Dish Network 1998 Annual Report Download - page 72

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–25
payable, deliver a notice instructing the deposit agent: (i) to purchase from EchoStar, for transfer to each holder of
Series C Preferred Stock, in lieu of the Quarterly Return Amount, that number of whole shares of Class A common
stock determined by dividing the Quarterly Return Amount by 95% of the market value of the Class A common stock
as of the date of such notice; or (ii) defer delivery of the Quarterly Return Amount to holders of Series C Preferred
Stock on such quarterly payment date until the next quarterly payment date or any subsequent payment date. However,
no later than November 1, 1999 (the “Deposit Expiration Date”), any amounts remaining in the Deposit Account, as of
such date, including amounts which have previously been deferred, will be (i) paid to the holders of Series C Preferred
Stock; or (ii) at EchoStar’s option, used to purchase from EchoStar for delivery to each holder of Series C Preferred
Stock that number of whole shares of Class A common stock determined by dividing the balance remaining in the
Deposit Account by 95% of the market value of the shares of Class A common stock as of the date of EchoStar’s
notice.
Each share of Series C Preferred Stock has a liquidation preference of $50 per share. Dividends on the
Series C Preferred Stock will accrue from November 2, 1999, and holders of the Series C Preferred Stock will be
entitled to receive cumulative dividends at an annual rate of 6 3/4% of the liquidation preference, payable quarterly in
arrears commencing February 1, 2000. Dividends may, at the option of EchoStar, be paid in cash, by delivery of
fully paid and nonassessable shares of Class A common stock, or a combination thereof. Each share of Series C
Preferred Stock is convertible at any time, unless previously redeemed, at the option of the holder thereof, into
approximately 2.05 shares of Class A common stock, subject to adjustment upon the occurrence of certain events.
The Series C Preferred Stock is redeemable at any time on or after November 1, 2000, in whole or in part, at the
option of EchoStar, in cash, by delivery of fully paid and nonassessable shares of Class A common stock, or a
combination thereof, initially at a price of $51.929 per share and thereafter at prices declining to $50.000 per share
on or after November 1, 2004, plus in each case all accumulated and unpaid dividends to the redemption date.
8. Stock Compensation Plans
Stock Incentive Plan
In April 1994, EchoStar adopted a stock incentive plan (the “Stock Incentive Plan”) to provide incentive to
attract and retain officers, directors and key employees. EchoStar has reserved up to 10 million shares of its Class A
common stock for granting awards under the Stock Incentive Plan. All stock options granted through
December 31, 1998 have included exercise prices not less than the fair market value of EchoStar’s Class A common
stock at the date of grant, and vest, as determined by EchoStar’s Board of Directors, generally at the rate of 20% per
year.
During 1998, EchoStar adopted the 1998 Incentive Plan which provided certain key employees a
contingent incentive that would be paid, at the key employee’s election, in stock options, a cash award or a
combination thereof. The payment of these incentives was contingent upon the achievement of certain financial and
other goals of EchoStar. EchoStar did not meet any of the goals during 1998. Accordingly, no cash incentives were
paid, all stock options granted pursuant to the Incentive Plan were cancelled and no compensation expense was
recognized related to 1998 Incentive Plan. The Board of Directors has approved a similar plan for 1999. Any
payments under this plan are contingent upon the achievement of certain financial and other goals.