SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
SPORTSLINE USA, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
-------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
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SPORTSLINE USA, INC.
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 11, 1998
---------------------------------
To the shareholders of SportsLine USA, Inc.
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders of
SportsLine USA, Inc., a Delaware corporation (the "Company"), will be held at
10:00 a.m., local time, on Thursday, June 11, 1998, at the Westin Hotel, 400
Corporate Drive, Fort Lauderdale, Florida, for the following purposes:
To elect four members to the Company's Board of Directors to hold office
until the Company's 2001 annual meeting of shareholders or until their
successors are duly elected and qualified;
To approve an amendment to the 1997 Incentive Compensation Plan to increase
by 1,000,000 the number of shares of Common Stock issuable thereunder; and
To transact such other business as may properly come before the meeting and
any adjournments thereof.
The Board of Directors has fixed the close of business on May 15, 1998 as the
record date for determining those shareholders entitled to notice of, and to
vote at, the Annual Meeting and any adjournments thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
Michael Levy
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Fort Lauderdale, Florida
May 19, 1998
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND
THE MEETING IN PERSON. SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE.
SHAREHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
OF
SPORTSLINE USA, INC.
---------------------------------------
PROXY STATEMENT
---------------------------------------
DATE, TIME AND PLACE OF ANNUAL MEETING
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of SportsLine USA, Inc., a Delaware corporation (the
"Company"), of proxies from the holders of the Company's Common Stock, par value
$0.01 per share (the "Common Stock"), for use at the 1998 Annual Meeting of
Shareholders of the Company, to be held at 10:00 a.m., local time, on Thursday,
June 11, 1998, at the Westin Hotel, 400 Corporate Drive, Fort Lauderdale,
Florida,, or any adjournment(s) thereof (the " Annual Meeting"), pursuant to the
enclosed Notice of Annual Meeting at the time and place indicated therein. The
approximate date this Proxy Statement and the enclosed form of proxy are first
being sent to holders of Common Stock is May 19, 1998. The complete mailing
address, including zip code, of the principal executive offices of the Company
is 6340 N.W. 5th Way, Fort Lauderdale, Florida 33309.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Board of Directors of the
Company. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Secretary
of the Company at the Company's headquarters a written revocation or duly
executed proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the Company at
or prior to the Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is to be borne
by the Company. In addition to the use of mail, employees of the Company may
solicit proxies personally and by telephone and facsimile. They will receive no
compensation therefor in addition to their regular salaries. Arrangements will
be made with banks, brokers and other custodians, nominees and fiduciaries to
forward copies of the proxy material to their principals and to request
authority for the execution of proxies. The Company will reimburse such persons
for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and vote upon
the following matters:
1. The election of four directors to serve until the Company's 2001 annual
meeting of shareholders or until their successors are duly elected and
qualified; and
2. A proposal to approve an amendment to the 1997 Incentive Compensation
Plan (the "Incentive Plan") to increase by 1,000,000 the number of
shares of Common Stock issuable thereunder; and
3. Such other business as may properly come before the Annual Meeting,
including any adjournments thereof.
Unless contrary instructions are indicated on the enclosed proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked in accordance with the procedures set forth above) will be
voted (i) FOR the election of the two nominees for director named below, (ii)
FOR the approval of the proposal to amend the Incentive Plan, and (iii) by the
proxies in their discretion upon any other proposals as may properly come before
the Annual Meeting. In the event a shareholder specifies a different choice by
means of the enclosed proxy, his shares will be voted in accordance with the
specification so made.
<PAGE>
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has set the close of business on May 15, 1998 (the
"Record Date"), as the record date for determining shareholders of the Company
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 18,625,820 shares of Common Stock issued and outstanding, all of
which are entitled to be voted at the Annual Meeting. Holders of Common Stock
are entitled to one vote per share on each matter that is submitted to
shareholders for approval.
The attendance, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum. If less
than a majority of the outstanding shares of Common Stock are represented at the
Annual Meeting, a majority of the shares so represented may adjourn the Annual
Meeting from time to time without further notice. For purposes of electing
directors at the Annual Meeting, the nominees receiving the greatest number of
votes of Common Stock shall be elected as directors. The proposed amendment to
the Incentive Plan, and any other matter that may be submitted to a vote of the
shareholders at the Annual Meeting, will be approved if the number of shares of
Common Stock voted in favor of the matter exceeds the number of shares of Common
Stock voted against the matter, unless the matter is one for which a greater
vote is required by law or the Company's Amended and Restated Certificate of
Incorporation or Bylaws.
Abstentions are considered as shares present and entitled to vote for
purposes of determining the presence of a quorum and will be counted as votes
cast for purposes of determining the outcome of any matter submitted to the
shareholders for a vote, but are not counted as votes "for" or "against" any
matter. The inspectors of election will treat shares referred to as "broker or
nominee non-votes" (shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
and the broker or nominee does not have discretionary voting power on a
particular matter) as shares that are present and entitled to vote for purposes
of determining the presence of a quorum. For purposes of determining the outcome
of any matter as to which the proxies reflect broker or nominee non-votes,
shares represented by such proxies will be treated as not present and not
entitled to vote on that subject matter and therefore will not be considered by
the inspectors of election when counting votes cast on the matter (even though
those shares are considered entitled to vote for quorum purposes and may be
entitled to vote on other matters.) Accordingly, abstentions and broker or
nominee non-votes will not have the same effect as a vote against a proposal.
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ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Board of Directors is divided into three classes, and each director
serves for a staggered three-year term, or until successors of such class have
been elected and qualified. At the Annual Meeting, the shareholders will elect
four directors, each of whom will serve for a term expiring at the 2001 annual
meeting of shareholders, or until his successor has been duly elected and
qualified. In the event that any nominee is unable or unwilling to serve as a
director at the time of the Annual Meeting, the proxies may be voted for the
balance of those nominees named and for any substitute nominee designated by the
present Board or the proxy holders to fill such vacancy, or for the balance of
the nominees named without nomination of a substitute, or the Board may be
reduced in accordance with the Company's Bylaws. As of the date of this Proxy
Statement, the Board of Directors has no reason to believe that any of the
persons named below will be unable or unwilling to serve as a nominee or as a
director if elected.
Assuming a quorum is present, the four nominees receiving the highest number
of affirmative votes of shares entitled to be voted for them will be elected as
directors of the Company. Shareholders are not entitled to cumulate votes in the
election of directors. Unless marked otherwise, proxies received will be voted
FOR the election of each of the four nominees named below.
NOMINEES FOR ELECTION AS DIRECTOR
NAME TERM EXPIRES
- ---- ------------
Michael Levy.......................... 2001
Joseph Lacob.......................... 2001
Andrew Nibley......................... 2001
James C. Walsh........................ 2001
CURRENT DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE SUBSEQUENT TO THE
ANNUAL MEETING
NAME TERM EXPIRES
- ---- ------------
Thomas Cullen......................... 1999
Richard B. Horrow..................... 1999
Derek Reisfield....................... 1999
Gerry Hogan........................... 2000
Sean McManus.......................... 2000
Michael P. Schulhof................... 2000
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED ABOVE.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S) HELD WITH THE COMPANY
- ---- --- ---------------------------------
<S> <C> <C>
Michael Levy 51 Chairman of the Board, President and Chief Executive Officer
Kenneth W. Sanders 41 Chief Financial Officer
Mark J. Mariani 41 Executive Vice President, Sales
Andrew S. Sturner 33 Vice President, Business Development
Thomas Cullen 38 Director
Gerry Hogan 52 Director
Richard B. Horrow 43 Director
Joseph Lacob 42 Director
Sean McManus 43 Director
Andrew Nibley 46 Director
Derek Reisfield 35 Director
Michael P. Schulhof 55 Director
James C. Walsh 57 Director
</TABLE>
MICHAEL LEVY has served as the President, Chief Executive Officer and
Chairman of the Board of the Company since its inception in February 1994. From
1979 through March 1993, Mr. Levy served as President, Chief Executive Officer
and as a director of Lexicon Corporation, a high technology company specializing
in data communications and signal processing technology. From January 1988 to
June 1993, Mr. Levy also served as Chairman of the Board and Chief Executive
Officer of Sports-Tech International, Inc., a company engaged in the
development, acquisition, integration and sale of computer software, equipment
and computer-aided video systems used by professional, collegiate and high
school sports programs. Between June 1993 and February 1994, Mr. Levy was a
private investor.
KENNETH W. SANDERS has served as the Chief Financial Officer of the
Company since September 1997. From January 1996 to August 1997, Mr. Sanders
served as Senior Vice President, Chief Financial Officer of Paging Network,
Inc., the world's largest paging company. From May 1993 to December 1995, Mr.
Sanders served as Executive Vice President, Chief Financial Officer and a
director of CellStar Corporation, an integrated wholesaler and retailer of
cellular phones and related products. Between July 1979 and April 1993, Mr.
Sanders was with KPMG Peat Marwick, most recently as an Audit Partner from July
1990 to April 1993.
MARK J. MARIANI has served as the Company's Executive Vice President,
Sales since April 1996. From August 1991 to March 1996, Mr. Mariani served as
Executive Vice President of Sports Sales for Turner Broadcasting Sales, Inc.
From June 1990 to August 1991, Mr. Mariani served as Senior Vice President and
National Sales Manager for CNN in New York, and from May 1986 to June 1990, Mr.
Mariani served as Vice President for CNN Sales Midwest. Prior to joining Turner
Broadcasting, Mr. Mariani served as an Account Executive for WBBM, an owned and
operated CBS television station in Chicago, Illinois.
ANDREW S. STURNER has served as the Company's Vice President, Business
Development since June 1995. From May 1994 to June 1995, Mr. Sturner served as
Vice President of Business Development for MovieFone, Inc., an interactive
telephone service company. From March 1993 to May 1994, Mr. Sturner served as
President of Interactive Services, an interactive audiotext development company
which he co-founded in 1992. From August 1990 to March 1993, Mr. Sturner was a
bankruptcy associate at the law firm of Stroock & Stroock & Lavan.
THOMAS CULLEN, appointed a director of the Company in April 1997, has
served as President of MediaOne Group's Interactive Services Division since
April 1997. Prior thereto, Mr. Cullen held various positions with US WEST since
1981, including Vice President, Business Development for Interactive Services
Group from April 1992 to April 1997. Mr. Cullen serves as a member of the Board
of Directors of Preview Travel, Inc. and Third Age Media, Inc.
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GERRY HOGAN, appointed a director of the Company in November 1996, has
served as Chairman and Chief Executive Officer of Cygnus Publishing, Inc., a
magazine publishing company, since May 1997. He served as President and Chief
Executive Officer of the Home Shopping Network from February 1993 to August
1995. Prior thereto, Mr. Hogan served as vice chairman of Whittle
Communications, L.P. from October 1990 to February 1993. From October 1971 to
September 1987, Mr. Hogan held various positions at Turner Entertainment
Networks and most recently served as President. Mr. Hogan serves as a member of
the Board of Directors of the Hard Rock Hotel & Casinos, London Fog Industries,
Inc. and Ethnic American Broadcasting Company and as a member of the Board of
Trustees of Eckerd College.
RICHARD B. HORROW, appointed a director of the Company in September
1994, is an attorney and sports development consultant and has served as
President of Horrow Sports Ventures, Inc., a sports consulting firm, since its
inception in May 1988. Since July 1994, Mr. Horrow has been the host of the
weekly television show "The Sports Business Report," which is distributed
nationally through Prime Network/Sports Channel/New Sport affiliates, and has
also hosted the weekly radio show "The Sports Professor," aired nationally on
Prime Radio. Mr. Horrow also currently serves as a consultant for various
sports-related matters to The City of Oklahoma City, the National Football
League, the Ladies Professional Golf Association, the Baltimore Orioles and the
National Association of Professional Baseball Leagues. From March 1991 to March
1992, Mr. Horrow served as the Executive Director of Golden Bear Sports
Management, a sports management firm.
JOSEPH LACOB, appointed a director of the Company in May 1995, has
served as a general partner of Kleiner Perkins Caufield & Byers, a venture
capital partnership, since May 1987. Mr. Lacob also serves as the Chairman of
the Board of CellPro, Inc., a cell therapy device company, and Corixa, Inc., a
cancer and infectious disease vaccine company. Mr. Lacob is also a director of
publicly-held Pharmacyclics, Inc. and Hearport, Inc., as well as six privately
held ventures in the medical and sports media businesses.
SEAN MCMANUS, appointed a director of the Company in March 1997, has
served as President of CBS Sports since December 1996. From October 1987 to
December 1996, Mr. McManus was Senior Vice President U.S. Television Sales and
Programming at Trans World International, the television division of
International Management Group. From August 1981 to October 1987, Mr. McManus
was Vice President Planning and Development at NBC Sports. From September 1979
to August 1981, Mr. McManus served as Associate Producer and Producer at NBC
Sports and from August 1977 to September 1979 he was a Production Assistant to
the Associate Producer at ABC Sports.
ANDREW NIBLEY, appointed a director of the Company in March 1996, has
served as President, Reuters NewMedia, Inc. ("Reuters NewMedia") since January
1998 and a director of Reuters NewMedia since January 1994. From January 1994 to
January 1998, Mr. Nibley was the Editor and Executive Vice President of Reuters
NewMedia. From January 1989 to January 1994, Mr. Nibley was the Editor, America
for Reuters America, Inc. He was also named the Senior Vice President, News and
Television of Reuters America, Inc. in July 1993.
DEREK REISFIELD, appointed a director of the Company in March 1997, has
served as President, CBS New Media Group since April 1998 and was Vice President
of Business Development at CBS from May 1997 to April 1998.From April 1996 to
April 1997, Mr. Reisfield was Director of Strategic Management of Westinghouse
Electric Corporation. Prior thereto, Mr. Reisfield held various positions at
Mitchell Madison Group, a management consulting firm, and most recently as a
Partner of the firm's Media and Communications Practice, the Consumer Marketing
Practice and Mitchell Madison's Venture Capital Group from June 1995 to April
1996. From August 1987 to June 1995, Mr. Reisfield held various positions, most
recently as a Senior Manager at McKinsey & Company, a management consulting
firm.
MICHAEL P. SCHULHOF, appointed a director of the Company in November
1997, is a private investor. From June 1974 to January 1996, Mr. Schulhof held
various positions at Sony Corporation of America, Inc. and most recently served
as President and Chief Executive Officer from June 1993 to January 1996. Mr.
Schulhof is a trustee of Brandeis University, Lincoln Center for the Performing
Arts, Inc., New York University Medical Center and the Brookings Institute,
serves on the Board of Directors of the Center on Addiction and Substance Abuse
at Columbia University, is a member of the Council on Foreign Relations and a
member of the Investment and Services Policy Advisory Committee to the U.S.
Trade Representative.
JAMES C. WALSH, appointed a director of the Company in August 1994, is
an attorney who has been engaged in the private practice of law since 1968. Mr.
Walsh has also served as the President of Namanco Productions, Inc., a sports
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marketing and management firm, since 1969. Namanco Productions, Inc. is the
agent and manager of NFL Hall of Fame quarterback Joe Namath.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company fiscal year ended December 31, 1997, the Board of
Directors held twelve meetings, including telephonic meetings, and took certain
actions by written consent. Each director attended at least 75 percent of the
aggregate of (i) the number of such meetings, and (ii) the number of meetings
held by all committees of the Board of Directors on which such director served
during 1997.
The Board of Directors has established two standing committees: the
Audit Committee and the Compensation Committee.
Messrs. Cullen, Lacob and Reisfield are the members of the Audit
Committee, which did not meet during 1997. The duties and responsibilities of
the Audit Committee include (a) reviewing audit functions, including accounting
and financial reporting practices of the company, the adequacy of the company's
system of internal accounting control and the quality and integrity of the
Company's financial statement and relations with independent auditors.
Messrs. Hogan, Levy and McManus are the members of the Compensation
Committee, which held one meeting during 1997. The Compensation Committee is
responsible for establishing the compensation of the Company's directors,
officers and employees, including salaries, bonuses, commission, and benefit
plans, and administering the Company's stock plans, including the 1995 Stock
Option Plan (the "Stock Option Plan"), the Incentive Plan and the 1997 Employee
Stock Purchase Plan, and other forms of or matters relating to compensation.
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PROPOSAL TO AMEND THE 1997 INCENTIVE COMPENSATION PLAN
(PROPOSAL NO. 2)
The Board of Directors has adopted an amendment to the Incentive Plan to
increase the number of shares of Common Stock issuable thereunder from 2,000,000
to 3,000,000. The Board of Directors felt that the number of shares currently
available under the Incentive Plan may be insufficient in light of the continued
growth in the Company's operations, including potential increases in the number
of employees if and to the extent the Company completes acquisitions of other
companies or businesses. For this reason, the Board has determined that it is in
the best interests of the Company to increase the number of shares available for
issuance under the Incentive Plan, so that the Company would be able to continue
to use stock options and other equity awards to retain and attract qualified
employees.
The material features of the Incentive Plan are discussed below, but the
description is subject to, and is qualified in its entirety by, the full text of
the Incentive Plan, attached hereto as Exhibit A. The bold face portions of the
Incentive Plan reflect the proposed amendment to be voted on at the Annual
Meeting.
GENERAL. The purpose of the Incentive Plan is to assist the Company in
attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, directors and independent contractors (collectively,
"Participants") by enabling such persons to acquire or increase a proprietary
interest in the Company in order to strengthen the mutuality of interests
between such persons and the Company's shareholders, and providing such persons
with annual and long term performance incentives to expend their maximum efforts
in the creation of shareholder value. Pursuant to the Incentive Plan, the
Company may grant Participants stock options, stock appreciation rights,
restricted stock, deferred stock, other stock-related awards and performance or
annual incentive awards that may be settled in cash, stock or other property
(collectively, "Awards").
Before adoption of the amendment of the Incentive Plan, the total number of
shares of Common Stock subject to the granting of Awards under the Incentive
Plan was: (i) 2,000,000 shares, plus (ii) the number of shares with respect to
Awards previously granted under the Incentive Plan that terminate without being
exercised, expire, are forfeited or canceled, and the number of shares of Common
Stock that are surrendered in payment of any Awards or any tax withholding
requirements. As of April 30, 1998, options to purchase 881,000 shares were
outstanding under the Incentive Plan, 1,934 shares had been issued pursuant to
the exercise of stock options granted under such plan and 1,117,066 shares
remained available for future grants. In addition, as of Aprl 30, 1998, options
to purchase 933,122 shares were outstanding and 143,967 shares had been issued
pursuant to the exercise of stock options gratned under the Company's Stock
Option Plan . The Company does not presently intend to make any future grants
under the Stock Option Plan.
ADMINISTRATION. The Incentive Plan is presently administered by the
Compensation Committee. However, except as otherwise required to comply with
Rule 16b-3 of the Exchange Act, or Section 162(m) of the Code, the Board of
Directors may exercise any power or authority granted to the Compensation
Committee. The Compensation Committee or the Board of Directors (hereinafter,
the "Committee") is authorized to select eligible persons to receive Awards,
determine the type, number and other terms and conditions of, and all other
matters relating to, Awards, prescribe Award agreements (which need not be
identical for each Participant) and rules and regulations for the administration
of the Plan, construe and interpret the Plan and Award agreements and correct
defects, supply omissions or reconcile inconsistencies therein, and to make all
other decisions and determinations as the Compensation Committee or the Board
may deem necessary or advisable for the administration of the Plan.
AWARDS. The following is a description of the types of Awards that may be
granted under the Incentive Plan:
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The Committee is
authorized to grant stock options, including incentive and non-qualified
stock options, and stock appreciation rights ("SARs") entitling the
Participant to receive the amount by which the fair market value of a
share of Common Stock on the date of exercise exceeds the grant price of
the SAR. The exercise price per share subject to an option and the grant
price of a SAR are determined by the Committee, but must not be less than
the fair market value of a share of Common Stock on the date of grant.
Each option is exercisable after the period or periods specified in the
related option agreement, but no option may be exercised after the
expiration of ten years from the date of grant. Options granted to an
individual who owns (or is deemed to own) at least 10% of the total
combined
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voting power of all classes of stock of the Company must have an
exercise price of at least 110% of the fair market value of the Common
Stock on the date of grant and a term of no more than five years. Options
may be exercised by payment of the exercise price in cash, shares of
Common Stock, outstanding Awards or other property having a fair market
value equal to the exercise price, as the Committee may determine from
time to time.
RESTRICTED AND DEFERRED STOCK. The Committee is authorized to grant
restricted stock and deferred stock. Restricted stock is a grant of shares
of Common Stock which may not be sold or disposed of, and which may be
forfeited in the event of certain terminations of employment, prior to the
end of a restricted period specified by the Committee. A Participant
granted restricted stock generally has all the rights of a shareholder of
the Company, unless otherwise determined by the Committee. An Award of
deferred stock confers upon the Participant the right to receive shares of
Common Stock at the end of a specified deferral period, subject to
possible forfeiture of the Award in the event of certain terminations of
employment prior to the end of a specified restricted period. Prior to
settlement, an Award of deferred stock carries no voting or dividend
rights. The restricted or deferral period for restricted stock or deferred
stock Awards may not be less than three years unless the Award is subject
to performance conditions, in which case the period will not be less than
one year.
BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee is
authorized to grant shares of Common Stock as a bonus, free of
restrictions, or to grant shares of Common Stock or other Awards in
lieu of cash under the Incentive Plan, subject to such terms as the
Committee may specify.
OTHER STOCK-BASED AWARDS. The Committee is authorized to grant Awards
that are denominated or payable in, valued by reference to, or otherwise
based on or related to shares of Common Stock. Such Awards might include
convertible or exchangeable debt securities, other rights convertible or
exchangeable into shares of Common Stock, purchase rights for shares of
Common Stock, Awards with value and payment contingent upon performance by
the Company or any other factors designated by the Committee, and Awards
valued by reference to the book value of shares of Common Stock or the
value of securities of or the performance of specified subsidiaries or
business units. The Committee determines the terms and conditions of such
Awards.
The right of a Participant to exercise or receive a grant or settlement of an
Award, and the timing thereof, may be subject to such performance conditions
(including subjective individual goals) as may be specified by the Committee. In
addition, the Incentive Plan authorizes specific annual incentive Awards, which
represent a conditional right to receive cash, shares of Common Stock or other
Awards upon achievement of certain pre-established performance goals and
subjective individual goals during a specified fiscal year.
Awards may be settled in the form of cash, shares of Common Stock, other
Awards or other property in the discretion of the Committee. The Committee may
condition any payment relating to an Award on the withholding of taxes and may
provide that a portion of any shares of Common Stock or other property to be
distributed will be withheld (or previously acquired shares of Common Stock or
other property surrendered by the Participant) to satisfy withholding and other
tax obligations. Awards granted under the Incentive Plan generally may not be
pledged or otherwise encumbered and are not transferable except by will or by
the laws of descent and distribution, or to a designated beneficiary upon the
Participant's death, except that the Committee may, in its discretion, permit
transfers for estate planning or other purposes subject to any applicable
restrictions.
The Incentive Plan also provides that each non-employee director who is not
affiliated with or a designee of a beneficial owner of more than 5% of the
Common Stock will automatically receive (i) for those directors elected or
appointed after the completion of the Company's initial public offering, an
option to purchase 12,000 shares of Common Stock on the date of his or her
election or appointment and (ii) for all directors, on the date of the Company's
annual meeting of shareholders, an option to purchase 3,000 shares of Common
Stock. Such options have a term of 10 years and become exercisable at the rate
of 25% per year commencing on the first anniversary of the date of grant;
provided, however, that the options shall be fully exercisable in the event
that, while serving as a director, the non-employee director dies, suffers a
"disability," or "retires" (within the meaning of such terms as defined in the
Incentive Plan). The per share exercise price of options granted to non-employee
directors will be equal to the fair market value of a share of Common Stock on
the date such option is granted. Unless otherwise extended in the sole
discretion of the Compensation Committee, the unexercised portion of any formula
option grant will become null and void (i) three months after the date on which
the non-employee director ceases to be a director
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for any reason other than the non-employee director's willful misconduct or
negligence, disability, death or retirement, (ii) immediately in the event of
the non-employee director's willful misconduct or negligence, (iii) at the
expiration of its original term if the non-employee ceases to be a director by
reason or his or her retirement, or (iv) one year after the non-employee
director ceases to be a director by reason of his or her disability or death.
If and to the extent provided in any Award, upon a Change in Control (as
defined in the Incentive Plan), (i) any Award carrying a right to exercise that
was not previously exercisable and vested will become fully exercisable and
vested; (ii) certain SARs will become exercisable for amounts, in cash,
determined by reference to highest price per share paid (including extraordinary
dividends) in the transaction triggering the Change in Control; (iii) the
restrictions, deferral of settlement, and forfeiture conditions applicable to
any other Award will lapse and such Awards will be deemed fully vested as of the
time of the Change in Control; and (iv) the performance goals and other
conditions of any outstanding Award will be deemed to be met if and to the
extent so provided by the Committee in the Award agreement relating to such
Award. A "Change in Control" means: (A) the acquisition by any person or group
of beneficial ownership of 25% or more of the Common Stock outstanding or 25% or
more of the combined voting power of the Company's outstanding voting
securities; (B) approval by the Company's shareholders of a reorganization,
merger, consolidation or other form of corporate transaction or series of
transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior thereto do not, immediately
thereafter, own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, or a liquidation or
dissolution of the Company or the sale of all or substantially all of the
Company's assets (any such event being referred to as a "Corporate
Transaction"); or (C) a change in the composition of the Board of Directors such
that individuals who, as of the date of the Incentive Plan, constituted the
Board of Directors (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board of Directors, provided that any person becoming a
director whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Securities Exchange Act) will be considered as though such person were
a member of the Incumbent Board. An acquisition or Corporate Transaction
unanimously approved by the Incumbent Board will not constitute a Change in
Control for purposes of the Incentive Plan.
ELIGIBILITY. Awards may be granted to officers, directors, employees and
independent contractors of the Company or any of its subsidiaries. A Participant
may not be granted Awards relating to more than 250,000 shares of Common Stock
which during any fiscal year. The Incentive Plan also contains a limits on the
maximum amount that may be earned as a cash Award in any fiscal year by any one
Participant and on the aggregate market value of shares subject to all incentive
stock options that may be granted to a Participant during any calendar year. As
of April 30, 1998, there were approximately 200 persons were eligible to
participate in the Incentive Plan.
AMENDMENT AND TERMINATION. The Board may amend, alter, suspend, discontinue
or terminate the Incentive Plan or the Committee's authority to grant Awards
without further stockholder approval, except stockholder approval must be
obtained for any amendment or alteration if such approval is required by law or
regulation or under the rules of any stock exchange or quotation system on which
shares of Common Stock are then listed or quoted. Unless earlier terminated by
the Board, the Incentive Plan will terminate at such time as no shares of Common
Stock remain available for issuance under the Incentive Plan and the Company has
no further rights or obligations with respect to outstanding Awards under the
Incentive Plan.
FEDERAL INCOME TAX EFFECTS. The Incentive Plan is not qualified under the
provisions of Section 401(a) of the Code, nor is it subject to any of the
provisions of the Employee Retirement Income Security Act of 1974, as amended.
NONQUALIFIED STOCK OPTIONS. On exercise of a nonqualified stock option
granted under the Incentive Plan, an optionee (other than an officer or
director of the Company) will recognize ordinary income equal to the
excess, if any, of the fair market value on the date of exercise of the
option of the shares of Common Stock acquired on exercise over the
exercise price. That income will be subject to the withholding of Federal
income tax. The optionee's tax basis in those shares will be equal to
their fair market value on the date of exercise of the option, and his
holding period for those shares will begin on that date.
9
<PAGE>
If an optionee pays for shares of Common Stock on exercise of an
option by delivering shares of the Company's Common Stock, the optionee
will not recognize gain or loss on the shares delivered, even if their
fair market value at the time of exercise differs from the optionee's tax
basis in them. The optionee, however, otherwise will be taxed on the
exercise of the option in the manner described above as if he had paid the
exercise price in cash. If a separate identifiable stock certificate is
issued for that number of shares equal to the number of shares delivered
on exercise of the option, the optionee's tax basis in the shares
represented by that certificate will be equal to his tax basis in the
shares delivered, and his holding period for those shares will include his
holding period for the shares delivered. The optionee's tax basis and
holding period for the additional shares received on exercise of the
option will be the same as if the optionee had exercised the option solely
in exchange for cash.
The Company will be entitled to a deduction for Federal income tax
purposes equal to the amount of ordinary income taxable to the optionee,
provided that amount constitutes an ordinary and necessary business
expense for the Company and is reasonable in amount, and either the
employee includes that amount in income or the Company timely satisfies
its reporting requirements with respect to that amount.
INCENTIVE STOCK OPTIONS. The Incentive Plan provides for the grant of
stock options that qualify as "incentive stock options" as defined in
section 422 of the Code to employees of the Company or its subsidiaries.
Under the Code, an optionee generally is not subject to tax upon the grant
or exercise of an incentive stock option. In addition, if the optionee
holds a share received on exercise of an incentive stock option for at
least two years from the date the option was granted and at least one year
from the date the option was exercised (the "Required Holding Period"),
the difference, if any, between the amount realized on a sale or other
taxable disposition of that share and the holder's tax basis in that share
will be long-term capital gain or loss. If, however, an optionee disposes
of a share acquired on exercise of an incentive stock option before the
end of the Required Holding Period (a "Disqualifying Disposition"), the
optionee generally will recognize ordinary income in the year of the
Disqualifying Disposition equal to the excess, if any, of the fair market
value of the share on the date the incentive stock option was exercised
over the exercise price. If, however, the Disqualifying Disposition is a
sale or exchange on which a loss, if realized, would be recognized for
Federal income tax purposes, and if the sales proceeds are less than the
fair market value of the share on the date of exercise of the option, the
amount of ordinary income the optionee recognizes will not exceed the
gain, if any, realized on the sale. If the amount realized on a
Disqualifying Disposition exceeds the fair market value of the share on
the date of exercise of the option, that excess will be short-term or
long-term capital gain, depending on whether the holding period for the
share exceeds one year.
An optionee who exercises an incentive stock option by delivering
shares of Common Stock acquired previously pursuant to the exercise of an
incentive stock option before the expiration of the Required Holding
Period for those shares is treated as making a Disqualifying Disposition
of those shares. This rule prevents "pyramiding" the exercise of an
incentive stock option (that is, exercising an incentive stock option for
one share and using that share, and others so acquired, to exercise
successive incentive stock options) without the imposition of current
income tax.
For purposes of the alternative minimum tax, the amount by which the
fair market value of a share of Common Stock acquired on exercise of an
incentive stock option exceeds the exercise price of that option generally
will be an item of adjustment included in the optionee's alternative
minimum taxable income for the year in which the option is exercised. If,
however, there is a Disqualifying Disposition of the share in the year in
which the option is exercised, there will be no item of adjustment with
respect to that share. If there is a Disqualifying Disposition in a later
year, no income with respect to the Disqualifying Disposition is included
in the optionee's alternative minimum taxable income for that year. In
computing alternative minimum taxable income, the tax basis of a share
acquired on exercise of an incentive stock option is increased by the
amount of the item of adjustment taken into account with respect to that
share for alternative minimum tax purposes in the year the option is
exercised.
AWARDS GRANTED UNDER THE INCENTIVE PLAN. As of April 30, 1998,
nonqualified stock options to purchase an aggregate of 882,934 shares of Common
Stock had been granted under the Incentive Plan to approximately 200 persons
(including options that have been exercised, but excluding cancelled options),
at exercise prices ranging from $1.96 to $33 per share (the fair market value of
the Common Stock as of the dates of grant).
10
<PAGE>
The following table sets forth information with respect to stock
options granted under the Incentive Plan during the fiscal year ended December
31, 1997 to (i) each Named Executive Officer (see "Executive
Compensation--Summary Compensation Table"), who comprise the Company's only
executive officers, (ii) all current directors who are not executive officers as
a group and (iii) all employees, including all current officers who are not
executive officers, as a group. No additional stock options were granted to the
Named Executive Officers after December 31, 1997 and prior to the date of this
Proxy Statement.
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE
SUBJECT TO OPTIONS GRANTED PRICE
NAME UNDER THE INCENTIVE PLAN PER SHARE
---- ------------------------ ---------
<S> <C> <C>
Michael Levy....................................... 150,000 $8.00
Mark J. Mariani.................................... 12,000 8.00
Kenneth W. Sanders................................. 20,000 8.00
Andrew S. Sturner.................................. 14,000 8.00
All Named Executive Officers....................... 196,000 8.00
All current directors who are not executive
officers as a group............................. 20,000 8.00
All employees, including all current officers
who are not executive officers, as a group...... 136,500 8.00 - 11.3125
</TABLE>
Awards under the Incentive Plan have been and will be granted primarily
to persons who possess a capacity to contribute significantly to the Company's
successful performance. Because the persons to whom grants of Awards are to be
made will be determined from time to time by the Committee in its discretion, it
is impossible at this time to indicate the precise number, name or positions of
persons who will hereafter receive Awards or the number of shares for which
Awards will be granted, except to the extent already granted.
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the votes of Common Stock present
in person or by proxy at the Annual Meeting and entitled to vote will be
required for approval of the proposal to amend the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROPOSAL
TO AMEND THE INCENTIVE PLAN.
11
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information with respect to the beneficial
ownership of the Company's Common Stock as of April 30, 1998 by (a) each person
known to the Company to own beneficially more than 5 percent of the Company's
outstanding Common Stock, (b) each director who owns any such shares, (c) each
Named Executive Officer who owns any such shares (see "Executive
Compensation--Summary Compensation Table"), and (d) the directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(2)
---------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) SHARES PERCENT
- --------------------------------------- ------ -------
<S> <C> <C>
CBS Broadcasting Inc. (3) 2,248,075 11.8%
Kleiner Perkins Caufield & Byers (4) 1,952,221 10.3
Joseph Lacob (5) 1,952,221 10.3
US WEST Interactive Services, Inc. 1,595,852 8.6
Thomas Cullen (6) 1,595,852 8.6
Michael Levy (7) 1,370,000 7.4
Estate of Burk Zanft (8) 1,000,000 5.3
Andrew Nibley (9) 845,672 4.5
James C. Walsh (10) 160,000 *
Mark J. Mariani (11) 33,333 *
Andrew S. Sturner (12) 34,499 *
Kenneth Sanders (13) 20,000 *
Richard B. Horrow (14) 12,500 *
Gerry Hogan (15) 10,000 *
Sean McManus -- *
Derek Reisfield -- *
Michael P. Schulhof (16) -- *
All directors and executive officers as a group (13 persons) (17) 8,282,152 42.5
</TABLE>
- -------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the beneficial
owners identified is c/o SportsLine USA, Inc., 6340 N.W. 5th Way, Fort
Lauderdale, Florida 33309. Except as otherwise indicated, such
beneficial owners have sole voting and investment power with respect to
all shares of Common Stock owned by them, except to the extent such
power may be shared with a spouse.
(2) The number of shares of Common Stock deemed outstanding as of April 30,
1998 includes (i) 18,608,247 shares of Common Stock outstanding as of
April 30, 1998, and (ii) shares issuable pursuant to options and
warrants held by the respective person or group which may be exercised
within 60 days after April 30, 1998 ("presently exercisable stock
options" and "presently exercisable warrants," respectively), as set
forth below. Pursuant to the rules of the Securities and Exchange
Commission, presently exercisable stock options and presently
exercisable warrants are deemed to be outstanding and to be
beneficially owned by the person or group holding such options or
warrants for the purpose of computing the percentage ownership of such
person or group, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person or group.
(3) Reflects (i) 1,868,075 shares held of record and (ii) 380,000 shares
subject to presently exercisable warrants. Does not include any
additional shares of Common Stock and warrants to purchase Common Stock
to be issued to CBS after February 28, 1998 pursuant to the CBS
agreement. See "Certain Relationships and Related Transactions--CBS
Agreement." The address of CBS is 51 West 52nd Street, New York, New
York 10019.
(4) Reflects (i) 1,581,666 shares held of record and 322,500 shares subject
to presently exercisable warrants held by Kleiner Perkins Caufield &
Byers VII and (ii) 40,555 shares held of record and 7,500 shares
subject to presently exercisable warrants held by KPCB Information
Sciences Zaibatsu Fund II. The address of Kleiner Perkins Caufield &
Byers is 2750 Sand Hill Road, Menlo Park, California 94025.
(5) Reflects shares held of record and shares subject to presently
exercisable warrants held by various funds associated with Kleiner
Perkins Caufield & Byers of which Mr. Lacob is a general partner. Mr.
Lacob disclaims beneficial ownership of such shares except to the
extent of his pecuniary interest therein. See note (5) above. Mr.
Lacob's address is 2750 Sand Hill Road, Menlo Park, California 94025.
(6) Reflects shares held of record by US WEST of which Mr. Cullen is
President. Mr. Cullen disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest therein. The address of
US WEST and Mr. Cullen is 9000 East Nichols, Englewood, Colorado 80112.
12
<PAGE>
(7) Reflects 1,370,000 shares held of record. Excludes 150,000 shares
issuable upon exercise of stock options held by Mr. Levy not
exercisable within 60 days.
(8) Reflects (i) 800,000 shares held of record and (ii) 200,000 shares
subject to presently exercisable warrants. The address of the Estate of
Burk Zanft is 745 Downing Street, Teaneck, New Jersey 07666.
(9) Reflects shares held of record by Reuters NewMedia of which Mr. Nibley
is a director, the Editor and Executive Vice President. Mr. Nibley
disclaims beneficial ownership of such shares except to the extent of
his pecuniary interest therein. The address of Reuters NewMedia and Mr.
Nibley is 1700 Broadway, New York, New York 10019.
(10) Reflects (i) 80,000 shares held of record and (ii) 80,000 shares
subject to presently exercisable warrants.
(11) Includes 33,333 shares subject to presently exercisable stock options.
Excludes 56,667 shares issuable upon exercise of stock options held by
Mr. Mariani not exercisable within 60 days.
(12) Includes 34,499 shares subject to presently exercisable stock options.
Excludes 35,501 shares issuable upon exercise of stock options held by
Mr. Sturner that are not exercisable within 60 days.
(13) Includes 20,000 shares subject to presently exercisable stock options.
Excludes 80,000 shares issuable upon exercise of stock options held by
Mr. Sanders not exercisable within 60 days.
(14) Includes 12,500 shares subject to presently exercisable warrants.
Excludes 7,500 shares issuable upon exercise of warrants held by Mr.
Horrow that are not exercisable within 60 days.
(15) Includes 10,000 shares subject to presently exercisable warrants.
Excludes 30,000 shares issuable upon exercise of warrants held by Mr.
Hogan that are not exercisable within 60 days.
(16) Excludes 40,000 shares issuable upon exercise of warrants held by Mr.
Schulhof that are not exercisable within 60 days and 20,000 shares
issuable upon exercise of stock options held by Mr. Schulhof that are
not exercisable within 60 days.
(17) Includes the information in the notes herein, as applicable. Reflects
(i) 7,381,820 shares held of record, (ii) 87,832 shares subject to
presently exercisable stock options and (iii) 812,500 shares subject to
presently exercisable warrants. Excludes (i) 342,168 shares issuable
upon exercise of stock options and (ii) 77,500 shares issuable upon
exercise of warrants not exercisable within 60 days.
13
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation awarded to, earned by or paid
for services rendered to the Company in all capacities during the years ended
December 31, 1996 and 1997 by the Company's Chief Executive Officer and its
other executive officers (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
------------------
ANNUAL COMPENSATION (1) COMPENSATION
-------------------------------------- AWARDS
SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS UNDERLYING OPTIONS COMPENSATION
--------------------------- ---- ------ ----- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Michael Levy, 1997 $206,787 $75,000 150,000 $23,027 (2)
Chairman, President and 1996 167,887 50,000 -- 22,922 (2)
Chief Executive Officer
Mark J. Mariani, 1997 165,066 25,000 20,000 --
Executive Vice President, Sales 1996 112,243 10,000 80,000 8,205 (3)
Kenneth W. Sanders, 1997 72,717 15,000 100,000 47,579 (3)
Chief Financial Officer (4)
Andrew Sturner, 1997 127,500 20,000 30,000 --
Vice President, Business Development 1996 101,934 10,000 -- --
</TABLE>
- -----------------
(1) The column for "Other Annual Compensation" has been omitted because
there is no compensation required to be reported in such column. The
aggregate amount of perquisites and other personal benefits provided to
each Named Executive Officer is less than 10% of the total annual
salary and bonus of such officer.
(2) Represents premiums paid for life and disability insurance policies for
the benefit of Mr. Levy.
(3) Represents reimbursement of relocation and moving expenses.
(4) Mr. Sanders joined the Company in September 1997.
STOCK OPTION GRANTS
The following table sets forth information concerning the grant of
stock options made during 1997 to each Named Executive Officer.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
----------------------------------------------------- ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE TERM(2)
OPTIONS EMPLOYEES IN PRICE ----------------------
NAME GRANTED(1) FISCAL YEAR PER SHARE EXPIRATION DATE 5%($) 10%($)
- ---- ---------- ------------ --------- --------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael Levy 150,000 16.6 $ 8.00 12/5/07 754,654 1,912,491
Mark J. Mariani 20,000 2.2 8.00 7/1/07 - 12/5/07 100,623 254,999
Kenneth W. Sanders 100,000 11.1 8.00 8/27/07 - 12/5/07 503,116 1,274,994
Andrew S. Sturner 30,000 3.3 5.00-8.00 3/1/07 - 12/5/07 135,841 344,248
</TABLE>
- -------------------------
(1) All such options were granted under the Company's 1995 Stock Option
Plan and the Incentive Plan and become exercisable in installments over
four years. Under the 1995 Stock Option Plan and the Incentive Plan,
these options will become immediately exercisable in the event of
certain change of control transactions involving the Company.
(2) In accordance with the rules of the Commission, the potential
realizable values for such options shown in the table are based on
assumed rates of stock price appreciation of 5% and 10% compounded
annually from the date the respective options were granted to their
expiration date. These assumed rates of appreciation do not represent
the Company's estimate or projection of the appreciation of shares of
Common Stock of the Company.
14
<PAGE>
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUE TABLE
The following table sets forth information concerning exercisable and
unexercisable stock options held as of December 31, 1997 by each of the Named
Executive Officers. No options were exercised by the Named Executive Officers in
1997.
<TABLE>
<CAPTION>
FISCAL YEAR-END OPTION VALUES
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
December 31, 1997 (1) December 31, 1997 (2)
---------------------------------------------- --------------------------------------------------
NAME Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Michael Levy 0 150,000 $ 0 $ 412,500
Mark J. Mariani 33,333 66,667 337,330 611,600
Kenneth W. Sanders 20,000 80,000 55,000 220,000
Andrew S. Sturner 25,000 45,000 253,000 258,300
</TABLE>
- ----------------
(1) Exercisable in accordance with the provisions described in Note (1) to
the table entitled "Option Grants in Fiscal Year 1997."
(2) Based on the closing price of the Common Stock on December 31, 1997
($10.75), as reported by Nasdaq.
EMPLOYMENT AGREEMENTS
The Company has entered into a three-year employment agreement with Kenneth
W. Sanders, pursuant to which he will serve as Chief Financial Officer. Mr.
Sanders will receive an annual base salary of $210,000 and such bonuses as may
be awarded from time to time by the Board or any compensation committee thereof.
Upon commencement of his employment, the Company granted Mr. Sanders options to
purchase 80,000 shares of Common Stock at an exercise price of $8.00 per share.
If the agreement is terminated by the Company other than by reason of death,
Disability (as defined) or Cause (as defined), or by Mr. Sanders for Good Reason
(generally defined as a material breach by the Company of the agreement), the
Company will continue to pay Mr. Sanders for a period of six months his base
salary plus, an additional amount not to exceed $105,000 depending on the value
during such six-month period of the stock options granted to him. The agreement
prohibits Mr. Sanders from competing with the Company during his employment and
for a period of two years after termination of his employment.
DIRECTOR COMPENSATION
The Company reimburses its directors for out-of-pocket expenses incurred in
connection with their rendering of services as directors. The Company currently
does not pay cash fees to its directors for attendance at meetings. Non-employee
directors are eligible to receive options under the Incentive Plan. See
"--Proposal to Amend the 1997 Incentive Compensation Plan."
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS REPORT ON EXECUTIVE
COMPENSATION
Under rules established by the Securities and Exchange Commission, the
Compensation Committee of the Board of Directors of the Company is required to
provide a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting the Company's executive officers
(including the Named Executive Officers) during the past fiscal year.
COMPENSATION PHILOSOPHY AND REVIEW. The Company's compensation philosophy for
executive officers serves two principal purposes: (i) to provide a total
compensation package for officers that is competitive and enables the Company to
attract and retain key executive and employee talent needed to accomplish the
Company's long-term business objectives and (ii) to directly link compensation
to improvements in Company performance and increases in shareholder value as
measured principally by the trading price of the Company's Common Stock and an
individual's contribution and personal performance. During 1997, the
Compensation Committee did not attempt to specifically analyze compensation
levels at comparable companies.
The Compensation Committee reviews, recommends and approves changes to the
Company's compensation policies and benefits programs, administers the Company's
stock option
15
<PAGE>
plans, including approving stock option grants, and otherwise seeks to ensure
that the Company's compensation philosophy is consistent with the Company's best
interests and is properly implemented.
ELEMENTS OF EXECUTIVE OFFICER COMPENSATION. The Company's executive
compensation consists primarily of base salary, health insurance and similar
benefits, cash bonuses and the award of stock options designed to provide
long-term incentives. In addition, the Compensation Committee may recommend the
grant of discretionary bonuses to the Company's executive officers. The
Compensation Committee believes that in the highly competitive, emerging markets
in which the Company operates, equity-based compensation provides the greatest
incentive for outstanding executive performance and the greatest alignment of
management and shareholder long-term interests.
OFFICER SALARIES. The Compensation Committee reviews the annual salary of the
executive officers, including the Chief Executive Officer. In determining the
appropriate salary levels, the Compensation Committee considers, among other
factors, the officer's scope of responsibility, prior experience, past
accomplishments, and data on prevailing compensation levels in relevant markets
for executive talent. Based on the foregoing, during 1997 the Compensation
Committee approved salary increases for certain executive officers which the
Compensation Committee believes appropriately reflect the increase in the level
of the Company's operations and officer responsibility and performance. In
December 1997, the Compensation Committee increased Mr. Levy's salary to
$300,000, effective December 1, 1997, based upon, among other factors, the
Compensation Committee's positive assessment of Mr. Levy's performance during
1997. In reviewing Mr. Levy's performance, the Compensation Committee noted in
particular a number of Company achievements during 1997, including the
significant revenues and site traffic, the completion of a number of significant
strategic alliances (including those with CBS and America Online, Inc.) and the
successful recruiting and hiring of other key employees. The Compensation
Committee also increased the salary levels of several of the other members of
the Company's senior management team, effective December 1, 1997. In general,
these increases were consistent with Mr. Levy's increase, and were based upon a
similar analysis of such officers' increased responsibility and positive
performance assessments.
STOCK OPTION GRANTS. The Company has relied utilized long-term equity
compensation as an important element for compensating and incentivizing its
executive officers. It is the Company's practice to set option exercise prices
for officers at not less than 100% of the stock fair market value on the date of
grant. Thus, the value of the shareholders' investment in the Company must
appreciate before an optionee receives any financial benefit from the option.
Options are generally granted for a term of ten years. Options granted to
executive officers generally provide that they are not exercisable until one
year after the date of grant, at which time they become exercisable on a
cumulative basis at a maximum annual rate of 25% of the total number of shares
underlying the option grant. In determining the size of the stock option grants,
the Compensation Committee considers various subjective factors primarily
relating to the responsibilities of the individual officers, and also to their
expected future contributions and the number of shares owned by the officer or
which continue to be subject to vesting under outstanding options. In addition,
the Compensation Committee examines the level of equity incentives held by each
officer relative to the other officers' equity positions and their tenure,
responsibilities, experience, and value to the Company. During December 1997,
the Compensation Committee approved the grant of options to Mr. Levy for 150,000
shares of the Company's Common Stock, reflecting Mr. Levy's successful
achievement of the business objectives described above. In addition, during
December 1997, the Compensation Committee granted all executive officers as a
group (including Mr. Levy) additional options to purchase an aggregate of
196,000 shares of Common Stock.
ANNUAL CASH BONUSES. Annual cash bonus awards are based on both Company
performance relative to an annual plan prepared before the beginning of each
fiscal year and approved by the Board of Directors, reflecting appropriate
progress toward the Company's long-term goals and individual contributions to
the achievement of the annual plan. Bonus awards vary depending on the officer's
base salary.
SUMMARY. The Compensation Committee believes that the Company's compensation
programs are competitive with those of other technology and Internet companies.
POLICY ON DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the U.S. Internal
Revenue Code limits the tax deductibility by a corporation of compensation in
excess of $1 million paid to the Chief Executive Officer and any other of its
four most highly compensated executive officers. However, compensation which
qualifies as "performance-based" is excluded from the $1 million limit if, among
other requirements, the compensation is payable only upon attainment of
pre-established, objective performance goals under a plan approved by
shareholders. The Compensation
16
<PAGE>
Committee does not presently expect total cash compensation payable for salaries
to exceed the $1 million limit for any individual executive. Having considered
the requirements of Section 162(m), the Compensation Committee believes that
stock option grants to date meet the requirement that such grants be
"performance-based" and are, therefore, exempt from the limitations on
deductibility. The Compensation Committee will continue to monitor the
compensation levels potentially payable under the Company's cash compensation
programs, but intends to retain the flexibility necessary to provide total cash
compensation in line with competitive practice, the Company's compensation
philosophy, and the Company's best interests.
Gerry Hogan
Michael Levy
Sean McManus
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Gerry Hogan, Michael Levy and Sean
McManus. Mr. Levy is an executive officer of the Company. Mr. Levy does not
participate in discussion regarding his own compensation or performance
appraisals.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than 10 percent of the Company's Common Stock, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock. Officers, directors and greater than 10
percent shareholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with
during the year ended December 31, 1997.
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PERFORMANCE GRAPH
The following graph compares, for the period from November 13, 1997
(the date that the Common Stock was first publicly traded) to December 31, 1997,
the cumulative total shareholder return on the Common Stock with (i) the Nasdaq
Stock Market (U.S. companies) Index (the "Nasdaq Market Index") and (ii) the
Hambrecht & Quist Internet Index ("H&Q Internet Index"). The graph assumes that
$100 was invested on November 13, 1997 in the Common Stock and the Nasdaq Market
Index and the H&Q Internet Index, and further assumes no payment or reinvestment
of dividends. The stock price performance on the following graph is not
necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
SPORTSLINE USA, INC. NASDAQ MARKET INDEX AND H&Q INTERNET INDEX
[GRAPHIC OMITTED]
11/13/97 12/31/97
SPLN 100 134.38
Nasdaq 100 101.16
H&Q 100 112.85
18
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CBS AGREEMENT. On March 5, 1997, the Company entered into a five-year
agreement with CBS, pursuant to which, among other things, the Company's
flagship Internet site was renamed "cbs.sportsline.com." The term of the CBS
agreement expires on December 31, 2001. The CBS agreement provides for
cbs.sportsline.com to receive certain minimum amounts of advertising and on-air
promotion, including at least $11 million during 1998 and 1999 and at least $14
million during 2000 and 2001. The Company has the right to use certain CBS logos
and television-related sports content on cbs.sportsline.com and in connection
with the operation and promotion of that Web site.
In consideration of CBS's advertising and promotional efforts and its license
to the Company of the right to use certain CBS logos and television-related
sports content, CBS will receive 3,100,000 shares of Common Stock over the term
of the CBS agreement (752,273, 735,802, 558,988, 567,579 and 485,358 shares in
1997, 1998, 1999, 2000 and 2001, respectively). CBS will also have the right to
receive 60% of the Company's advertising revenue on cbs.sportsline.com pages
related to certain "signature events (such as the NCAA Men's Basketball
Tournament, PGA Tour events, U.S. Open tennis and the Daytona 500) and 50% of
the Company's advertising revenue on cbs.sportsline.com pages containing other
CBS television-related sports content. The CBS agreement also provides that the
Company shall issue to CBS on the first business day of each contract year
warrants to purchase 380,000 shares of Common Stock at per share exercise prices
ranging from $10.00 in 1997 to $30.00 in 2001. Such warrants are exercisable at
any time during the contract year in which they are granted. In January 1998,
CBS exercised warrants to purchase 380,000 shares of Common Stock at an exercise
price of $10.00 per share.
US WEST AGREEMENT. In connection with its September 1996 investment in Series
C Preferred Stock, US WEST Interactive Services, Inc. ("US WEST") and the
Company entered into a two-year agreement that provides for the Company and US
WEST to (i) establish hypertext links and certain cross promotional pages
between the Company's Web sites and US WEST's "Dive In" local Internet sites,
(ii) jointly develop original local sports content for the "Dive In" service and
(iii) engage in certain joint promotional activities. The Company also agreed to
offer US WEST the right of first refusal to provide any "yellow page" offering
that the Company considers launching during the term of the agreement. The
agreement also provides for the Company to pay US WEST royalties based on the
number of customers referred from US WEST's Web sites who purchase memberships
on the Company's Web sites. The Company also issued US WEST warrants to purchase
960,000 shares of Common Stock at an exercise price of $8.25 per share. Such
warrants were exercised in March 1997.
REUTERS NEWMEDIA AGREEMENT. In March 1996, the Company and Reuters NewMedia
entered into an agreement pursuant to which the Company agreed to provide
Reuters NewMedia a 60-day exclusive negotiation period with respect to (i) the
provision of non-U.S. sports news and information for any Internet, wireless or
other proprietary online service marketed to foreign countries or regions that
the Company considers launching, (ii) the branding of such service and (iii) an
investment in such service. The Company also agreed to provide Reuters NewMedia
a reasonable opportunity to match the terms for such an agreement offered by
another party if such terms are equivalent or less favorable to the Company than
those offered by Reuters NewMedia. The Company also agreed (i) subject to
technological feasibility, to negotiate an agreement to develop a customized
version of cbs.sportsline.com available only to Reuters NewMedia subscribers
through a Reuters NewMedia product, (ii) to grant Reuters NewMedia the exclusive
right to redistribute the Company's news and information content within a
Reuters NewMedia product as part of a sports news service, subject to
negotiation of royalties and the agreement of the Company's third party content
providers and (iii) to provide Reuters NewMedia an opportunity to license to the
Company content specifically related to sports outside the United States, if
such content is already owned, licensed or produced by Reuters NewMedia, and to
license such content from Reuters NewMedia if its proposal is equivalent to or
better than proposals received from third parties.
KLEINER PERKINS CAUFIELD & BYERS GUARANTY. In December 1995, Kleiner Perkins
Caufield & Byers VII ("KPCB VII") guaranteed a $1,500,000 loan the Company
received from Silicon Valley Bank. In return for executing the guaranty, the
Company issued KPCB VII warrants to purchase 30,000 shares of Common Stock,
which are exercisable until December 13, 2000 at a price of $2.50 per share.
HORROW CONSULTING AGREEMENT. In September 1994, the Company and Horrow
Sports Ventures, an entity owned by Richard Horrow, a director of the Company,
entered into a consulting agreement that, among other things, provides for
Horrow Sports Ventures and Mr. Horrow to assist the Company in obtaining access
to representatives of professional sports leagues, college sports associations
and television networks and developing strategic, promotional and marketing
19
<PAGE>
plans. In consideration of the services rendered pursuant to the agreement, Mr.
Horrow received warrants to purchase 10,000 shares of Common Stock at an
exercise price of $5.00 per share in August 1994 and received warrants to
purchase an additional 10,000 shares of Common Stock at an exercise price of
$5.00 per share in January 1997. Horrow Sports Ventures currently receives a
consulting fee of $5,000 per month.
SCHULHOF CONSULTING AGREEMENT. In June 1996, the Company and Michael P.
Schulhof entered into a two year consulting agreement that provides for Mr.
Schulhof to consult with and advise the Company from time to time with respect
to corporate, business and marketing strategy. In consideration of the services
rendered pursuant to the agreement, Mr. Schulhof received warrants to purchase
40,000 shares of Common Stock at an exercise price of $5.00 per share in 1994
and received warrants to purchase an additional 8,000 shares of Common Stock at
an exercise price of $8.00 per share in December 1997.
PLANNED LICENSING AGREEMENT. In August 1994, the Company and Planned
Licensing, Inc., a wholly owned subsidiary of Namanco Productions, Inc.
("Planned Licensing"), entered into a five-year agreement pursuant to which
Planned Licensing agreed to cause Joe Namath to provide certain services for the
Company, including endorsements of the Company's products. James C. Walsh, a
director of the Company, is the president and sole stockholder of Namanco
Productions, Inc. The Company has the right to renew the agreement for three
additional five-year terms. Under the agreement, the Company is obligated to pay
Planned Licensing royalties equal to $0.15 per month for each individual who
becomes a member during the initial term of the agreement and remains a member
for three months, and, during each renewal term, $0.15 per month for each new
member, or $0.05 per month if the total royalties during the last calendar year
prior to the renewal term were more than $500,000. The royalties paid to Planned
Licensing for the years ended December 31, 1995, 1996 and 1997 were $932,
$18,645 and $49,967, respectively.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for the year ended December 31,
1997 were, and for 1998 will be, the firm of Arthur Andersen LLP. It is not
expected that representatives of such firm will attend the Annual Meeting.
OTHER MATTERS
The Board knows of no other business to be brought before the Annual Meeting.
If any other business should properly come before the Annual Meeting, the
persons named in the accompanying proxy will vote proxies in their discretion,
unless they are directed by a proxy to do otherwise.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to presented at the 1999 Annual Meeting of
Shareholders be received at the Company's principal executive offices no later
than January 19, 1999. The Company's Bylaws provide that shareholders seeking to
bring business before an annual meeting of shareholders, or to nominate
candidates for election as directors at an annual meeting of shareholders, must
provide notice thereof in writing, not less than 120 days nor more than 150 days
prior to the first anniversary of the date of the Company's notice of annual
meeting provided with respect to the previous year's annual meeting; provided,
that if no annual meeting was held in the previous year or the date of the
annual meeting has been changed to be more than 30 calendar days earlier than or
60 calendar days after such anniversary, notice by the shareholder, to be
timely, must be so received not more than 90 days nor later than the later of
(i) 60 days prior to the annual meeting or (ii) the close of business on the
10th day following the date on which notice of the date of the meeting is given
to stockholders or made public, whichever first occurs. The Bylaws also specify
certain requirements for a shareholder's notice to be in proper written form.
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EXHIBIT A
SPORTSLINE USA, INC.
1997 INCENTIVE COMPENSATION PLAN
(PROPOSED MAY 1998 AMENDMENT)
<PAGE>
<TABLE>
<CAPTION>
SPORTSLINE USA, INC.
1997 INCENTIVE COMPENSATION PLAN
<S> <C>
1. Purpose 1
2. Definitions 1
3. Administration 3
(a) Authority of the Committee 3
(b) Manner of Exercise of Committee Authority 4
(c) Limitation of Liability 4
4. Stock Subject to Plan 4
(a) Limitation on Overall Number of Shares Subject to Awards 4
(b) Application of Limitations 4
5. Eligibility; Per-Person Award Limitations 4
6. Specific Terms of Awards 5
(a) General 5
(b) Options 5
(c) Stock Appreciation Rights 6
(d) Restricted Stock 6
(e) Deferred Stock 7
(f) Bonus Stock and Awards in Lieu of Obligations 8
(g) Dividend Equivalents 8
(h) Other Stock-Based Awards 8
7. Certain Provisions Applicable to Awards 8
(a) Stand-Alone, Additional, Tandem, and Substitute Awards 8
(b) Term of Awards 9
(c) Form and Timing of Payment Under Awards; Deferrals 9
(d) Exemptions from Section 16(b) Liability 9
8. Performance and Annual Incentive Awards 9
(a) Performance Conditions 9
(b) Performance Awards Granted to Designated Covered Employees 9
(c) Annual Incentive Awards Granted to Designated Covered
Employees 10
(d) Written Determinations 11
(e) Status of Section 8(b) and Section 8(c) Awards Under Code
Section 162(m) 11
9. Change in Control 12
(a) Effect of "Change in Control" 12
(b) Definition of "Change in Control" 12
(c) Definition of "Change in Control Price." 13
10. General Provisions 13
(A) Compliance With Legal and Other Requirements 13
(b) Limits on Transferability; Beneficiaries 13
(c) Adjustments 14
(d) Taxes 14
(e) Changes to the Plan and Awards 15
(f) Limitation on Rights Conferred Under Plan 15
(g) Unfunded Status of Awards; Creation of Trusts 15
(h) Nonexclusivity of the Plan 15
(i) Payments in the Event of Forfeitures; Fractional Shares 15
(j) Governing Law 16
(k) Plan Effective Date and Stockholder Approval; Termination of
Plan 16
</TABLE>
i
<PAGE>
SPORTSLINE USA, INC.
1997 INCENTIVE COMPENSATION PLAN
1. PURPOSE. The purpose of this 1997 Incentive Compensation Plan (the "Plan")
is to assist SportsLine USA, Inc. (the "Company") and its subsidiaries in
attracting, motivating, retaining and rewarding high-quality executives and
other employees, officers, Directors and independent contractors enabling such
persons to acquire or increase a proprietary interest in the Company in order to
strengthen the mutuality of interests between such persons and the Company's
stockholders, and providing such persons with annual and long term performance
incentives to expend their maximum efforts in the creation of shareholder value.
The Plan is also intended to qualify certain compensation awarded under the Plan
for tax deductibility under Section 162(m) of the Code (as hereafter defined) to
the extent deemed appropriate by the Committee (or any successor committee) of
the Board of Directors of the Company.
2. DEFINITIONS. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.
(a) "Annual Meeting Date" shall mean the date of the annual meeting of
the Company's stockholders at which the Directors are elected.
(b) "Annual Incentive Award" means a conditional right granted to a
Participant under Section 8(c) hereof to receive a cash payment, Stock or other
Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.
(c) "Award" means any Option, SAR (including Limited SAR), Restricted
Stock, Deferred Stock, Stock granted as a bonus or in lieu of another award,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.
(d) "Beneficiary" means the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(e) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.
(f) "Board" means the Company's Board of Directors.
(g) "Change in Control" means Change in Control as defined with related
terms in Section 9 of the Plan.
(h) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.
(i) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, including regulations thereunder and successor provisions and
regulations thereto.
(j) "Committee" means a committee designated by the Board to administer
the Plan; provided, however, that the Committee shall consist solely of at least
two directors, each of whom shall be (i) a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act, unless administration of the Plan
by "non-employee directors" is not then required in order for exemptions under
Rule 16b-3 to apply to transactions under the Plan, and (ii) an "outside
director" within the meaning of Section 162(m) of the Code, unless
administration of the Plan by "outside directors" is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.
(k) "Corporate Transaction" means a Corporate Transaction as defined in
Section 9(b)(i) of the Plan.
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(l) "Covered Employee" means an Eligible Person who is a Covered
Employee as specified in Section 8(e) of the Plan.
(m) "Deferred Stock" means a right, granted to a Participant under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified deferral period.
(n) "Director" means a member of the Board.
(o) "Disability" means a permanent and total disability (within the
meaning of Section 22(e) of the Code), as determined by a medical doctor
satisfactory to the Committee.
(p) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g) hereof, to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.
(q) "Effective Date" means the effective date of the Plan, which shall
be March 1, 1997.
(r) "Eligible Person" means each Executive Officer of the Company (as
defined under the Exchange Act) and other officers, Directors and employees of
the Company or of any Subsidiary, and independent contractors with the Company
or any Subsidiary. The foregoing notwithstanding, (i) only employees of the
Company or any Subsidiary shall be an Eligible Persons for purposes of receiving
any Incentive Stock Options and (ii) no independent contractor shall be an
Eligible Person for purposes of receiving any Awards other than Options under
Section 6(b) of the Plan. An employee on leave of absence may be considered as
still in the employ of the Company or a Subsidiary for purposes of eligibility
for participation in the Plan.
(s) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including rules thereunder and successor provisions
and rules thereto.
(t) "Executive Officer" means an executive officer of the Company as
defined under the Exchange Act.
(u) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined by the Committee or the Board, or under procedures
established by the Committee or the Board. Unless otherwise determined by the
Committee or the Board, the Fair Market Value of Stock as of any given date
shall be the closing sale price per share reported on a consolidated basis for
stock listed on the principal stock exchange or market on which Stock is traded
on the date as of which such value is being determined or, if there is no sale
on that date, then on the last previous day on which a sale was reported.
(v) ""Formula Grants" means the Formula Grant Options granted to
Non-Employee Directors pursuant to Section 6(b)(iv) of the Plan.
(w) "Incentive Stock Option" or "ISO" means any Option intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.
(x) "Incumbent Board" means the Incumbent Board as defined in Section
9(b)(ii) of the Plan.
(y) "Initial Grant Date" means the date on which a Non-Employee
Director is first elected or appointed as a Director.
(z) "Limited SAR" means a right granted to a Participant under Section
6(c) hereof.
(aa) "Non-Employee Director" shall mean a member of the Board who is
not an employee of the Company or any subsidiary.
(bb) "Option" means a right granted to a Participant under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.
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(cc) "Other Stock-Based Awards" means Awards granted to a Participant
under Section 6(h) hereof.
(dd) "Parent Corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.
(ee) "Participant" means a person who has been granted an Award under
the Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(ff) "Performance Award" means a right, granted to a Eligible Person
under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.
(gg) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and
shall include a "group" as defined in Section 13(d) thereof.
(hh) "Restricted Stock" means Stock granted to a Participant under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.
(ii) "Retire" or "Retirement" means termination of service as a
Director after having attained at least age 62 and having served as a Director
for at least 5 years, other than by reason of death, Disability or the
Director's willful misconduct or negligence.
(jj) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and Rule
16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act
(kk) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.
(ll) "Stock Appreciation Rights" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
(mm) "Subsidiary" means any corporation or other entity in which the
Company has a direct or indirect ownership interest of 50% or more of the total
combined voting power of the then outstanding securities or interests of such
corporation or other entity entitled to vote generally in the election of
directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. The Plan shall be administered by the
Committee; provided, however, that except as otherwise expressly provided in
this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.
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(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. The Committee, and not
the Board, shall exercise sole and exclusive discretion on any matter relating
to a Participant then subject to Section 16 of the Exchange Act with respect to
the Company to the extent necessary in order that transactions by such
Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any action
of the Committee or the Board shall be final, conclusive and binding on all
persons, including the Company, its subsidiaries, Participants, Beneficiaries,
transferees under Section 10(b) hereof or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power
to the Committee or the Board, and the taking of any action by the Committee or
the Board, shall not be construed as limiting any power or authority of the
Committee or the Board. The Committee or the Board may delegate to officers or
managers of the Company or any subsidiary, or committees thereof, the authority,
subject to such terms as the Committee or the Board shall determine, (i) to
perform administrative functions, (ii) with respect to Participants not subject
to Section 16 of the Exchange Act, to perform such other functions as the
Committee or the Board may determine, and (iii) with respect to Participants
subject to Section 16, to perform such other functions of the Committee or the
Board as the Committee or the Board may determine to the extent performance of
such functions will not result in the loss of an exemption under Rule 16b-3
otherwise available for transactions by such persons, in each case to the extent
permitted under applicable law and subject to the requirements set forth in
Section 8(d). The Committee or the Board may appoint agents to assist it in
administering the Plan.
(c) LIMITATION OF LIABILITY. The Committee and the Board, and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other information furnished to him or her by any executive officer, other
officer or employee of the Company or a Subsidiary, the Company's independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee or
the Board, shall not be personally liable for any action or determination taken
or made in good faith with respect to the Plan, and shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.
4. STOCK SUBJECT TO PLAN.
(a) LIMITATION ON OVERALL NUMBER OF SHARES SUBJECT TO AWARDS. Subject
to adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the
Plan shall be the sum of (i) 3,000,000, plus (ii) the number of shares with
respect to Awards previously granted under the Plan that terminate without being
exercised, expire, are forfeited or canceled, and the number of shares of Stock
that are surrendered in payment of any Awards or any tax withholding with regard
thereto. Any shares of Stock delivered under the Plan may consist, in whole or
in part, of authorized and unissued shares or treasury shares. Subject to
adjustment as provided in Section 10(c) hereof, in no event shall the aggregate
number of shares of Stock which may be issued pursuant to ISOs exceed 1,500,000
shares.
(b) APPLICATION OF LIMITATIONS. The limitation contained in Section
4(a) shall apply not only to Awards that are settleable by the delivery of
shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
5. ELIGIBILITY; PER-PERSON AWARD LIMITATIONS. Awards may be granted under the
Plan only to Eligible Persons. In each fiscal year during any part of which the
Plan is in effect, an Eligible Person may not be granted Awards relating to more
than 250,000 shares of Stock, subject to adjustment as provided in Section
10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h), 8(b) and
8(c). In addition, the maximum amount that may be earned as an Annual Incentive
Award or other cash Award in any fiscal year by any one Participant shall be
$2,000,000, and the maximum amount that may be earned as a Performance Award or
other cash Award in respect of a performance period by any one Participant shall
be $5,000,000.
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6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee or the Board may impose on
any Award or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a Participant to make
elections relating to his or her Award. The Committee or the Board shall retain
full power and discretion to accelerate, waive or modify, at any time, any term
or condition of an Award that is not mandatory under the Plan. Except in cases
in which the Committee or the Board is authorized to require other forms of
consideration under the Plan, or to the extent other forms of consideration must
be paid to satisfy the requirements of Delaware law, no consideration other than
services may be required for the grant (but not the exercise) of any Award.
(b) OPTIONS. The Committee and the Board each is authorized to grant
Options to Participants on the following terms and conditions:
(i) EXERCISE PRICE. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee or
the Board, provided that such exercise price shall not, in the case
of Incentive Stock Options, be less than 100% of the Fair Market
Value of the Stock on the date of grant of the Option and shall not,
in any event, be less than the par value of a share of Stock on the
date of grant of such Option. If an employee owns or is deemed to own
(by reason of the attribution rules applicable under Section 424(d)
of the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Parent Corporation and an
Incentive Stock Option is granted to such employee, the option price
of such Incentive Stock Option (to the extent required by the Code at
the time of grant) shall be no less than 110% of the Fair Market
Value of the Stock on the date such Incentive Stock Option is
granted.
(ii) TIME AND METHOD OF EXERCISE. The Committee or the Board shall
determine the time or times at which or the circumstances under which
an Option may be exercised in whole or in part (including based on
achievement of performance goals and/or future service requirements),
the time or times at which Options shall cease to be or become
exercisable following termination of employment or upon other
conditions, the methods by which such exercise price may be paid or
deemed to be paid (including in the discretion of the Committee or
the Board a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, other Awards or awards
granted under other plans of the Company or any subsidiary, or other
property (including notes or other contractual obligations of
Participants to make payment on a deferred basis), and the methods by
or forms in which Stock will be delivered or deemed to be delivered
to Participants.
(III) ISOS. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the
Code. Anything in the Plan to the contrary notwithstanding, no term
of the Plan relating to ISOs (including any SAR in tandem therewith)
shall be interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to disqualify
either the Plan or any ISO under Section 422 of the Code, unless the
Participant has first requested the change that will result in such
disqualification. Thus, if and to the extent required to comply with
Section 422 of the Code, Options granted as Incentive Stock Options
shall be subject to the following special terms and conditions:
(A) the Option shall not be exercisable more than ten
years after the date such Incentive Stock Option is granted;
provided, however, that if a Participant owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of
the Code) more than 10% of the combined voting power of all
classes of stock of the Company or any Parent Corporation and
the Incentive Stock Option is granted to such Participant, the
term of the Incentive Stock Option shall be (to the extent
required by the Code at the time of the grant) for no more
than five years from the date of grant; and
(B) The aggregate Fair Market Value (determined as
of the date the Incentive Stock Option is granted) of the
shares of stock with respect to which Incentive Stock Options
granted under the Plan
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and all other option plans of the Company or its Parent
Corporation during any calendar year exercisable for the first
time by the Participant during any calendar year shall not (to
the extent required by the Code at the time of the grant)
exceed $100,000.
(iv) FORMULA GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS. Each
Non-Employee Director, other than a Non-Employee Director who is, or
is an affiliate or designee of, a Beneficial Owner of more than 5% of
the Company Voting Securities Outstanding (as defined in Section
9(b)(i)), shall receive on such Non-Employee Director's Initial Grant
Date an Option to purchase 12,000 shares of Stock. In addition, each
Non-Employee Director shall receive on each Annual Meeting Date
thereafter, an Option to purchase 3,000 shares of Stock. Options
granted to Non-Employee Directors pursuant to this Section shall be
for a term of 10 years and shall become exercisable at the rate of
25% per year commencing on the first anniversary of the date on which
the Option is granted; provided, however, that the Options shall be
fully exercisable in the event that, while serving as a Director, the
Non-Employee Director dies, suffers a Disability, or Retires. The per
share exercise price of all Options granted to Non-Employee Directors
pursuant to this paragraph (iv) shall be equal to the Fair Market
Value of a share of Stock on the date such Option is granted. Unless
otherwise extended in the sole discretion of the Committee, the
unexercised portion of any Option granted pursuant to this paragraph
(iv) shall become null and void (V) three months after the date on
which such Non-Employee Director ceases to be a Director of the
Company for any reason other than the Non-Employee Director's willful
misconduct or negligence, Disability, death or Retirement, (W)
immediately in the event of the Non-Employee Director's willful
misconduct or negligence, (X) one year after the Non-Employee
Director ceases to be a Director by reason of his Disability, (Y) at
the expiration of its original term, if the Non-Employee Director
ceases to be a Director by reason of his Retirement, and (Z) twelve
months after the date of the Non-Employee Director's death in the
event that such death occurs prior to the time the Option otherwise
would become null and void pursuant to this sentence.
(c) STOCK APPRECIATION RIGHTS. The Committee and the Board each is
authorized to grant SAR's to Participants on the following terms and conditions:
(i) RIGHT TO PAYMENT. A SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the
excess of (A) the Fair Market Value of one share of stock on the date
of exercise (or, in the case of a "Limited SAR" that may be exercised
only in the event of a Change in Control, the Fair Market Value
determined by reference to the Change in Control Price, as defined
under Section 9(c) hereof), over (B) the grant price of the SAR as
determined by the Committee or the Board. The grant price of an SAR
shall not be less than the Fair Market Value of a share of Stock on
the date of grant except as provided under Section 7(a) hereof.
(ii) OTHER TERMS. The Committee or the Board shall determine at
the date of grant or thereafter, the time or times at which and the
circumstances under which a SAR may be exercised in whole or in part
(including based on achievement of performance goals and/or future
service requirements), the time or times at which SARs shall cease to
be or become exercisable following termination of employment or upon
other conditions, the method of exercise, method of settlement, form
of consideration payable in settlement, method by or forms in which
Stock will be delivered or deemed to be delivered to Participants,
whether or not a SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised in connection with a Change in
Control or other event as specified by the Committee or the Board,
may be granted on such terms, not inconsistent with this Section
6(c), as the Committee or the Board may determine. SARs and Limited
SARs may be either freestanding or in tandem with other Awards.
(d) RESTRICTED STOCK. The Committee and the Board each is authorized
to grant Restricted Stock to Participants on the following terms and conditions:
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject to
such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee or the Board may impose, which
restrictions may lapse separately or in combination at such times,
under such circumstances (including based on achievement
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of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee or the Board may determine
at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award agreement relating to the
Restricted Stock, a Participant granted Restricted Stock shall have all
of the rights of a stockholder, including the right to vote the
Restricted Stock and the right to receive dividends thereon (subject to
any mandatory reinvestment or other requirement imposed by the
Committee or the Board). During the restricted period applicable to the
Restricted Stock, subject to Section 10(b) below, the Restricted Stock
may not be sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant.
(ii) FORFEITURE. Except as otherwise determined by the Committee
or the Board at the time of the Award, upon termination of a
Participant's employment during the applicable restriction period, the
Participant's Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company; provided
that the Committee or the Board may provide, by rule or regulation or
in any Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock
shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Committee or the Board may in
other cases waive in whole or in part the forfeiture of Restricted
Stock.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee or the Board
shall determine. If certificates representing Restricted Stock are
registered in the name of the Participant, the Committee or the Board
may require that such certificates bear an appropriate legend referring
to the terms, conditions and restrictions applicable to such Restricted
Stock, that the Company retain physical possession of the certificates,
and that the Participant deliver a stock power to the Company, endorsed
in blank, relating to the Restricted Stock.
(iv) DIVIDENDS AND SPLITS. As a condition to the grant of an
Award of Restricted Stock, the Committee or the Board may require that
any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise
determined by the Committee or the Board, Stock distributed in
connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect
to which such Stock or other property has been distributed.
(e) DEFERRED STOCK. The Committee and the Board each is authorized to
grant Deferred Stock to Participants, which are rights to receive Stock, cash,
or a combination thereof at the end of a specified deferral period, subject to
the following terms and conditions:
(i) AWARD AND RESTRICTIONS. Satisfaction of an Award of Deferred
Stock shall occur upon expiration of the deferral period specified
for such Deferred Stock by the Committee or the Board (or, if
permitted by the Committee or the Board, as elected by the
Participant). In addition, Deferred Stock shall be subject to such
restrictions (which may include a risk of forfeiture) as the
Committee or the Board may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals
and/or future service requirements), separately or in combination, in
installments or otherwise, as the Committee or the Board may
determine. Deferred Stock may be satisfied by delivery of Stock, cash
equal to the Fair Market Value of the specified number of shares of
Stock covered by the Deferred Stock, or a combination thereof, as
determined by the Committee or the Board at the date of grant or
thereafter. Prior to satisfaction of an Award of Deferred Stock, an
Award of Deferred Stock carries no voting or dividend or other rights
associated with share ownership.
(ii) FORFEITURE. Except as otherwise determined by the Committee
or the Board, upon termination of a Participant's employment during
the applicable deferral period thereof to which forfeiture conditions
apply (as provided in the Award agreement evidencing the Deferred
Stock), the Participant's Deferred Stock that is at that time subject
to deferral (other than a deferral at the election of the
Participant) shall be forfeited; provided that the Committee or the
Board may provide, by rule or regulation or in any Award agreement,
or
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may determine in any individual case, that restrictions or
forfeiture conditions relating to Deferred Stock shall be waived in
whole or in part in the event of terminations resulting from
specified causes, and the Committee or the Board may in other cases
waive in whole or in part the forfeiture of Deferred Stock.
(iii) DIVIDEND EQUIVALENTS. Unless otherwise determined by the
Committee or the Board at date of grant, Dividend Equivalents on the
specified number of shares of Stock covered by an Award of Deferred
Stock shall be either (A) paid with respect to such Deferred Stock at
the dividend payment date in cash or in shares of unrestricted Stock
having a Fair Market Value equal to the amount of such dividends, or
(B) deferred with respect to such Deferred Stock and the amount or
value thereof automatically deemed reinvested in additional Deferred
Stock, other Awards or other investment vehicles, as the Committee or
the Board shall determine or permit the Participant to elect.
(f) BONUS STOCK AND AWARDS IN LIEU OF OBLIGATIONS. The Committee and
the Board each is authorized to grant Stock as a bonus, or to grant Stock or
other Awards in lieu of Company obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee or the Board.
(g) DIVIDEND EQUIVALENTS. The Committee and the Board each is
authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.
(h) OTHER STOCK-BASED AWARDS. The Committee and the Board each is
authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards or other property, as the Committee or the Board shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company or
a subsidiary, or any other right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem, and substitute or exchange
Awards may be granted at any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee or the Board shall require
the surrender of such other Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu of cash compensation,
including in lieu of cash amounts payable under other plans of the Company or
any subsidiary, in which the value of Stock subject to the Award is equivalent
in value to the cash compensation (for example, Deferred Stock or Restricted
Stock), or in which the exercise price, grant price or purchase price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value of the underlying
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Stock minus the value of the cash compensation surrendered (for example, Options
granted with an exercise price "discounted" by the amount of the cash
compensation surrendered).
(b) TERM OF AWARDS. The term of each Award shall be for such period as
may be determined by the Committee or the Board; provided that in no event shall
the term of any Option or SAR exceed a period of ten years (or such shorter term
as may be required in respect of an ISO under Section 422 of the Code).
(c) FORM AND TIMING OF PAYMENT UNDER AWARDS; DEFERRALS. Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Company or a subsidiary upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee or the Board
shall determine, including, without limitation, cash, Stock, other Awards or
other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or the Board (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.
(d) EXEMPTIONS FROM SECTION 16(B) LIABILITY. It is the intent of the
Company that this Plan comply in all respects with applicable provisions of Rule
16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither the
grant of any Awards to nor other transaction by a Participant who is subject to
Section 16 of the Exchange Act is subject to liability under Section 16(b)
thereof (except for transactions acknowledged in writing to be non-exempt by
such Participant). Accordingly, if any provision of this Plan or any Award
agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such Participant shall
avoid liability under Section 16(b). In addition, the purchase price of any
Award conferring a right to purchase Stock shall be not less than any specified
percentage of the Fair Market Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.
8. PERFORMANCE AND ANNUAL INCENTIVE AWARDS.
(a) PERFORMANCE CONDITIONS. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the Committee or
the Board. The Committee or the Board may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive Award intended to qualify under Code Section 162(m). If and to the
extent required under Code Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m), shall be exercised by the Committee and not the Board.
(b) PERFORMANCE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES. If and
to the extent that the Committee determines that a Performance Award to be
granted to an Eligible Person who is designated by the Committee as likely to be
a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(b).
(i) PERFORMANCE GOALS GENERALLY. The performance goals for such
Performance Awards shall consist of one or more business criteria and
a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this
Section 8(b). Performance goals shall be objective and shall
otherwise meet the requirements of Code Section 162(m) and
regulations thereunder including the requirement that the level or
levels of performance targeted by the Committee result in the
achievement of performance goals being "substantially uncertain." The
Committee may determine that such
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Performance Awards shall be granted, exercised and/or settled upon
achievement of any one performance goal or that two or more of the
performance goals must be achieved as a condition to grant, exercise
and/or settlement of such Performance Awards. Performance goals may
differ for Performance Awards granted to any one Participant or to
different Participants.
(ii) BUSINESS CRITERIA. One or more of the following business
criteria for the Company, on a consolidated basis, and/or specified
subsidiaries or business units of the Company (except with respect to
the total stockholder return and earnings per share criteria), shall be
used exclusively by the Committee in establishing performance goals for
such Performance Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a comparable basis)
of a publicly available index such as, but not limited to, the Standard
& Poor's 500 Stock Index or the Nasdaq Composite Index; (3) net income;
(4) pretax earnings; (5) earnings before interest expense, taxes,
depreciation and amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and extraordinary or
special items; (7) operating margin; (8) earnings per share; (9) return
on equity; (10) return on capital; (11) return on investment; (12)
operating earnings; (13) working capital or inventory; and (14) ratio
of debt to stockholders' equity. One or more of the foregoing business
criteria shall also be exclusively used in establishing performance
goals for Annual Incentive Awards granted to a Covered Employee under
Section 8(c) hereof that are intended to qualify as "performance-based
compensation" under Code Section 162(m).
(iii) PERFORMANCE PERIOD; TIMING FOR ESTABLISHING PERFORMANCE
GOALS. Achievement of performance goals in respect of such Performance
Awards shall be measured over a performance period of up to ten years,
as specified by the Committee. Performance goals shall be established
not later than 90 days after the beginning of any performance period
applicable to such Performance Awards, or at such other date as may be
required or permitted for "performance-based compensation" under Code
Section 162(m).
(iv) PERFORMANCE AWARD POOL. The Committee may establish a
Performance Award pool, which shall be an unfunded pool, for purposes
of measuring Company performance in connection with Performance Awards.
The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the
business criteria set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in accordance with
Section 8(b)(iii) hereof. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship
to such business criteria.
(v) SETTLEMENT OF PERFORMANCE AWARDS; OTHER TERMS. Settlement
of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee may,
in its discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards. The Committee shall
specify the circumstances in which such Performance Awards shall be
paid or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or settlement of
Performance Awards.
(c) ANNUAL INCENTIVE AWARDS GRANTED TO DESIGNATED COVERED EMPLOYEES. If
and to the extent that the Committee determines that an Annual Incentive Award
to be granted to an Eligible Person who is designated by the Committee as likely
to be a Covered Employee should qualify as "performance-based compensation" for
purposes of Code Section 162(m), the grant, exercise and/or settlement of such
Annual Incentive Award shall be contingent upon achievement of preestablished
performance goals and other terms set forth in this Section 8(c).
(i) ANNUAL INCENTIVE AWARD POOL. The Committee may establish
an Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring Company performance in connection with Annual
Incentive Awards. The amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance goal or goals based on
one or more of the business criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof. The Committee
may specify the amount of the Annual Incentive Award pool as a
percentage of any such business criteria, a percentage thereof in
excess of a threshold amount, or as another
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amount which need not bear a strictly mathematical relationship to such
business criteria.
(ii) POTENTIAL ANNUAL INCENTIVE AWARDS. Not later than the end
of the 90th day of each fiscal year, or at such other date as may be
required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will potentially
receive Annual Incentive Awards, and the amounts potentially payable
thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Section 8(c)(i) hereof or as
individual Annual Incentive Awards. In the case of individual Annual
Incentive Awards intended to qualify under Code Section 162(m), the
amount potentially payable shall be based upon the achievement of a
performance goal or goals based on one or more of the business criteria
set forth in Section 8(b)(ii) hereof in the given performance year, as
specified by the Committee; in other cases, such amount shall be based
on such criteria as shall be established by the Committee. In all
cases, the maximum Annual Incentive Award of any Participant shall be
subject to the limitation set forth in Section 5 hereof.
(iii) PAYOUT OF ANNUAL INCENTIVE AWARDS. After the end of each
fiscal year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool, and the maximum amount of potential
Annual Incentive Award payable to each Participant in the Annual
Incentive Award pool, or (B) the amount of potential Annual Incentive
Award otherwise payable to each Participant. The Committee may, in its
discretion, determine that the amount payable to any Participant as a
final Annual Incentive Award shall be reduced from the amount of his or
her potential Annual Incentive Award, including a determination to make
no final Award whatsoever. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or
forfeited in the event of termination of employment by the Participant
prior to the end of a fiscal year or settlement of such Annual
Incentive Award.
(d) WRITTEN DETERMINATIONS. All determinations by the Committee as to
the establishment of performance goals, the amount of any Performance Award pool
or potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Section 8(b), and the
amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards and the amount of final Annual Incentive Awards under Section
8(c), shall be made in writing in the case of any Award intended to qualify
under Code Section 162(m). The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards if and to the
extent required to comply with Code Section 162(m).
(e) STATUS OF SECTION 8(B) AND SECTION 8(C) AWARDS UNDER CODE SECTION
162(M). It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Section 8(b) and 8(c) hereof granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder shall, if so designated by the
Committee, constitute "qualified performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder. Accordingly, the
terms of Sections 8(b), (c), (d) and (e), including the definitions of Covered
Employee and other terms used therein, shall be interpreted in a manner
consistent with Code Section 162(m) and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a
given Participant will be a Covered Employee with respect to a fiscal year that
has not yet been completed, the term Covered Employee as used herein shall mean
only a person designated by the Committee, at the time of grant of Performance
Awards or an Annual Incentive Award, as likely to be a Covered Employee with
respect to that fiscal year. If any provision of the Plan or any agreement
relating to such Performance Awards or Annual Incentive Awards does not comply
or is inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements.
9. CHANGE IN CONTROL.
(a) EFFECT OF "CHANGE IN CONTROL." If and to the extent provided in
the Award, in the event of a "Change in Control," as defined in Section 9(b),
the following provisions shall apply:
(i) Any Award carrying a right to exercise that was not
previously exercisable and vested shall become fully exercisable and
vested as of the time of the Change in Control, subject only to
applicable restrictions set
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forth in Section 10(a) hereof;
(ii) Limited SARs (and other SARs if so provided by their
terms) shall become exercisable for amounts, in cash, determined by
reference to the Change in Control Price;
(iii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse and such Awards shall be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the
Participant and subject to applicable restrictions set forth in Section
10(a) hereof; and
(iv) With respect to any such outstanding Award subject to
achievement of performance goals and conditions under the Plan, such
performance goals and other conditions will be deemed to be met if and
to the extent so provided by the Committee in the Award agreement
relating to such Award.
(b) DEFINITION OF "CHANGE IN CONTROL. A "Change in Control" shall be
deemed to have occurred upon:
(i) An acquisition by any Person of Beneficial Ownership of
the shares of Common Stock of the Company then outstanding (the
"Company Common Stock Outstanding") or the voting securities of the
Company then outstanding entitled to vote generally in the election
of directors (the "Company Voting Securities Outstanding") if such
acquisition of Beneficial Ownership results in the Person's
Beneficially Owning 25% or more of the Company Common Stock
outstanding or 25% or more of the combined voting power of the
Company Voting Securities Outstanding; or
(ii) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate
transaction or series of transactions, in each case, with respect to
which persons who were the shareholders of the Company immediately
prior to such reorganization, merger or consolidation or other
transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of the
Company or the sale of all or substantially all of the assets of the
Company (unless such reorganization, merger, consolidation or other
corporate transaction, liquidation, dissolution or sale (any such
event being referred to as a "Corporate Transaction") is subsequently
abandoned); or
(iii) A change in the composition of the Board such that
individuals who, as of the date hereof, constitute the Board (as of
the date hereof the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved
by a vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the Directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Securities Exchange Act)
shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board.
Notwithstanding the provisions set forth in subparagraphs (i) and (ii)
of this Section 9(b), any acquisition or consummation of a Corporate Transaction
unanimously approved by the Incumbent Board shall not constitute a Change in
Control for purposes of the Plan.
(c) DEFINITION OF "CHANGE IN CONTROL PRICE." The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.
A-12
<PAGE>
10. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL AND OTHER REQUIREMENTS. The Company may, to
the extent deemed necessary or advisable by the Committee or the Board, postpone
the issuance or delivery of Stock or payment of other benefits under any Award
until completion of such registration or qualification of such Stock or other
required action under any federal or state law, rule or regulation, listing or
other required action with respect to any stock exchange or automated quotation
system upon which the Stock or other Company securities are listed or quoted, or
compliance with any other obligation of the Company, as the Committee or the
Board, may consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations. The
foregoing notwithstanding, in connection with a Change in Control, the Company
shall take or cause to be taken no action, and shall undertake or permit to
arise no legal or contractual obligation, that results or would result in any
postponement of the issuance or delivery of Stock or payment of benefits under
any Award or the imposition of any other conditions on such issuance, delivery
or payment, to the extent that such postponement or other condition would
represent a greater burden on a Participant than existed on the 90th day
preceding the Change in Control.
(b) LIMITS ON TRANSFERABILITY; BENEFICIARIES. No Award or other right
or interest of a Participant under the Plan, including any Award or right which
constitutes a derivative security as generally defined in Rule 16a-1(c) under
the Exchange Act, shall be pledged, hypothecated or otherwise encumbered or
subject to any lien, obligation or liability of such Participant to any party
(other than the Company or a Subsidiary), or assigned or transferred by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant
only by the Participant or his or her guardian or legal representative, except
that Awards and other rights (other than ISOs and SARs in tandem therewith) may
be transferred to one or more Beneficiaries or other transferees during the
lifetime of the Participant, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the extent such
transfers and exercises are permitted by the Committee or the Board pursuant to
the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any
prohibitions or restrictions on such transfers pursuant to Rule 16b-3). A
Beneficiary, transferee, or other person claiming any rights under the Plan from
or through any Participant shall be subject to all terms and conditions of the
Plan and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the Board.
(c) ADJUSTMENTS. In the event that any dividend or other distribution
(whether in the form of cash, Stock, or other property), recapitalization,
forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation, dissolution or other
similar corporate transaction or event affects the Stock such that a
substitution or adjustment is determined by the Committee or the Board to be
appropriate in order to prevent dilution or enlargement of the rights of
Participants under the Plan, then the Committee or the Board shall, in such
manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would
A-13
<PAGE>
cause Options, SARs, Performance Awards granted under Section 8(b) hereof or
Annual Incentive Awards granted under Section 8(c) hereof to Participants
designated by the Committee as Covered Employees and intended to qualify as
"performance-based compensation" under Code Section 162(m) and the regulations
thereunder to otherwise fail to qualify as "performance-based compensation"
under Code Section 162(m) and regulations thereunder.
(d) TAXES. The Company and any Subsidiary is authorized to withhold
from any Award granted, any payment relating to an Award under the Plan,
including from a distribution of Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter,
suspend, discontinue or terminate the Plan, or the Committee's authority to
grant Awards under the Plan without the consent of stockholders or Participants,
except that any amendment or alteration to the Plan shall be subject to the
approval of the Company's stockholders not later than the annual meeting next
following such Board action if such stockholder approval is required by any
federal or state law or regulation (including, without limitation, Rule 16b-3 or
Code Section 162(m)) or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to the Plan
to stockholders for approval; provided that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights
of such Participant under any previously granted and outstanding Award. The
Committee or the Board may waive any conditions or rights under, or amend,
alter, suspend, discontinue or terminate any Award theretofore granted and any
Award agreement relating thereto, except as otherwise provided in the Plan;
provided that, without the consent of an affected Participant, no such Committee
or the Board action may materially and adversely affect the rights of such
Participant under such Award. Notwithstanding anything in the Plan to the
contrary, if any right under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that would, but for the right
hereunder, be eligible for such accounting treatment, the Committee or the Board
may modify or adjust the right so that pooling of interest accounting shall be
available, including the substitution of Stock having a Fair Market Value equal
to the cash otherwise payable hereunder for the right which caused the
transaction to be ineligible for pooling of interest accounting. Notwithstanding
anything herein to the contrary, the provisions of Section 6(b)(iv) of this Plan
which govern formula grants of Options to Non-Employee Directors, shall not be
amended more than once every six months other than to comport with changes to
the Code or the rules promulgated thereunder or the Employee Retirement Income
Security Act of 1974, as amended, or the rules promulgated thereunder, or with
rules promulgated by the Securities and Exchange Commission, unless such limit
on amendments is not required under Rule 16b-3 or other applicable law.
(f) LIMITATION ON RIGHTS CONFERRED UNDER PLAN. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any Eligible Person
or Participant the right to continue as an Eligible Person or Participant or in
the employ of the Company or a Subsidiary; (ii) interfering in any way with the
right of the Company or a Subsidiary to terminate any Eligible Person's or
Participant's employment at any time, (iii) giving an Eligible Person or
Participant any claim to be granted any Award under the Plan or to be treated
uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.
(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.
A-14
<PAGE>
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor its submission to the stockholders of the Company for approval shall
be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).
(i) PAYMENTS IN THE EVENT OF FORFEITURES; FRACTIONAL SHARES. Unless
otherwise determined by the Committee or the Board, in the event of a forfeiture
of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) GOVERNING LAW. The validity, construction and effect of the Plan,
any rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the laws of the State of Delaware without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) PLAN EFFECTIVE DATE AND STOCKHOLDER APPROVAL; TERMINATION OF PLAN.
The Plan shall become effective on the Effective Date, subject to subsequent
approval within 12 months of its adoption by the Board by stockholders of the
Company eligible to vote in the election of directors, by a vote sufficient to
meet the requirements of Code Sections 162(m) and 422, Rule 16b-3 under the
Exchange Act, applicable stock exchange requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan. Awards may
be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.
A-15
<PAGE>
SPORTSLINE USA, INC.
6340 N.W. 5th Way
Fort Lauderdale, Florida 33309
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned holder of Common Stock of SportsLine USA, Inc., a Delaware
corporation (the "Company"), hereby appoints Michael Levy and Kenneth W.
Sanders, and each of them, as proxies for the undersigned, each with full power
of substitution, for and in the name of the undersigned to act for the
undersigned and to vote, as designated below,all of the shares of stock of the
Company that the undersigned is entitled to vote at the Company's 1998 Annual
Meeting of Shareholders, to be held on Thursday, June 11, 1998 at 10:00 a.m.,
local time, at the Westin Hotel, 400 Corporate Drive, Fort Lauderdale, Florida
and at any adjournments or postponements thereof.
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. ELECTION OF DIRECTORS.
VOTE FOR ALL NOMINEES LISTED AT RIGHT EXCEPT VOTE WITHHELD FROM THE
FOLLOWING NOMINEE(S) (IF ANY)
[ ]
VOTE WITHHELD FROM ALL NOMINEES
[ ]
NOMINEES: Michael Levy
Joseph Lacob
Andrew Nibley
James C. Walsh
(Instruction: To withhold authority for an individual nominee, write that
nominee's name on the line provided below.)
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2. To approve an amendment to the Company's 1997 Incentive Compensation Plan to
increase by 1,000,000 the number of shares of Common Stock authorized for
issuance thereunder.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED HEREIN AND "FOR" THE
APPROVAL OF THE PROPOSAL TO AMEND THE COMPANY'S 1997 INCENTIVE COMPENSATION
PLAN.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN THE
ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF MAILED WITHIN THE UNITED STATES.
<PAGE>
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement, and (iii) the Company's 1997 Annual Report to
Shareholders.
DATE_________________________________________________________________________
SIGNATURE____________________________________________________________________
SIGNATURE (If held jointly)__________________________________________________
Note: Please sign exactly as your name appears hereon and mail it promptly even
though you may plan to attend the meeting. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If
partnership, please sign in the partnership name by authorized person.
