<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1999
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)
1999 STOCK OPTION AND RESTRICTED STOCK PLAN
(Full title of the Plan)
ROBERT F.X. SILLERMAN
EXECUTIVE CHAIRMAN
SFX ENTERTAINMENT, INC.
650 MADISON AVENUE, 16TH FLOOR
NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(212) 838-3100
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
<S> <C>
- --------------------------------------------------------------------------------------------------------------------
TITLE OF SECURITIES AMOUNT TO BE
TO BE REGISTERED (1) REGISTERED (1)
- --------------------------------------------------------------------------------------------------------------------
Class A Common Stock,
$.01 par value per share ............ 4,500,000 shares
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
TITLE OF SECURITIES PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED (1) PRICE PER SHARE (2) OFFERING PRICE(3) REGISTRATION FEE
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Class A Common Stock,
$.01 par value per share ........... $32.875 $147,937,500 $41,126.62
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Shares of Class A common stock of SFX Entertainment, Inc. (the
"Company" or "SFX"), par value $.01 per share (the "Class A Common
Stock"), being registered hereby relate to the SFX Entertainment, Inc.
1999 Stock Option and Restricted Stock Plan (the "Plan"). 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 Class A Common Stock as may become issuable pursuant to the
anti-dilution provisions of the Plan.
(2) Based upon the average of the high and low prices of the Class A Common
Stock as reported on the New York Stock Exchange on October 6, 1999, in
accordance with Rule 457(c) under the Securities Act.
(3) This amount is the sum of the assumed aggregate price of the Class A
Common Stock being registered hereunder pursuant to the Plan, based upon
the average of the high and low prices of the Class A Common Stock as
reported on the New York Stock Exchange on October 6, 1999, in accordance
with Rule 457(a), (c) and (h) under the Securities Act.
In accordance with the provisions of Section 462 promulgated under the
Securities Act, this Registration Statement will become effective upon filing
with the Securities and Exchange Commission.
This Registration Statement, including all exhibits, contains 25 pages. The
exhibit index may be found on page II-7 of this Registration Statement.
- --------------------------------------------------------------------------------
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The document(s) containing the information specified in Part I of Form S-8
will be sent or given to participants in the 1999 Stock Option and Restricted
Stock Plan (the "Plan") as specified by Rule 428(b)(1) of the Securities Act of
1933, as amended (the "Securities Act"). Such documents are not being filed with
or included in this Form S-8 (by incorporation by reference or otherwise) in
accordance with the rules and regulations of the Securities and Exchange
Commission (the "SEC"). These documents and the documents incorporated by
reference into this Registration Statement pursuant to Item 3 of Part II of this
Registration Statement, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THIS REGISTRATION STATEMENT
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 SFX 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.
1. SFX's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, filed on March 31, 1999.
2. SFX's Current Report on Form 8-K dated January 31, 1999.
3. The historical financial statements and related notes and audit reports
included on pages F-1 through F-142 in SFX's Current Report on Form 8-K
dated April 14, 1999.
4. SFX's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1999, filed on May 14, 1999.
5. SFX's Current Report on Form 8-K dated June 1, 1999.
6. SFX's Current Report on Form 8-K dated June 22, 1999.
7. SFX's Current Report on Form 8-K dated June 23, 1999.
8. SFX's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1999, filed on August 3, 1999.
9. SFX's Current Report on Form 8-K dated August 23, 1999.
10. SFX's Current Report on Form 8-K dated August 27, 1999.
11. SFX's Current Report on Form 8-K dated September 17, 1999, as amended by
SFX's Current Report on Form 8-K/A filed on September 30, 1999.
12. The description of SFX's Class A common stock contained in the
registration statement on Form 8-A filed on May 7, 1999.
Any statement contained in a document incorporated or deemed to be
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 subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
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<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
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 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.
SFX's Certificate of Incorporation provides that no director of SFX will be
personally liable to SFX 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 SFX 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 Delaware General Corporation Law; or
o for any transaction from which the director derived an improper
personal benefit.
In addition to the circumstances in which a director of SFX is not personally
liable as set forth above, no director will be liable to SFX or its stockholders
to such further extent as permitted by any law enacted after the date of SFX's
Certificate of Incorporation, including any amendment to the Delaware General
Corporation Law.
SFX's Certificate of Incorporation requires SFX 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 SFX or (b)
is or was serving at the request of SFX 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 Delaware law. 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 SFX or elects
to continue to serve as a director or officer of SFX while this provision of
SFX's Certificate of Incorporation is in effect. The right to indemnification
includes the right to be paid by SFX for expenses incurred in defending any such
action, suit or proceeding in advance of its final disposition to the maximum
extent permitted under Delaware law. If a claim for indemnification or
advancement of expenses is not paid in full by SFX within 60 days after a
written claim has been received by SFX, the claimant may, at any time
thereafter, bring suit against SFX 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 Delaware law, but the
burden of proving this defense will be on SFX. The rights
II-2
<PAGE>
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 Bylaws of SFX require SFX to indemnify its officers, directors,
employees and agents to the full extent permitted by Delaware law. The Bylaws
also require SFX 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 SFX'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 SFX as authorized by relevant sections of Delaware
law. The indemnification and advancement of expenses provided in the Bylaws 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
Not applicable.
ITEM 8. EXHIBITS
See Exhibit Index at page II-7.
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, 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;
(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 this Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and 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 SEC 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 therein, 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 further 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 therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE>
(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 SEC 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 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, 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 this 8th day of
October, 1999.
SFX ENTERTAINMENT, INC.
By: /s/ Howard J. Tytel
----------------------------------
Howard J. Tytel
Executive Vice President, General
Counsel
and Secretary
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in their respective
capacities with the Registrant and on the dates indicated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Robert F.X. Sillerman and Howard J. Tytel and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and his name, place and stead, in
any and all capacities, to sign any and all Registration Statements, or any
amendments thereto, on Form S-8, or other appropriate form in order to register
interests in any plans for the benefit of the employees of SFX Entertainment,
Inc. (the "Registrant") and its subsidiaries pursuant to which the Registrant
intends to offer its Class A common stock, $.01 par value, to participants under
the 1999 Stock Option and Restricted Stock Plan, and to file such registration
statements or amendments, with the SEC, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, 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 their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Robert F.X. Sillerman Executive Chairman, Member of the October 8, 1999
- ------------------------- Office of the Chairman and Director
Robert F.X. Sillerman (principal executive officer)
/s/ Michael G. Ferrel Director October 8, 1999
- -------------------------
Michael G. Ferrel
/s/ Brian Becker Director October 8, 1999
- -------------------------
Brian Becker
/s/ David Falk Director October 6, 1999
- -------------------------
David Falk
/s/ Howard J. Tytel Director October 8, 1999
- -------------------------
Howard J. Tytel
/s/ Thomas P. Benson Chief Financial Officer, Senior Vice October 8, 1999
- ------------------------- President and Director (principal
Thomas P. Benson financial and accounting officer)
/s/ Richard A. Liese Director October 8, 1999
- -------------------------
Richard A. Liese
/s/ D. Geoffrey Armstrong Director October 8, 1999
- -------------------------
D. Geoffrey Armstrong
/s/ James F. O'Grady, Jr. Director October 5, 1999
- -------------------------
James F. O'Grady, Jr.
/s/ Paul Kramer Director October 8, 1999
- -------------------------
Paul Kramer
/s/ Edward F. Dugan Director October 8, 1999
- -------------------------
Edward F. Dugan
/s/ John D. Miller Director October 8, 1999
- -------------------------
John D. Miller
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER DESCRIPTION
------- -----------
4.1 SFX Entertainment, Inc. 1999 Stock Option and Restricted Stock Plan
5.1 Opinion of Winston & Strawn
23.1 Consent of Winston & Strawn (included in Exhibit 5.1 hereto)
23.2 Consent of Ernst & Young LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of PricewaterhouseCoopers LLP
23.5 Consent of Deloitte & Touche
23.6 Consent of Smith Partnership
24.1 Power of Attorney (included on page II-6)
II-6
<PAGE>
EXHIBIT 4.1
SFX ENTERTAINMENT, INC.
1999 STOCK OPTION AND RESTRICTED STOCK PLAN
EFFECTIVE OCTOBER 8, 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, retain and motivate 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 whollyowned 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 12b2 of the Exchange Act)) is or becomes the
"beneficial owner" (as defined in Rule 13d3 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.
"COVERED EMPLOYEE" shall mean an individual who, on the last day of the taxable
year, is the chief executive officer of the Company or any one of the four most
highly compensated officers of the Company other than the chief executive, as
described in Section 162(m)(e) of the Code.
"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.
<PAGE>
"DISINTERESTED DIRECTOR" shall mean a member of the Board of Directors who
is both (i) a Non-Employee Director, within the meaning of Rule 16b3 promulgated
under the Exchange Act, as amended from time to time and (ii) 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 other than as a Consultant and only 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
overthecounter 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 of the Code.
"NONSTATUTORY OPTION" shall mean any Option granted by the Committee that
is not an ISO.
"OPTION" shall mean either an ISO or Nonstatutory Option, as the context
requires, granted under this Plan.
"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 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. 1999 Stock Option and
Restricted Stock Plan, as amended from time to time.
"PLAN AND 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.
2
<PAGE>
"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 or any of its
Subsidiaries 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 stoc 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.
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 16b3 (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 the Code and shall have absolute and final authority, subject
to the provisions of the Plan, 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;
3
<PAGE>
(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 or cancel 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
articipant, 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 brokerdealer 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,
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 administration and interpretation of the Plan and 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. The
provisions and conditions of the Plan Awards need not be the same with respect
to each Optionee or Participant or with respect to each Plan Award. 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 an Option if at least six months
elapse from the date of acquisition of the Option to the date of disposition of
the Option (other than upon exercise or conversion) or its underlying equity
security.
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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 three million (3,000,000) 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.
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 TenPercent 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 any
Optionee and a Nonstatutory Option to an Optionee who is also a Covered
Employee, 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 ISO granted to a Participant who is a TenPercent 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. To the extent that Options granted hereunder are ISOs, the
Committee shall
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designate such Options as ISOs in the written instrument evidencing such Option.
If the written instrument does not designate the Options as ISOs, then the
Option shall be a Nonstatutory Option.
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 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.
(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
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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 Nonstatutory
Options.
(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 until the employeremployee relationship, as defined under the Code or
the regulations promulgated thereunder, ends or, if earlier, the leave of
absence period expires and the individual fails to return to active employment
with the Company.
(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 during any oneyear period shall not
exceed 1,200,000 in the aggregate.
(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 twoyear period commencing on the
day after the Date of Grant of such Option or within a oneyear 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
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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.
(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) PERFORMANCE BASED GRANTS TO COVERED EMPLOYEES. Grants of Restricted
Stock to Covered Employees shall be designed to be performancebased in order to
qualify as performancebased compensation under Section 162(m) of the Code. The
performance period will be determined by the Committee, but no performance
period will be less than one year. Within 90 days after the beginning of a
performance period, the Committee will establish in writing one or more
objective criteria for the performance period. Each Covered Employee who is
granted Restricted Stock will begin to vest in the number of Shares of
Restricted Stock at the close of the performance period based on the attainment
of the
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objective criteria during the performance period as determined by the Committee
within the first 90 days of that period.
Prior to the vesting of Restricted Stock by the Covered Employees, the
Committee shall certify in writing the actual performance of the criteria. No
vesting of Restricted Stock under the Plan shall occur until the Stockholders
have approved this Plan.
(vi) 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.
(vii) 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.
(viii) 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.
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
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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 whollyowned
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 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
whollyowned 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.
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SECTION 11
TERM OF PLAN; EFFECT OF AMENDMENT OR TERMINATION
(a) EFFECTIVE DATE; TERM OF PLAN. This Plan shall become effective as
determined by the Board of Directors, but no Options granted under this Plan
shall be exercised and no grants of Restricted Stock shall have their
restrictions lapse unless and until this Plan has been approved by the
stockholders of the Company, which approval shall be within twelve (12) months
before or after the date this Plan is adopted 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.
(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.
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Exhibit 5.1
[Winston & Strawn Letterhead]
October 8, 1999
SFX Entertainment, Inc.
650 Madison Avenue
New York, New York 10022
Re: Registration Statement on Form S-8 of SFX Entertainment, Inc.
Relating to 1999 Stock Option and Restricted Stock Plan
Ladies and Gentlemen:
We have acted as special counsel to SFX Entertainment, Inc., a Delaware
corporation (the "Company"), in connection with the registration on Form S-8 of
4,500,000 shares (the "Shares") of Class A common stock, par value $.01 per
share (the "Class A Common Stock"), of the Company under the Company's 1999
Stock Option and Restricted Stock Plan (the "Plan").
This opinion letter is delivered in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended
(the "Act"). In connection with this opinion letter, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of (i) the Registration Statement relating to the Shares to be
filed with the Securities and Exchange Commission (the "Commission") on October
8, 1999 (the "Registration Statement"), (ii) the Amended and Restated
Certificate of Incorporation, as currently in effect, of the Company, (iii) the
By-laws, as currently in effect, of the Company, and (iv) resolutions of the
Board of Directors of the Company relating to, among other things, the issuance
and sale of the Shares and the filing of the Registration Statement. We have
also examined such other documents as we have deemed necessary or appropriate as
a basis for the opinions set forth below.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as certified or photostatic copies, and the authenticity of the
originals of such latter documents. As to any facts material to this opinion
letter which we did not independently establish or verify, we have relied upon
oral or written statements and representations of officers and other
representatives of the Company and others.
Based upon and subject to the foregoing, we are of the opinion that the
Shares, when issued and delivered in accordance with the terms and conditions of
the Plan, and upon receipt by the Company of the full consideration for the
Shares as determined pursuant to the Plan, shall be legally issued, fully paid
and non-assessable.
We hereby consent to the filing of this opinion letter with the Commission
as an exhibit to the Registration Statement. In giving such consent, we do not
concede that we are experts within the meaning of the Act or the rules and
regulations thereunder or that this consent is required by Section 7 of the Act.
Very truly yours,
/s/ Winston & Strawn
<PAGE>
Exhibit 23.2
Consent of Independent Auditors
We consent to the incorporation by reference of our reports dated: (i) February
25, 1999 with respect to the consolidated financial statements of SFX
Entertainment, Inc. and (ii) October 2, 1997 with respect to the consolidated
financial statements of Delsener/Slater Enterprises, Ltd. and Affiliated
Companies, included in the SFX Entertainment, Inc. Form 10-K for the year ended
December 31, 1998 filed with the Securities and Exchange Commission and to the
incorporation by reference of our reports dated: (i) December 13, 1996 with
respect to the consolidated financial statements of PACE Entertainment
Corporation and Subsidiaries, (ii) May 22, 1998 with respect to the combined
financial statements of the Contemporary Group, (iii) November 20, 1997 with
respect to the combined financial statements of The Album Network, Inc. and
Affiliated Companies, (iv) March 20, 1998 with respect to the consolidated
financial statements of BG Presents, Inc. and Subsidiaries, (v) March 13, 1998
with respect to the combined financial statements of Concert/Southern Promotions
and Affiliated Companies, (vi) April 10, 1998 with respect to the combined
financial statements of Falk Associates Management Enterprises, Inc., (vii) May
1, 1998 with respect to the combined financial statements of Blackstone
Entertainment LLC, (viii) March 5, 1998 with respect to the consolidated
financial statements of The Marquee Group, Inc. and Subsidiaries, (ix) May 21,
1998 with respect to the combined financial statements of Alphabet City Sports
Records, Inc. and Alphabet City Industries, Inc., (x) June 3, 1998 with respect
to the consolidated financial statements of Cambridge Holding Corporation, Inc.
and (xi) July 6, 1998 with respect to the combined financial statements of
Tollin-Robbins Entertainment, included in the SFX Entertainment, Inc. Form 8-K
dated April 14, 1999 filed with the Securities and Exchange Commission, in the
Registration Statement (Form S-8) pertaining to the 1999 Stock Option and
Restricted Stock Plan of SFX Entertainment, Inc. and the Registration Statement
(Form S-8) pertaining to the Director Deferred Stock Ownership Plan of SFX
Entertainment, Inc.
/s/ Ernst & Young
New York, New York
October 6, 1999
<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 SFX Entertainment, Inc. 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 the
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) which appears
in the Current Report on Form 8-K of SFX Entertainment, Inc. dated April 14,
1999.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
October 6, 1999
<PAGE>
Exhibit 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of SFX Entertainment, Inc. of our report dated December
12, 1996, relating to the financial statements of Pavilion Partners, which
appears in the Current Report on Form 8-K of SFX Entertainment, Inc. dated April
14, 1999.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Houston, Texas
October 6, 1999
<PAGE>
Exhibit 23.5
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our joint report dated July 27, 1999 with respect to
the financial statements of Apollo Leisure Group plc as of November 28, 1998 and
for each of the two years then ended incorporated by reference in the
Registration Statement and related Prospectus on Form S-8 to be filed by SFX
Entertainment, Inc., with respect to its 1999 Stock Option and Restricted Stock
Plan and in the Registration Statement and related Prospectus on form S-8 to be
filed by SFX Entertainment, Inc., with respect to its Directors' Deferred Stock
Ownership Plan.
/s/ Deloitte & Touche
Deloitte & Touche
Chartered Accountants
Bracknell, England
October 6, 1999
<PAGE>
Exhibit 23.6
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our joint report dated July 27, 1999 with respect to
the financial statements of Apollo Leisure Group plc as of November 28, 1998 and
for each of the two years then ended incorporated by reference in the
Registration Statement and related Prospectus on Form S-8 to be filed by SFX
Entertainment, Inc., with respect to its 1999 Stock Option and Restricted Stock
Plan and in the Registration Statement and related Prospectus on form S-8 to be
filed by SFX Entertainment, Inc., with respect to its Directors' Deferred Stock
Ownership Plan.
/s/ Smith Partnership
Smith Partnership
Chartered Accountants
Manchester, England
October 6, 1999
