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EXHIBIT 10.10
TCI MUSIC, INC.
1997 STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AND
STOCK APPRECIATION RIGHTS AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of the 11th day of
July, 1997 (the "Effective Grant Date"), by and between TCI MUSIC, INC., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxx ("Grantee").
The Company has adopted the TCI Music, Inc. 1997 Stock Incentive
Plan (the "Plan"), a copy of which is attached to this Agreement as Exhibit A
and by this reference made a part hereof, for the benefit of certain eligible
persons as set forth in the Plan. Capitalized terms used and not otherwise
defined herein shall have the meaning ascribed thereto in the Plan.
Pursuant to the Plan, the Board has determined that it is in the
interests of the Company and its stockholders to grant the options and rights
provided herein in order to encourage Grantee to remain as a director of the
Company and to increase Grantee's personal interest in the continued success and
progress of the Company by providing a method whereby Grantee is encouraged to
invest in the capital stock of the Company.
The Company and Grantee therefore agree as follows:
1. GRANT OF OPTION; OPTION TERM. Subject to the terms and conditions
herein, the Company grants to the Grantee during the period commencing on the
Effective Grant Date and expiring at 5:00 p.m., Denver, Colorado time ("Close of
Business") on July 11, 2007, the tenth anniversary of the Effective Grant Date
(the "Option Term"), subject to earlier termination as provided in paragraphs 8
and 12(b) below, an option to purchase from the Company, at the price per share
set forth on Schedule 1 hereto (the "Series A Stock Option Price"), the number
of shares of Series A Common Stock of the Company ("Series A Stock") set forth
on said Schedule 1 (the "Series A Stock Option Shares"). The Series A Stock
Option Price and Series A Stock Option Shares are subject to adjustment pursuant
to paragraph 12 below. This option is as a "Nonqualified Stock Option" and is
hereinafter referred to as the "Series A Stock Option".
2. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the terms and
conditions herein and in tandem with the Series A Stock Option, the Grantee
shall also have, during the Option Term, subject to earlier termination as
provided in paragraphs 8 and 12(b) below, a stock appreciation right with
respect to each Series A Stock Option Share (individually, a "Series A Stock
Tandem SAR" and collectively, the "Series A Stock Tandem SARs"). Upon exercise
of a Series A Stock Tandem SAR in accordance with this Agreement, the Company
shall, subject to paragraph 6 below, make payment as follows:
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(a) the amount of payment shall equal the amount by which the
Fair Market Value of the Series A Stock Option Share on the date of
exercise of the Series A Stock Tandem SAR exceeds the Series A Stock
Option Price; and
(b) payment of the amount determined in accordance with clause
(a) shall be made in the sole discretion of the Committee in shares of
Series A Stock (valued at their Fair Market Value as of the date of
exercise of such Series A Stock Tandem SAR), in cash, or partly in cash
and partly in shares of Series A Stock.
3. REDUCTION UPON EXERCISE. The exercise of any number of Series A Stock
Tandem SARs shall cause a corresponding reduction in the number of Series A
Stock Option Shares which shall apply against the Series A Stock Option Shares
then available for purchase. The exercise of the Series A Stock Option to
purchase any number of Series A Stock Option Shares shall cause a corresponding
reduction in the number of Series A Stock Tandem SARs.
4. CONDITIONS OF EXERCISE; VESTING. The Series A Stock Option and Series
A Stock Tandem SARs are exercisable only in accordance with the conditions
stated in this paragraph.
(a) Except as otherwise provided in paragraphs 8 and 12(b) below
and in this paragraph 4, the Series A Stock Option may only be exercised
to the extent the Series A Stock Option Shares have become available for
purchase in accordance with the following schedule:
Percentage of Series A Stock Option
Date Shares Available for Purchase
---- -----------------------------
Effective Grant Date 20%
First Anniversary of Effective Grant Date 40%
Second Anniversary of Effective Grant Date 60%
Third Anniversary of Effective Grant Date 80%
Fourth Anniversary of Effective Grant Date 100%
Notwithstanding the foregoing, subject to the provisions of
paragraph 8 of this Agreement, all Series A Stock Option Shares shall
become available for purchase if during the Option Term Grantee's
directorship with the Company shall cease for any reason other than
voluntary termination by Grantee.
(b) A Series A Stock Tandem SAR with respect to a Series A Stock
Option Share shall be exercisable only if the Series A Stock Option
Share is then available for purchase in accordance with subparagraph
(a).
(c) To the extent the Series A Stock Option or Series A Stock
Tandem SARs become exercisable, such Series A Stock Option or Series A
Stock Tandem SARs may be
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exercised in whole or in part (at any time or from time to time, except
as otherwise provided herein) until expiration of the Option Term or
earlier termination thereof.
(d) Grantee acknowledges and agrees that the Committee, in its
discretion and as contemplated by Section 7.5 of the Plan, (i) at any
time before complete termination of the Series A Stock Option, may
accelerate the time or times at which the Series A Stock Option may be
exercised in whole or in part (without reducing the term of such Option)
and (ii) may adopt rules and regulations from time to time after the
date hereof with respect to the exercise of any Award and that the
exercise by Grantee of such Award will be subject to the further
condition that such exercise is made in accordance with all such rules
and regulations as the Committee may determine are applicable thereto.
5. MANNER OF EXERCISE. The Series A Stock Option or a Series A Stock
Tandem SAR may be exercised only by delivering to the Company all of the
following and shall be considered exercised (as to the number of Series A Stock
Option Shares or Series A Stock Tandem SARs specified in the notice referred to
in subparagraph (a) below) on the later of (i) the date of exercise designated
in the written notice referred to in subparagraph (a) below (or if the date so
designated is not a business day, the first business day following such date) or
(ii) the first business day on which the Company has received all of the
following:
(a) Written notice, in such form as the Committee may require,
stating that Grantee is exercising the Series A Stock Option and/or the
Series A Stock Tandem SAR, setting forth the date of such exercise and
designating, among other things, the number of Series A Stock Option
Shares to be purchased and/or the number of Series A Stock Tandem SARs
to be exercised; the aggregate purchase price to be paid by Grantee (in
the case of the exercise of Series A Stock Option Shares) and the manner
in which such payment is being made;
(b) If the Series A Stock Option is to be exercised, payment of
the Series A Stock Option Price for each Series A Stock Option Share to
be purchased in cash or in such other form, or combination of forms, as
the Committee, in its sole discretion, may permit, including (i) cash,
(ii) check, (iii) promissory note, (iv) whole shares of Series A Stock
or Series B Stock that the Grantee has owned for a period of at least
six months prior to the date of exercise, (v) the withholding of shares
of Series A Stock issuable upon such exercise of the Series A Stock
Option, (vi) the delivery, together with a properly executed exercise
notice, of irrevocable instructions to a broker to deliver promptly to
the Company the amount of sale or loan proceeds required to pay the
purchase price, (vii) any combination of the foregoing methods of
payment, or (viii) such other consideration and method of payment as may
be permitted for the issuance of shares under the Delaware General
Corporation Law;
(c) Payment of, or other provision acceptable to the Committee
for, any and all withholding taxes required to be withheld by the
Company upon such exercise in accordance with paragraph 6 hereof; and
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(d) Any other documentation that the Committee may reasonably
require (including, without limitation, proof satisfactory to the
Committee that the Award is then exercisable for the number of Series A
Stock Option Shares or Series A Stock Tandem SARs).
6. MANDATORY WITHHOLDING FOR TAXES. It shall be a condition precedent to
any exercise of the Series A Stock Option Shares or the Series A Stock Tandem
SARs that Grantee make provision acceptable to the Company and in accordance
with the Plan for the payment or withholding of any and all federal, state and
local taxes and other amounts required to be withheld by the Company to satisfy
the tax liability associated with such exercise, as determined by the Board.
7. DELIVERY BY THE COMPANY. As soon as practicable after receipt of all
items referred to in paragraph 5, and subject to the withholding referred to in
paragraph 6, the Company shall deliver to the Grantee certificates issued in
Grantee's name for the number of Series A Stock Option Shares purchased by
exercise of the Series A Stock Option and for the number of shares of Series A
Stock to which the Grantee is entitled by the exercise of Series A Stock Tandem
SARs and any cash payment to which the Grantee is entitled by the exercise of
Series A Stock Tandem SARs. If delivery is by mail, delivery of shares of Series
A Stock shall be deemed effected for all purposes when a stock transfer agent of
the Company shall have deposited the certificates in the United States mail,
addressed to the Grantee, and any cash payment shall be deemed effected when a
Company check, payable to Grantee and in an amount equal to the amount of the
cash payment, shall have been deposited in the United States mail, addressed to
the Grantee.
8. EARLY TERMINATION OF OPTION AND TANDEM SARS. Unless otherwise
determined by the Committee in its sole discretion, the Series A Stock Option
and Series A Stock Tandem SARs shall terminate, prior to the expiration of the
Series A Stock Option Term, at the time specified below:
(a) If Grantee voluntarily elects to terminate his directorship
during the Option Term, then the Series A Stock Option and Series A
Stock Tandem SARs shall cease to vest as of the date of termination of
Grantee's directorship and shall terminate at the Close of Business on
the first business day following the expiration of the 90-day period
which began on the date of termination of Grantee's directorship.
(b) If Grantee ceases to be a director of the Company during the
Option Term for any reason other than voluntary termination, including,
but not limited to the death of Grantee, the Series A Stock Option and
Series A Stock Tandem SARs shall terminate at the Close of Business on
the first business day following the expiration of the one-year period
which began on the date of death or date of termination of Grantee's
directorship.
In any event in which the Series A Stock Option and Series A
Stock Tandem SARs remain exercisable for a period of time following the date of
termination of Grantee's directorship as provided above, the Series A Stock
Option and Series A Stock Tandem SARs may be exercised
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during such period of time only to the extent the same were exercisable as
provided in paragraph 4 above on such date of termination of Grantee's
directorship. Notwithstanding any period of time referenced in this paragraph 8
or any other provision of this paragraph to the contrary, the Series A Stock
Option and all Series A Stock Tandem SARs shall in any event terminate upon the
expiration of the Option Term.
9. AUTOMATIC EXERCISE OF SERIES A STOCK TANDEM SARS. Immediately prior
to the termination of the Series A Stock Option, as provided in paragraph 8
above, or the expiration of the Option Term, all remaining Series A Stock Tandem
SARs shall be deemed to have been exercised by the Grantee.
10. NONTRANSFERABILITY OF SERIES A STOCK OPTION AND SERIES A STOCK
TANDEM SARS. During Grantee's lifetime, the Series A Stock Option and Series A
Stock Tandem SARs are not transferable (voluntarily or involuntarily) other than
pursuant to a domestic relations order and, except as otherwise required
pursuant to a domestic relations order, are exercisable only by the Grantee or
Grantee's court appointed legal representative. The Grantee may designate a
beneficiary or beneficiaries to whom the Series A Stock Option and Series A
Stock Tandem SARs shall pass upon Grantee's death and may change such
designation from time to time by filing a written designation of beneficiary or
beneficiaries with the Committee on the form annexed hereto as Exhibit B or such
other form as may be prescribed by the Committee, provided that no such
designation shall be effective unless so filed prior to the death of Grantee. If
no such designation is made or if the designated beneficiary does not survive
the Grantee's death, the Series A Stock Option and Series A Stock Tandem SARs
shall pass by will or the laws of descent and distribution. Following Grantee's
death, the Series A Stock Option and any Series A Stock Tandem SARs, if
otherwise exercisable, may be exercised by the person to whom such option or
right passes according to the foregoing and such person shall be deemed the
Grantee for purposes of any applicable provisions of this Agreement.
11. NO SHAREHOLDER RIGHTS; NO GUARANTEE OF DIRECTORSHIP.
(a) The Grantee shall not be deemed for any purpose to be, or to
have any of the rights of, a stockholder of the Company with respect to
any shares of Series A Stock as to which this Agreement relates until
such shares shall have been issued to Grantee by the Company.
Furthermore, the existence of this Agreement shall not affect in any way
the right or power of the Company or its stockholders to accomplish any
corporate act.
(b) Nothing contained in this Agreement, and no action by the
Company or the Committee with respect hereto, shall confer or be
construed to confer on Grantee any right to continue as a director of
the Company.
12. ADJUSTMENTS.
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(a) The Series A Stock Option and Series A Stock Tandem SARs
shall be subject to adjustment (including, without limitation, as to the
number of Series A Stock Option Shares and the Series A Stock Option
Price per share) in the sole discretion of the Committee and in such
manner as the Committee may deem equitable and appropriate in connection
with the occurrence of any of the events described in, and in accordance
with the provisions of, Section 4.2 of the Plan following the Effective
Grant Date.
(b) In the event of any Approved Transaction, Board Change or
Control Purchase, the Series A Stock Option and all Series A Stock
Tandem SARs shall become exercisable in full without regard to paragraph
4(a); provided, however, that to the extent not theretofore exercised
the Series A Stock Option and all Series A Stock Tandem SARs shall
terminate, unless otherwise determined by the Board, upon the first to
occur of the consummation of the Approved Transaction, the expiration of
the Series A Stock Option Term or the earlier termination of the Series
A Stock Option and Series A Stock Tandem SARs pursuant to paragraph 8
hereof. Notwithstanding the foregoing, the Committee may, in its
discretion, determine that the Series A Stock Option and Series A Stock
Tandem SARs will not become exercisable on an accelerated basis in
connection with an Approved Transaction and/or will not terminate if not
exercised prior to consummation of the Approved Transaction, if the
Board or the surviving or acquiring corporation, as the case may be,
shall have taken or made effective provision for the taking of such
action as in the opinion of the Committee is equitable and appropriate
to substitute a new Award for the Award evidenced by this Agreement or
to assume this Agreement and the Award evidenced hereby and in order to
make such new or assumed Award, as nearly as may be practicable,
equivalent to the Award evidenced by this Agreement as then in effect
(but before giving effect to any acceleration of the exercisability
hereof unless otherwise determined by the Committee), taking into
account, to the extent applicable, the kind and amount of securities,
cash or other assets into or for which the Series A Stock may be
changed, converted or exchanged in connection with the Approved
Transaction.
13. RESTRICTIONS IMPOSED BY LAW. Grantee acknowledges that neither the
Series A Stock Option nor any of the Series A Stock Option Shares has been
registered under the Securities Act of 1933 and that the Series A Stock Option
Shares may not be transferred in the absence of such registration or the
availability of an exemption therefrom under such Act or the rules and
regulations of the Securities and Exchange Commission promulgated thereunder.
Neither the Company nor any other person shall have any obligation to register
any Series A Stock Option Shares, or any transfer of Series A Stock Option
Shares, under the Securities Act of 1933, the Securities Exchange Act of 1934 or
any other state or federal securities law. Certificates representing Series A
Stock Option Shares purchased by Grantee hereunder may bear such restrictive and
other legends as counsel for the Company shall require in order to insure
compliance with any such law or any rule or regulation promulgated thereunder.
Without limiting the generality of Section 11.9 of the Plan, the Grantee agrees
that Grantee will not exercise the Series A Stock Option or any Series A Stock
Tandem SAR and that the Company will not be obligated to deliver any shares of
Series A Stock or make any cash payment, if counsel to the Company determines
that such exercise, delivery or payment would violate
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any applicable law or any rule or regulation of any governmental authority or
any rule or regulation of, or agreement of the Company with, any securities
exchange or association upon which the Series A Stock is listed or quoted. The
Company shall in no event be obligated to take any affirmative action in order
to cause the exercise of the Series A Stock Option or any Series A Stock Tandem
SAR or the resulting delivery of shares of Series A Stock or other payment to
comply with any such law, rule, regulation or agreement.
14. NOTICE. Unless the Company notifies the Grantee in writing of a
different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be:
(a) delivered personally to the following address:
TCI Music, Inc.
c/o Liberty Media Corporation
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
or
(b) sent by first class mail, postage prepaid and addressed as
follows:
TCI Music, Inc.
c/o Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee's address as listed in the records of
the Company on the Effective Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
15. AMENDMENT. Notwithstanding any other provisions hereof, this
Agreement may be supplemented or amended from time to time as approved by the
Committee as contemplated by Section 11.8 of the Plan. Without limiting the
generality of the foregoing, without the consent of the Grantee,
(a) this Agreement may be amended or supplemented (i) to cure any
ambiguity or to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein, or (ii) to
add to the covenants and agreements of the Company for the benefit of
Grantee or surrender any right or power reserved to or conferred upon
the
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Company in this Agreement, subject, however, to any required approval of
the Company's stockholders and, provided, in each case, that such
changes or corrections shall not adversely affect the rights of Grantee
with respect to the Award evidenced hereby, or (iii) to make such other
changes as the Company, upon advice of counsel, determines are necessary
or advisable because of the adoption or promulgation of, or change in or
of the interpretation of, any law or governmental rule or regulation,
including any applicable federal or state securities laws; and
(b) subject to Section 11.8 of the Plan and any required approval
of the Company's stockholders, the Award evidenced by this Agreement may
be canceled by the Committee and a new Award made in substitution
therefor, provided that the Award so substituted shall satisfy all of
the requirements of the Plan as of the date such new Award is made and
no such action shall adversely affect the Series A Stock Option or any
Series A Stock Tandem SAR to the extent then exercisable.
16. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Delaware.
17. CONSTRUCTION. References in this Agreement to "this Agreement" and
the words "herein," "hereof," "hereunder" and similar terms include all Exhibits
and Schedules appended hereto, including the Plan. This Agreement is entered
into, and the Award evidenced hereby is granted, pursuant to the Plan and shall
be governed by and construed in accordance with the Plan and the administrative
interpretations adopted by the Committee thereunder. All decisions of the
Committee upon questions regarding the Plan or this Agreement shall be
conclusive. Unless otherwise expressly stated herein, in the event of any
inconsistency between the terms of the Plan and this Agreement, the terms of the
Plan shall control. The headings of the paragraphs of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
18. DUPLICATE ORIGINALS. The Company and the Grantee may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together represent the same agreement.
19. RULES BY COMMITTEE. The rights of the Grantee and obligations of the
Company hereunder shall be subject to such reasonable rules and regulations as
the Committee may adopt from time to time hereafter.
20. ENTIRE AGREEMENT. This Agreement is in satisfaction of and in lieu
of all prior discussions and agreements, oral or written, between the Company
and Grantee regarding the subject matter hereof. Grantee and the Company hereby
declare and represent that no promise or agreement not herein expressed has been
made and that this Agreement contains the entire agreement between the parties
hereto with respect to the Series A Stock Options and Series A Stock Tandem SARs
and
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replaces and makes null and void any prior agreements between Grantee and the
Company regarding the Series A Stock Options.
21. GRANTEE ACCEPTANCE. Grantee shall signify acceptance of the terms
and conditions of this Agreement by signing in the space provided at the end
hereof and returning a signed copy to the Company.
TCI MUSIC, INC.
By: /s/ XXXXXX XXXXX XXX
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Name: Xxxxxx Xxxxx Xxx
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Title: Vice President-Finance
-----------------------------------
ACCEPTED:
/s/ XXXXX X. XXXX
-----------------------------------------
Name: Xxxxx X. Xxxx, Grantee
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Schedule 1 to Non-Qualified Stock Option
and Stock Appreciation Rights Agreement
dated as of July 11, 1997
TCI MUSIC, INC. 1997 INCENTIVE PLAN
Grantee: Xxxxx X. Xxxx
Xxxxx Date: July 11, 1997
Option Price: $6.25 per share
Option Shares: 100,000 shares of Series A TCI Music Common Stock ("Series
A Stock"), $.01 par value per share.
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