OUTDOOR SYSTEMS INC
S-8, 1997-10-23
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<PAGE>   1
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 1997.
                                                  REGISTRATION NO. 333-_________


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              --------------------
                                    FORM S-8
                        REGISTRATION STATEMENT UNDER THE
                             SECURITIES ACT OF 1933
                              --------------------

                              OUTDOOR SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

               DELAWARE                                          86-0736400
  (State or other jurisdiction of                             (I.R.S. Employer
   incorporation or organization)                            Identification No.)

                          2502 N. Black Canyon Highway
                             Phoenix, Arizona 85009
                                 (602) 246-9569
   (Address and telephone number of Registrant's principal executive offices)

                  1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
                             STOCK OPTION AGREEMENTS
                           (Full titles of the Plans)

                                WILLIAM S. LEVINE
                              Chairman of the Board
                              Outdoor Systems, Inc.
                          2502 N. Black Canyon Highway
                             Phoenix, Arizona 85009
                     (Name and address of agent for service)

                                 (602) 246-9569
                     (Telephone number, including Area Code,
                              of Agent for Service)

                              --------------------

                          Copies of Communications to:
                            GABRIEL DUMITRESCU, Esq.
                     Powell, Goldstein, Frazer & Murphy LLP
                                 Sixteenth Floor
                           191 Peachtree Street, N.E.
                             Atlanta, Georgia 30303
                                 (404) 572-6600

                              --------------------

                         CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
           TITLE OF SECURITIES                   AMOUNT         PROPOSED MAXIMUM      PROPOSED MAXIMUM      AMOUNT OF
                   TO BE                         TO BE         OFFERING PRICE PER    AGGREGATE OFFERING    REGISTRATION
                REGISTERED                    REGISTERED(1)         SHARE(2)              PRICE(2)            FEE(2)
- -----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>                   <C>                   <C>
Common Stock, par value $.01 per share....      6,395,556        $26.50               $169,482,234          $51,358.25
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)   Representing shares of the Registrant's Common Stock, par value $.01 per
      share (the "Common Stock"), to be issued and sold by the Registrant in
      connection with (i) the exercise of stock options issued or to be issued
      pursuant to the 1996 Non-Employee Director Stock Option Plan (the
      "Non-Employee Director Plan") and (ii) the exercise of options granted
      under the non-qualified stock option agreements (the "Agreements")
      described herein. This Registration Statement also covers such
      indeterminable number of additional shares as may become issuable to
      prevent dilution in the event of stock splits, stock dividends or similar
      transactions pursuant to the terms of the Non-Employee Director Plan and
      the Agreements.

(2)   Pursuant to Rule 457(c), the proposed offering price and registration fee
      are based upon the average of the high and low prices of the Common Stock
      on October 21, 1997 as reported by the New York Stock Exchange.
<PAGE>   2
                                     PART I
              INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS


      The documents containing the information specified in Part I of the
Instructions to the Registration Statement on Form S-8 will be sent or given to
the optionees as required by Rule 428(b)(1) promulgated under the Securities Act
of 1933, as amended (the "Securities Act").


                                      I-1
<PAGE>   3
                                     PART II


ITEM 3.  INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.

      The following documents previously filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated herein
by reference:

      (1)   Annual Report on Form 10-K for the year ended December 31, 1996
            (Commission File No. 0-28256);

      (2)   Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
            and June 30, 1997 (Commission File No. 0-28256);

      (3)   Current Report on Form 8-K filed with the Commission on May 27, 1997
            (Commission File No. 0-28256);

      (4)   Current Report on Form 8-K filed with the Commission on June 4, 1997
            (Commission File No. 0-28256);

      (5)   Current Report on Form 8-K filed with the Commission on June 18,
            1997 (Commission File No. 0-28256);

      (6)   Current Report on Form 8-K filed with the Commission on August 29,
            1997 (Commission File No. 1-13275); and

      (7)   The description of the Company's Common Stock contained in the
            Company's Registration Statement on Form 8-A as filed with the
            Commission on August 15, 1997 (Reg. No. 1-13275).

      All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date hereof and prior to the date
upon which this offering is terminated shall be deemed to be incorporated by
reference herein and to be part hereof from the date any such document is filed.

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 (the "Delaware Law")
and Article VIII of the Amended and Restated Articles of Incorporation of the
Registrant set forth the extent to which the Registrant's directors and officers
may be indemnified by the Registrant against liability that they may incur while
serving in such capacity.

      Section 145 of the Delaware General Corporation Law provides in relevant
part that a corporation may indemnify any person who was or is a party 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 such person is or was a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in


                                      II-1
<PAGE>   4
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful.

      In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Delaware Court
of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Delaware Court of Chancery or
such other court shall deem proper. Delaware law further provides that nothing
in the above-described provisions shall be deemed exclusive of any other rights
to indemnification or advancement of expenses to which any person may otherwise
be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise.

      The Company's Fourth Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation") provides that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) or
any breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) in respect of certain unlawful
dividend payments or stock redemptions or repurchases as provided in Section 174
of the Delaware General Corporation Law or (iv) for any transaction from which
the director derived an improper personal benefit. The effect of these
provisions is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against a director for breach of fiduciary duty as a director
(including breaches resulting from grossly negligent behavior), except in the
situations described above. The Company's Amended and Restated Bylaws, as
amended (the "Bylaws") provide that the Company will indemnify its directors and
officers to the fullest extent permissible under Delaware law. These
indemnification provisions require the Company to indemnify such persons against
certain liabilities and expenses to which they may become subject by reason of
their service as a director or officer of the Company. The provisions also set
forth certain procedures, including the advancement of expenses, that apply in
the event of a claim for indemnification.

      Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the Certificate of Incorporation, Bylaws, or otherwise, the
Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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 the Securities Act will be governed by the final
adjudication of such issue.

      The Company maintains directors' and officers' liability insurance.


                                      II-2
<PAGE>   5
ITEM 7.  EXEMPTION FROM REGISTRATION CLAIMED.

      Not applicable.

ITEM 8.  EXHIBITS.

      The following exhibits are filed herewith or incorporated by reference
herein:

Exhibit
Number                                   Description
                                         -----------

3.1              Fourth Amended and Restated Certificate of Incorporation.
                 [Incorporated herein by reference to Exhibit 99.2 to the
                 Registrant's Current Report on Form 8-K filed on June 4, 1997
                 (File No. 0-28256).]

3.2              Amended and Restated Bylaws. [Incorporated herein by reference
                 to Exhibit 3.2 to Amendment No. 2 to the Registrant's
                 Registration Statement on Form S-1 filed on April 16, 1996
                 (Reg. No. 333-1582).]

5.1              Opinion of Powell, Goldstein, Frazer & Murphy LLP.

23.1             Consent of Powell, Goldstein, Frazer & Murphy LLP (included in
                 Exhibit 5.1).

23.2             Consent of Deloitte & Touche LLP.

24.1             Power of Attorney (see signature page to this Registration
                 Statement).

99.1             Agreement and Grant of Option dated as of April 3, 1989,
                 between the Registrant and Arturo R. Moreno, as amended by the
                 First Amendment to Agreement and Grant of Option dated as of
                 January 1, 1991.  [Incorporated herein by reference to Exhibit
                 10.23 to the Registrant's Registration Statement on Form S-1
                 filed on June 17, 1993 (Reg. No. 33-64638).]

99.2             Agreement and Grant of Option dated as of January 1, 1991,
                 between the Registrant and Wally Kelly.  [Incorporated herein
                 by reference to Exhibit 10.24 to the Registrant's Registration
                 Statement on Form S-1 filed on June 17, 1993 (Reg. No.
                 33-64638).]

99.3             1996 Non-Employee Director Stock Option Plan.

ITEM 9.  UNDERTAKINGS.

      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 the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;


                                      II-3
<PAGE>   6
            (iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;

                  Provided, however, that paragraphs (1)(i) and (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 by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the 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.

      The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

      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 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 to the questions
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.


                                      II-4
<PAGE>   7
                                   SIGNATURES


      Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Phoenix, State of
Arizona, on October 20, 1997.

                                          OUTDOOR SYSTEMS, INC.



                                          By:  /s/ William S. Levine
                                              ---------------------------------
                                                William S. Levine
                                                Chairman of the Board




                                POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints WILLIAM S. LEVINE and BILL M. BEVERAGE, and each
of them as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite 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 either
of them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.


                                      II-5
<PAGE>   8

      Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

             SIGNATURE                       TITLE                   DATE
             ---------                       -----                   ----

/s/ Arturo R. Moreno                     President (Principal  October 20, 1997
- ------------------------------           Executive Officer)
Arturo R. Moreno                         and Director


/s/ William S. Levine                    Chairman of the       October 20, 1997
- ------------------------------           Board and Director
William S. Levine                        



/s/ Bill M. Beverage                     Secretary,            October 20, 1997
- ------------------------------           Treasurer and
Bill M. Beverage                         Chief Financial
                                         Officer (Principal
                                         Accounting and
                                         Financial Officer)


/s/ Brian J. O'Connor                    Director              October 20, 1997
- ------------------------------
Brian J. O'Connor


/s/ Stephen F. Butterfield               Director              October 20, 1997
- ------------------------------
Stephen F. Butterfield


                                      II-6
<PAGE>   9
                                  EXHIBIT INDEX


Exhibit
Number                                   Description
                                         -----------

3.1              Fourth Amended and Restated Certificate of Incorporation.
                 [Incorporated herein by reference to Exhibit 99.2 to the
                 Registrant's Current Report on Form 8-K filed on June 4, 1997
                 (File No. 0-28256).]

3.2              Amended and Restated Bylaws. [Incorporated herein by reference
                 to Exhibit 3.2 to Amendment No. 2 to the Registrant's
                 Registration Statement on Form S-1 filed on April 16, 1996
                 (Reg. No. 333-1582).]

5.1              Opinion of Powell, Goldstein, Frazer & Murphy LLP.

23.1             Consent of Powell, Goldstein, Frazer & Murphy LLP (included in
                 Exhibit 5.1).

23.2             Consent of Deloitte & Touche LLP.

24.1             Power of Attorney (see signature page to this Registration
                 Statement).

99.1             Agreement and Grant of Option dated as of April 3, 1989,
                 between the Registrant and Arturo R. Moreno, as amended by the
                 First Amendment to Agreement and Grant of Option dated as of
                 January 1, 1991.  [Incorporated herein by reference to Exhibit
                 10.23 to the Registrant's Registration Statement on Form S-1
                 filed on June 17, 1993 (Reg. No. 33-64638).]

99.2             Agreement and Grant of Option dated as of January 1, 1991,
                 between the Registrant and Wally Kelly.  [Incorporated herein
                 by reference to Exhibit 10.24 to the Registrant's Registration
                 Statement on Form S-1 filed on June 17, 1993 (Reg. No.
                 33-64638).]

99.3             1996 Non-Employee Director Stock Option Plan.

<PAGE>   1
                                                                     Exhibit 5.1

                                October 23, 1997




Outdoor Systems, Inc.
2502 North Black Canyon Highway
Phoenix, Arizona 85009

      Re:   Registration Statement on Form S-8

Ladies and Gentlemen:

      We have served as counsel for Outdoor Systems, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, pursuant to a Registration Statement on Form
S-8 (the "Registration Statement") of an aggregate of 6,395,556 shares (the
"Shares") of common stock, $.01 par value, of the Company, to be offered and
sold by the Company pursuant to the 1996 Non-Employee Director Stock Option Plan
(the "Director Plan"), the Agreement and Grant of Option dated as of April 3,
1989, between the Company and Arturo R. Moreno, as amended by the First
Amendment to the Agreement and Grant of an Option dated as of January 1, 1991
(the "Moreno Agreement") and the Agreement and Grant of Option dated as of
January 1, 1991, between the Company and Wally C. Kelly (the "Kelly Agreement"
and, together with the Director Plan and the Moreno Agreement, the "Plans").

      We have examined and are familiar with originals or copies (certified,
photostatic or otherwise identified to our satisfaction) of such documents,
corporate records and other instruments relating to the incorporation of the
Company and the adoption of the Plans as we have deemed necessary and advisable.

      In all such examinations, we have assumed the genuineness of all
signatures on all originals and copies of documents we have examined, the
authenticity of all documents submitted to us as originals and the conformity to
original documents of all certified, conformed or photostatic copies. As to
questions of fact material and relevant to our opinion, we have relied upon
certificates or representations of Company officials and of appropriate state,
local and federal officials.

      We express no opinion as to matters under or involving laws other than the
laws of the State of Georgia and the Delaware General Corporation Law.
<PAGE>   2
Outdoor Systems, Inc.
October 20, 1997
Page 2




      Based upon and subject to the foregoing and having regard for such legal
considerations as we have deemed relevant, it is our opinion that:

      1.    The Shares have been duly authorized; and

      2.    Upon the issuance and delivery of the Shares upon receipt of lawful
            consideration therefor pursuant to the Plans, such Shares will be
            validly issued, fully paid and non-assessable.

      We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement.

                                          Very truly yours,



                         POWELL, GOLDSTEIN, FRAZER & MURPHY LLP

<PAGE>   1
                                                                    EXHIBIT 23.2

                        INDEPENDENT AUDITORS' CONSENT

      We consent to the incorporation by reference in this Registration
Statement of Outdoor Systems, Inc. on Form S-8 of our reports dated February 14,
1997, except for Note 16 as to which the date is March 26, 1997, appearing in
the Annual Report on Form 10-K of Outdoor Systems, Inc. for the year ended
December 31, 1996.



DELOITTE & TOUCHE LLP



Phoenix, Arizona
October 20, 1997

<PAGE>   1
                                                                    Exhibit 99.3

                              OUTDOOR SYSTEMS, INC.
                  1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN


      The purpose of the Outdoor Systems, Inc. 1996 Non-Employee Director Stock
Option Plan (the "Plan") is to authorize the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board") to provide
non-employee directors of Outdoor Systems, Inc. (the "Company") with certain
rights to acquire common stock of the Company through the grant of nonqualified
stock options. Historically, the Company has not compensated its non-employee
directors, and the Company believes that implementing this Plan to award stock
options to current and future non-employee directors will materially enhance the
Company's ability to attract highly-qualified individuals to serve as
non-employee directors on the Board and further align the interests of the
non-employee directors with those of the Company's stockholders, thereby
benefiting the Company and its stockholders.


      1.    Administration

            The Plan shall be administered and interpreted by the Committee,
which shall consist of not less than two (2) persons appointed by the Board from
among its members who are not employees of the Company. A person may serve on
the Committee only if he is a "disinterested person" within the meaning of 17
C.F.R. Section 240.16b-3(c)(2)(i). The Committee shall have full power and
authority to administer and interpret the Plan and to adopt or amend such rules,
regulations, agreements and instruments for implementing the Plan and for
conducting its business as it deems necessary or advisable, in its sole
discretion. The Committee's interpretations of the Plan and all determinations
made by the Committee pursuant to the powers vested in it hereunder shall be
conclusive and binding on all persons having any interests in the Plan or in any
awards granted hereunder. The Committee may delegate to officers or managers of
the Company the authority, subject to such terms as the Committee shall
determine, to perform administrative functions under the Plan.


      2.    Options

            Incentives under the Plan shall consist of nonqualified stock
options ("Options"). All Options shall be subject to the terms and conditions
set forth herein.
<PAGE>   2
      3.    Shares Subject to the Plan


            (a) Subject to the adjustment specified below, the aggregate number
of shares of common stock of the Company ("Company Stock") that may be issued or
transferred under the Plan is 50,000 shares. The shares may be authorized but
unissued shares or treasury shares. If and to the extent any Options granted
under the Plan terminate, expire or are canceled without having been exercised,
the shares subject to any such Options shall again be available for purposes of
the Plan.

            (b) If there is any change in the number or kind of shares of
Company Stock through a recapitalization, the declaration of stock dividends,
stock splits, or combinations or exchanges of such shares, or merger,
reorganization or consolidation of the Company, reclassification or change in
par value or by reason of any other extraordinary or unusual events, the number
of shares of Company Stock available for Options and the number of such shares
covered by outstanding Options, and the price per share or the applicable market
value of such Options, shall be proportionately or otherwise appropriately
adjusted by the Committee; provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.

            (c) If the Company is reorganized, or merged or consolidated, or is
a party to a plan of exchange with another entity pursuant to which
reorganization, merger, consolidation or plan of exchange the stockholders of
the Company receive cash or other securities, or if the Company is dissolved or
liquidated, the Committee may cancel all outstanding Options as of the effective
date of the reorganization, merger, consolidation, plan of exchange or any
dissolution or liquidation of the Company, by giving notice to each holder
thereof or his personal representative of its intention to do so and by
permitting the purchase for a period of approximately thirty days during the
sixty days next preceding such effective date of all of the shares of Company
Stock subject to such outstanding Options.


      4.    Eligibility for Participation


                  All persons who are serving as non-employee directors of the
Company on or after April 24, 1996 shall receive Options (the "Director
Optionees").


                                       2
<PAGE>   3
      5.    Granting of Options


            (a) NUMBER OF SHARES. On April 24, 1996, each Director Optionee
shall automatically be granted a one-time Option to purchase the number of
shares of Company Stock equal to the product of 7,273 multiplied by (1 plus
(.125 multiplied by the number of years of continuous service to that point,
including any portion of any year of service as a full year)), rounded to the
nearest whole share; provided, however, that no such Option shall allow a
Director Optionee to purchase more than 10,000 shares of Company Stock.
Thereafter, each additional non-employee director of the Company shall, upon his
election to the Board, automatically be granted a one-time Option to purchase
the number of shares determined by the application of the foregoing formula to
such director. The date on which a non-employee director is granted an Option
shall, with respect to such non-employee director, be referred to as the
"Initial Grant Date".

            (b) EXERCISE PRICE. The exercise price of Company Stock subject to
an Option shall be the fair market value of Company Stock on the date the Option
is granted. The "fair market value" of Company Stock on a particular date shall
be deemed to be (A) if the Company Stock is being sold pursuant to an
underwritten public offering, the price at which each share of Company Stock is
being offered to the public by members of the underwriting group or (B) if the
Company Stock is not being sold pursuant to an underwritten public offering but
is quoted on the NASDAQ National Market System, the sales price per share of
Company Stock on the NASDAQ National Market System published in the Wall Street
Journal for that date, or, if there shall have been no such sale so reported for
that date, on the last preceding date on which such a sale was so reported.

            (c) EXERCISE PERIOD. The option exercise period of each Option shall
be ten (10) years. Notwithstanding anything herein to the contrary, all
outstanding Options shall become immediately exercisable upon a Change of
Control of the Company (as defined in Section 7).

            (d) VESTING OF OPTIONS. The vesting period for Options shall
commence on the Initial Grant Date applicable thereto, with twenty percent (20%)
of the shares originally subject to each Option becoming exercisable on each
successive year following the Initial Grant Date. Notwithstanding anything
herein to the contrary, all outstanding Options shall become immediately
exercisable upon a Change of Control of the Company (as defined in Section 7).

            (e) MANNER OF EXERCISE. A Director Optionee may exercise an Option
by delivering a notice of exercise to the Committee with accompanying payment of
the option price. Such notice may instruct the Company to deliver shares of
Company Stock due upon the exercise of the Option to any registered broker or
dealer designated by the Company ("Designated Broker") in lieu of delivery to
the Director Optionee. Such instructions must designate the account into which
the shares are to be deposited. The Director Optionee may tender this notice of
exercise, which has been properly executed by the Director Optionee, and the
aforementioned delivery instructions to any Designated Broker.


                                       3
<PAGE>   4
            (f) TERMINATION OF SERVICE, DISABILITY OR DEATH.


                  (i) In the event a Director Optionee ceases to serve as a
director for any reason other than death, any Option which is otherwise
exercisable by such Director Optionee shall terminate unless exercised within
three (3) months of the date on which he ceases to be a director, but in any
event, no later than the date of expiration of the exercise period pertaining to
such Option; provided, however, that in the case of a Director Optionee who is
disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code, as
amended (the "Code"), such period shall be one (1) year rather than three (3)
months (except as the Committee may otherwise provide in the Option Letter).
Upon the termination of service by a director, the unvested portion of his
Option shall be canceled.

                  (ii) In the event of the death of a Director Optionee while he
is a director of the Company or within not more than three (3) months of the
date on which he ceases to be a director, any Option which was otherwise
exercisable by the Director Optionee at the date of death may be exercised by
his personal representative at any time prior to the expiration of one (1) year
from the date of death, but in any event no later than the date of expiration of
the exercise period pertaining to such Option.


            (g) SATISFACTION OF OPTION PRICE. A Director Optionee shall pay the
option price in cash, with Company Stock, or by a combination of the foregoing.
If a Director Optionee elects to pay the option price for a Option in whole or
in part with Company Stock, such Company Stock must have been previously held by
the director for at least six (6) months prior to exercise. The Director
Optionee shall pay the option price and the amount of withholding tax due, if
any, at the time of exercise. Shares of Company Stock shall not be issued or
transferred upon exercise of an Option until the option price and the
withholding obligation is fully paid.


      6.    Transferability of Options

            Only a Director Optionee or his authorized legal representative 
may exercise rights under an Option. Such persons may not transfer those rights
except by will or by the laws of descent and distribution. When a director
Optionee dies, the personal representative or other person entitled to succeed
to the rights of the director Optionee ("Successor Optionee") may exercise such
rights. A Successor Optionee must furnish proof satisfactory to the Company of
his or her right to exercise the Option under the Director Optionee's will or
under the applicable laws of descent and distribution. Except for transfers
pursuant to a domestic relations order approved by a federal or state court, no
Option shall be subject in whole or in part, to attachment, execution or levy of
any kind.


      7.    Change of Control of the Company

            Change of Control" means the occurrence of one or more of the
following events: (a) the Permitted Holders (as defined below), individually or
in the aggregated, shall cease to beneficially own (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, voting Stock (as defined


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<PAGE>   5
below) representing at least 40% of the total voting power of all Voting Stock;
(b) any person, entity or group (as such term is used in Section 13(d)(3) of the
Exchange Act), other than the Permitted Holders, individually or in the
aggregate, shall beneficially own (within the meaning of Rule 13d-3 under the
Securities Exchange Act), directly or indirectly, Voting Stock representing more
than 30% of the total voting power of all Voting Stock; (c) the sale, lease, or
transfer of all or substantially all of the Company's assets to any person,
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act);
(d) the stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company; or (e) William S. Levine and Arte R.
Moreno (together with any new or replacement directors whose election was
approved by a vote of at least two-thirds of the directors then still in office)
shall cease for any reason to constitute a majority of the Board.

      For purposes hereof (i) the term "Permitted Holders" means William S.
Levine, Arte R. Moreno, any trust solely for the benefit of Messrs. Levine and
Moreno or their respective immediate family members, or any partnership in which
the ownership interests thereof are beneficially owned by any of the foregoing,
provided that with respect to any such trust or partnership either Mr. Levine or
Mr. Moreno shall at all times have the exclusive power to direct the voting of
the shares of Voting Stock of the Company held by such trust or partnership; and
(ii) the term "Voting Stock" means one or more classes of the capital stock of
the Company entitled to vote under ordinary circumstances in the election of
directors of the Company.




      8.      Amendment and Termination of the Plan

                 (a) AMENDMENT. This plan may not be amended more than once ever
six (6) months, except to comport with changes in the Code or the rules
thereunder.

                 (b) TERMINATION OF PLAN. The Plan shall terminate on April 24,
2006, unless terminated earlier by the board or unless extended by the Board.

                 (c) TERMINATION AND AMENDMENT OF OUTSTANDING OPTIONS. A
termination or amendment of the Plan that occurs after an Option is made shall
not result in the termination or amendment of the Option unless the director
Optionee consents or unless the Committee acts in accordance with Section 3(c)
or Section 15(a) of the Plan. The termination of the Plan shall not impair the
power and authority of the Committee with respect to an outstanding Option.
Whether or not the Plan has terminated, an outstanding Option may be terminated
or amended in accordance with Section 3(c) or Section 15(a) of the Plan or may
be amended by agreement of the Company and the Director Optionee consistent with
the Plan.


      9.      Funding of the Plan

                  This Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Options under this Plan. In no event shall
interest be paid or accrued on any option, including unexercised installments.


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<PAGE>   6
      10. Rights of Director Optionees

            Nothing in this Plan shall entitle any Director Optionee or other
person to any claim or right to be granted an award under this Plan. Neither
this Plan nor any action taken hereunder shall be construed as giving any
Director Optionee any right to be retained as a director or to be employed by
the Company.


      11. Withholding of Taxes

            The Company may make such provisions as it may deem appropriate for
the withholding of any taxes which it determines is required in connection with
any Options granted under the Plan.


      12. General Restrictions Applicable to Options

            (a) REQUIREMENTS FOR ISSUANCE OF SHARES. No Company Stock shall be
issued or transferred upon payment of any Option hereunder unless and until all
legal requirements applicable to the issuance or transfer of such Company Stock
have been complied with to the satisfaction of the Committee. The Committee
shall have the right to condition any Option made to any Director Optionee
hereunder on such participant's undertaking in writing to comply with such
restrictions on his subsequent disposition of such shares of Company Stock as
the Committee shall deem necessary or advisable as a result of any applicable
law, regulation or official interpretation thereof, and certificates
representing such shares may be legended to reflect any such restrictions.

            (b) COMPLIANCE WITH RULE 16b-3(c)(2)(II). It is the intent of the
Company that this Plan comply in all respects with the requirements of Rule
16b-3(c)(2)(ii) of the Exchange Act. Accordingly, if any provision of this Plan
or any Option does not comply with the requirements of Rule 16b-3(c)(2)(ii) as
then applicable to any such person, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements with respect to
such person.

      13. Headings

            Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.


      14. Effective Date

            This Plan shall be implemented upon approval of the Board of
Directors, and effective as of April 24, 1996.

      15. Miscellaneous


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