<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 21, 1996.
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DOVE AUDIO, INC.
(Exact Name of Registrant as Specified in Its Charter)
CALIFORNIA
(State or Other Jurisdiction of Incorporation or Organization)
95-4015834
(I.R.S. Employer Identification No.)
8955 BEVERLY BOULEVARD, WEST HOLLYWOOD, CALIFORNIA 90048
(Address of Principal Executive Offices)
DOVE AUDIO, INC.
1994 STOCK INCENTIVE PLAN
(Full Title of the Plan)
MICHAEL VINER, PRESIDENT AND CHIEF EXECUTIVE OFFICER
DOVE AUDIO, INC.
8955 Beverly Boulevard
West Hollywood, California
90048
(Name and Address of Agent For Service)
(310) 786-1600
(Telephone Number, Including Area Code of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Share (1) Price (1) Fee (1)
- ---------- ---------- --------- --------- -------
<S> <C> <C> <C> <C>
Common
Stock, $.01 Par Value 400,000 shares $10.50 $4,200,000 $1,449
</TABLE>
- ---------------
(1) These amounts have been estimated in accordance with Rule 457(c) and (h)
solely for the purpose of calculating the Registration Fee. The share price has
been determined by averaging the bid and ask price of the Common Stock on
June 17, 1996.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
* The documents containing the information specified in this Part I
have been or will be sent or given to optionees as specified by Rule
428(b)(1) promulgated under the Securities Act of 1933, as amended (the
"Act"). Such documents are not filed with the Securities and Exchange
Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule
424 under the Act. These documents and the documents incorporated by
reference in this Registration Statement pursuant to Item 3 of Part II
of this Form S-8, taken together, constitute a prospectus that meets
the requirements of Section 10(a) of the Act. Copies of all documents
incorporated by reference in Item 3 of Part II of this Form S-8
(other than exhibits to such documents unless such exhibits are
specifically incorporated by reference herein), as well as other
documents required to be delivered to employees pursuant to
Rule 428(b), will be provided without charge to each person,
including any beneficial owner, on the written or oral request of
such person made to Dove Audio, Inc., 8955 Beverly Boulevard,
West Hollywood, California 90048, Attention: Simon Baker, Chief
Financial Officer, Telephone: (310) 786-1600.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents heretofore filed by Dove Audio, Inc. (the
"Company") with the Commission are hereby incorporated by reference in this
Registration Statement.
1. The Company's Annual Report on Form 10-KSB for fiscal year ended
12/31/95;
2. Amendment to Annual Report of the Company on Form 10-KSB/A for the
fiscal year ended December 31, 1995;
3. Quarterly Report of the Company on Form 10-QSB for the fiscal
quarter ended March 31, 1996;
4. Current Report of the Company on Form 8-K/A filed March 8, 1996;
and
5. The description of Common Stock contained in the Company's
Registration Statement on Form 8-A, filed on October 14, 1994.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended
prior to the filing of a post-effective amendment that indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part thereof from the date of filing of such documents.
II-1
<PAGE> 4
A document incorporated or deemed to be incorporated by reference
herein shall be modified or superseded, for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws, as amended, state that the Company shall provide
indemnification of agents (as defined in Section 317 of the California General
Corporation Law) to the extent permitted by Section 317 of the California
General Corporation Law. The general effect of Section 317 of the California
General Corporation Law and the Company's Bylaws, as amended, is to provide for
indemnification of a corporation's agents except in situations in which an agent
has been adjudged to be liable to the corporation or if the matter is disposed
of without court approval.
The rights to indemnification provided by Section 317 of the California
General Corporation Law and by the Bylaws are not exclusive of any other right
which any person may have or acquire under a statute, bylaw, agreement, vote of
shareholders or of disinterested directors or otherwise.
Except to the extent set forth above, there is no current article,
provision, bylaw, contract or arrangement under which any director or officer of
the Company is indemnified in any manner by the Company against any liability
which may be incurred in such capacity.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See index to exhibits on page II-6.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement:
(i) To include any additional or changed
material information on the plan of distribution.
II-2
<PAGE> 5
(2) That, for determining liability under the Securities Act
of 1933, to treat each post-effective amendment as a new
registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona
fide offering.
(3) To file a post-effective amendment to remove from
registration any of the securities being registered which
remain unsold at the end of the offering.
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of West Hollywood, State of California, on the 21st day
of June, 1996.
Dove Audio, Inc.
By: /s/ Michael Viner
------------------------------------------------------
Michael Viner, Chief Executive Officer,
President and Director
II-4
<PAGE> 7
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Michael Viner his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any or all amendments and
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 attorney-in-fact and agent
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
or she might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on this 21st day of June, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Michael Viner
-------------------------
Michael Viner President, Chief Executive Officer and June 21, 1996
Director
/s/ Simon Baker
-------------------------
Simon Baker Chief Financial Officer June 21, 1996
(principal accounting officer)
/s/ Gerald Leider
-------------------------
Gerald Leider Chairman and Director June 21, 1996
/s/ Deborah Raffin
-------------------------
Deborah Raffin Vice President, Secretary and Director June 21, 1996
/s/ Charles Weber
-------------------------
Charles Weber Chief Operating Officer and Director June 21, 1996
-------------------------
Freddie Fields Director June , 1996
----
-------------------------
James Belasco Director June , 1996
----
-------------------------
Gary Matus Director June , 1996
----
</TABLE>
II-5
<PAGE> 8
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT PAGE
----------- ---------------------- ----
4.1 Registrants' 1994 Stock Incentive Plan............
5.1 Opinion of Kaye, Scholer, Fierman, Hays &
Handler, LLP......................................
23.1 Consent of Kaye, Scholer, Fierman, Hays &
Handler, LLP (included in Exhibit No. 5)..........
23.2 Consent of KPMG Peat Marwick LLP..................
23.3 Consent of Ernst & Young LLP......................
24 Power of Attorney (included on page II-5.1).......
II-6
<PAGE> 1
EXHIBIT 4.1
DOVE AUDIO, INC.
1994 STOCK INCENTIVE PLAN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
I. DEFINITIONS............................................................ 1
1.1 Definitions................................................. 1
II. THE PLAN............................................................... 4
2.1 Purpose..................................................... 4
2.2 Administration.............................................. 5
2.3 Participation............................................... 5
2.4 Stock Subject to the Plan................................... 6
2.5 Grant of Awards............................................. 6
2.6 Exercise of Awards.......................................... 7
III. OPTIONS................................................................ 7
3.1 Grants...................................................... 7
3.2 Option Price................................................ 9
3.3 Option Period............................................... 10
3.4 Exercise of Options......................................... 10
3.5 Limitations on Grant of Incentive Stock
Options .................................................... 11
3.6 Additional Rights........................................... 11
IV. STOCK APPRECIATION RIGHTS.............................................. 12
4.1 Grants...................................................... 12
4.2 Exercise of Stock Appreciation Rights....................... 12
4.3 Payment..................................................... 13
V. RESTRICTED STOCK AWARDS................................................ 14
5.1 Grants...................................................... 14
5.2 Restrictions................................................ 14
VI. PERFORMANCE SHARE AWARDS............................................... 15
6.1 Grants...................................................... 15
VII. OTHER PROVISIONS....................................................... 15
7.1 Rights of Eligible Persons, Participants and
Beneficiaries............................................... 15
7.2 Adjustments Upon Changes in Capitalization.................. 16
7.3 Termination of Employment................................... 17
7.4 Acceleration of Awards...................................... 18
7.5 Government Regulations...................................... 19
7.6 Tax Withholding............................................. 19
7.7 Amendment, Termination and Suspension....................... 20
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS (Continued)
<TABLE>
<S> <C> <C> <C>
7.8 Privileges of Stock Ownership; Nondistributive
Intent...................................................... 21
7.9 Effective Date of the Plan.................................. 21
7.10 Term of the Plan............................................ 21
7.11 Governing Law............................................... 21
</TABLE>
-ii-
<PAGE> 4
DOVE AUDIO, INC.
1994 Stock Incentive Plan
I. DEFINITIONS.
1.1 Definitions.
(a) "Award" shall mean an Option, which may be designated
as a Nonqualified Stock Option or an Incentive Stock Option, a Stock
Appreciation Right, a Restricted Stock Award or Performance Share Award, in each
case granted under this Plan.
(b) "Award Agreement" shall mean a written agreement
setting forth the terms of an Award.
(c) "Award Date" shall mean the date upon which the
Committee took the action granting an Award or such later date as is prescribed
by the Committee.
(d) "Award Period" shall mean the period beginning on an
Award Date and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive the
benefits specified under this Plan in the event of a Participant's death.
(f) "Board" shall mean the Board of Directors of the
Corporation.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(h) "Commission" shall mean the Securities and Exchange
Commission.
(i) "Committee" shall mean either a committee appointed by
the Board and consisting of two or more members, each of whom is a director and
Disinterested or the entire Board, if each member is Disinterested (except as
otherwise permitted under Rule 16b-3 promulgated under the Exchange Act). If
there are two or more members of the Board who are "outside directors" within
the meaning of Section 162(m) of the Code and the regulations promulgated
thereunder, then the Committee shall consist only of such members.
Notwithstanding anything to the
<PAGE> 5
contrary herein, no person may be a member of the Committee if such person has
received an Award hereunder for the period of one year prior to serving on the
Committee, and no member of the ommittee may receive an Award hereunder while
serving on the Committee, other than in accordance with Section 3.1(b).
(j) "Common Stock" shall mean the Common Stock of
the Corporation.
(k) "Company" shall mean, collectively, the Corporation
and its Subsidiaries.
(l) "Corporation" shall mean Dove Audio, Inc., a
California corporation, and its successors.
(m) "Disinterested" shall mean disinterested within the
meaning of the applicable regulatory requirements promulgated under Section 16
of the Exchange Act.
(n) "Eligible Person" shall mean an employee, director,
officer or key employee of the Company or any other person who, in the opinion
of the Committee, is rendering valuable services to the Company, including,
without limitation, as an independent contractor, outside consultant or advisor
to the Company.
(o) "Event" shall mean any of the following:
(1) Approval by the shareholders of the
Corporation of the dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the
Corporation of an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not
Subsidiaries, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity are, or are to
be, owned by former shareholders of the Corporation;
(3) Approval by the shareholders of the
Corporation of the sale of substantially all of the Corporation's
business and/or assets to a person or entity which is not a
Subsidiary; or
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<PAGE> 6
(4) A Change in Control. A "Change in Control"
shall be deemed to have occurred if (A) any "person" (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation
representing 35% or more of the combined voting power of the
Corporation's then outstanding securities; or (B) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at
least a majority thereof, unless the election, or the nomination for
election by the Corporation's shareholders, of each new Board member
was approved by a vote of at least three-fourths of the Board members
then still in office who were Board members at the beginning of such
period.
(p) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(q) "Fair Market Value" shall mean (i) if the stock is
listed or admitted to trade on a national securities exchange, the closing price
of the stock on the Composite Tape, as published in The Wall Street Journal, of
the principal national securities exchange on which the stock is so listed or
admitted to trade, on such date, or, if there is no trading of the stock on such
date, then the closing price of the stock as quoted on such Composite Tape on
the next preceding date on which there was trading in such stock; (ii) if the
stock is not listed or admitted to trade on a national securities exchange, the
last price for the stock on such date, as furnished by the National Association
of Securities Dealers, Inc. ("NASD") through the NASDAQ National Market
Reporting System or a similar organization if the NASD is no longer reporting
such information; (iii) if the stock is not listed or admitted to trade on a
national securities exchange and is not reported on the National Market
Reporting System, the average of the closing bid and asked prices for the stock
on such date, as reported or furnished by the NASDAQ; (iv) if the stock is not
listed or admitted to trade on a national securities exchange, is not reported
on the National Market Reporting System and if bid and asked prices for the
stock are not reported or furnished by the NASDAQ or a similar organization, the
values established by the Committee for purposes of granting Options under the
Plan.
-3-
<PAGE> 7
(r) "Incentive Stock Option" shall mean an option which is
designated as an incentive stock option within the meaning of Section 422 of the
Code, the award of which contains such provisions as are necessary to comply
with that section.
(s) "Nonqualified Stock Option" shall mean an option which
is designated a Nonqualified Stock Option.
(t) "Option" shall mean an option to purchase Common Stock
under this Plan. An option shall be designated by the Committee as a
Nonqualified Stock Option or an Incentive Stock Option.
(u) "Participant" shall mean an Eligible Person,
who has been awarded an Award.
(v) "Performance Share Award" shall mean an award of
shares of Common Stock, issuance of which is contingent upon attainment of
performance objectives specified by the Committee.
(w) "Personal Representative" shall mean the person or
persons who, upon the disability or incompetence of a Participant, shall have
acquired on behalf of the Participant by legal proceeding or otherwise the power
to exercise the rights and receive the benefits specified in this Plan.
(x) "Plan" shall mean Dove Audio, Inc. 1994 Stock
Incentive Plan.
(y) "Restricted Stock" shall mean those shares of Common
Stock issued pursuant to a Restricted Stock Award which are subject to the
restrictions set forth in the related Award Agreement.
(z) "Restricted Stock Award" shall mean an award of a
fixed number of shares of Common Stock to the Participant subject, however, to
payment of such consideration, if any, and such forfeiture provisions, as are
set forth in the Award Agreement.
(aa) "Retirement" shall mean retirement as defined in
termination of employment with the Company pursuant to the Company's retirement
policy, as in effect from time to time.
-4-
<PAGE> 8
(bb) "Securities Act" shall mean the Securities Act of
1933, as amended.
(cc) "Stock Appreciation Right" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, determined as provided in Section 4.3(a).
(dd) "Subsidiary" shall mean any corporation or other
entity fifty percent or more of whose outstanding voting stock or voting power
is beneficially owned directly or indirectly by the Corporation.
(ee) "Tax-Offset Bonus" shall mean a bonus payable
pursuant to a disqualifying disposition of Common Stock acquired pursuant to the
exercise of an Incentive Stock Option, determined as provided in Section 3.6.
(ff) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
II. THE PLAN.
2.1 Purpose.
The purpose of this Plan is to promote the success of the
Company by providing an additional means to attract and retain key personnel
through added long term incentives for high levels of performance and for
significant efforts to improve the financial performance of the Company by
granting Awards.
2.2 Administration.
(a) This Plan shall be administered by the Committee.
Action of the Committee with respect to the administration of this Plan shall be
taken pursuant to a majority vote or the written consent of a majority of its
members. In the event action by the Committee is taken by written consent, the
action shall be deemed to have been taken at the time specified in the consent
or, if none is specified, at the time of the last signature. The Committee may
delegate administrative functions (other than functions which are required to be
performed by the Committee pursuant to requirements promulgated under Section 16
-5-
<PAGE> 9
of the Exchange Act and Section 162(m) of the Code) to individuals who are
officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the
Committee shall have the authority to construe and interpret this Plan and any
agreements defining the rights and obligations of the Company and Participants
under this Plan, to further define the terms used in this Plan, to prescribe,
amend and rescind rules and regulations relating to the administration of this
Plan, to determine the duration and purposes of leaves of absence which may be
granted to Participants without constituting a termination of their employment
for purposes of this Plan and to make all other determinations necessary or
advisable for the administration of this Plan. The determinations of the
Committee on the foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Corporation,
any Subsidiary, the Board or the Committee relating to this Plan shall be within
the absolute discretion of that entity or body and shall be conclusive and
binding upon all persons. No member of the Board or Committee, or officer of the
Corporation or Subsidiary, shall be liable for any such action or inaction of
the entity or body, of another person or, except in circumstances involving bad
faith, of himself or herself. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their absolute discretion
in matters related to this Plan.
(d) Subject to the requirements of Section 1.1(i), the
Board, at any time it so desires, may increase or decrease the number of members
of the Committee, may remove from membership on the Committee all or any portion
of its members, and may appoint such person or persons as it desires to fill any
vacancy existing on the Committee, whether caused by removal, resignation or
otherwise.
2.3 Participation.
Awards may be granted only to Eligible Persons. An
Eligible Person who has been granted an Award may, if otherwise eligible, be
granted additional Awards if the Committee shall so determine. Members of the
Committee shall not be eligible to receive Awards, other than in accordance with
Section 3.1(b).
2.4 Stock Subject to the Plan.
-6-
<PAGE> 10
The stock to be offered under this Plan shall be shares of
the Corporation's authorized but unissued Common Stock. The aggregate amount of
Common Stock that may be issued or transferred pursuant to Awards granted under
this Plan shall not exceed 400,000 shares, subject to adjustment as set forth in
Section 7.2; provided that any Stock Appreciation Rights granted concurrently in
accordance with Section 4.1 are not subject to the foregoing limitation. If an
Option and any Stock Appreciation Right shall lapse or terminate without having
been exercised in full, or any Common Stock subject to a Restricted Stock Award
shall not vest or any Common Stock subject to a Performance Share Award shall
not have been transferred, the unpurchased or nontransferred shares subject
thereto shall again be available for purposes of this Plan; provided, however,
that the counting of shares subject to Awards granted under the Plan against the
number of shares available for further Awards shall in all cases conform to the
requirements of Rule 16b-3 under the Exchange Act; and provided, further, that
with respect to any Option and any Stock Appreciation Right granted to any
Eligible Person who is a "covered employee" as defined in Section 162(m) of the
Code and the regulations promulgated thereunder that is canceled, the number of
shares subject to such Option and Stock Appreciation Right shall continue to
count against the maximum number of shares which may be the subject of Options
and Stock Appreciation Rights granted to such Eligible Person. For purposes of
the preceding sentence, if, after grant, the exercise price of an Option and/or
the base amount of any Stock 6 Appreciation Right is reduced, such reduction
shall be treated as a cancellation of such Option and Stock Appreciation Right
and the grant of a new Option and Stock Appreciation Right (if any), and both
the cancellation of the Option and Stock Appreciation Right and the new Option
and Stock Appreciation Right shall reduce the maximum number of shares for which
Options and Stock Appreciation Rights may be granted to the holder of such
Option and Stock Appreciation Right.
2.5 Grant of Awards.
Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those individuals
to whom Awards under the Plan shall be granted, the terms of Awards (which need
not be identical) and the number of shares of Common Stock subject to each
Award. Each Award shall be subject to the terms and conditions set forth in the
Plan and such other terms and conditions established by the
-7-
<PAGE> 11
Committee as are not inconsistent with the purpose and provisions of the Plan.
The grant of an Award is made on the Award Date.
2.6 Exercise of Awards.
An Option or Stock Appreciation Right shall be deemed to
be exercised when the Secretary of the Corporation receives written notice of
such exercise from the Participant, together with payment of the purchase price
made in accordance with Section 3.2(a), except to the extent payment may be
permitted to be made following delivery of written notice of exercise in
accordance with Section 3.2(b). Notwithstanding any other provision of this
Plan, the Committee may impose, by rule and in Award Agreements, such conditions
upon the exercise of Awards (including, without limitation, conditions limiting
the time of exercise to specified periods) as may be required to satisfy
applicable regulatory requirements, including, without limitation, Rule 16b-3
(or any successor rule) promulgated by the Commission pursuant to the Exchange
Act.
III. OPTIONS.
3.1 Grants.
(a) One or more Options may be granted to any Eligible
Person other than members of the Committee. Each Option so granted shall be
designated by the Committee as either a Nonqualified Stock Option or an
Incentive Stock Option. Members of the Committee shall be granted Options in
accordance with Section 3.1(b).
(b) Notwithstanding any other provision of the Plan,
effective on November 1, 1994 and on each subsequent date a director who is not
also an employee of the Company is appointed, elected or, commencing in 1995,
re-elected to the Board, such director will automatically be granted a
Nonqualified Stock Option, having a duration of ten years, to purchase 5,000
shares of Common Stock for a purchase price per share equal to the Fair Market
Value of the Common Stock on the date of grant, to vest as to twenty percent
(20%) of such shares on each of the first five (5) anniverseries of the date of
grant. The purchase price of any shares purchased pursuant to any such Option
shall be paid in full at the time of each purchase in cash or by certified or
-8-
<PAGE> 12
cashier's check payable to the order of the Corporation. Notwithstanding
anything to the contrary contained in Section 7.2 or 7.4, each such Option shall
be adjusted and shall accelerate, respectively, in the following events:
(i) If the outstanding shares of Common Stock
are increased, decreased or changed into, or exchanged for, a
different number or kind of shares or securities of the
Corporation through a reorganization or merger in which the
Corporation is the surviving entity, or through a combination,
recapitalization, reclassification, stock split, stock dividend,
stock consolidation or otherwise, an appropriate adjustment
shall be made in the number and kind of shares that may be
issued pursuant to each Option. Any such adjustment, however,
shall be made without change in the total payment, if any,
applicable to the portion of the Option not exercised but with a
corresponding adjustment in the price for each share.
(ii) Upon the dissolution or liquidation of the
Corporation, or upon a reorganization, merger or consolidation
of the Corporation with one or more corporations as a result of
which the Corporation is not the surviving corporation, any such
Option then outstanding shall terminate and be forfeited. In the
event the Options terminate as aforesaid in connection with such
a dissolution, liquidation, reorganization, merger or
consolidation, the holder of any such Option shall be entitled
to receive from the Corporation cash in an amount equal to the
excess of (A) the Fair Market Value (determined on the basis of
the amount received by shareholders in connection with such
transaction) of the shares of Common Stock subject to the
portion of the Option not theretofore exercised (whether or not
the Option is then exercisable pursuant to its terms or
otherwise), over (B) the aggregate purchase price which would be
payable for such shares upon the exercise of the Option.
(iii) In adjusting Options to reflect the
changes described in this Section 3.1(b) or in determining that
no such adjustment is necessary, the Committee shall make only
such adjustment as shall be necessary to maintain the
proportionate interest of the holder and preserve the value of
the respective Option and may rely upon the advice of
independent counsel and accountants of the Corporation,
-9-
<PAGE> 13
and the determination of the Committee shall be conclusive. No
fractional shares of stock shall be issued under this Plan on
account of any such adjustment.
(iv) Upon the occurrence of an Event, each such
Option shall become immediately exercisable to the full extent
theretofore not exercisable. Acceleration of Awards shall comply
with applicable regulatory requirements, including, without
limitation, Rule 16b-3 promulgated by the Commission pursuant to
the Exchange Act.
All or any part of any remaining unexercised
Options granted pursuant to this Section 3.1(b) may be exercised (after approval
of the Plan by shareholders of the Corporation but in no event during the
six-month period commencing on the later of the date of grant or the date of
such shareholder approval) in the event of the holder's cessation of service as
a director of the Company due to the holder's death, during the period beginning
on the date of death and ending 12 months thereafter, but in no event after the
expiration of the term of the Option. Any Option granted pursuant to this
Section 3.1(b), to the extent unexercised, shall terminate immediately upon the
holder's ceasing to serve as a director of the Company due to Total Disability,
except that the holder or the holder's Personal Representative shall have 12
months following such cessation of service to exercise any unexercised Option
that the holder could have exercised on the day on which such service
terminated; provided that such exercise must be accomplished prior to the
expiration of the term of such Option. Any Option granted pursuant to this
Section 3.1(b), to the extent unexercised, shall terminate immediately upon the
holder's ceasing to serve as a director of the Company (for reasons other than
Total Disability or death), except that the holder shall have three months from
the date of such cessation of service to exercise any unexercised Option that he
or she could have exercised on the day on which such service terminated;
provided that such exercise must be accomplished prior to the expiration of the
term of such Option. Notwithstanding the preceding, if the service as a director
of any holder of an Option granted pursuant to this Section 3.1(b) shall be
terminated because of the holder's (a) fraud or intentional misrepresentation,
or (b) embezzlement, misappropriation or conversion of assets or opportunities
of the Company, then all such unexercised Options of the holder shall
terminate immediately upon such holder's ceasing to serve as a
director.
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Subject to the limitations of Section 7.7, this
award formula may be amended from time to time by the Board with respect to
timing and amount; provided that such formula will not be modified to provide an
award in excess of Options to acquire 5,000 shares of Common Stock per year; and
provided, further, that the provisions of this Section 3.1(b) shall not be
amended more than once every six months, other than to comport with changes in
the Code or the Employee Retirement Income Security Act of 1974, as amended (and
to such extent, if any, as it may be applicable to the Plan) or the rules and
regulations thereunder.
3.2 Option Price.
(a) The purchase price per share of the Common Stock
covered by each Option shall be determined by the Committee, but in the case of
Incentive Stock Options shall not be less than 100% (110% in the case of a
Participant who owns more than 10% of the total combined voting power of all
classes of stock of the Company) of the Fair Market Value of the Common Stock on
the date the Incentive Stock Option is granted. The purchase price of any shares
purchased shall be paid in full at the time of each purchase in one or a
combination of the following methods: (i) in cash, or by certified or cashier's
check payable to the order of the Corporation; (ii) if authorized by the
Committee or specified in the Option being exercised, by a promissory note made
by the Participant in favor of the Corporation, upon the terms and conditions
determined by the Committee but at a rate of interest at least equal to the
imputed interest specified under Section 483 or Section 1274, whichever is
applicable, of the Code, and secured by the Common Stock issuable upon exercise
in compliance with applicable law (including, without limitation, state
corporate law and federal margin requirements); or (iii) by shares of Common
Stock of the Corporation already owned by the Participant; provided, however,
the Committee may in its absolute discretion limit the Participant's ability to
exercise an Option by delivering shares, and any shares delivered which were
initially acquired upon exercise of a stock option must have been owned, or
deemed to have been owned, by the Participant at least six months as of the date
of delivery. Shares of Common Stock used to satisfy the exercise price of an
Option shall be valued at their Fair Market Value on the date of exercise.
(b) In addition to the payment methods described in
subsection (a), the Option may provide that the Option can be
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exercised and payment made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Corporation the amount of sale or loan proceeds necessary to pay the exercise
price and, unless otherwise disallowed by the Committee, any applicable tax
withholding under Section 7.6. The Corporation shall not be obligated to deliver
certificates for the shares unless and until it receives full payment of the
exercise price therefor.
3.3 Option Period.
Each Option and all rights or obligations thereunder shall
expire on such date as shall be determined by the Committee, but not later than
10 years after the Award Date of an Incentive Stock Option or 10 years and one
day after the Award Date of a Nonqualified Stock Option, and shall be subject to
earlier termination as hereinafter provided.
3.4 Exercise of Options.
Except as otherwise provided in Section 7.4, an Option may
become exercisable, in whole or in part, on the date or dates specified in the
Award Agreement which date(s) shall not be earlier than six months after the
later of (i) the Award Date, or (ii) the date of shareholder approval of the
Plan pursuant to Section 7.9, and thereafter shall remain exercisable until the
expiration or earlier termination of the Participant's Option. The Committee
may, at any time after grant of the Option and from time to time, increase the
number of shares purchasable at any time so long as the total number of shares
subject to the Option is not increased. No Option shall be exercisable except in
respect of whole shares, and fractional share interests shall be disregarded.
Not less than 100 shares of Common Stock may be purchased at one time unless the
number purchased is the total number at the time available for purchase under
the terms of the Option.
3.5 Limitations on Grant of Incentive Stock Options.
(a) The aggregate Fair Market Value (determined as of the
Award Date) of the Common Stock for which Incentive Stock Options may first
become exercisable by any Participant during any calendar year under this Plan
(other than as a result of acceleration pursuant to Section 7.4 or 7.2),
together with that of common stock subject to incentive stock options first
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exercisable by such Participant under any other plan of the Corporation or any
Subsidiary, shall not exceed $100,000; to the extent such limitation is exceeded
as a result of acceleration, Options shall be treated as Nonqualified Stock
Options.
(b) There shall be imposed in the Award Agreement relating
to Incentive Stock Options such terms and conditions as are required in order
that the Option be an "incentive stock option" as that term is defined in
Section 422 of the Code.
(c) No Incentive Stock Option may be granted to any person
who, at the time the Incentive Stock Option is granted, owns shares of stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation or any Subsidiary, unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to the
Option and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
(d) No Incentive Stock Option may be granted to any person
who is not an employee of the Company.
3.6 Additional Rights.
In its discretion the Committee may, in the Award
Agreement, provide for a Tax-Offset Bonus to any Participant who elects to make
a disqualifying disposition (as defined in Section 422(a)(1) of the Code) of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option. The
Tax-Offset Bonus shall be in the form of a cash payment equal to a percentage of
the difference between the exercise price and the lesser of (i) the Fair Market
Value on the date of exercise of the Common Stock with respect to which the
disqualifying disposition occurs, or (ii) the amount realized from such
disqualifying disposition. Such percentage shall be set out in the Award
Agreement and shall be designed to offset the impact of additional taxes which
result from the disqualifying disposition. Notwithstanding the preceding
sentence, the Committee may reserve the right to from time to time change the
percentage applicable with respect to the Award Agreement.
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IV. STOCK APPRECIATION RIGHTS.
4.1 Grants.
In its discretion, the Committee may grant Stock
Appreciation Rights concurrently with the grant of Options. A Stock Appreciation
Right shall extend to all or a portion of the shares covered by the related
Option. A Stock Appreciation Right shall entitle the Participant who holds the
related Option, upon exercise of the Stock Appreciation Right and surrender of
the related Option, or portion thereof, to the extent the Stock Appreciation
Right and related Option each were previously unexercised, to receive payment of
an amount determined pursuant to Section 4.3. Any Stock Appreciation Right
granted in connection with an Incentive Stock Option shall contain such
terms as may be required to comply with the provisions of Section 422 of the
Code and the regulations promulgated thereunder. In its discretion, the
Committee may also grant Stock Appreciation Rights independently of any Option
subject to such conditions as the Committee may in its absolute discretion
provide.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right granted concurrently
with an Option shall be exercisable only at such time or times, and to the
extent, that the related Option shall be exercisable and only when the Fair
Market Value of the stock subject to the related Option exceeds the exercise
price of the related Option.
(b) In the event that a Stock Appreciation Right granted
concurrently with an option is exercised, the number of shares of Common Stock
subject to the related Option shall be charged against the maximum amount of
Common Stock that may be issued or transferred pursuant to Awards under this
Plan. The number of shares subject to the Stock Appreciation Right and the
related Option of the Participant shall be reduced by such number of shares.
(c) If a Stock Appreciation Right granted concurrently
with an Option extends to less than all the shares covered by the related Option
and if a portion of the related Option is thereafter exercised, the number of
shares subject to the unexercised Stock Appreciation Right shall be reduced only
if and to the extent that the remaining number of shares covered by such related
Option is less than the remaining number of shares
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subject to such Stock Appreciation Right. The number of shares subject to
unexercised Stock Appreciation Rights may also be reduced proportionately.
(d) A Stock Appreciation Right granted independently of
any Option shall be exercisable pursuant to the terms of the Award Agreement but
in no event earlier than six months after the later of (i) the Award Date, or
(ii) the date of shareholder approval of the Plan pursuant to Section 7.9.
(e) In order to achieve the Plan's objective of
encouraging ownership of the Common Stock, the Committee may require that Stock
Appreciation Rights can only be exercised if the Participant uses all or a
portion of any cash received upon exercise of the Stock Appreciation Right to
concurrently exercise all or a portion of the Option he or she holds.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and
surrender of an exercisable portion of the related Option, the Participant shall
be entitled to receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise
price per share of Common Stock under the related Option from the Fair
Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right, by
(ii) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) The Committee, in its sole discretion, may settle the
amount determined under paragraph (a) above solely in cash, solely in shares of
Common Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in cash, provided that
the Committee shall have determined that such exercise and payment are
consistent with applicable law. In any event, cash shall be paid in lieu of
fractional shares. Absent a determination to the contrary, all Stock
Appreciation Rights shall be settled in cash as soon as practicable after
exercise. Notwithstanding the foregoing, the Committee may, in the Award
Agreement, determine
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the maximum amount of cash or stock or a combination thereof which may be
delivered upon exercise of a Stock Appreciation Right.
(c) Upon exercise of a Stock Appreciation Right granted
independently of any Option, the Participant shall be entitled to receive
payment in cash of an amount based on a percentage, specified in the Award
Agreement, of the difference obtained by subtracting the Fair Market Value per
share of Common Stock on the Award Date from the Fair Market Value per share of
Common Stock on the date of exercise of the Stock Appreciation Right.
(d) Notwithstanding any other provision of the Plan or of
the Stock Appreciation Rights, for purposes of determining the amount specified
in subsection (a) in the case of a holder of Stock Appreciation Rights who is a
director or officer of the Company subject to Section 16(b) of the Exchange Act,
the Committee, in its sole discretion, may designate a single Fair Market Value
per share with respect to all such holders who exercise Stock Appreciation
Rights during any single ten-day period specified in Rule 16b-3(e)(3) under the
Exchange Act; provided, however, that the Fair Market Value per share designated
by the Committee during any such period shall in no event be greater than the
highest Fair Market Value per share on any day during such period or less than
the lowest Fair Market Value per share on any day during such period.
V. RESTRICTED STOCK AWARDS.
5.1 Grants.
Subject to Section 2.4, the Committee may, in its
discretion, grant one or more Restricted Stock Awards to any Eligible Person.
Each Restricted Stock Award Agreement shall specify the number of shares of
Common Stock to be issued to the Participant, the date of such issuance, the
price, if any, to be paid for such shares by the Participant and the
restrictions imposed on such shares, which restrictions shall not terminate
earlier than six months after the later of (i) the Award Date, or (ii) the date
of shareholder approval of the Plan pursuant to Section 7.9. Shares of
Restricted Stock shall be evidenced by a stock certificate registered only in
the name of the Participant, which stock certificate shall bear a legend making
appropriate
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reference to the restrictions imposed and shall be held by the Corporation until
the restrictions on such shares shall have lapsed and those shares shall have
thereby vested.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock
Awards may not be sold, assigned, transferred, pledged or otherwise disposed of
or encumbered, either voluntarily or involuntarily, until such shares have
vested.
(b) Participants receiving Restricted Stock shall be
entitled to voting rights for the shares issued even though they are not vested;
provided that such rights shall terminate immediately as to any forfeited
Restricted Stock; and provided further that any dividends declared and paid on
the shares issued but not yet vested shall be retained for the benefit of the
Participant, to be paid to the Participant when and if such shares vest or
returned to the Corporation immediately as to any forfeited Restricted Stock.
(c) In the event that the Participant shall have paid cash
in connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned upon a forfeiture (with
or without an earnings factor).
VI. PERFORMANCE SHARE AWARDS.
6.1 Grants.
The Committee may, in its discretion, grant
Performance Share Awards to Eligible Persons based upon such factors as the
Committee shall determine. A Performance Share Award Agreement shall specify the
number of shares of Common Stock subject to the Performance Share Award, the
price, if any, to be paid for such shares by the Participant and the conditions
upon which issuance to the Participant shall be based, which issuance shall not
be earlier than six months after the later of (i) the Award Date, or (ii) the
date of shareholder approval of the Plan pursuant to Section 7.9.
VII. OTHER PROVISIONS.
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7.1 Rights of Eligible Persons, Participants and
Beneficiaries.
(a) Status as an Eligible Person shall not be construed as
a commitment that any Award will be made under this Plan to an Eligible Person
or to Eligible Persons generally.
(b) Nothing contained in this Plan (or in Award Agreements
or in any other documents related to this Plan or to Awards) shall confer upon
any Eligible Person or Participant any right to continue in the employ of the
Company or constitute any contract or agreement of employment, or interfere in
any way with the right of the Company to reduce such person's compensation or to
terminate the employment of such Eligible Person or Participant, with or without
cause, but nothing contained in this Plan or any document related thereto shall
affect any other contractual right of any Eligible Person or Participant.
(c) Amounts payable pursuant to an Award shall be paid
only to the Participant or, in the event of the Participant's death, to the
Participant's Beneficiary or, in the event of the Participant's Total
Disability, to the Participant's Personal Representative or, if there is none,
to the Participant. Other than by will or the laws of descent and distribution,
or pursuant to a "qualified domestic relations order" as defined by the Code, no
benefit payable under, or interest in, this Plan or in any Award shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge and any such attempted action shall be void and no
such benefit or interest shall be, in any manner, liable for, or subject to,
debts, contracts, liabilities, engagements or torts of any Eligible Person,
Participant or Beneficiary. The Committee shall disregard any attempted
transfer, assignment or other alienation prohibited by the preceding sentence
and shall pay or deliver such cash or shares of Common Stock in accordance with
the provisions of this Plan.
(d) No Participant, Beneficiary or other person
shall have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock) of the Company by reason of any Award granted
hereunder. Neither the provisions of this Plan (or of any documents related
hereto), nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between
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the Company and any Participant, Beneficiary or other person. To the extent that
a Participant, Beneficiary or other person acquires a right to receive an Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
7.2 Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are
increased, decreased or changed into, or exchanged for, a different number or
kind of shares or securities of the Corporation through a reorganization or
merger in which the Corporation is the surviving entity, or through a
combination, recapitalization, reclassification, stock split, stock dividend,
stock consolidation or otherwise, an appropriate adjustment shall be made in the
number and kind of shares that may be issued pursuant to Awards. A corresponding
adjustment to the consideration payable with respect to Awards granted prior to
any such change and to the price, if any, paid in connection with Restricted
Stock Awards or Performance Share Awards shall also be made. Any such
adjustment, however, shall be made without change in the total payment, if any,
applicable to the portion of the Award not exercised but with a corresponding
adjustment in the price for each share. Corresponding adjustments shall be made
with respect to Stock Appreciation Rights based upon the adjustments made to the
Options to which they are related or, in the case of Stock Appreciation Rights
granted independently of any Option, based upon the adjustments made to Common
Stock. Corresponding adjustments may also be made in particular stock grants
with respect to extraordinary cash dividends.
(b) Upon the dissolution or liquidation of the
Corporation, or upon a reorganization, merger or consolidation of the
Corporation with one or more corporations as a result of which the Corporation
is not the surviving corporation, the Plan shall terminate, and any outstanding
Awards shall terminate and be forfeited. Notwithstanding the foregoing, the
Committee may provide in writing in connection with, or in contemplation of, any
such transaction for any or all of the following alternatives (separately or in
combinations): (i) for the assumption by the successor corporation of the Awards
theretofore granted or the substitution by such corporation for such Awards of
awards covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; (ii) for the continuance of the
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Plan by such successor corporation in which event the Plan and the Awards shall
continue in the manner and under the terms so provided; or (iii) for the payment
in cash or shares of Common Stock in lieu of and in complete satisfaction of
such Awards.
(c) In adjusting Awards to reflect the changes described
in this Section 7.2, or in determining that no such adjustment is necessary, the
Committee may rely upon the advice of independent counsel and accountants of the
Corporation, and the determination of the Committee shall be conclusive. No
fractional shares of stock shall be issued under this Plan on account of any
such adjustment.
7.3 Termination of Employment.
(a) If the Participant's employment by the Company
terminates for any reason other than Retirement, death or Total Disability, the
Participant shall have, subject to earlier termination pursuant to or as
contemplated by Section 3.3, three months (or up to one year if so determined by
the Committee in the grant or otherwise) from the date of termination of
employment to exercise any Option to the extent it shall have become exercisable
on that date, and any Option not exercisable on that date shall terminate.
Notwithstanding the preceding sentence, in the event the Participant is
discharged for cause as determined by the Committee in its sole discretion, all
Options shall lapse immediately upon such termination of employment.
(b) If the Participant's employment by the Company
terminates as a result of Retirement or Total Disability, the Participant or
Participant's Personal Representative, as the case may be, shall have, subject
to earlier termination pursuant to or as contemplated by Section 3.3, 12 months
from the date of termination of employment (or 3 months from the date of
termination of employment as a result of Retirement, with respect to an
Incentive Stock Option) to exercise any Option to the extent it shall have
become exercisable by that date, and any Option not exercisable on that date
shall terminate.
(c) If the Participant's employment by the Company
terminates as a result of death while the Participant is employed by the Company
or during the 12 month period referred to in subsection (b) above, the
Participant's Option shall be exercisable by the Participant's Beneficiary,
subject to earlier termination pursuant to or as contemplated by Section 3.3,
during
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the 12-month period or such shorter period as is provided in the Award Agreement
following the Participant's death, as to all or any part of the shares of Common
Stock covered thereby, including all shares as to which the Option would not
otherwise be exercisable.
(d) Each Stock Appreciation Right granted concurrently
with an Option shall have the same termination provisions and exercisability
periods as the Option to which it relates. The termination provisions and
exercisability periods of any Stock Appreciation Right granted independently of
an Option shall be established in accordance with Section 4.2(d). The
exercisability period of a Stock Appreciation Right shall not exceed that
provided in Section 3.3 or in the related Award Agreement and the Stock
Appreciation Right shall expire at the end of such exercisability period.
(e) In the event of termination of employment with the
Company for any reason, (i) shares of Common Stock subject to the Participant's
Restricted Stock Award shall be forfeited in accordance with the provisions of
the related Award Agreement to the extent such shares have not become vested on
that date; and (ii) shares of Common Stock subject to the Participant's
Performance Share Award shall be forfeited in accordance with the provisions of
the related Award Agreement to the extent such shares have not been issued or
become issuable on that date.
(f) In the event of termination of employment with the
Company for any reason, other than discharge for cause, the Committee may, in
its discretion, increase the portion of the Participant's Award available to the
Participant, or Participant's Beneficiary or Personal Representative, as the
case may be, upon such terms as the Committee shall determine.
(g) If an entity ceases to be a Subsidiary, such action
shall be deemed for purposes of this Section 7.3 to be a termination of
employment of each employee of that entity.
(h) Upon forfeiture of a Restricted Stock Award pursuant
to this Section 7.3, the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, shall transfer to the Corporation the
portion of the Restricted Stock Award not vested at the date of termination of
employment, without payment of any consideration by the Company for such
transfer unless the Participant paid a purchase price in which
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case repayment, if any, of that price shall be governed by the Award Agreement.
Notwithstanding any such transfer to the Corporation, or failure, refusal or
neglect to transfer, by the Participant, or his or her Beneficiary or Personal
Representative, as the case may be, such non-vested portion of any Restricted
Stock Award shall be deemed transferred automatically to the Corporation on the
date of termination of employment. The Participant's original acceptance of the
Restricted Stock Award shall constitute his or her appointment of the
Corporation and each of its authorized representatives as attorney(s)-in-fact to
effect such transfer and to execute such documents as the Corporation or such
representatives deem necessary or advisable in connection with such transfer.
7.4 Acceleration of Awards.
Unless prior to an Event the Committee determines that,
upon its occurrence, there shall be no acceleration of Awards or determines
those Awards which shall be accelerated and the extent to which they shall be
accelerated, upon the occurrence of an Event (i) each Option and each Stock
Appreciation Right shall become immediately exercisable to the full extent
theretofore not exercisable, (ii) Restricted Stock shall immediately vest free
of restrictions and (iii) the number of shares covered by each Performance Share
Award shall be issued to the Participant; provided, however, that Awards shall
not in any event be so accelerated to a date less than six months after the
later of (i) the Award Date, or (ii) the date of shareholder approval of the
Plan pursuant to Section 7.9. Acceleration of Awards shall comply with
applicable regulatory requirements, including, without limitation, Rule 16b-3
promulgated by the Commission pursuant to the Exchange Act and Section 422 of
the Code.
7.5 Government Regulations.
This Plan, the granting of Awards under this Plan and the
issuance or transfer of shares of Common Stock (and/or the payment of money)
pursuant thereto are subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency
(including, without limitation, interpretive letters of the Commission) which
may, in the opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Without limiting the generality of the foregoing, no
Awards may be granted under this
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Plan, and no shares shall be issued by the Corporation, nor cash payments made
by the Corporation, pursuant to or in connection with any such Award, unless and
until, in each such case, all legal requirements applicable to the issuance or
payment have, in the opinion of counsel to the Corporation, been complied with.
In connection with any stock issuance or transfer, the person acquiring the
shares shall, if requested by the Corporation, give assurances satisfactory to
counsel to the Corporation in respect of such matters as the Corporation may
deem desirable to assure compliance with all applicable legal requirements.
7.6 Tax Withholding.
(a) Upon the disposition by a Participant or other person
of shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of Section
422 of the Code, or upon the exercise of a Nonqualified Stock Option or a Stock
Appreciation Right, the vesting of a Restricted Stock Award, the payment of a
Performance Share Award, payment pursuant to a Stock Appreciation Right or
payment of a Tax-Offset Bonus, the Company shall have the right to (i) require
such Participant or other person to pay by cash, or certified or cashier's check
payable to the Company, the amount of any taxes which the Company may be
required to withhold with respect to such transactions or (ii) deduct from
amounts paid in cash the amount of any taxes which the Company may be required
to withhold with respect to such cash amounts. The above notwithstanding, in any
case where a tax is required to be withheld in connection with the issuance or
transfer of shares of Common Stock under this Plan, the Participant may elect,
pursuant to such rules as the Committee may establish, to have the Company
reduce the number of such shares issued or transferred by the appropriate number
of shares to accomplish such withholding; provided, the Committee may impose
such conditions on the payment of any withholding obligation as may be required
to satisfy applicable regulatory requirements, including, without limitation,
Rule 16b-3 promulgated by the Commission pursuant to the Exchange Act.
(b) The Committee may, in its discretion, permit a loan
from the Company to a Participant (other than a member of the Committee) in the
amount of any taxes which the Company may be required to withhold with respect
to shares of Common Stock received pursuant to a transaction described in
subsection (a) above. Such a loan will be for a term, at a rate of interest and
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pursuant to such other terms and rules as the Committee may establish.
7.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan (or any part hereof). In addition, the
Committee may, from time to time, amend or modify any provision of this Plan
and, with the consent of the Participant, make such modifications of the terms
and conditions of such Participant's Award as it shall deem advisable. The
Committee, with the consent of the Participant, may also amend the terms of any
Option to provide that the Option price of the shares remaining subject to the
original Award shall be reestablished at a price not less than 100% of the Fair
Market Value of the Common Stock on the effective date of the amendment. No
modification of any other term or provision of any Option which is amended in
accordance with the foregoing shall be required, although the Committee may, in
its discretion, make such further modifications of any such Option as are not
inconsistent with or prohibited by the Plan. No Awards may be granted during any
suspension of this Plan or after its termination.
(b) If an amendment would (i) materially increase the
benefits accruing to Participants within the meaning of Rule 16b-3(a) under the
Exchange Act or any successor thereto, (ii) increase the aggregate number of
shares which may be issued under this Plan or to any individual, or (iii) modify
the requirements of eligibility for participation in this Plan, the amendment
shall be approved by the Board or the Committee and by a majority of the
shareholders.
(c) In the case of Awards issued before the effective date
of any amendment, suspension or termination of this Plan, such amendment,
suspension or termination of the Plan shall not, without specific action of the
Board or the Committee and the consent of the Participant, in any way modify,
amend, alter or impair any rights or obligations under any Award previously
granted under the Plan.
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7.8 Privileges of Stock Ownership; Nondistributive
Intent.
A Participant shall not be entitled to the privilege of
stock ownership as to any shares of Common Stock not actually issued to him.
Upon the issuance and transfer of shares to the Participant, unless a
registration statement is in effect under the Securities Act, relating to such
issued and transferred Common Stock and there is available for delivery a
prospectus meeting the requirements of Section 10 of the Securities Act, the
Common Stock may be issued and transferred to the Participant only if he
represents and warrants in writing to the Corporation that the shares are being
acquired for investment and not with a view to the resale or distribution
thereof. No shares shall be issued and transferred unless and until there shall
have been full compliance with any then applicable regulatory requirements
(including those of exchanges upon which any Common Stock of the Corporation may
be listed).
7.9 Effective Date of the Plan.
This Plan shall be effective upon approval by the
shareholders of the Corporation by the vote of the holders of a majority of the
stock of the Corporation voting at a meeting of such holders in person or by
proxy; except that this Plan is adopted and approved by the Board effective
October 1, 1994 to permit the grant of Awards prior to the approval of the Plan
by the shareholders of the Corporation as aforesaid. In the event that this Plan
is not approved by the shareholders of the Corporation as aforesaid, this Plan
and any Awards granted hereunder shall be void and of no force or effect.
7.10 Term of the Plan.
Unless previously terminated by the Board, this Plan shall
terminate at the close of business on October 1, 2004, and no Awards shall be
granted under it thereafter, but such termination shall not affect any Award
theretofore granted.
7.11 Governing Law.
Except as required by Delaware corporate law, this Plan
and the documents evidencing Awards and all other related documents shall be
governed by, and construed in accordance with, the laws of the State of
California. If any provision shall be
-25-
<PAGE> 29
held by a court of competent jurisdiction to be invalid and unenforceable, the
remaining provisions of this Plan shall continue to be fully effective.
-26-
<PAGE> 1
Exhibit 5.1
[KAYE, SCHOLER, FIERMAN, HAYS & HANDLER, LLP LETTERHEAD]
June 20, 1996
Dove Audio, Inc.
8955 Beverly Boulevard
West Hollywood, California 90048
Gentlemen:
We have acted as special counsel to Dove Audio, Inc., a California
corporation (the "Company"), in connection with its Registration Statement on
Form S-8 (the "Registration Statement"), filed pursuant to the Securities Act
of 1933, as amended (the "Act"), relating to the offering by the Company of up
to an aggregate of 400,000 shares of the Company's common stock, par value $.01
per share (the "Common Stock"), pursuant to its 1994 Stock Incentive Plan (the
"Plan").
In that connection, we have reviewed the Amended and Restated Articles
of Incorporation of the Company, its By-Laws, resolutions of its Board of
Directors and such other documents and records as we have deemed appropriate.
On the basis of such review and having regard to legal considerations
that we deemed relevant, it is our opinion that the Common Stock to be issued
by the Company pursuant to the Plan has been duly authorized, and when (i) the
Registration Statement shall have become effective and (ii) the Common Stock
has been issued and paid for as described in Registration Statement will be
duly and validly issued, fully paid and non-assessable.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement. In giving this opinion, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ Kaye, Scholer, Fierman, Hays & Handler, LLP
<PAGE> 1
Exhibit 23.2
[KPMG PEAT MARWICK LLP LETTERHEAD]
The Board of Directors
Dove Audio, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-8 of Dove Audio, Inc. of our report dated April 12, 1996, relating to the
consolidated balance sheet of Dove Audio, Inc. and subsidiaries as of December
31, 1995, and the related consolidated statements of income, stockholders'
equity, and cash flows for the year then ended, which report appears in the
December 31, 1995, annual report of Form 10-KSB of Dove Audio, Inc.
/s/ KPMG Peat Marwick LLP
Los Angeles, California
June 19, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the 1994 Stock Incentive Plan of Dove Audio, Inc. of
our report dated March 28, 1995, with respect to the consolidated financial
statements of Dove Audio, Inc. for the year ended December 31, 1994 included in
its Annual Report (Form 10-KSB) for the year ended December 31, 1995 filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Los Angeles, California
June 21, 1996
