert F.X. Sillerman Executive Chairman, Member of the July 7, 1998
- -----------------------------
Robert F.X. Sillerman Office of the Chairman and Director
(principal executive officer)
/s/ Michael G. Ferrel President, Chief Executive Officer, July 7, 1998
- ----------------------------- Member of the Office of the Chairman
Michael G. Ferrel and Director
/s/ Brian Becker Executive Vice President, Member of the July 7, 1998
- -----------------------------
Brian Becker Office of the Chairman and Director
/s/ David Falk Member of the Office of the Chairman July 7, 1998
- -----------------------------
David Falk and Director
/s/ Howard J. Tytel Executive Vice President, General Counsel, July 7, 1998
- -----------------------------
Howard J. Tytel Secretary and Director
/s/ Thomas P. Benson Chief Financial Officer, Vice President July 7, 1998
- ----------------------------- and Director (principal financial and
Thomas P. Benson accounting officer)
Vice President, Associate General July , 1998
- -----------------------------
Richard A. Liese Counsel and Director
/s/ D. Geoffrey Armstrong Executive Vice President and Director July 7, 1998
- -----------------------------
D. Geoffrey Armstrong
/s/ James F. O'Grady, Jr. Director July 7, 1998
- -----------------------------
James F. O'Grady, Jr.
II-5
<PAGE>
/s/ Paul Kramer Director July 7, 1998
- -----------------------------
Paul Kramer
/s/ Edward F. Dugan Director July 7, 1998
- -----------------------------
Edward F. Dugan
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
4.1 SFX Entertainment, Inc. 1998 Stock Option and Restricted Stock Plan*
4.2 Employee Stock Option Plan*
5.1 Opinion of Baker & McKenzie*
23.1 Consent of Baker & McKenzie (see Exhibit 5)*
23.2 Consent of Ernst & Young LLP*
23.3 Consents of Arthur Andersen LLP*
23.4 Consent of PricewaterhouseCoopers LLP*
24.1 Power of Attorney (included on the signature page of the Registration Statement)*
</TABLE>
- --------------
* filed herewith
<PAGE>
SFX ENTERTAINMENT, INC.
1998 STOCK OPTION AND RESTRICTED STOCK PLAN
EFFECTIVE JANUARY 15, 1998
SECTION 1
ESTABLISHMENT AND PURPOSE
-------------------------
This Plan is established to (i) offer selected, directors, officers,
Employees and Consultants of the Company or its Subsidiaries an equity
ownership interest in the financial success of the Company, (ii) provide the
Company an opportunity to attract and retain the best available personnel for
positions of substantial responsibility and (iii) to encourage equity
participation in the Company by eligible Participants. This Plan provides for
the grant by the Company of (i) Options to purchase Shares, and (ii) shares of
Restricted Stock. Options granted under this Plan may include Nonstatutory
Options as well as ISOs intended to qualify under section 422 of the Code.
SECTION 2
DEFINITIONS
-----------
"BOARD OF DIRECTORS" shall mean the board of directors of the Company, as
duly elected from time to time.
"CHANGE IN CONTROL" shall mean such time as either (i) any "person", as
such term is used in section 14(d) of the Exchange Act (other than the Company,
a wholly-owned subsidiary of the Company, any employee benefit plan of the
Company or its Subsidiaries or Mr. Sillerman together with his affiliates (as
such term is defined in Rule 12b-2 of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act (or any
successor rule), directly or indirectly, of fifty percent (50%) or more of the
combined voting power of the Company's common stock or (ii) individuals who
constitute the Board of the Directors on the effective date of this Plan (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election or nomination for election by the Company's shareholders
was approved by a vote of at least three quarters of the directors comprising
the Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for the
director without objection to such nomination) shall be, for purposes of this
clause (ii) considered as though such person was a member of the Incumbent
Board.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and as
interpreted by the regulations thereunder.
"COMMITTEE" shall mean the Stock Option Committee of the Company, or such
other Committee as may be appointed by the Board of Directors from time to
time.
"COMPANY" shall mean SFX Entertainment, Inc., a Delaware corporation.
"CONSULTANT" shall mean any individual that is expressly designated as a
consultant of the Company or its Subsidiaries by the Committee in its sole
discretion.
<PAGE>
"DATE OF GRANT" shall mean the date on which the Committee resolves to
grant an Option to an Optionee or grant Restricted Stock to a Participant, as
the case may be.
"DISINTERESTED DIRECTOR" shall mean a member of the Board of Directors who
is both (a) a Non-Employee Director, within the meaning of Rule 16b-3
promulgated under the Exchange Act, as amended from time to time and (b) an
Outside Director, within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder, as amended from time to time.
"EMPLOYEE" shall include every individual performing Services to the
Company or its Subsidiaries if the relationship between such individual and the
Company or its Subsidiaries is the legal relationship of employer and employee.
This definition of "Employee" is qualified in its entirety and is subject to
the definition set forth in section 3401(c) of the Code and the regulations
thereunder.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and as interpreted by the rules and regulations promulgated thereunder.
"EXERCISE PRICE" shall mean the amount for which one Share may be
purchased upon exercise of an Option, as specified by the Committee in the
applicable Stock Option Agreement, but in no event less than the par value per
Share.
"FAIR MARKET VALUE" shall mean the closing price of the shares on the
national securities exchange on which the Shares are listed (if the shares are
so listed) as reported in the Wall Street Journal on the applicable date (or,
if not so reported, as otherwise reported by the National Association of
Securities Dealers Automated Quotation System) or on the NASDAQ National Market
System (if the Shares are regularly quoted thereon), or, if not so listed or
regularly quoted, the mean of the closing bid and asked prices of the
securities in the over-the-counter market, on the applicable date or, if such
bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code.
"ISO" shall mean a stock option which is granted to an individual and
which meets the requirements of section 422(b) of the Code, pursuant to which
the Optionee has no tax consequences resulting from the grant or, subject to
certain holding period requirements, exercise of the option and the employer is
not entitled to a business expense deduction with respect thereto.
"NONSTATUTORY OPTION" shall mean any Option granted by the Committee that
does not meet the requirements of sections 421 through 424 of the Code, as
amended.
"OPTION" shall mean either an ISO or Nonstatutory Option, as the context
requires.
"OPTIONEE" shall mean a Participant who holds an Option.
"PARTICIPANTS" shall mean those individuals described in Section 1 of this
Plan selected by the Committee who are eligible under Section 4 of this Plan
for grants of either Options or Restricted Stock under this Plan.
"PERMANENT AND TOTAL DISABILITY" shall mean that an individual is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which
<PAGE>
can be expected to result in death or which has lasted or can be expected to
last for a continuous period of more than twelve (12) months. An individual
shall not be considered to suffer from Permanent and Total Disability unless
such individual furnishes proof of the existence thereof in such form and
manner, and at such times, as the Committee may reasonably require. The scope
of this definition shall automatically be reduced or expanded to the extent
that section 22(e)(3) of the Code is amended to reduce or expand the scope of
the definition of Permanent and Total Disability thereunder.
"PLAN" shall mean this SFX Entertainment, Inc. 1998 Stock Option and
Restricted Stock Plan, as amended from time to time.
"PLAN AWARD" shall mean the grant of either an Option or Restricted Stock,
as the context requires.
"RESTRICTED STOCK" shall have that meaning set forth in Section 7(a) of
this Plan.
"RESTRICTED STOCK ACCOUNT" shall have that meaning set forth in Section
7(a)(ii) of this Plan.
"RESTRICTED STOCK CRITERIA" shall have that meaning in Section 7(a)(iv) of
this Plan.
"RESTRICTION PERIOD" shall have that meaning in Section 7(a)(iii) of this
Plan.
"SERVICES" shall mean services rendered to the Company by a Participant.
"SHARE" shall mean one share of Stock, as adjusted in accordance with
Section 9 of this Plan (if applicable).
"STOCK" shall mean the Class A Common Stock of the Company, par value $.01
per share.
"STOCK OPTION AGREEMENT" shall mean the agreement executed between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to the granting of an Option.
"SUBSIDIARY" shall mean any corporation as to which more than fifty (50%)
percent of the outstanding voting stock or shares shall now or hereafter be
owned or controlled, directly by a person, any Subsidiary of such person, or
any Subsidiary of such Subsidiary.
"TEN-PERCENT SHAREHOLDER" shall mean a person that owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Company or any Subsidiary, taking into account the attribution
rules set forth in section 424 of the Code, as amended. For purposes of this
definition of "Ten Percent Shareholder" the term "outstanding stock" shall
include all stock actually issued and outstanding immediately after the grant
of an Option to an Optionee. "Outstanding stock" shall not include reacquired
shares or shares authorized for issuance under outstanding Options held by the
Optionee or by any other person.
"VEST DATE" shall have that meaning in Section 7(a)(v) of this Plan.
<PAGE>
SECTION 3
ADMINISTRATION
--------------
(A) GENERAL ADMINISTRATION. This Plan shall be administered by the
Committee, which shall consist of at least two persons, each of whom shall be
Disinterested Directors. The members of the Committee shall be appointed by the
Board of Directors for such terms as the Board of Directors may determine. The
Board of Directors may from time to time remove members from, or add members
to, the Committee. Vacancies on the Committee, however caused, may be filled by
the Board of Directors.
(B) COMMITTEE PROCEDURES. The Board of Directors shall designate one of
the members of the Committee as chairman. The Committee may hold meetings at
such times and places as it shall determine. The acts of a majority of the
Committee members present at meetings at which a quorum exists, or acts reduced
to or approved in writing by a majority of all Committee members, shall be
valid acts of the Committee. A majority of the Committee shall constitute a
quorum.
(C) AUTHORITY OF COMMITTEE. This Plan shall be administered by, or under
the direction of, the Committee constituted in such a manner as to comply at
all times with Rule 16b-3 (or any successor rule) under the Exchange Act. The
Committee shall administer this Plan so as to comply at all times with the
Exchange Act and, subject to the Code, shall otherwise have absolute and final
authority to interpret this Plan and to make all determinations specified in or
permitted by this Plan or deemed necessary or desirable for its administration
or for the conduct of the Committee's business including without limitation the
authority to take the following actions:
(i) To interpret this Plan and to apply its provisions;
(ii) To adopt, amend or rescind rules, procedures and forms relating
to this Plan;
(iii) To authorize any person to execute, on behalf of the Company,
any instrument required to carry out the purposes of this Plan;
(iv) To determine when Plan Awards are to be granted under this Plan;
(v) To select the Optionees and Participants;
(vi) To determine the number of Shares to be made subject to each
Plan Award;
(vii) To prescribe the terms, conditions and restrictions of each
Plan Award, including without limitation., the Exercise Price,
the vesting schedule and the determination whether an Option is
to be classified as an ISO or a Nonstatutory Option;
(viii) To amend any outstanding Stock Option Agreement (other than
the Exercise Price) or the terms, conditions and restrictions of
a grant of Restricted Stock, subject to applicable legal
restrictions and the consent of the Optionee or Participant, as
the case may be, who entered into such agreement, or accelerate
the vesting of any Plan Award;
(ix) To establish procedures so that an Optionee may obtain a loan
through a registered broker-dealer under the rules and
regulations of the Federal Reserve Board, for the purpose of
exercising an Option;
(x) To establish procedures for an Optionee (1) to have withheld
from the total number of Shares to be acquired upon the exercise
of an Option that number of Shares having a Fair Market Value,
<PAGE>
which, together with such cash as shall be paid in respect of
fractional shares, shall equal the Exercise Price, and (2) to
exercise a portion of an Option by delivering that number of
Shares already owned by an Optionee having a Fair Market Value
which shall equal the partial Exercise Price and to deliver the
Shares thus acquired by such Optionee in payment of Shares to be
received pursuant to the exercise of additional portions of the
Option, the effect of which shall be that an Optionee can in
sequence utilize such newly acquired shares in payment of the
Exercise Price of the entire Option, together with such cash as
shall be paid in respect of fractional shares;
(xi) To establish procedures whereby a number of Shares may be
withheld from the total number of Shares to be issued upon
exercise of an Option, to meet the obligation of withholding for
federal and state income and other taxes, if any, incurred by
the Optionee upon such exercise; and
(xii) To take any other actions deemed necessary or advisable for the
administration of this Plan.
All interpretations and determinations of the Committee made with respect
to the granting of Plan Awards shall be final, conclusive, and binding on all
interested parties. The Committee may make grants of Plan Awards on an
individual or group basis. No member of the Committee shall be liable for any
action that is taken or is omitted to be taken if such action or omission is
taken in good faith with respect to this Plan or grant of any Plan Award.
(D) HOLDING PERIOD. The Committee may in its sole discretion require as a
condition to the granting of any Plan Award, that a Participant hold the Plan
Awards for a period of six months following the date of such acquisition. This
condition shall be satisfied with respect to a derivative security if at least
six months elapse from the date of acquisition of the derivative security to
the date of disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security.
SECTION 4
ELIGIBILITY
-----------
(A) GENERAL RULE. Subject to the limitations set forth in subsection b
below or elsewhere in this Plan, Participants shall be eligible to participate
in this Plan.
(B) NON-EMPLOYEE INELIGIBLE FOR ISOS. In no event shall an ISO be granted
to any individual who is not an Employee on the Date of Grant.
SECTION 5
SHARES SUBJECT TO PLAN
----------------------
BASIC LIMITATION. Shares offered under this Plan may be authorized but
unissued Shares or Shares that have been reacquired by the Company. The
aggregate number of Shares that are available for issuance under this Plan
shall not exceed two million (2,000,000) Shares, subject to adjustment pursuant
to Section 9 of this Plan. The Committee shall not issue more Shares than are
available for issuance under this Plan. The number of Shares that are subject
to unexercised Options at any time under this Plan shall not exceed the number
of Shares that remain available for issuance under this Plan. The Company,
during the term of this Plan, shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of this Plan.
<PAGE>
ADDITIONAL SHARES. In the event any outstanding Option for any reason
expires, is canceled or otherwise terminates, the Shares allocable to the
unexercised portion of such Option shall again be available for issuance under
this Plan. In the event that Shares issued under this Plan revert to the
Company prior to the Vest Date under a grant of Restricted Stock, such Shares
shall again be available for issuance under this Plan.
SECTION 6
TERMS AND CONDITIONS OF OPTIONS
-------------------------------
(A) TERM OF OPTION. The term of each Option shall be ten (10) years from
the Date of Grant or such shorter term as may be determined by the Committee;
provided, however, in the case of an ISO granted to a Ten-Percent Shareholder,
the term of such ISO shall be five (5) years from the Date of Grant or such
shorter time as may be determined by the Committee.
(B) EXERCISE PRICE AND METHOD OF PAYMENT.
(I) EXERCISE PRICE. The Exercise Price shall be such price as is
determined by the Committee in its sole discretion and set forth in the
Stock Option Agreement; provided, however, in the case of an ISO granted
to an Optionee, the Exercise Price shall not be less than 100% of the Fair
Market Value of the Shares subject to such option on the Date of Grant (or
110% in the case of an Option granted to a Participant who is a
Ten-Percent Shareholder on the Date of Grant).
(II) PAYMENT OF SHARES. Payment for the Shares upon exercise of an
Option shall be made in cash, by certified check, or if authorized by the
Committee, by delivery of other Shares having a Fair Market Value on the
date of delivery equal to the aggregate exercise price of the Shares as to
which said Option is being exercised, or by any combination of such
methods of payment or by any other method of payment as may be permitted
under applicable law and this Plan and authorized by the Committee under
Section 3(c) of this Plan.
(C) EXERCISE OF OPTION.
(I) PROCEDURE FOR EXERCISE; RIGHTS OF SHAREHOLDER. Any Option granted
hereunder shall be exercisable at such times under such conditions as
shall be determined by the Committee, including without limitation
performance criteria with respect to the Company and/or the Optionee and
in accordance with the terms of this Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Stock Option Agreement by the Optionee entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received
<PAGE>
by the Company. Full payment may, as authorized by the Committee, consist of
any form of consideration and method of payment allowable under Section
6(b)(ii) of this Plan. Upon the receipt of notice of exercise and full payment
for the Shares, the Shares shall be deemed to have been issued and the Optionee
shall be entitled to receive such Shares and shall be a shareholder with
respect to such Shares, and the Shares shall be considered fully paid and
nonassessable. No adjustment will be made for a dividend or other right for
which the record date is prior to the date on which the stock certificate is
issued, except as provided in Section 9 of this Plan.
Each exercise of an Option shall reduce, by an equal number, the total
number of Shares that may thereafter be purchased under such Option.
(II) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. Except as
provided in Subsections 6(c)(iii) and 6(c)(iv) below, an Optionee holding
an Option who ceases to be an Employee, a Consultant or a director of the
Company may, but only until the earlier of the date (x) the Option held by
the Optionee expires, or (y) thirty (30) days after the date such Optionee
ceases to be an Employee, a Consultant or a director, exercise the Option
to the extent that the Optionee was entitled to exercise it on such date;
provided, however, that in the event the Optionee is an Employee and is
terminated without cause (as determined in the sole discretion of the
Committee) then the thirty (30) day period described in this sentence
shall be automatically extended to ninety (90) days (and in the case of a
Nonstatutory Option, such period shall be automatically extended to six
(6) months), unless the Committee further extends such period in its sole
discretion. To the extent that the Optionee was not entitled to exercise
an Option on such date, or if the Optionee does not exercise it within the
time specified herein, such Option shall terminate. The Committee shall
have the authority to determine the date an Optionee ceases to be an
Employee, a Consultant or a director.
(III) PERMANENT AND TOTAL DISABILITY.
Notwithstanding the provisions of Section 6(c)(ii) above, in the event an
Optionee is unable to continue to perform Services for the Company or any of
its Subsidiaries as a result of such Optionee's Permanent and Total Disability
(and, for ISOs, at the time such Permanent and Total Disability begins, the
Optionee was an Employee and had been an Employee since the Date of Grant),
such Optionee may exercise an Option in whole or in part notwithstanding that
such Option may not be fully exercisable, but only until the earlier of the
date (x) the Option held by the Optionee expires, or (y) twelve (12) months
from the date of termination of Services due to such Permanent and Total
Disability. To the extent the Optionee is not entitled to exercise an Option on
such date or if the Optionee does not exercise it within the time specified
herein, such Option shall terminate.
(IV) DEATH OF AN OPTIONEE. Upon the death of an Optionee, any Option
held by an Optionee shall terminate and be of no further effect; provided,
however, notwithstanding the provisions of Section 6(c)(ii) above, in the
event an Optionee's death occurs during the term of an Option held by such
Optionee and, at the time of death, the Optionee was an Employee,
Consultant or director (and, for ISOs, the Optionee had been an Employee
since the Date of Grant), the Option may be exercised in whole or in part
notwithstanding that such Option may not have been fully exercisable on
the date of the Optionee's death, but only until the earlier of the date
(x) the Option held by the Optionee expires, or (y) twelve (12) months
from the date of the Optionee's death, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or
inheritance. To the extent the Option is not entitled to be exercised on
such date or if the Option is not exercised within the time specified
herein, such Option shall terminate.
<PAGE>
(D) NON-TRANSFERABILITY OF OPTIONS. Except as may be permitted by the
Committee in its sole discretion, any Option granted under this Plan may not be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder, and is not
assignable by operation of law or subject to execution, attachment or similar
process. During the Optionee's lifetime, any Option granted under this Plan can
only be exercised by such Optionee. Any attempted sale, pledge, assignment,
hypothecation or other transfer of the Option contrary to the provisions hereof
and the levy of any execution, attachment or similar process upon the Option
shall be null and void and without force or effect. No transfer of the Option
by will or by the laws of descent and distribution shall be effective to bind
the Company unless the Company shall have been furnished written notice thereof
and an authenticated copy of the will and/or such other evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of the
Option. The terms of any Option transferred by will or by the laws of descent
and distribution shall be binding upon the executors, administrators, heirs and
successors of Optionee.
(E) TIME OF GRANTING OPTIONS. Any Option granted hereunder shall be deemed
to be granted on the Date of Grant. Written notice of the Committee's
determination to grant an Option to a Participant, evidenced by a Stock Option
Agreement, dated as of the Date of Grant, shall be given to such Participant
within a reasonable time after the Date of Grant.
(F) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the limitations
of this Plan, the Committee may modify, extend or renew outstanding Options or
may accept the cancellation of outstanding Options (to the extent not
previously exercised) for the granting of new Options in substitution therefor.
The foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair the Optionee's rights or obligations
under such Option; provided that the Committee may, in its sole discretion, and
without the consent of the Optionee or any other person, reduce the exercise
price of all or any part of any Option or accelerate the vesting of all or part
of any Option.
(G) RESTRICTIONS ON TRANSFER OF SHARES. Any Shares issued upon exercise of
an Option shall be subject to such rights of repurchase and other transfer
restrictions as the Committee may determine in its sole discretion. Such
restrictions shall be set forth in the applicable Stock Option Agreement.
(H) SPECIAL LIMITATION ON ISOS. To the extent that the aggregate Fair
Market Value (determined on the Date of Grant) of the Shares with respect to
which ISOs are exercisable for the first time by an individual during any
calendar year under this Plan, and under all other plans maintained by the
Company, exceeds $100,000, such Options shall be treated as Options that are
not ISOs.
(I) LEAVES OF ABSENCE. Leaves of absence approved by the Committee which
conform to the policies of the Company shall not be considered termination of
employment if the employer-employee relationship as defined under the Code or
the regulations promulgated thereunder otherwise exists.
(J) LIMITATION ON GRANTS OF OPTIONS TO COVERED EMPLOYEES. The total number
of Shares for which Options may be granted and which may be awarded as
Restricted Stock to any "covered employee" within the meaning of Section 162(m)
of the Code and the regulations promulgated thereunder, as amended from time to
time, during any one-year period shall not exceed 350,000 in the aggregate.
<PAGE>
(K) DISQUALIFYING DISPOSITIONS. The Stock Option Agreement evidencing any
ISO granted under this Plan shall provide that if the Optionee makes a
disposition, within the meaning of Section 425(c) of the Code and the
regulations promulgated thereunder, of any share or shares issued to him
pursuant to the exercise of the ISO within the two-year period commencing on
the day after the Date of Grant of such Option or within a one-year period
commencing on the day after the date of transfer of the share or shares to him
pursuant to the exercise of such Option, he shall, within ten days of such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of federal income tax withholding required by law.
(L) WITHHOLDING TAXES. The Committee shall require an Optionee to pay to
the Company at the time of exercise of an Option the amount that the Company
deems necessary to satisfy its obligation to withhold federal, state or local
income or other taxes incurred by reason of the exercise. Upon the exercise of
an Option requiring tax withholding, an Optionee may either pay such taxes in
cash or make a written election to have Shares withheld by the Company from the
shares otherwise to be received by the Optionee. The acceptance of any such
election by an Optionee shall be at the sole discretion of the Committee. In
addition, the Committee may require the Company to withhold Shares from the
Shares otherwise to be received by an Optionee upon exercise of an option. The
number of Shares withheld pursuant to this paragraph shall have an aggregate
Fair Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes.
SECTION 7
RESTRICTED STOCK
----------------
(A) AUTHORITY TO GRANT RESTRICTED STOCK. The Committee shall have the
authority to grant to Participants Shares that are subject to certain terms,
conditions and restrictions (the "Restricted Stock"). The Restricted Stock may
be granted by the Committee either separately or in combination with Options.
The terms, conditions and restrictions of the Restricted Stock shall be
determined from time to time by the Committee without limitation, except as
otherwise provided in this Plan; provided, however, that each grant of
Restricted Stock shall require the Participant to remain an Employee of (or
otherwise provide Services to) the Company or any of its Subsidiaries for at
least six (6) months from the Date of Grant. The granting, vesting and issuing
of the Restricted Stock shall also be subject to the following provisions:
(I) NATURE OF GRANT. Restricted Stock shall be granted to
Participants for Services rendered and at no additional cost to
Participant; provided, however, that the value of the Services performed
must, in the opinion of the Committee, equal or exceed the par value of
the Restricted Stock to be granted to the Participant.
(II) RESTRICTED STOCK ACCOUNT. The Company shall establish a
restricted stock account (the "Restricted Stock Account") for each
Participant to whom Restricted Stock is granted, and such Restricted Stock
shall be credited to such account. No certificates will be issued to the
Participant with respect to the Restricted Stock until the Vest Date as
provided herein. Every credit of Restricted Stock under this Plan to a
Restricted Stock Account shall be considered "contingent" and unfunded
until the Vest Date. Such contingent credits shall be considered
bookkeeping entries only, notwithstanding the "crediting" of "dividends"
as provided herein. Such accounts shall be subject to the general claims
of the Company's creditors. The Participant's rights to the Restricted
Stock Account shall be no greater than that of a general creditor of the
Company. Nothing contained herein shall be construed as creating a trust
or fiduciary relationship between the Participants and the Company, the
Board of Directors or the Committee.
<PAGE>
(III) RESTRICTIONS. The terms, conditions and restrictions of the
Restricted Stock shall be determined by the Committee on the Date of
Grant. The Restricted Stock may not be sold, assigned, transferred,
redeemed, pledged or otherwise encumbered during the period in which the
terms, conditions and restrictions apply (the "Restriction Period"). More
than one grant of Restricted Stock may be outstanding at any one time, and
the Restriction Periods may be of different lengths. Receipt of the
Restricted Stock is conditioned upon satisfactory compliance with the
terms, conditions and restrictions of this Plan and those imposed by the
Committee.
(IV) RESTRICTED STOCK CRITERIA. At the time of each grant of
Restricted Stock, the Committee in its sole discretion may establish
certain criteria to determine the times at which restrictions placed on
Restricted Stock shall lapse (i.e., the termination of the Restriction
Period), which criteria may include without limitation performance
measures and targets and/or holding period requirements (the "Restricted
Stock Criteria"). The Committee may establish a corresponding relationship
between the Restricted Stock Criteria and (x) the number of Shares of
Restricted Stock that may be earned, and (y) the extent to which the
terms, conditions and restrictions on the Restricted Stock shall lapse.
Restricted Stock Criteria may vary among grants of Restricted Stock;
provided, however, that once the Restricted Stock Criteria are established
for a grant of Restricted Stock, the Restricted Stock Criteria shall not
be modified with respect to such grant.
(V) VESTING. On the date the Restriction Period terminates, the
Restricted Stock shall vest in the Participant (the "Vest Date"), who may
then require the Company to issue certificates evidencing the Restricted
Stock credited to the Restricted Stock Account of such Participant.
(VI) DIVIDENDS. The Committee may provide from time to time that
amounts equivalent to dividends shall be payable with respect to the
Restricted Stock held in the Restricted Stock Account of a Participant.
Such amounts shall be credited to the Restricted Stock Account and shall
be payable to the Participant on the Vest Date.
(VII) TERMINATION OF SERVICES. If a Participant (x) with the consent
of the Committee, ceases to be an Employee of, or otherwise ceases to
provide Services to, the Company or any of its Subsidiaries, or (y) dies
or suffers from Permanent and Total Disability, the vesting or forfeiture
(including without limitation the terms, conditions and restrictions) of
any grant under this Section 7 shall be determined by the Committee in its
sole discretion, subject to any limitations or terms of this Plan. If the
Participant ceases to be an Employee of, or otherwise ceases to provide
Services to, the Company or any of its Subsidiaries for any other reason,
all grants of Restricted Stock under this Plan shall be forfeited (subject
to the terms of this Plan).
(B) DEFERRAL OF PAYMENTS.
The Committee may establish procedures by which a Participant may elect to
defer the transfer of Restricted Stock to the Participant. The Committee shall
determine the terms and conditions of such deferral in its sole discretion.
7
<PAGE>
SECTION 8
ISSUANCE OF SHARES
------------------
As a condition to the transfer of any Shares issued under this Plan, the
Company may require an opinion of counsel, satisfactory to the Company, to the
effect that such transfer will not be in violation of the Securities Act of
1933, as amended (the "Securities Act"), or any other applicable securities
laws, rules or regulations, or that such transfer has been registered under
federal and all applicable state securities laws. The Company may refrain from
delivering or transferring Shares issued under this Plan until the Committee
has determined that the Participant has tendered to the Company any and all
applicable federal, state or local tax owed by the Participant as the result of
the receipt of a Plan Award, the exercise of an Option or the disposition of
any Shares issued under this Plan, in the event that the Company reasonably
determines that it might have a legal liability to satisfy such tax. The
Company shall not be liable to any person or entity for damages due to any
delay in the delivery or issuance of any stock certificate evidencing any
Shares for any reason whatsoever.
SECTION 9
CAPITALIZATION ADJUSTMENTS; MERGER; CHANGE IN CONTROL
-----------------------------------------------------
(A) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Option, the aggregate number of Shares that have been authorized
for issuance under this Plan and the number of Shares of Restricted Stock
credited to any Restricted Stock Account of a Participant (as well as the
Exercise Price covered by any outstanding Option), shall be proportionately
adjusted for any increase or decrease in the number of issued Shares resulting
from a stock split, payment of a stock dividend with respect to the Stock or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company. Such adjustment shall be made by the
Committee in its sole discretion, which adjustment shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
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 subject to an
Option.
(B) DISSOLUTION, LIQUIDATION, SALE OF ASSETS OR MERGER. In the event of
the dissolution or liquidation of the Company, other than pursuant to a
Reorganization (hereinafter defined), any Option granted under the Plan shall
terminate as of a date to be fixed by the Committee, provided that not less
than 30 days written notice of the date so fixed shall be given to each
Optionee and each such Optionee shall have the right during such period to
exercise his Options as to all or any part of the Shares covered thereby
including Shares as to which such Options would not otherwise be exercisable by
reason of an insufficient lapse of time.
In the event of a Reorganization in which the Company is not the surviving
or acquiring company, or in which the Company is or becomes a wholly-owned
subsidiary of another company after the effective date of the Reorganization,
then
(i) if there is no plan or agreement respecting the Reorganization
("Reorganization Agreement") or if the Reorganization Agreement
does not specifically provide for the change, conversion or
exchange of the Shares under outstanding unexercised Options for
securities of another corporation, then the Committee shall take
such action, and the Options shall terminate, as provided above;
or
(ii) if there is a Reorganization Agreement and if the Reorganization
Agreement specifically provides for the change, conversion or
exchange of the shares under outstanding or unexercised options
for securities of another corporation, then the
<PAGE>
Committee shall adjust the shares under such outstanding
unexercised Options (and shall adjust the Shares which are
then available to be optioned, if the Reorganization
Agreement makes specific provisions therefore) in a manner
not inconsistent with the provisions of the Reorganization
Agreement for the adjustment, change, conversion or
exchange of such stock and such options.
The term "Reorganization" as used in this Subsection 9(b) shall mean any
statutory merger, statutory consolidation, sale of all or substantially all of
the assets of the Company, or sale, pursuant to an agreement with the Company,
of securities of the Company pursuant to which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization.
Except as provided above in this Section 9(b) and except as otherwise
provided by the Committee in its sole discretion, any Options shall terminate
immediately prior to the consummation of such proposed action.
Fractional shares resulting from any adjustments pursuant to this Section
may be settled in cash or otherwise as the Committee shall determine. Notice of
any adjustment shall be given by the Company to each holder of an Option or
share of Restricted Stock which shall have been so adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.
(C) CHANGE IN CONTROL. Subject to Section 9(b), in the event there occurs
a Change of Control, (i) the Optionees shall have the right to exercise from
and after the date of the Change in Control the Option held by such Optionee in
whole or in part notwithstanding that such Option may not be fully exercisable,
and (ii) any and all restrictions on any Restricted Stock credited to a
Restricted Stock Account shall lapse and such stock shall immediately vest in
the Participants notwithstanding that the Restricted Stock held in such account
was unvested.
SECTION 10
NO EMPLOYMENT RIGHTS
--------------------
No provision of this Plan, under any Stock Option Agreement or under any
grant of Restricted Stock shall be construed to give any Participant any right
to remain an Employee of, or provide Services to, the Company or any of its
Subsidiaries or to affect the right of the Company to terminate any
Participant's service at any time, with or without cause.
SECTION 11
TERM OF PLAN; EFFECT OF AMENDMENT OR TERMINATION
------------------------------------------------
(A) EFFECTIVE DATE; TERM OF PLAN. This Plan shall become effective upon
its adoption by the Board of Directors. This Plan shall continue in effect for
a term of ten (10) years unless sooner terminated under this Section 11.
(B) AMENDMENT AND TERMINATION. The Board of Directors in its sole
discretion may terminate this Plan at any time. The Board of Directors may
amend this Plan at any time in such respects as the Board of Directors may deem
advisable; provided, that any change in the aggregate number of Shares that may
be issued under this Plan, other than in connection with an adjustment under
Section 9 of this Plan, shall require approval of the holders of a majority of
the outstanding Shares entitled to vote.
<PAGE>
(C) EFFECT OF TERMINATION. In the event this Plan is terminated, no Shares
shall be issued under this Plan, except upon exercise of an Option granted
prior to such termination or issuance of Shares of Restricted Stock previously
credited to a Restricted Stock Account. The termination of this Plan, or any
amendment thereof, shall not affect any Shares previously issued to a
Participant, any Option previously granted under this Plan or any Restricted
Stock previously credited to a Restricted Stock Account.
SECTION 12
GOVERNING LAW
-------------
THIS PLAN AND ANY AND ALL STOCK OPTION AGREEMENTS AND AGREEMENTS RELATING
TO THE GRANT OF RESTRICTED STOCK EXECUTED IN CONNECTION WITH THIS PLAN SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
<PAGE>
OPTION AGREEMENT
SFX ENTERTAINMENT, INC.
This Agreement, effective as of March 20, 1998, between SFX ENTERTAINMENT,
INC., a Delaware corporation (the "Company"), and Peter A. Strauss ("Grantee").
WHEREAS, Company has agreed to employ Grantee; and
WHEREAS, the Company desires to provide an incentive to Grantee to
encourage stock ownership and to remain an employee of the Company; and
WHEREAS, the achievement of these goals will be assisted by the grant of
a non-qualified option to purchase shares of the Company's Class A Common
Stock, $.01 par value (the "Class A Common Stock");
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. The Company hereby grants to Grantee, subject to the
terms and conditions herein set forth, the right and option to purchase from
the Company all or any part of an aggregate of 6,500 shares of Class A Common
Stock at the purchase price of $13.33 per share representing the fair market
value as of the date hereof, such option to be exercisable as hereinafter
provided.
2. Terms and Conditions. The option evidenced hereby is subject to the
following terms and conditions:
(a) Expiration Date. The option shall expire on March 20, 2008.
(b) Exercise of Option. The option is fully, completely and
unconditionally vested as of the date of this Agreement and may
be exercised, in whole or in part, at any time (from time to
time) before the expiration date of the option as provided in
paragraph (a) above. Any exercise shall be accompanied by a
written notice to the Company specifying the number of shares as
to which the option is being exercised. If Grantee shall so
request, shares of the Class A Common Stock purchased upon
exercise of an option may be issued in the name of Grantee or
another person.
(c) Payment of Purchase Price. At the time of any exercise, Grantee
shall deliver to the Company, together with the notice provided
in paragraph (b) above, the full amount of the purchase price
therefor either by bank cashier's check or certified check
payable to the Company or in Class A Common Stock
<PAGE>
delivered by Grantee valued at the Closing Price of the Class A
Common Stock, or any combination of cash or Class A Common Stock.
The term "Closing Price" shall be the last sale price on the date
of the exercise of the option or, in the case no sale takes place
on such date, the average of the high and low sales prices on the
next preceding trading day, in either case as reported by NASDAQ,
or if the shares of Class A Common Stock are not listed or
admitted to trading on NASDAQ, the average high bid and low asked
prices on the principal National Securities Exchange in which the
Class A Common Stock is listed or admitted to trading. If the
Class A Common Stock is not traded such that the Closing Price can
be determined in accordance with the preceding sentence, the
Closing Price shall mean the fair market value of the Class A
Common Stock as of the last day of the measuring period as
determined by an independent investment banker approved by the
Company and Grantee.
(d) Exercise Upon Termination of Employment. Any option granted
hereunder may be exercised by Grantee, his heirs, devises,
legatees, legal representative or assigns at any time up to and
including March 20, 2008, whether or not Grantee shall cease to
be an employee of the Company for any reason, including, without
limitation, termination by voluntary resignation, by action of
the Company, for cause, without cause, or by reason of death or
disability.
(e) Transferability of Option and Shares Acquired Upon Exercise of
Option. This option shall be transferable only by will or the
laws of descent and distribution; provided Grantee may transfer
the option with the consent of the Company. Except as limited by
applicable securities laws, shares of Class A Common Stock
acquired upon exercise of this option hereunder shall be freely
tradeable.
(f) Adjustment of the Changes in the Stock. (i) In the event the
shares of Class A Common Stock, as presently constituted, shall
be changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another
corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split, reverse split,
combination of shares, or otherwise) or if the number of such
shares of Class A Common Stock shall be increased through the
payment of a stock dividend, then there shall be substituted for
or added to each share of Class A Common Stock theretofore
appropriated or thereafter subject or which may become subject to
an option, the number and kind of shares of stock or other
securities into which each outstanding share of Class A Common
Stock shall be so changed, or to which each such share shall be
entitled, as the case may be. Outstanding options shall also be
appropriately amended as to price and other terms as may be
necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the
outstanding shares of the Class A Common Stock, or of any stock
or other securities into
<PAGE>
which such Class A Common Stock shall have been changed, or for
which it shall have been exchanged, then, if the Board of
Directors shall, in its sole discretion, determine that such
change equitably requires an adjustment in any option theretofore
granted, such adjustments shall be made in accordance with such
determination. Fractional shares resulting from any adjustment in
options may be settled in cash or otherwise as the Committee
shall determine. Notice of any adjustment shall be given by the
Company to each holder of an option which shall have been so
adjusted and such adjustment (whether or not such notice is
given) shall be effective and binding.
(ii) Further, in the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares,
consolidation, merger (other than a merger or consolidation which
does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares), any sale or transfer by the
Company of all or substantially all of its assets or any tender
offer or exchange offer for or the acquisition, directly or
indirectly, by any person or group of all or a majority of the
then outstanding voting securities of the Company, rights
offering, or any other change in the corporate structure or
rights with respect to any shares of the Company, adjustments
shall be made to the number or type of stock subject to this
Agreement and, in order to prevent dilution or enlargement of the
rights of Grantee, to the number of shares of Class A Common
Stock subject to the option, and the type and option price of
the Class A Common Stock subject to the then outstanding option.
(g) Withholding. Grantee may elect that shares of the Class A Common
Stock valued at the Closing Price be applied towards the payment
of withholding taxes.
(3) Registration. The Company shall register all the shares underlying
the option on a Registration Statement with the Registration Statement filed
for the shares underlying the Company's 1998 Stock Option and Restricted Stock
Plan (the "Plan") or on Form S-8 as soon as reasonably practical after the
filing of the Registration Statement for the Plan, but in no event later than
120 days after the date the Class A Common Stock shall first be traded on
NASDAQ (on other than a when issued basis). If the shares underlying the option
granted hereunder have not been registered by the Company by the date of
exercise of the option, the Company shall cause such shares to be registered on
Form S-3 upon Grantee's exercise of the option.
(4) Non-Qualified Stock Options. The Company and Grantee acknowledge the
stock options granted hereunder shall be treated as non-qualified stock options
for U.S. federal income tax purposes.
(5) Grantee to Have No Rights as a Stockholder. With regard to the stock
underlying the option (from time to time) Grantee shall not have the rights of
a stockholder until Grantee has timely exercise the option relating to such
stock and paid in full the option price relating thereto.
<PAGE>
6. Notice. Notice to the Company shall be deemed given if in writing and
mailed to the Secretary of the Company at its principal executive offices by
first class, certified mail at the then principal office of the Company.
7. Governing Law. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware.
8. Binding Agreement. This Agreement constitutes the binding agreement of
the parties with respect to the grant of options to Grantee. The Company
represents and warrants to Grantee that this Agreement and the grant of options
hereunder has been duly authorized pursuant to any necessary corporate action.
This Agreement may not be modified except by the mutual agreement of the
parties in writing. In the event of any overlap, inconsistency, contradiction
or any other conflict between this Agreement and any other agreement, option
plan, policy or other statement, this Agreement shall be controlling.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year written above.
SFX ENTERTAINMENT, INC.
By: /s/ Richard A. Liese
------------------------
Richard A. Liese
Vice President
/s/ Peter A. Strauss
------------------------
Peter A. Strauss
- 4 -
<PAGE>
July 7, 1998
SFX Entertainment, Inc.
650 Madison Avenue
16th Floor
New York, New York 10022
Gentlemen:
SFX Entertainment, Inc. a Delaware corporation (the "Company"), intends to
file with the Securities and Exchange Commission (the "Commission") a
registration statement (the "Registration Statement") on Form S-8 under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
covers 2,006,500 shares of Class A common stock, par value $.01 per share
("Class A Common Stock"), of the Company, including such additional shares of
Class A Common Stock as may become issuable pursuant to the anti-dilution
provisions of the Plan or the Agreement (such shares collectively referred to
as the "Securities"). Such Securities are to be issued pursuant to the
Company's 1998 Stock Option and Restricted Stock Plan (the "Plan") or an
employee stock option agreement (the "Agreement").
We have acted as counsel to the Company in connection with the preparation
and filing of the Registration Statement. In rendering this opinion we have
examined such corporate records, documents and instruments of the Company and
such certificates of public officials, have received such representations from
officers of the Company, and have reviewed such questions of law as in our
judgment are necessary, relevant or appropriate to enable us to render the
opinion expressed below. In such examination, we have assumed the genuineness
of all signatures, the authenticity of all corporate records, documents and
instruments submitted to us as originals, the conformity to original documents
of all documents submitted to us as conformed, certified or photostatic copies
thereof, and the authenticity of the originals of such photostatic, certified
or conformed copies.
Based upon such examination and review and upon representations made to us
by officers of the Company, we are of the opinion that upon issuance and
delivery of the Securities in accordance with the terms and conditions of the
Plan or the Agreement, and upon receipt by the Company of the full
consideration for the Securities as determined pursuant to the Plan or the
Agreement, the Securities will be legally issued, fully paid and nonassessable
shares of Class A Common Stock.
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we come
within the category of persons whose consent is required by Section 7 of the
Act or the rules and regulations of the Commission thereunder.
Respectfully submitted,
BAKER & MCKENZIE
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Interest of Named
Experts and Counsel" and to the incorporation by reference of our reports dated
(i) March 5, 1998, except for Notes 1 and 11 as to which the date is April 27,
1998, with respect to the consolidated financial statements of SFX
Entertainment, Inc., (ii) October 2, 1997 with respect to the consolidated
financial statements of Delsener/Slater Enterprises, Ltd. and Affiliated
Companies, (iii) December 13, 1996 with respect to the consolidated financial
statements of PACE Entertainment Corporation and Subsidiaries, (iv) May 22,
1998 with respect to the consolidated financial statements of the Contemporary
Group, (v) March 18, 1998 with respect to the combined financial statements of
SJS Entertainment Corporation, (vi) November 20, 1997 with respect to the
combined financial statements of The Album Network, Inc. and Affiliated
Companies, (vii) March 20, 1998 with respect to the consolidated financial
statements of BG Presents, Inc and Subsidiaries, (viii) March 13, 1998 with
respect to the combined financial statements of Concert/Southern Promotions and
Affiliated Companies, (ix) April 10, 1998 with respect to the combined
financial statements of Falk Associates Management Enterprises, Inc, and (x)
May 1, 1998 with respect to the combined financial statements of Blackstone
Entertainment, LLC, in the Registration Statement on Form S-8 and related
Prospectus of SFX Entertainment, Inc. for the registration of shares of its
Class A Common Stock pertaining to the 1998 Stock Option and Restricted Stock
Plan.
/s/ ERNST & YOUNG LLP
New York, New York
July 6, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report on the combined financial statements of Connecticut Performing Arts,
Inc. and Connecticut Performing Arts Partners dated March 21, 1997 (and to all
references to our Firm) included in or made a part of the Registration
Statement on Form S-8.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
July 7, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports on the consolidated financial statements of PACE Entertainment
Corporation and subsidiaries dated December 15, 1997 (except with respect to
the matters discussed in Note 12, as to which the date is December 22, 1997)
and Pavilion Partners dated December 15, 1997 (except with respect to the
matters discussed in Note 11, as to which the date is December 22, 1997), and
to all references to our Firm included in or made a part of this registration
statement of SFX Entertainment, Inc.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
July 7, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement of our report on the combined
financial statements of Deer Creek Partners, L.P. (formerly Sand Creek
Partners, L.P.) and Murat Centre, L.P. dated September 29, 1997 (and to all
references to our firm) included (or incorporated by reference) in or made a
part of the Registration Statement on Form S-8 of SFX Entertainment, Inc.
/s/ ARTHUR ANDERSEN LLP
Indianapolis, Indiana,
July 6, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated February 27, 1998 on the financial statements of Riverport
Performing Arts Centre, Joint Venture, as of and for the years ended December
31, 1997 and 1996, (and all references to our firm) included or made part of
the Registration Statement on Form S-8.
/s/ ARTHUR ANDERSEN LLP
St. Louis, Missouri
July 6, 1998
<PAGE>
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-8 of our report dated December 12, 1996,
relating to the financial statements of Pavilion Partners, which appears in
such Prospectus. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PRICEWATERHOUSECOOPERS LLP
Houston, Texas
July 7, 1998
