<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
/X/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BIG CITY RADIO, 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:
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2) Aggregate number of securities to which transaction applies:
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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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
BIG CITY RADIO, INC.
11 SKYLINE DRIVE
HAWTHORNE, NEW YORK 10532
[LOGO]
April 9, 1998
Dear Stockholder:
On behalf of the Board of Directors, I wish to extend to you a cordial
invitation to attend the Annual Meeting of Stockholders of Big City Radio, Inc.,
which will be held on the Concourse Level at 1285 Avenue of the Americas, New
York, New York 10019 at 9:00 a.m., New York time, on May 12, 1998. I look
forward to greeting as many stockholders as possible at the Annual Meeting.
At the Annual Meeting, holders of Class A Common Stock of Big City Radio
will be asked to vote on proposals to elect two Class A Directors for a one year
term ending in the year 1999 and all stockholders will be asked to vote on
proposals to adopt the Big City Radio, Inc. 1998 Stock Option Plan and to ratify
the selection of KPMG Peat Marwick LLP as Big City Radio's independent
accountants for the year ending December 31, 1998 and to vote on any other
matters that may properly come before the Annual Meeting.
It is important that your shares be represented at the Annual Meeting,
whether or not you are able to attend. Accordingly, you are urged to sign, date
and mail the enclosed proxy promptly. If you later decide to attend the Annual
Meeting, you may revoke your proxy and vote in person.
Thank you.
Sincerely,
Stuart Subotnick
CHAIRMAN OF THE BOARD OF DIRECTORS
<PAGE>
BIG CITY RADIO, INC.
------------------------
11 SKYLINE DRIVE
HAWTHORNE, NEW YORK 10532
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1998
------------------------
TO THE STOCKHOLDERS OF
BIG CITY RADIO, INC.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the "Annual
Meeting") of Big City Radio, Inc., a Delaware corporation ("Big City Radio"),
will be held on Tuesday, May 12, 1998, at 9:00 a.m., New York time, on the
Concourse Level, 1285 Avenue of the Americas, New York, New York 10019.
At the Annual Meeting, holders of Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"), will be asked to consider and vote as a
separate class upon the election of two members to Big City Radio's Board of
Directors to serve a one-year term as Class A Directors (Proposal 1).
At the Annual Meeting, holders of Class A Common Stock together with holders
of Class B Common Stock, par value $.01 per share, will be asked to consider and
vote as a single class upon the adoption of the Big City Radio, Inc. 1998
Incentive Stock Plan (Proposal 2) and the ratification of the selection of KPMG
Peat Marwick LLP as Big City Radio's independent accountants for the year ending
December 31, 1998 (Proposal 3) and to vote upon the transaction of such other
business as may properly come before the Annual Meeting or any adjournment
thereof. The Board of Directors is not aware of any other business that will be
presented for consideration at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" PROPOSALS 1, 2 AND 3 AT THE ANNUAL MEETING.
Only stockholders of record at the close of business on March 27, 1998 (the
"Record Date"), will be entitled to notice of and to vote at the Annual Meeting
or any adjournments thereof. The Annual Meeting may be adjourned from time to
time without notice other than by announcement at the Annual Meeting. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection by any stockholder, for any reason germane to the Annual Meeting,
during ordinary business hours during the ten days prior to the Annual Meeting
at Big City Radio, Inc. c/o Metromedia Company, One Meadowlands Plaza, East
Rutherford, NJ 07073.
By Order of the Board of Directors,
Arnold L. Wadler
Secretary
Hawthorne, New York
April 9, 1998
<PAGE>
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU HOLD IN ORDER THAT A QUORUM MAY BE
ASSURED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING IN PERSON.
PLEASE COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ACCOMPANYING
RETURN ENVELOPE (TO WHICH NO POSTAGE NEED BE AFFIXED BY THE SENDER IF MAILED
WITHIN THE UNITED STATES). IF YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOUR
SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY SHOULD BE
SIGNED AND RETURNED TO ASSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY
SHOULD BE SIGNED BY ALL REGISTERED HOLDERS EXACTLY AS THE STOCK IS REGISTERED.
<PAGE>
BIG CITY RADIO, INC.
------------------------
11 SKYLINE DRIVE
HAWTHORNE, NEW YORK 10532
------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 12, 1998
------------------------
This Proxy Statement, the accompanying Notice of Annual Meeting and proxy
card are being furnished to the holders of shares of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), and to the holders of shares
of Class B Common Stock, par value $.01 per share (the "Class B Common Stock"
and, together with the Class A Common Stock, the "Common Stock"), of Big City
Radio, Inc., a Delaware corporation ("Big City Radio" or the "Company"), in
connection with the solicitation of proxies by the Board of Directors of Big
City Radio for use at the Annual Meeting of the Stockholders of Big City Radio
to be held at 9:00 a.m., New York time, on Tuesday, May 12, 1998 on the
Concourse Level, 1285 Avenue of the Americas, New York, New York 10019 (the
"Annual Meeting"), and any adjournments of the Annual Meeting. This Proxy
Statement and the accompanying Notice of Annual Meeting and proxy card, along
with the Company's Annual Report to Stockholders for the year ended December 31,
1997 are being mailed to the stockholders of the Company on or about April 13,
1998.
INFORMATION REGARDING THE ANNUAL MEETING
PROPOSALS. At the Annual Meeting, holders of the Class A Common Stock of
Big City Radio will be asked to consider and vote as a separate class upon the
election of two members to Big City Radio's Board of Directors to serve a
one-year term as Class A Directors (Proposal 1), and holders of the Class A
Common Stock together with holders of the Class B Common Stock will be asked to
consider and vote as a single class upon the adoption of the Big City Radio,
Inc. 1998 Incentive Stock Plan (Proposal 2) and the ratification of the
selection of KPMG Peat Marwick LLP as Big City Radio's independent accountants
for the year ending December 31, 1998 (Proposal 3), and to vote upon such other
matters as may properly come before the Annual Meeting.
The Board of Directors of Big City Radio knows of no business that will be
presented for consideration at the Annual Meeting other than the matters
described in this Proxy Statement.
RECORD DATE; QUORUM. Only holders of record of Common Stock as of the close
of business on March 27, 1998 (the "Record Date") will be entitled to notice of
and to vote at the Annual Meeting (such holders are referred to herein as the
"Stockholders"). As of the Record Date, there were 5,725,062 shares of Class A
Common Stock outstanding and entitled to vote at the Annual Meeting, held by
approximately 1,500 stockholders of record, which number includes nominees for
an undeterminable number of beneficial owners, with each share entitled to one
vote and 8,250,458 shares of Class B Common Stock outstanding and entitled to
vote at the Annual Meeting, held by two stockholders of record, with each share
entitled to ten votes on each matter voted upon. The presence of one-third of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting,
present in person or represented by proxy, is necessary to constitute a quorum
at the Annual Meeting. Broker non-votes, shares of Common Stock represented by
proxies marked "ABSTAIN" for any proposal presented at the Annual Meeting and
shares of Common Stock held by persons in attendance at the Annual Meeting who
abstain from voting on any such proposal will be counted for purposes of
determining the presence of a quorum.
VOTE REQUIRED. The affirmative vote of the holders of a plurality of shares
of Class A Common Stock voting as a separate class present in person or
represented by proxy and entitled to vote at the Annual Meeting will be required
to elect each of the Class A Directors to Big City Radio's Board of Directors.
The affirmative vote of the holders of a majority of shares of Common Stock
voting as a single class present in person or represented by proxy and entitled
to vote at the Annual Meeting will be required to approve and adopt each of the
matters identified in this Proxy Statement as being presented to holders of
shares of
<PAGE>
Common Stock at the Annual Meeting (other than Proposal 1), each of which will
be voted upon separately at the Annual Meeting. In voting on each matter,
holders of Class A Common Stock are entitled to one vote per share and holders
of Class B Common Stock are entitled to ten votes per share.
Stockholders who hold their shares through an intermediary must provide
instructions on voting as requested by their banks or brokers. Votes cast by
proxy or in person at the Annual Meeting will be tabulated by one or more
inspectors of election appointed by the Board of Directors. These inspectors of
election will also determine whether a quorum is present for the transaction of
business.
Shares of Common Stock represented by proxies marked "ABSTAIN" for any
proposal presented at the Annual Meeting and shares of Common Stock held by
persons in attendance at the Annual Meeting who abstain from voting on any such
proposal will not be voted for or against such proposal. Broker non-votes will
not be voted for or against a proposal. Because of the vote required to approve
the proposals presented at the Annual Meeting, abstentions and broker non-votes
will have the effect of a vote against such proposals (except with respect to
Proposal 1). Because only a plurality is required for the election of directors,
abstentions and broker non-votes will have no effect on the election of
directors.
PROXIES. All properly executed proxy cards delivered pursuant to this
solicitation and not revoked will be voted at the Annual Meeting in accordance
with the directions given. In voting by proxy with regard to the election of
directors, the Stockholders entitled to vote upon such election may vote in
favor of all nominees, withhold their votes as to all nominees or withhold their
votes as to specific nominees. With regard to other proposals, the Stockholders
may vote in favor of each proposal or against each proposal, or in favor of some
proposals and against others, or may abstain from voting on any or all
proposals. Stockholders should specify their respective choices on the
accompanying proxy card. If no specific instructions are given with regard to
the matters to be voted upon, the shares of Common Stock represented by a signed
proxy card will be voted "FOR" Proposals 1, 2 and 3 listed on the proxy card. If
any other matters properly come before the Annual Meeting, the persons named as
proxies will vote upon such matters according to their judgment.
All proxies delivered pursuant to this solicitation are revocable at any
time prior to the Annual Meeting at the option of the Stockholders executing
them by giving written notice of revocation to the Secretary of Big City Radio,
by delivering a duly executed proxy card bearing a later date or by attending
and voting in person at the Annual Meeting. Attendance at the Annual Meeting
will not in itself constitute revocation of a proxy. All written notices of
revocation and other communications with respect to revocations of proxies
should be addressed to: Big City Radio, Inc., c/o Metromedia Company, One
Meadowlands Plaza, East Rutherford, NJ 07073-2137, Attention: Arnold L. Wadler,
Secretary.
Proxies will initially be solicited by Big City Radio by mail, but
directors, officers and selected employees may solicit proxies from Stockholders
personally or by telephone, facsimile or other forms of communication. Such
directors, officers and employees will not receive any additional compensation
for such solicitation. Big City Radio will also request brokerage houses,
nominees, fiduciaries and other custodians to forward soliciting materials to
beneficial owners, and Big City Radio will reimburse such persons for their
reasonable expenses incurred in doing so. All expenses incurred in connection
with the solicitation of proxies will be borne by Big City Radio.
2
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of the Record Date, certain information
regarding the beneficial ownership (as such term is defined in Rule 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of each
class of Common Stock by (i) each person (including any "group" as that term is
used in Section 13(d)(3) of the Exchange Act) known to own beneficially more
than 5% of the outstanding shares of each class of Common Stock, (ii) each
director and director nominee of Big City Radio, (iii) each executive officer
named in the Summary Compensation Table under "Executive Compensation" and (iv)
all directors and executive officers of Big City Radio as a group. In accordance
with the rules promulgated by the Commission, such ownership includes shares
currently owned as well as shares which the named person has the right to
acquire beneficial ownership of within 60 days, including, but not limited to,
shares which the named person has the right to acquire through the exercise of
any option, warrant or right, or through the conversion of a security.
Accordingly, more than one person may be deemed to be a beneficial owner of the
same securities. Except as otherwise indicated, each stockholder listed below
has sole voting and investment power with respect to shares beneficially owned
by such person.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OF OUTSTANDING
COMMON STOCK CLASS OF COMMON
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED STOCK
- --------------------------- --------------------------------------------- ------------------- -----------------
<S> <C> <C> <C>
Class B Common Stock Stuart Subotnick and Anita Subotnick (1)..... 8,250,458(2) 100.0%
Class A Common Stock Michael Kakoyiannis (3)...................... 1,125,062 19.7%
Capital Guardian Trust Company (4)........... 500,000 8.7%
Strong Capital Management, Inc. (5).......... 450,000 7.9%
Michael H. Boyer............................. 2,500(6) *
Silvia Kessel................................ 7,140(7) *
Arnold L. Wadler............................. 6,000(7) *
Leonard White................................ 2,500(6) *
Steven G. Blatter............................ 25,450(8) *
Bryan Subotnick.............................. 25,000(8) *
Alan D. Kirschner............................ 25,000(8) *
Paul R. Thomson.............................. 30,000(8) *
All Directors and Executive Officers as a
Group (11 persons)......................... 9,499,110(9) 68.0%
</TABLE>
- ------------------------
* Holdings do not exceed one percent of the total outstanding shares of any
class of Common Stock.
(1) Mr and Mrs. Subotnick's address is c/o Kluge & Company, 215 East 67th
Street, New York, New York 10021.
(2) The shares of Class B Common Stock are convertible into shares of Class A
Common Stock at the rate of one share of Class A Common Stock for each share
of Class B Common Stock and the holders of shares of Class B Common Stock
are entitled to 10 votes per share and to vote as a separate class to elect
75% of the members of the Company's Board of Directors. Mr. and Mrs.
Subotnick have shared voting and investment power with respect to their
shares.
(3) Mr. Kakoyiannis' address is c/o Big City Radio, Inc., 11 Skyline Drive,
Hawthorne, NY 10532.
(4) Capital Guardian Trust Company, a bank as defined in Section 3(a)6 of the
Securities Act of 1933 is the beneficial owner of 500,000 shares of Class A
Common Stock as a result of its serving as the investment manager of various
institutional accounts. Capital Guardian Trust Company is a wholly-owned
subsidiary of The Capital Group Companies, Inc., the parent holding company
of a group of
3
<PAGE>
investment management companies that hold investment power and, in some
cases, voting power over the securities reported. The Capital Group
Companies, Inc. does not have investment power or voting power over any of
the securities reported herein; however, The Capital Group Companies, Inc.
may be deemed to "beneficially own" such securities by virtue of Rule 13d-3
under the Exchange Act. The business address of The Capital Group Companies,
Inc. and Capital Guardian Trust Company is 333 South Hope Street, Los
Angeles, California 90071.
(5) Strong Capital Management, Inc. is an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940. Richard S. Strong is the
Chairman of the Board and the principal shareholder of Strong Capital
Management, Inc. The business address of Strong Capital Management, Inc. is
100 Heritage Reserve, Menomonee Falls, Wisconsin 53051.
(6) Includes 2,500 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of the date of this Proxy
Statement.
(7) Does not include 50,000 shares issuable upon exercise of options that will
become exercisable in five annual installments commencing December 18, 1998.
(8) Includes 25,000 shares issuable upon exercise of options that are currently
exercisable and does not include 50,000 shares issuable upon exercise of
options that will become exercisable in five annual installments commencing
December 18, 1998.
(9) Includes 105,000 shares issuable upon exercise of options that are currently
exercisable or exercisable within 60 days of the date of this Proxy
Statement and does not include 300,000 shares issuable upon exercise of
options that will become exercisable in five annual installments commencing
December 18, 1998.
The foregoing information is based on a review, as of the Record Date, by
Big City Radio of statements filed with the Commission under Sections 13(d) and
13(g) of the Exchange Act. To the best knowledge of Big City Radio, except as
set forth above, no person owns beneficially more than 5% of the outstanding
Common Stock.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS OF BIG CITY RADIO
The Amended and Restated Certificate of Incorporation of Big City Radio (the
"Certificate of Incorporation") provides that the Board of Directors shall
initially consist of eight members: six Directors to be elected by the holders
of Class B Common Stock (the "Class B Directors") and two Directors to be
elected by the holders of Class A Common Stock (the "Class A Directors"). The
Board of Directors currently consists of five Class B Directors and two Class A
Directors. The Class B Directors are Mr. Stuart Subotnick, Mrs. Anita Subotnick,
Mr. Michael Kakoyiannis, Ms. Silvia Kessel and Mr. Arnold L. Wadler. The Class A
Directors are Mr. Leonard L. White and Mr. Michael H. Boyer. Holders of the
Class B Common Stock remain entitled to elect one additional Class B Director.
Directors of each class will hold office until their successors are elected
and qualified or until their earlier death, resignation or removal. The Amended
and Restated Bylaws of the Company (the "Bylaws") provide that the Class A
Directors will be elected by a plurality of the votes cast at a meeting of
stockholders (or stockholders acting by written consent) by the holders of Class
A Common Stock entitled to vote at the election, voting as a separate class, and
that Class B Directors will be elected by a plurality of the votes cast at a
meeting of stockholders (or stockholders acting by written consent) by the
holders of Class B Common Stock entitled to vote at the election, voting as a
separate class.
The Class A Directors and Class B Directors are nominated for election by a
Class A Nominating Committee and a Class B Nominating Committee, respectively.
For more information regarding the Class A Nominating Committee and the Class B
Nominating Committee and their respective members,
4
<PAGE>
see "Meetings of Certain Committees of the Board" below. In addition,
nominations for election of Class A Directors only to the Board of Directors of
Big City Radio may be made at an annual or special meeting of stockholders
called by the Board of Directors for the purpose of electing Directors, by any
holder of the Class A Common Stock entitled to vote for the election of
directors at such meeting. Such nominations shall be made pursuant to timely
notice in writing to the Secretary of Big City Radio. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of Big City Radio not less than 60 days nor more
than 90 days prior to the scheduled date of the meeting, regardless of any
postponement, deferral or adjournment of that meeting to a later date; PROVIDED,
HOWEVER, that if less than 70 days' notice or prior public disclosure of the
date of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so delivered or received not later than the close of
business on the 10th day following the earlier of (i) the day on which such
notice of the date of the meeting was mailed or (ii) the day on which such
public disclosure was made. A stockholder's notice to the Secretary of Big City
Radio shall set forth (i) as to each person whom the stockholder proposes to
nominate for election or reelection as a director (a) the name, age, business
address and residence address of such person, (b) the principal occupation or
employment of such person, (c) the class and number of shares of stock of Big
City Radio which are beneficially owned by such person on the date of such
stockholder's notice and (d) any other information relating to such person that
is required to be disclosed in solicitations of proxies for election of
directors, or is otherwise required in each case pursuant to Regulation 14A
under the Exchange Act (including, without limitation, such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director, if elected); (ii) as to the stockholder giving the notice (a) the name
and address, as they appear on Big City Radio's books, of such stockholder and
any other stockholders known by such stockholder to be supporting such
nominee(s), (b) the class and number of shares of stock of Big City Radio which
are beneficially owned by such stockholder on the date of such stockholder's
notice and by any other stockholders known by such stockholder to be supporting
such nominee(s) on the date of such stockholder's notice, (c) a representation
that the stockholder is a holder of record of stock of Big City Radio entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; and (iii) a
description of all arrangements or understandings between the stockholder and
each nominee and other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder. Any such nominations should be submitted in writing to Big City
Radio, Inc., c/o Metromedia Company, One Meadowlands Plaza, East Rutherford, New
Jersey 07073-2137, Attention: Secretary.
Directors may be removed, with or without cause, only by the holders of the
class or classes of Common Stock or series of preferred stock, if any, that, as
of the date such removal is effected, would be entitled to elect such Directors
at the next annual meeting of stockholders. Newly created directorships
resulting from an increase in the number of Directors and vacancies occurring on
the Board of Directors for any reason, including the removal of Directors
without cause, may be filled only by (i) the affirmative vote of a majority of
the remaining Directors elected by holders of each class or classes of Common
Stock or series of preferred stock, if any, that (x) elected such Directors and
(y) as of the date such vacancy is filled, would be entitled to elect such
Directors at the next annual meeting of stockholders or (ii) if there are no
such remaining Directors, then by a plurality of the votes cast by the holders
of the class or classes of Common Stock or series of preferred stock, if any,
that, as of the date such vacancy is filled, would be entitled to elect such
Directors at the next annual meeting of stockholders, voting as a separate class
at a meeting, special or otherwise, of the holders of Common Stock of such class
or classes or series of preferred stock, if any.
For more information regarding each of Big City Radio's directors, including
biographical information, see "PROPOSAL 1--ELECTION OF DIRECTORS."
5
<PAGE>
MEETINGS AND CERTAIN COMMITTEES OF THE BOARD
The Board of Directors took action by unanimous written consent 12 times
in 1997.
The Board of Directors has delegated certain functions to the following
standing committees:
THE EXECUTIVE COMMITTEE. The Executive Committee was created on December
24, 1997 and is authorized to exercise, to the extent permitted by law, all of
the powers of the Board of Directors in the management and affairs of the
Company including, without limitation, the power and authority to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger in connection with the merger of Big City Radio and any of
its subsidiaries. The Executive Committee held no meetings in 1997. The members
of the Executive Committee are Mr. Stuart Subotnick and Ms. Silvia Kessel.
THE AUDIT COMMITTEE. The Audit Committee was created on March 25, 1998 and
is responsible for (a) making recommendations concerning the engagement of
independent public accountants, (b) approving the professional services provided
by Big City Radio's independent auditors, (c) reviewing, in consultation with
Big City Radio's independent auditors, the plans and results of the audit
engagement, (d) reviewing the independence of Big City Radio's independent
auditors, (e) considering the range of audit and non-audit fees and (f)
reviewing the adequacy of Big City Radio's internal accounting controls. The
members of the Audit Committee are Mr. Michael H. Boyer, Mr. Leonard White and
Ms. Silvia Kessel.
THE COMPENSATION COMMITTEE. The Compensation Committee was created on March
25, 1998 and its function is to review, approve, recommend and report to the
Board of Directors on matters specifically relating to the compensation of Big
City Radio's executive officers and other key executives and to administer Big
City Radio's stock option plans. The members of the Compensation Committee are
Mr. Michael H. Boyer and Mr. Leonard White.
THE NOMINATING COMMITTEES. The Class A Nominating Committee and the Class B
Nominating Committee (together, the "Nominating Committees") were created on
December 24, 1997 and (i) establish criteria and procedures for the election of
the Class A Directors and the Class B Directors, respectively, (ii) review
management's evaluation of any officers proposed for nomination as Class A
Director or Class B Director, as applicable, (iii) review the qualifications of
and, when necessary and appropriate, interview candidates who may be proposed
for nomination as Class A Director or Class B Director, as applicable, (iv)
recommend to the entire Board of Directors a slate of Class A Directors or Class
B Directors, as applicable, to be elected for the following year and (v) perform
such other duties in connection with the selection, election or termination of
the Directors as the Board of Directors may request.
The Nominating Committees did not hold any formal meetings in 1997. The
current member of the Class A Nominating Committee is Mr. Leonard White and the
current members of the Class B Nominating Committee are Mr. Stuart Subotnick and
Mrs. Anita Subotnick.
COMPENSATION OF DIRECTORS
Directors who are officers, employees or affiliates of the Company receive
no compensation for their services as directors. Accordingly, Messrs. Subotnick,
Kakoyiannis and Wadler and Ms. Kessel and Mrs. Subotnick do not receive
compensation for their services as directors. Each director of the Company who
is not also an officer, employee or affiliate of the Company (an "outside
director") is entitled to receive annual directors' fees of $20,000, an
additional $1,200 for each Board of Directors meeting attended ($500 if attended
by conference telephone call) and $500 for each committee meeting attended.
Outside directors are eligible to participate in the Big City Radio 1997
Incentive Stock Plan (the "1997 Incentive Stock Plan") pursuant to which options
to purchase 2,500 shares of Class A Common Stock will
6
<PAGE>
be granted to each outside director immediately upon such director's initial
election and qualification for the Board of Directors. Options to purchase 2,500
shares of Class A Common Stock will be granted annually on the day of each
annual stockholders' meeting. Each outside director is eligible to receive
options to purchase a maximum of 25,000 shares of Class A Common Stock pursuant
to the 1997 Incentive Stock Plan. Each option will have an exercise price equal
to the fair market value of a share of Class A Common Stock on the date of
grant. All such options granted to outside directors will be immediately
exercisable.
On December 1, 1997, the Board of Directors granted to each of Ms. Silvia
Kessel and Mr. Arnold L. Wadler options under the 1997 Incentive Stock Plan to
purchase up to 50,000 shares of Class A Common Stock and granted to Mr. Leonard
White options under the 1997 Incentive Stock Plan to purchase up to 2,500 shares
of Class A Common Stock, at an exercise price of $7.00 per share (which
corresponds to the initial public offering price per share for the Class A
Common Stock in Big City Radio's initial public offering of its Class A Common
Stock which was completed on December 24, 1997 (the "Initial Public Offering")).
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information on
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and other most highly compensated executive officers whose individual
compensation exceeded $100,000 during the fiscal years ended December 31, 1997,
and 1996 for services rendered in all capacities to Big City Radio and its
subsidiaries. The persons listed in the table below are referred to as the
"Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION --------------------------
RESTRICTED SECURITIES
------------------------ STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARD(S)($) STOCK OPTIONS COMPENS.($)
- --------------------------------------------------- --------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael Kakoyiannis................................ 1997 $ 300,000 $ 75,000 $1,968,855(1) -- $
(President and Chief Executive Officer) 1996 230,000 -- -- --
Paul R. Thomson.................................... 1997 175,000 30,000 -- 75,000(2)
(Vice President and Chief Financial Officer) 1996 165,000 25,000 -- --
Steven G. Blatter.................................. 1997 165,000 27,500 -- 75,000(2)
(Vice President--Programming) 1996 150,000 25,000 -- --
Bryan Subotnick.................................... 1997 100,000 -- -- 75,000(2) (3)
(Executive Vice President-Corporate Development) 1996 (3) (3) -- (3)
Alan D. Kirschner.................................. 1997 94,000 5,000 -- 75,000(2) (3)
(Vice President-Engineering) 1996 (3) (3) -- (3)
</TABLE>
- ------------------------
(1) Pursuant to his employment agreement, Mr. Kakoyiannis is entitled to receive
93,755 shares of Class A Common Stock for every 20% increase in the average
closing price of the Class A Common Stock following the Company's initial
public offering (up to a maximum of 281,265 shares). The aggregate value of
such shares was calculated based on the price of the Class A Common Stock in
the Company's initial public offering ($7.00 per share) by the maximum
number of shares which Mr. Kakoyiannis may be entitled to receive under his
employment agreement. No shares were issued to Mr. Kakoyiannis under his
employment agreement in 1997.
(2) Includes options to purchase 25,000 shares of Class A Common Stock at an
exercise price of $6.00 per share, exercisable immediately and options to
purchase 50,000 shares of Class A Common Stock at an exercise price of $7.00
per share, that will become exercisable in five annual installments
commencing December 18, 1998.
(3) Compensation information is omitted because aggregate compensation during
fiscal year 1996 was less than $100,000.
7
<PAGE>
During 1997, Mr. Wadler and Ms. Kessel, each of whom serves as an executive
officer of the Company, were employed and paid by Metromedia Company
("Metromedia"). No other amounts were paid by Big City Radio to such named
executive officers or to Metromedia for services during 1997.
The following table sets forth individual grants of stock options by Big
City Radio pursuant to the 1997 Incentive Stock Plan to the Named Executive
Officers during the fiscal year ended December 31, 1997. The 1997 Incentive
Stock Plan does not provide for stock appreciation rights and Big City Radio did
not grant any stock appreciation rights during the fiscal year ended December
31, 1997.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES % OF TOTAL OPTIONS
UNDERLYING GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION GRANT-DATE
NAME OPTIONS GRANTED (#) FISCAL YEAR PRICE($/SH) DATE VALUE(1)
- ---------------------------- ------------------- ----------------------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Michael Kakoyiannis......... -- %-- $ -- --
Paul R. Thomson............. 25,000 5.6% 6.00 12/01/2008 $ 124,500
50,000 11.1% 7.00 12/18/2008 $ 239,000
Steven G. Blatter........... 25,000 5.6% 6.00 12/01/2008 $ 124,500
50,000 11.1% 7.00 12/18/2008 $ 239,000
Bryan Subotnick............. 25,000 5.6% 6.00 12/01/2008 $ 124,500
50,000 11.1% 7.00 12/18/2008 $ 239,000
Alan D. Kirschner........... 25,000 5.6% 6.00 12/01/2008 $ 124,500
50,000 11.1% 7.00 12/18/2008 $ 239,000
</TABLE>
- ------------------------
(1) The modified Black-Scholes method of option valuation has been used to
determine grant date present value. The assumptions used in the
Black-Scholes option valuation calculation are (i) estimated future annual
stock price volatility of 50%; (ii) a United States risk free rate of return
of 5.57%; (iii) a future dividend yield of 0%; and (iv) an expected life of
ten years.
The following table sets forth the exercise of stock options during the year
ended December 31, 1997, by each of the Named Executive Officers and the
year-end value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN
NUMBER OF UNEXERCISED OPTIONS THE
AT MONEY OPTIONS AT FISCAL
FISCAL YEAR-END (#) YEAR-END
SHARES ACQUIRED VALUE EXERCISABLE/ ($)EXERCISABLE/
ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
----------------------- --------------- ------------------------------- -------------------------
<S> <C> <C> <C> <C>
Michael Kakoyiannis.......... -- -- -- --
Paul R. Thomson.............. -- -- 25,000/50,000 53,125/56,250
Steven G.Blatter............. -- -- 25,000/50,000 53,125/56,250
Bryan Subotnick.............. -- -- 25,000/50,000 53,125/56,250
Alan D.Kirschner............. -- -- 25,000/50,000 53,125/56,250
</TABLE>
- ------------------------
(1) Calculated based on a closing price for the Class A Common Stock of $8 1/8
as reported by the American Stock Exchange on December 31, 1997.
EMPLOYMENT AGREEMENTS OF NAMED EXECUTIVE OFFICERS
The Company has entered into employment agreements with Messrs. Michael
Kakoyiannis, Paul R. Thomson, Steven G. Blatter and Alan D. Kirschner.
8
<PAGE>
EMPLOYMENT AGREEMENT WITH MICHAEL KAKOYIANNIS
Mr. Kakoyiannis and the Company are parties to an employment agreement that
provides that he will be employed as the Company's President and Chief Executive
Officer through December 31, 2000 and that Mr. Kakoyiannis will receive a base
salary of $300,000 a year. In addition to his base salary, Mr. Kakoyiannis is
also entitled to an annual bonus as determined by the Compensation Committee if
certain performance targets have been met. Mr. Kakoyiannis is entitled to
participate in all benefits generally made available to senior executives of the
Company. The Company has caused a term life insurance to be issued to Mr.
Kakoyiannis for $2.0 million. Under his employment agreement, Mr. Kakoyiannis is
entitled to receive 93,755 shares of Class A Common Stock for every 20% increase
in the average closing price of the Class A Common Stock following the Initial
Public Offering (up to a maximum of 281,265 shares) provided that such price
remains in effect for six consecutive months. If Mr. Kakoyiannis earns these
grants of shares of Class A Common Stock, the Company will record future
non-cash, compensation expense equal to the fair value of such stock on the date
of grant. If the fair value were based on exact 20% increments over the Initial
Public Offering price of $7.00 per share, future compensation expense would be
approximately $2.9 million. If the Company terminates Mr. Kakoyiannis'
employment without cause, it will be obligated to pay him severance payments in
an amount equal to eighteen times his base monthly salary. In addition, Mr.
Kakoyiannis' employment-related benefits will continue for eighteen months after
his termination of employment. If Mr. Kakoyiannis' employment is terminated for
cause or disability, the Company will not be obligated to make any severance
payments or continue any benefits. Mr. Kakoyiannis will be entitled to terminate
his employment and to receive severance payments upon the occurrence of a
"change of control" of the Company (as defined in Mr. Kakoyiannis' employment
agreement). Following the termination of his employment with the Company for any
reason, Mr. Kakoyiannis will not, during eighteen months thereafter, own,
acquire or obtain any license for an AM or FM radio station or render any
services or advice to, or be engaged in any AM or FM radio station within 75
miles of the transmitter of any radio station owned or operated by the Company.
EMPLOYMENT AGREEMENT WITH PAUL R. THOMSON
The Company and Mr. Thomson are parties to an employment agreement that
provides for Mr. Thomson's employment as Vice President and Chief Financial
Officer through December 31, 1998. Mr. Thomson's employment agreement provides
for an annual base salary of $187,500. Mr. Thomson is entitled to participate in
all benefits generally made available to senior executives of the Company and to
receive annual bonus compensation as determined by the Compensation Committee if
certain performance targets have been met. Such bonus compensation will not
exceed $35,000 for 1998. If the Company terminates Mr. Thomson's employment
without cause or upon the occurrence of a "change of control" (as defined in Mr.
Thomson's employment agreement), the Company will be obligated to make severance
payments in an amount equal to the lesser of (i) three times Mr. Thomson's
monthly base salary or (ii) the base salary for the remaining months of Mr.
Thomson's employment under his employment agreement. Following the termination
of his employment with the Company for any reason, Mr. Thomson shall not serve
in any accounting or financial capacity for, or otherwise be involved in the
accounting and financial functions of any radio station with a rock-based format
within 50 miles of the transmitter of any of the Company's radio stations for a
period of six months following the termination of Mr. Thomson's employment
agreement.
EMPLOYMENT AGREEMENT WITH STEVEN G. BLATTER
The Company and Mr. Blatter are parties to an employment agreement that
provides for Mr. Blatter's employment as Vice President--Programming through
December 31, 1998. Mr. Blatter's employment agreement provides for an annual
base salary of $181,500. Mr. Blatter is entitled to participate in all benefits
generally made available to senior executives of the Company and to receive
semi-annual bonus compensation as determined by the Compensation Committee if
certain performance targets have been
9
<PAGE>
met. Such semi-annual bonus compensation shall not exceed $15,000 for 1998. If
the Company terminates Mr. Blatter's employment agreement without cause, the
Company will be obligated to make severance payments in an amount equal to (i)
six times Mr. Blatter's base monthly salary if such termination occurs before
July 1, 1998, or (ii) the aggregate amount of Mr. Blatter's monthly salary for
the remaining term of his employment if the termination occurs after July 1,
1998. If Mr. Blatter's employment agreement is terminated following a "change of
control" (as defined in Mr. Blatter's employment agreement), Mr. Blatter will be
entitled to one and one-half times his base monthly salary. Following the
termination of his employment with the Company for any reason, Mr. Blatter shall
not serve as Program Director, or otherwise be involved in the programming of
any radio station with a rock-based format within 50 miles of the transmitter of
any of the Company's radio stations for 180 days following the termination of
Mr. Blatter's employment agreement.
EMPLOYMENT AGREEMENT WITH ALAN D. KIRSCHNER
The Company and Mr. Kirschner are parties to an employment agreement that
provides for Mr. Kirshner's employment as Vice President-Engineering through
December 31, 1998. Mr. Kirschner's employment agreement provides for an annual
base salary of $110,000. Mr. Kirschner is entitled to participate in all
benefits generally made available to senior executives of the Company and to
receive annual bonus compensation as determined by the Compensation Committee if
certain performance targets have been met. Such bonus compensation shall not
exceed $15,000. If Mr. Kirschner's employment agreement is terminated without
cause or upon Mr. Kirschner's disability, the Company will be obligated to make
severance payments in an amount equal to six times Mr. Kirschner's base monthly
salary. If Mr. Kirschner's employment agreement is terminated upon a "change of
control" (as defined in Mr. Kirschner's employment agreement), the Company shall
pay Mr. Kirschner twelve times his monthly salary. Following the termination of
his employment with the Company for any reason, Mr. Kirschner shall not serve in
any engineering or technical capacity for, or otherwise be involved in the
engineering and technical functions of any radio station within 50 miles of the
transmitter of any of the Company's radio stations for 30 days following the
termination of Mr. Kirschner's employment agreement.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 29, 1996, the Company was merged with Q Broadcasting, Inc., a
Delaware corporation, owned by Mr. and Mrs. Subotnick, with the Company as the
surviving corporation. As a result of the merger, Mr. and Mrs. Subotnick each
received 216 shares of then existing common stock, par value $.01 per share, of
the Company (the "Old Common Stock").
On May 30, 1996, the Company entered into an Amended and Restated Credit
Agreement (the "Credit Facility") with The Chase Manhattan Bank ("Chase")
pursuant to which Chase agreed to make revolving credit loans to the Company
from time to time until December 24, 2002 or earlier, as provided under the
Credit Facility. The payment and performance by the Company under the Credit
Facility was guaranteed by Stuart Subotnick under a Guarantee Agreement, dated
as of May 30, 1996. Simultaneously with the consummation of the Initial Public
Offering of the Company and the application or the use of proceeds therefrom,
Mr. Subotnick's guarantee was reduced from a guarantee of the entire Credit
Facility to a guarantee of $6.0 million. On March 17, 1998, in connection with
the consummation of the offering of its 110% Senior Discount Notes due 2005 (the
"Notes") and the application of the proceeds therefrom, the Company entered into
a Second Amended and Restated Credit Agreement (the "Revolving Facility") with
Chase and repaid its indebtedness under the Credit Facility and Mr. Subotnick's
guarantee of the Credit Facility was terminated. Mr. Subotnick does not
guarantee all or any portion of the Revolving Facility.
In addition, pursuant to a Pledge Agreement, dated as of May 30, 1996 (the
"Pledge Agreement"), Mr. and Mrs. Subotnick (the "Principal Stockholders") each
granted Chase a first priority security interest in their shares of Old Common
Stock and Mr. Kakoyiannis granted Chase a second priority security interest in
his shares of Old Common Stock. In connection with the consummation of the
Company's Initial Public Offering, the Pledge Agreement terminated.
On October 31, 1997, Mr. Subotnick gave a support letter to the Company
guaranteeing his financial support through the earlier of a successful minimum
initial public offering of $36.0 million of equity securities to the public or
October 1, 1998. In connection with the consummation of the offering of the
Notes by the Company, this support letter was terminated.
The Principal Stockholders have made various loans to the Company in order
to finance the Company's radio station acquisitions and working capital
requirements. The loans from the Principal Stockholders bear interest at
variable rates not exceeding 8%, payable monthly, and aggregated approximately
$8.7 million of principal amount on May 30, 1996. In May 1996, in connection
with the merger of Q Broadcasting, Inc. with and into the Company, the Principal
Stockholders contributed $5.1 million principal amount of stockholders' loans to
Q Broadcasting, Inc. to the capital of Q Broadcasting, Inc. The Principal
Stockholders' outstanding loans to Q Broadcasting, Inc. and to the Company of
$11.7 million of aggregate principal amount were subordinated to the Credit
Facility by a subordinated promissory note dated May 24, 1996. Immediately prior
to the consummation of the Initial Public Offering on December 18, 1997, the
Principal Stockholders contributed $13.3 million representing the entire amount
of their outstanding stockholders' loans to the capital of the Company. In
addition, in connection with the consummation of the Initial Public Offering,
the Principal Stockholders exchanged all of their shares of Class A Common Stock
for shares of Class B Common Stock, effectively giving them control of the
Company.
As of July 1, 1997, Mr. and Mrs. Subotnick transferred an aggregate of 68
shares of Old Common Stock to Mr. Kakoyiannis as an employment incentive.
Mr. Subotnick and Mr. Kakoyiannis entered into a Loan Agreement, dated as of
August 4, 1995, as amended, pursuant to which Mr. Subotnick made a loan to Mr.
Kakoyiannis as evidenced by a promissory note, dated August 4, 1995, in the
original principal amount of $500,000. This loan is secured by a first priority
security interest in favor of Mr. Subotnick in Mr. Kakoyiannis' shares of Class
A Common Stock.
11
<PAGE>
The Company receives certain legal, accounting, tax and other services from
Metromedia for which it will pay to Metromedia an annual fee not to exceed
initially up to $200,000, increasing up to $500,000. Mr. Subotnick is a general
partner of Metromedia. No such management fee was paid in 1997.
INDEMNIFICATION AGREEMENTS
The Company has not entered into any indemnification agreements.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Big City Radio's directors and
executive officers, and persons who beneficially own more than 10% of the
outstanding Common Stock, to file with the Commission and the American Stock
Exchange (the "AMEX") initial reports of ownership and reports of changes in
ownership of the Class A Common Stock. Such officers, directors and greater than
10% stockholders are required by the regulations of the Commission to furnish
Big City Radio with copies of all reports that they file under Section 16(a). To
Big City Radio's knowledge, based solely on a review of the copies of such
reports furnished to Big City Radio and written representations that no other
reports were required, all Section 16(a) filing requirements applicable to Big
City Radio's officers, directors and greater than 10% beneficial owners were
complied with by such persons during the fiscal year ended December 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Mr. Michael H. Boyer
and Mr. Leonard White. Mr. White is also a director of Metromedia International
Group, Inc. ("MMG") and of Metromedia Fiber Network, Inc. ("MFN"), two public
companies controlled by Metromedia.
COMPENSATION COMMITTEE REPORT ON COMPENSATION
The Compensation Committee of the Board of Directors is comprised entirely
of independent directors and is responsible for developing and making
recommendations to the Board of Directors with respect to Big City Radio's
executive compensation policies.
The following report of the Compensation Committee discusses Big City
Radio's executive compensation policies and the basis of the compensation paid
to Big City Radio's executive officers in 1997:
In general, the Compensation Committee seeks to link the compensation
paid to each executive officer to the performance of such executive officer.
Within these parameters, the executive compensation program attempts to
provide an overall level of executive compensation that is competitive with
companies of comparable size and with similar market and operating
characteristics.
There are three elements in the Company's executive total compensation
program, all determined by individual and corporate performance as specified
in the various employment agreements:
- Base salary
- Annual incentive
- Long-term incentive
BASE SALARY
Amounts earned during 1997 by Big City Radio's executive officer are
shown in the Summary Compensation Table. The base compensation of such
executive officers is set by the terms of the employment agreement entered
into with such executive officer. Base Salaries were established by the
12
<PAGE>
Company prior to the Company's initial public offering for each of the
executive employment agreements.
ANNUAL INCENTIVES
Executive officers of Big City Radio were awarded cash bonuses in 1997
based on 1996 performance against established targets established by the
Company. Individual awards were determined based on provisions of the
various employment agreements. Each executive officer is entitled to an
annual incentive bonus as determined by the Compensation Committee.
LONG-TERM INCENTIVES
Long-term incentive awards are intended to align a significant portion
of the executive compensation program with shareholder interests. Executives
of the Company are eligible to participate in the 1997 Incentive Stock Plan.
1997 INCENTIVE STOCK PLAN
The Company has adopted the 1997 Incentive Stock Plan pursuant to which
key employees, officers and directors (including independent directors and
members of the Compensation Committee) of the Company and its subsidiaries
who have substantial responsibility in the direction of the Company and its
subsidiaries, and others whom the Compensation Committee determines provide
substantial and important services to the Company may be granted (i)
incentive stock options ("ISOs") and/or (ii) non-qualified stock options
("NQSOs" and together with ISOs, "Stock Options" and "Awards"). The
aggregate number of shares of the Class A Common Stock that may be the
subject of Awards under the 1997 Incentive Stock Plan is 700,000 and the
maximum number of shares of Class A Common Stock available with respect to
Awards granted to any one grantee is 100,000 shares.
The exercise price of all ISOs is not less than the fair market value of
the Class A Common Stock on the date of grant (or 110% of such fair market
value with respect to ISOs granted to persons who own stock possessing more
than 10% of the voting rights of Big City Radio's capital stock) and the
exercise price of all NQSOs is determined by the Compensation Committee.
Stock Options vest and become exercisable over a period of years and have a
term not to exceed ten years, as determined by the Compensation Committee.
If a grantee's employment with the Company or a subsidiary is terminated
because of the grantee's death, or the grantee's retirement on or after
attaining age sixty-five prior to the date when the Stock Option is by its
terms exercisable, the Stock Option shall be immediately exercisable (and
the restrictions thereof, if any, shall lapse) as of the date of the
termination of the grantee's employment, subject to the other terms of the
1997 Incentive Stock Plan. Upon a "change in control" of the Company (as
defined in the 1997 Incentive Stock Plan) and at the sole discretion of the
Board of Directors, each holder of a Stock Option shall have the right to
exercise the Stock Option in full without regard to any waiting period,
installment period or other limitation or restriction thereon. Upon a
grantee's termination of employment from the Company or a subsidiary on
account of disability, the grantee or the legal representative of the
grantee, shall have the right for a period of one year following the date of
such termination to exercise an Award to the extent such award is
exercisable and to the extent such Award has not yet expired. In the event
the grantee's employment with the Company or a subsidiary is terminated for
any reason other than disability, death or retirement on or after attaining
age sixty-five, the grantee may exercise an Award to the extent then vested
within three months after his or her termination of employment.
13
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION.
Amounts earned during 1997 by Big City Radio's Chief Executive Officer
are shown in the Summary Compensation Table. The base compensation of such
Chief Executive Officer is set by the terms of the employment agreement
entered into with such Chief Executive Officer. The Chief Executive Officer
is also entitled to an annual incentive bonus as determined by the
Compensation Committee.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M).
One of the factors the Compensation Committee considers in connection
with compensation matters is the anticipated tax treatment to the Company
and to the executives of the compensation arrangements. The deductibility of
certain types of compensation depends upon the timing of an executive's
vesting in, or exercise of, previously granted rights. Moreover,
interpretation of, and changes in, the tax laws and other factors beyond the
Compensation Committee's control also affect the deductibility of
compensation. Accordingly, the Compensation Committee will not necessarily
limit executive compensation to that deductible under Section 162(m) of the
Code. The Compensation Committee will consider various alternatives to
preserving the deductibility of compensation payments and benefits to the
extent consistent with its other compensation objectives.
The foregoing report of the Compensation Committee shall not be deemed
to be incorporated by reference into any filing of Big City Radio under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent that the Company specifically incorporates
such information by reference, and shall not otherwise be deemed filed under
such Acts.
Submitted by the Compensation
Committee of Big City Radio's Board of
Directors as of March 27, 1998
Michael H. Boyer
Leonard White
14
<PAGE>
PERFORMANCE GRAPH
The following graph sets forth Big City Radio's total stockholder return as
compared to the Bloomberg R&R Index, an equity index designed to track
performance in the radio industry, and the AMEX Composite Index, a
capitalization-weighted index representing the aggregate value of the common
shares or ADRs of all AMEX listed companies, REITS, master limited partnerships,
and closed-end investment vehicles.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE DECEMBER 1997 AMONG
BIG CITY RADIO, INC. & SELECT INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DOLLARS
<S> <C> <C> <C>
Big City Radio
Inc. Bloomberg R&R Index AMEX Composite Index
12-Dec-97 100 100 100
31-Dec-97 116 105 104
</TABLE>
Assumes $100 investment on December 19, 1997, the date of the initial public
offering, in Big City Radio, Inc. & select indices.
* Total Return Assumes Reinvestment of Dividends.
<TABLE>
<CAPTION>
12/12/97 12/31/97
<S> <C> <C>
Big City Radio Inc. $ 100 $ 116
Bloomberg R&R Index $ 100 $ 105
AMEX Composite Index $ 100 $ 104
</TABLE>
15
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
The following table sets forth certain information with respect to the
current members of Big City Radio's Board of Directors, including Mr. Michael H.
Boyer and Mr. Leonard White, who have been nominated for re-election as Class A
Directors at the Annual Meeting.
The Board of Directors knows of no reason why any of its nominees will be
unable to or will refuse to accept election. If any nominee becomes unable to or
refuses to accept election, the Board of Directors will either reduce the number
of directors to be elected or select a substitute nominee. If a substitute
nominee is selected, proxies will be voted in favor of such nominee.
The affirmative vote of the holders of a plurality of shares of Class A
Common Stock present in person or represented by proxy at the Annual Meeting and
voting as a single class will be required to elect each of Messrs. Boyer and
White as Class A Directors to Big City Radio's Board of Directors.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR PAST CLASS OF DIRECTOR
FIVE YEARS AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- -------------------------------------------------------------------------------------- --- --------- -----------
<S> <C> <C> <C>
Stuart Subotnick...................................................................... 56 Class B 1994
Mr. Subotnick founded the Company in 1994 and has served as Chairman of the Board of
Directors since the Company's inception. Mr. Subotnick has spent approximately 30
years at Metromedia (and its predecessor) and together with long-time partner John
W. Kluge, has overseen Metromedia's investments in numerous media, entertainment and
communications businesses. Mr. Subotnick has served since 1996 as Vice Chairman,
President and Chief Executive Officer of Metromedia International Group, Inc.
("MMG"), an international telecommunications and media company that invests in
telecommunications and media joint ventures in Eastern Europe, Russia, the republics
of the former Soviet Union, the People's Republic of China and other selected
emerging markets. Mr. Subotnick has also served as Executive Vice President of
Metromedia and its predecessor for over five years. Metromedia and its predecessor
owned and operated radio stations, television stations, an outdoor advertising
business, and cellular telephone and paging operations throughout the United States.
Mr. Subotnick is also a director of Carnival Cruise Lines, Inc., a cruise line
company, and Metromedia Fiber Network, Inc. ("MFN"), a provider of high bandwidth,
fiber optic transmission capacity. Mr. Subotnick is married to Anita Subotnick.
Stuart and Anita Subotnick are the parents of Bryan Subotnick.
Michael Kakoyiannis................................................................... 55 Class B 1994
Mr. Kakoyiannis founded the Company in 1994 and has served as Chief Executive
Officer, President and a Director of the Company since its inception. Mr.
Kakoyiannis has over 25 years of experience in the radio broadcasting business in
major metropolitan markets. Prior to joining the Company, Mr. Kakoyiannis was
Executive Vice President of the Westwood One Stations Group ("Westwood One"), which
operated three stations in Los Angeles and New York: WNEW-AM and WYNY-FM in New York
and KQLZ-FM,known as "Pirate Radio," in Los Angeles. Additionally, Mr. Kakoyiannis
was Vice President and General Manager of all three stations. Prior to his tenure at
Westwood One, Mr. Kakoyiannis was an Executive Vice President from 1986 to 1989 at
Metropolitan Broadcasting, a company that was owned by Metromedia and its
predecessor, and controlled nine stations that were generally located in major
metropolitan markets.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION FOR PAST CLASS OF DIRECTOR
FIVE YEARS AND CERTAIN DIRECTORSHIPS AGE DIRECTORS SINCE
- -------------------------------------------------------------------------------------- --- --------- -----------
<S> <C> <C> <C>
Anita Subotnick....................................................................... 54 Class B 1994
Mrs. Subotnick founded the Company in 1994 and has been serving as a Director since
the Company's inception. Mrs. Subotnick has been a private investor for over five
years.
Silvia Kessel......................................................................... 47 Class B 1997
Ms. Kessel has served as a Director of the Company since December 1997 and has
served as Executive Vice President of the Company since September 1997. Ms. Kessel
has served as Executive Vice President of MFN since October 1997, Chief Financial
Officer and Treasurer of MMG since 1995 and Executive Vice President of MMG since
1996. In addition, Ms. Kessel served as Executive Vice President of Orion Pictures
Corporation ("Orion"), a motion picture production and distribution company, from
January 1993 through July 1997, Senior Vice President of Metromedia since 1994 and
President of Kluge & Company since January 1994. Prior to that time, Ms. Kessel
served as Senior Vice President and a Director of Orion from June 1991 to November
1992 and Managing Director of Kluge & Company from April 1990 to January 1994. Ms.
Kessel is a member of the Board of Directors of MMG and MFN.
Arnold L. Wadler...................................................................... 54 Class B 1997
Mr. Wadler has served as a Director and General Counsel of the Company since
December 1997 and has served as Executive Vice President and Secretary of the
Company since September 1997. Mr. Wadler has served as Director of MFN since July
1997, General Counsel of MFN since August 1997, Executive Vice President and
Secretary of MFN since October 1997, Executive Vice President, General Counsel and
Secretary of MMG since August 29, 1996 and, from November 1, 1995 until that date,
as Senior Vice President, General Counsel and Secretary of MMG. In addition, Mr.
Wadler serves as a director of MMG and has served as a Director of Orion from 1991
until July 1997 and has served as Senior Vice President, Secretary and General
Counsel of Metromedia for over five years.
Michael H. Boyer...................................................................... 48 Class A 1998
Mr. Boyer was elected as a Director of the Company as of January 1998. Mr. Boyer is
currently Senior Vice President and Chief Financial Officer of Stanadyne Automotive
Corp., a manufacturer of diesel fuel injection equipment and hydraulic value
lifters, where he has been employed since July 1978. Mr. Boyer is a member of the
Audit and Compensation Committees.
Leonard White......................................................................... 58 Class A 1997
Mr. White has served as a Director of the Company since December 1997. Mr. White is
President and Chief Executive Officer of Rigel Enterprises, a management and private
investment firm, since July 1997. Mr. White served as President and Chief Executive
Officer of Orion from 1992 until 1997 and as President and Chief Executive Officer
of Orion Home Entertainment Corporation from 1987 to 1992. Mr. White is also a
Director of MMG, American Film Technologies, Inc. and MFN. Mr. White is a member of
the Audit and Compensation Committees.
</TABLE>
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PROPOSAL 2--ADOPTION OF THE BIG CITY RADIO, INC.
1998 INCENTIVE STOCK PLAN
The Board of Directors has approved the Big City Radio, Inc. 1998 Incentive
Stock Plan (the "1998 Stock Option Plan"), subject to its adoption by the
Stockholders holding Class A Common Stock and Class B Common Stock, voting as a
single class. As Mr. Stuart Subotnick and Mrs. Anita Subotnick, the holders of
all outstanding shares of Class B Common Stock, have indicated that they intend
to vote in favor of the adoption of the 1998 Stock Option Plan, such adoption is
therefore assured. Once adopted at the Annual Meeting, the 1998 Stock Option
Plan will be effective as of the date of Board approval.
The following is a summary of the material features contained in the 1998
Stock Option Plan. A complete copy of the 1998 Stock Option Plan is attached as
Appendix A to this Proxy Statement.
The purpose of the 1998 Stock Option Plan is to give the Company a
significant advantage in retaining key employees, officers and directors, and to
provide an incentive to selected key employees, officers and directors of the
Company and its subsidiaries who have substantial responsibility in the
direction of the Company and its subsidiaries, and others whom the Compensation
Committee determines provide substantial and important services to the Company,
to acquire a proprietary interest in the Company, to continue as employees,
officers and directors or in their other capacities, and to increase their
efforts on behalf of the Company.
TYPES OF AWARDS
The types of awards that may be granted pursuant to the 1998 Stock Option
Plan include (i) incentive stock options ("ISOs") and (ii) non-qualified stock
options ("NQSOs" and together with ISOs, "Stock Options" and "Awards"). ISOs are
intended to be treated as incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). NQSOs are, in
general, options which do not have the special income tax advantages associated
with ISOs.
Stock Option grants consist of the maximum number of ISOs that may be
granted to a particular grantee under applicable law with the balance, if any,
of the Stock Options being NQSOs.
ADMINISTRATION OF THE PLAN
The 1998 Stock Option Plan will be administered by the Compensation
Committee. Members of the Compensation Committee will be eligible to receive
certain Awards (other than ISOs) under the 1998 Stock Option Plan.
Subject to the terms and conditions of the 1998 Stock Option Plan and the
formula awards for Independent Directors (as defined herein), the Compensation
Committee is authorized to grant Awards, to determine which employees, officers,
directors or other individuals may be granted Awards, to determine the type and
number of Awards to be granted, to determine the term of such Awards, to
determine the exercise price of any Award, to determine the terms of any
agreement pursuant to which Awards are granted, to interpret and construe the
1998 Stock Option Plan, and to determine any other matters delegated to it under
the 1998 Stock Option Plan or necessary for the proper administration of the
1998 Stock Option Plan.
SHARES OF CLASS A COMMON STOCK SUBJECT TO THE 1998 STOCK OPTION PLAN
Subject to certain adjustments set forth in the 1998 Stock Option Plan, the
aggregate number of shares of the Class A Common Stock that may be the subject
of Awards under the 1998 Stock Option Plan is 300,000. The maximum number of
shares of Class A Common Stock available with respect to Awards granted to any
one grantee shall not exceed, in the aggregate, 100,000 shares. Shares of Class
A Common Stock subject to Awards granted under the 1998 Stock Option Plan may
either be authorized but unissued
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shares of Class A Common Stock not reserved for any other purpose or shares of
Class A Common Stock held in or acquired for the treasury of the Company.
Shares of Class A Common Stock subject to an Award which terminates
unexercised may again be subject to an Award under the 1998 Stock Option Plan.
In addition, shares of Class A Common Stock surrendered to the Company in
payment of the exercise price or applicable taxes upon exercise of an Award may
also be used thereafter for additional Awards.
ELIGIBILITY
Any key employee, officer and director, including a director who is not an
employee and a director who serves on the Compensation Committee, of the Company
and its subsidiaries who has substantial responsibility in the direction of the
Company and its subsidiaries and anyone else whom the Compensation Committee
determines provides substantial and important services to the Company is
eligible to receive Awards.
Independent Directors who first serve on the Board of Directors shall be
entitled to receive Awards under the 1998 Stock Option Plan with respect to
2,500 shares of Common Stock, each having an exercise price equal to the fair
market value of a share of Class A Common Stock on the date of grant and
thereafter, annually on the date of each annual stockholders' meeting, Awards
with respect to 2,500 shares of Common Stock (subject to an aggregate maximum of
25,000 shares of Common Stock), each having an exercise price equal to the fair
market value of a share on the date of grant. Awards to independent directors
under the 1997 Incentive Stock Plan and the 1998 Stock Option Plan will,
however, be aggregated. Accordingly, Independent Directors shall not be entitled
to receive annual and aggregate Awards under the 1997 Incentive Stock plan
and/or the 1998 Stock Option Plan with respect to more than 2,500 and 25,000
shares of Common Stock, respectively. For purposes hereof, "Independent
Directors" shall mean any member of the Board of Directors who during his entire
term as a director was not employed by the Company and its subsidiaries, within
the meaning of Section 424(f) of the Code, and who also satisfies the criteria
for "outside director" under Section 162(m) of the Code. Once effective, these
Stock Options will be immediately exercisable.
TERMS AND CONDITIONS OF STOCK OPTIONS
The exercise price of all ISOs granted under the 1998 Stock Option Plan is
not less than the fair market value of the Class A Common Stock on the date of
grant. The exercise price of all NQSOs granted under the 1998 Stock Option Plan
are determined by the Compensation Committee, although the initial awards will
be made at fair market value of the Class A Common Stock on the date of grant.
The term of each Stock Option granted under the 1998 Stock Option Plan are
determined by the Compensation Committee but will in no event be greater than
ten years from the date of grant.
With respect to ISOs granted to a grantee who owns stock possessing more
than 10% of the voting rights of the Company's outstanding capital stock on the
date of grant, the exercise price of the ISO shall be equal to 110% of the fair
market value of the Class A Common Stock subject to the ISO on the date of grant
and the ISO may not be exercisable more than five years after the date of grant.
Stock Options shall vest and become exercisable over a period of years as
determined by the Compensation Committee.
Upon the exercise of a Stock Option, the grantee must pay the exercise price
in cash. Notwithstanding the foregoing, at the discretion of the Compensation
Committee, the exercise price may be paid with shares of Class A Common Stock
already owned by, and in possession of, the grantee or with a combination of
cash or shares of Class A Common Stock.
The aggregate fair market value of the Class A Common Stock (determined on
the date of grant) for which ISOs granted under the 1998 Stock Option Plan and
any other plan of the Company or a subsidiary
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may be exercisable for the first time by any grantee during any calendar year
cannot exceed $100,000 or such other amount as may be prescribed under the Code
or applicable regulations and rulings from time to time. To the extent that the
aggregate fair market value exceeds $100,000, such Stock Options will be treated
as NQSOs.
ACCELERATION OF VESTING AND EXERCISABILITY
If a grantee's employment with the Company is terminated because of the
grantee's death, or the grantee's retirement on or after attaining age
sixty-five prior to the date the Stock Option is by its terms exercisable, the
Stock Option shall be immediately exercisable (and the restrictions thereof, if
any, shall lapse) as of the date of the termination of the grantee's employment,
subject to the other terms of the 1998 Stock Option Plan.
Upon a Change in Control (as defined below), and at the sole discretion of
the Board of Directors, each holder of a Stock Option shall have the right to
exercise the Stock Option in full without regard to any waiting period,
installment period or other limitation or restriction thereon.
In general, under the 1998 Stock Option Plan, a "Change in Control" of the
Company shall be deemed to have occurred as of the first day any one or more of
the following four conditions have been satisfied: (i) any event whereby a
Person (as defined below) (other than (a) the Company or an affiliate, as
defined in the Securities Exchange Act of 1934 (the "Exchange Act") of the
Company, or (b) any employee benefit plan or trust sponsored or maintained by
the Company or an affiliate, as defined in the Exchange Act) (x) acquires 50% or
more of the Company's outstanding voting securities or (y) acquires (in one
transaction or in a series of related transactions) a subsidiary, business unit,
segment or division of the Company as defined by the Compensation Committee
(provided, however, that in such event a Change in Control shall be deemed to
occur only with respect to employees of such subsidiary, business unit, segment
or division and who cease to be employees of the Company or any "affiliate" of
the Company); (ii) a change in the composition of the Board of Directors such
that at any time a majority of the Board of Directors shall not have been
members of the Board of Directors for twenty-four months; provided, however,
that directors who were appointed or nominated for election by at least
two-thirds of the directors who were directors at the beginning of such
twenty-four month period (or deemed to be such directors under this clause (ii))
shall be deemed to be directors at the beginning of such twenty-four month
period for the purposes of this clause (ii); (iii) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company; or (iv) any consolidation or merger of the Company, other than a merger
or consolidation of the Company in which the voting securities of the Company
outstanding immediately prior thereto continue to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation. "Person" shall have the same meaning as ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in Section 13(d) thereof.
ADJUSTMENT PROVISIONS
The total number and character of shares of Class A Common Stock subject to
Awards and the number and character of shares of Class A Common Stock subject to
outstanding Awards and/or the exercise price of such shares will be
appropriately adjusted by the Compensation Committee if the shares of Class A
Common Stock are changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization, reclassification,
split, reverse split, combination of shares, or otherwise). The Compensation
Committee may also make appropriate adjustments in the event of a merger,
consolidation or other transaction or event having a similar effect.
20
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
INCENTIVE STOCK OPTIONS
Under the Code and Treasury regulations and administrative pronouncements
thereunder, a grantee will not realize taxable income by reason of either the
grant or the exercise of an ISO, and the Company will not receive an income tax
deduction at either such time. However, any appreciation in share value
following the date of grant will be taken into consideration at the time of
exercise in determining liability for the alternative minimum tax. If a grantee
exercises an ISO and delivers shares of Class A Common Stock as payment for part
or all of the exercise price of the Class A Common Stock received upon exercise
of the ISO ("Payment Stock"), no gain or loss will be recognized with respect to
the Payment Stock delivered and no tax will be payable with respect to the
Payment Stock or the Class A Common Stock received upon exercise of the ISO. The
holding period of such Class A Common Stock received will include the holding
period of the Payment Stock. To the extent the number of shares received exceeds
the number of shares tendered, the grantee's basis in the additional shares of
Class A Common Stock received upon exercise of the ISO is zero and these shares
have a holding period that commences on the date of exercise of the ISO.
However, if the Payment Stock was acquired pursuant to the exercise of an ISO
and the required holding period in order to obtain favorable tax treatment with
respect to such Class A Common Stock is not met as of the date such Class A
Common Stock is delivered, the grantee will be treated as having sold the
Payment Stock in a disqualifying disposition and will be subject to the rules
described below for disqualifying dispositions. The grantee's basis in the Class
A Common Stock that he or she receives upon exercise of the ISO in exchange for
the Payment Stock is the same as his or her basis in the Payment Stock increased
by any amount included in gross income as ordinary income due to any
disqualifying disposition and any cash paid on the exercise. The holding period
of such Class A Common Stock commences on the date of exercise of the ISO.
If a grantee exercises an ISO and does not dispose of the shares of Class A
Common Stock within two years from the date of grant and one year from the date
of exercise, the entire gain, if any, realized upon disposition will be taxable
to the grantee as long term capital gain, and the Company will not be entitled
to any deduction. If, however, a grantee disposes of shares of Class A Common
Stock prior to the expiration of the holding periods described in the previous
sentence (a so-called "disqualifying disposition"), the grantee will generally
realize ordinary income in, and tax withholding may be required upon, an amount
equal to the difference between the exercise price and the fair market value of
such shares of Class A Common Stock on the date of exercise. The Company will be
entitled to a deduction equal to the amount recognized as ordinary income by the
grantee. Any additional appreciation will be treated as a capital gain (long
term or short term depending on how long the grantee held the shares of Class A
Common Stock prior to disposition) and the Company will not be entitled to any
further deductions for federal income tax purposes. If the amount realized by
the grantee is less than the fair market value of the shares of Class A Common
Stock upon exercise, then the amount of ordinary income and the corresponding
Company deduction is equal to the excess of the amount realized over the
exercise price.
NON-QUALIFIED STOCK OPTIONS
As to the NQSOs, there will be no federal income tax consequences to either
the grantee or the Company on the grant of the option because the NQSO does not
have a "readily ascertainable fair market value" as required by Section 83 of
the Code. Additionally, if a grantee exercises a NQSO and delivers shares of
Class A Common Stock as payment for part or all of the exercise price of the
Class A Common Stock purchased, no gain or loss will be recognized with respect
to the Class A Common Stock delivered. To the extent a grantee receives more
shares of Class A Common Stock pursuant to the exercise of the option than
shares of Class A Common Stock delivered, the fair market value of this excess,
less any cash paid by the grantee, will be taxed as ordinary income and will be
subject to applicable tax withholding.
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<PAGE>
On the exercise of an NQSO, the grantee (except as described below)
recognizes taxable ordinary income equal to the difference between the exercise
price of the NQSO and the fair market value of such shares of Class A Common
Stock on the date of exercise. The Company will be entitled to a tax deduction
in an amount equal to the grantee's taxable ordinary income if it provides the
grantee with a timely Form W-2 or Form 1099, as appropriate.
Upon disposition of the Common Stock by the grantee, he or she will
recognize long term or short term capital gain or loss, as the case may be,
equal to the difference between the amount realized on such disposition and his
or her basis for the Class A Common Stock, which will include the amount
previously recognized by him or her as ordinary income. The holding period for
capital gains purposes will commence on the day the optionee acquires the shares
of Class A Common Stock pursuant to the NQSO. None of the appreciation on NQSO
is subject to the alternative minimum tax.
SECTION 280G
Under Section 280G of the Code, amounts payable to officers and highly
compensated individuals that are contingent upon a change in the ownership or
effective control of a corporation or of a substantial portion of its assets may
be subject to a 20% excise tax and may not be deductible by the corporate payor
if they exceed a "basic amount" allocated to such payment (so-called "excess
parachute payments"). The acceleration of the right to exercise otherwise
non-vested NQSOs, when considered in connection with other payments to officers
and highly compensated individuals of the Company, may give rise to excess
parachute payments. In that event, the affected grantee will be subject to a 20%
excise tax, and the Company will lose its deduction.
SECTION 162(M)
Under Section 162(m) of the Code, the income tax deduction of
publicly-traded companies may be limited to the extent total compensation
(including base salary, annual bonus, stock option exercises and non-qualified
benefits paid in 1994 and thereafter) for certain executive officers exceeds
$1,000,000 (less the amount of any "excess parachute payments" as defined in
Section 280G of the Code) in any one year. However, under Section 162(m) of the
Code, the deduction limit does not apply to certain "performance-based"
compensation established by an independent compensation committee which is
adequately disclosed to, and approved by, stockholders. In particular, Awards
will satisfy the performance-based exception if the Awards are made by a
qualifying compensation committee, the specified period and the compensation is
based solely on an increase in the stock price after the date of grant (i.e.,
the option exercise price is equal to or greater than the fair market value of
the stock subject to the Award on the grant date). The Company intends to
consider fully the implications of Section 162(m) of the Code on the
deductibility of compensation in making awards under the 1998 Stock Option Plan.
The foregoing federal income tax information is a summary only and does not
purport to be a complete statement of the relevant provisions of the Code.
AMENDMENT AND TERMINATION OF THE 1998 STOCK OPTION PLAN
Unless terminated earlier by action of the Board of Directors, the 1998
Stock Option Plan will terminate on the tenth anniversary of its adoption and no
additional grants under the 1998 Stock Option Plan will be made after that date.
Except as provided below, the Board of Directors may amend or terminate the
1998 Stock Option Plan at any time. The 1998 Stock Option Plan may not however
be amended without the approval of the holders of a majority of the outstanding
voting stock of the Company (i) to decrease the minimum exercise price for ISOs;
(ii) to extend the term of the 1998 Stock Option Plan beyond ten years, (iii) to
extend the maximum terms of the Awards granted beyond ten years, (iv) to
withdraw the administration of the 1998
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Stock Option Plan from the Compensation Committee, (v) to change the class of
eligible employees, officers, directors and other grantees, (vi) to increase the
aggregate number of shares of Class A Common Stock which may be issued under the
Plan, and (vii) to otherwise require stockholder approval to comply with Rule
16b-3 under the Exchange Act or any other applicable law, regulation, or listing
requirement or to qualify for an exemption or characterization that is deemed
desirable by the Board of Directors. Furthermore, no amendment or termination of
the 1998 Stock Option Plan shall, without the written consent of the grantee,
alter the terms of Awards already granted and such Stock Options shall remain in
full force and effect as if the 1998 Stock Option Plan had not been terminated.
MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
The Compensation Committee may, within the limitations of the 1998 Stock
Option Plan, modify, extend or renew outstanding Awards granted under the 1998
Stock Option Plan, or accept the surrender of outstanding Awards and authorize
the granting of new Awards in substitution therefore. No modification may,
without the consent of the grantee, alter or impair any rights or obligations
under any Award theretofore granted to the grantee nor shall any modification
adversely affect the status of an ISO under Section 422 of the Code.
TRANSFERABILITY OF AWARDS AND OTHER PROVISIONS
The rights of a grantee with respect to the Awards granted pursuant to the
1998 Stock Option Plan are not transferable other than by will or the laws of
descent and distribution and are exercisable, during the lifetime of the
grantee, only by the grantee or by the guardian or legal representative of the
grantee acting in a fiduciary capacity on behalf of the grantee under state law
or court supervision. An Award is not subject, in whole or in part, to
attachment, execution or levy of any kind.
RIGHTS UPON TERMINATION OF EMPLOYMENT
If the grantee dies while an employee or when no longer an employee but
while he or she still has the right to exercise an Award, the grantee's estate
shall have the right for a period of one year following the date of death to
exercise the Award to the extent such Award is exercisable and to the extent
such Award has not yet expired.
Upon a grantee's retirement from the Company or a subsidiary on or after
attaining age sixty-five the grantee shall have the right for a period of three
months following the date of retirement to exercise an Award to the extent such
Award is exercisable and to the extent such Award has not yet expired.
Upon a grantee's termination of employment from the Company or a subsidiary
on account of disability, the grantee or the legal representative of the
grantee, shall have the right for a period of one year following the date of
such termination to exercise an Award to the extent such award is exercisable
and to the extent such Award has not yet expired.
In the event the grantee's employment with the Company or a subsidiary is
terminated for any reason other than disability, death or retirement on or after
attaining age sixty-five, the grantee may exercise an Award within three months
after his or her termination of employment.
RIGHTS AS STOCKHOLDER
No grantee of any Stock Option has any rights as a stockholder with respect
to any shares of Class A Common Stock subject to his or her Stock Option prior
to the date on which he or she is recorded as the holder of such shares of Class
A Common Stock on the records of the Company.
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NO RIGHT TO CONTINUED EMPLOYMENT
The 1998 Stock Option Plan is not a contract of employment, and the terms of
employment of any grantee shall not be affected in any way by the 1998 Stock
Option Plan or related instruments except as specifically provided therein. The
establishment of the 1998 Stock Option Plan shall not be construed as conferring
any legal rights upon any grantee for a continuation of employment, nor shall it
interfere with the right of the Company or any subsidiary to discharge any
grantee and to treat him or her without regard to the effect which such
treatment might have upon him or her as a grantee.
The 300,000 shares of Class A Common Stock which would be available under
the 1998 Stock Option Plan represent approximately 5.2% of the shares of Class A
Common Stock outstanding on the Record Date.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ADOPTION
OF THE 1998 STOCK OPTION PLAN.
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PROPOSAL 3--RATIFICATION OF
THE APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of Big City Radio has appointed the firm of KPMG Peat
Marwick LLP, independent auditors, to audit the financial statements of Big City
Radio and its subsidiaries for the fiscal year ending December 31, 1998, subject
to ratification by the Stockholders holding Class A Common Stock and Class B
Common Stock, voting as a single class. As Mr. Stuart Subotnick and Mrs. Anita
Subotnick, the holders of all outstanding shares of Class B Common Stock, have
indicated that they intend to vote in favor of the retention of KPMG Peat
Marwick LLP at the Annual Meeting, such ratification is therefore assured.
A partner of KPMG Peat Marwick LLP is expected to be present at the Annual
Meeting and to be provided with an opportunity to make a statement if such
partner desires to do so and to be available to respond to appropriate questions
from stockholders.
If the Stockholders do not ratify the appointment KPMG Peat Marwick LLP as
Big City Radio's independent auditors for the forthcoming fiscal year, such
appointment will be reconsidered by the Audit Committee and the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF BIG
CITY RADIO'S FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
25
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APPENDIX--A
BIG CITY RADIO, INC.
1998 INCENTIVE STOCK PLAN
1. PURPOSE. The purposes of the Big City Radio, Inc. Incentive Stock Plan
are, in general, to give the Company a significant advantage in retaining key
employees, officers and directors, and to provide an incentive to selected key
employees, officers and directors of the Company and its subsidiaries, within
the meaning of Code Section 424(f), who have substantial responsibility in the
direction of the Company and its subsidiaries, and others whom the Committee
determines provide substantial and important services to the Company, to acquire
a proprietary interest in the Company, to continue as employees, officers and
directors or in their other capacities, and to increase their efforts on behalf
of the Company.
2. DEFINITIONS. Unless the context clearly indicates to the contrary, the
following terms, when used in the Plan, shall have the meanings set forth in
this Section 2.
"Act" shall mean the Securities Act of 1933, as amended from time to time.
"Award" means any Option.
"Board" means the Board of Directors of the Company.
"Change in Control" means an event that shall be deemed to have occurred as
of the first day any one or more of the following have been satisfied:
(a) any event whereby a Person (other than (i) the Company or an
affiliate, as defined in the Exchange Act, or (ii) any employee benefit plan
or trust sponsored or maintained by the Company or an affiliate, as defined
in the Exchange Act) (x) acquires 50% or more of the Company's outstanding
voting securities, or (y) acquires (in one transaction or in a series of
related transactions) a subsidiary, business unit, segment or division of
the Company as defined by the Committee (provided, however, that in such
event a Change in Control shall be deemed to occur only with respect to
employees of such subsidiary, business unit, segment or division and who
cease to be employees of the Company or of any "affiliate" of the Company).
For purposes of this subsection an "affiliate" shall mean any member of the
same controlled group (as defined in Code Sections 414(b)-(o) inclusive)
with the Company. "Person" shall have the same meaning as ascribed to such
term in Section 3(a)(9) of the Exchange Act and used in Section 13(d)
thereof;
(b) a change in the composition of the Board such that at any time a
majority of the Board shall not have been members of the Board for
twenty-four (24) months; provided, however, that directors who were
appointed or nominated for election by at least two-thirds of the directors
who were directors at the beginning of such twenty-four (24) month period
(or deemed to be such directors under this subparagraph) shall be deemed to
be directors at the beginning of such twenty-four (24) month period for the
purposes of this subparagraph;
(c) the stockholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
(d) any consolidation or merger of the Company, other than a merger or
consolidation of the Company in which the voting securities of the Company
outstanding immediately prior thereto continue to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% of the combined voting power of the voting
securities of the Company, or such surviving entity, outstanding immediately
after such merger or consolidation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Committee described in Section 11 of the Plan.
"Common Stock" shall mean $.01 par value Class A common stock of the
Company.
"Company" shall mean Big City Radio, Inc. or any successor company thereto.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" shall mean the closing price of publicly traded Common
Stock on the national securities exchange on which the Common Stock is listed
(if the Common Stock is so listed) or on the NASDAQ National Market System (if
the Common Stock is regularly quoted on the NASDAQ National Market System), or,
if not so listed or regularly quoted, the mean between the closing bid and asked
prices of publicly traded Common Stock in the over-the-counter market, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code.
"Grantee" shall mean any key employee, officer or director of the Company or
a subsidiary of the Company, within the meaning of Code Section 424(f), as
determined by the Committee who has substantial responsibility in the direction
of the Company and its subsidiaries, and anyone else whom the Committee
determines provides substantial and important services to the Company who is
granted an Award under the Plan.
"Incentive Stock Option" or "ISO" shall mean any stock option as defined in
Code Section 422.
"Independent Director" shall mean any member of the Board who during his
entire term as a director was not employed by the Company and its subsidiaries
within the meaning of Code Section 424(f), and who also satisfies the criteria
for "outside director" under Code Section 162(m).
"Non-Qualified Stock Option" or "NQSO" shall mean an option other than an
Incentive Stock Option.
"Option" shall mean ISOs and NQSOs, collectively.
"Plan" shall mean the Big City Radio, Inc. 1998 Incentive Stock Plan.
"Reporting Person" shall mean any person subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to equity
securities of the Company.
"Rule 16b-3" means Rule 16b-3 of the Exchange Act, or any successor thereto,
that excepts transactions under employee benefit plans, as in effect from time
to time.
3. TYPES OF AWARDS. The Plan provides for Incentive Stock Options and
Non-Qualified Stock Options. Except as provided herein, a particular form of
Award may be granted either alone or in addition to other grants hereunder. The
provisions of the particular forms of grants need not be the same with respect
to each recipient.
ISOs may be awarded to employees of the Company and its subsidiaries, within
the meaning of Code Section 424(f), including employees who are officers and
directors, but shall not be issued to directors or others who are not employees.
NQSOs may be awarded to employees and directors, including directors who are
not employees of the Company and its subsidiaries, within the meaning of Code
Section 424(f), and including members of the Committee and anyone whom the
Committee administering the Plan pursuant to Section 11 determines provides
substantial and important services to the Company. Options will consist of the
maximum number of ISOs that may be issued to a Grantee under applicable law,
with the balance (if any) of the Options being NQSO's.
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4. TERM OF PLAN.
(a) EFFECTIVE DATE. This Plan shall become effective as of the date of
adoption thereof by the Board; provided, however, that the Plan shall be
submitted for approval by the stockholders of the Company no earlier than twelve
(12) months prior to, and no later than twelve (12) months after, the date of
adoption of the Plan by the Board.
(b) TERMINATION DATE. This Plan shall terminate on the earliest of:
(i) the tenth anniversary of the effective date as determined under this
Section 4;
(ii) the date when all shares of the Common Stock reserved for issuance
under the Plan, shall have been acquired through exercise of any Awards
granted under the Plan; or
(iii) such earlier date as the Board may determine. Any Award outstanding
under the Plan at the time of its termination shall remain in effect in
accordance with its terms and conditions and those of the Plan.
5. THE STOCK. Subject to adjustment as provided in Section 9, the aggregate
number of shares of Common Stock which may be issued under the Plan shall be
300,000 shares; provided, however, that the maximum number of shares of Common
Stock available with respect to the Awards granted by the Committee to any one
Grantee under the Plan, in the aggregate, shall not exceed 100,000. Such number
of shares of Common Stock may be set aside out of the authorized but unissued
shares of Common Stock not reserved for any other purpose or out of shares of
Common Stock held in or acquired for the treasury of the Company. The Company,
during the term of the Plan, will at all times reserve and keep available such
number of shares of Common Stock as shall be sufficient to satisfy the
requirements of the Plan. All or any shares of Common Stock subjected under this
Plan to an Award which, for any reason, terminates unexercised as to such
shares, may again be subjected to an Award under the Plan. In addition to the
foregoing, shares surrendered to the Company by, or on behalf of, a Grantee in
payment of the exercise price or applicable taxes upon exercise may also be used
thereafter for additional Awards.
6. STOCK OPTIONS.
(a) GRANTS. Options may be granted by the Committee at any time and from
time to time prior to the termination of the Plan. Each Option granted under the
Plan shall be evidenced by an agreement in a form approved by the Committee. The
terms and conditions of such Option agreement need not be identical with respect
to each Grantee, but each Option agreement will evidence on its face whether it
is an ISO, a NQSO, or both. For purposes of this Section, an Option shall be
deemed granted on the date the Committee selects an individual to be a Grantee,
determines the number of shares to be issued pursuant to such Option and
specifies the terms and conditions of the Option. Except as hereinafter
provided, Options granted pursuant to the Plan shall be subject to the following
terms and conditions set forth in this Section 6.
Independent Directors who serve on the Board on the date this Plan is
adopted shall be entitled to receive Awards under the Plan with respect to
shares of Common Stock, each having an exercise price equal to the Fair Market
Value of a share on the date of grant. Any other Independent Director who first
serves on the Board subsequent to the date the Plan was adopted shall be
entitled to receive Awards under the Plan, upon his initial election to the
Board, with respect to 2,500 shares of Common Stock, each having an exercise
price equal to the Fair Market Value of a share on the date of grant; and
thereafter, annually on the date of each annual stockholder's meeting, Awards
with respect to 2,500 shares of Common Stock (subject to an overall 25,000
shares of Common Stock limit), each having an exercise price equal to the Fair
Market Value of a share on the date of grant. All Options awarded to Independent
Directors shall be immediately exercisable. Notwithstanding the above, if any of
the Independent Directors are eligible to receive Awards under the Big City
Radio, Inc. 1997 Incentive Stock Plan (the "Prior Plan") or any subsequent or
future incentive stock plan maintained by the Company (collectively, the "Prior
and Future
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Plans"), then such Independent Directors shall be eligible to receive Awards
under this Plan only to the extent that: (i) the aggregate number of shares of
Common Stock which can be issued under the Prior Plan has been attained; and
(ii) the Awards under this Plan would not in the aggregate with Awards under the
Prior and Future Plans, either at the time of the Award or at any time
thereafter, exceed 2,500 shares of Common Stock per annum or an overall total of
25,000 shares of Common Stock.
(b) PRICE AND EXERCISE. The purchase price of the shares of Common Stock
upon exercise of an ISO shall be no less than the Fair Market Value of the
shares of Common Stock at the time of grant of an ISO; provided, however, if an
ISO is granted to a person owning either directly (or through application of the
attribution rules under Code Section 318) shares of Common Stock of the Company
possessing more than 10% of the total combined voting power of all classes of
shares of Common Stock of the Company as defined in Code Section 422 ("10%
Stockholder"), the purchase price shall be equal to 110% of the Fair Market
Value of the shares of Common Stock. The purchase price of the shares of Common
Stock upon exercise of a NQSO may be any price set by the Committee.
The purchase price shall be paid in United States dollars in cash or by
certified or cashier's check payable to the order of the Company at the time of
purchase. At the discretion of the Committee the purchase price may be paid
with: (i) shares of Common Stock already owned by, and in the possession of, the
Grantee; or (ii) any combination of United States dollars or shares of Common
Stock of the Company. Any required withholding tax shall be paid by the Grantee
in full, in accordance with the provisions of Section 12. Shares of Common Stock
of the Company used to satisfy the purchase price of an Option shall be valued
at their Fair Market Value. The purchase price shall be subject to adjustment,
but only as provided in Section 9 hereof.
Any vested Option may be exercised in full at one time by giving written
notice to the Company, which notice shall be signed and dated by the Grantee and
shall state the number of shares of Common Stock with respect to which the
Option is being exercised. The notice of the exercise of any Option shall be
accompanied by payment in full of the purchase price. If required by the
Company, such notice of exercise of an Option shall be accompanied by the
Grantee's written representation in accordance with Section 21. Upon such
demand, delivery of such representation prior to the delivery of any Common
Stock issued upon exercise of an Option shall be a condition precedent to the
right of the Grantee or such other person to purchase any shares of Common
Stock.
(c) VESTING. Options shall vest in accordance with the schedule established
for each Grantee; provided, however, that all Options awarded to a Grantee shall
vest immediately upon said Grantee's death or retirement as defined herein. The
Committee may accelerate the vesting schedule of any Award other than in the
event of a Change in Control.
(d) ADDITIONAL RESTRICTIONS ON EXERCISE OF AN ISO. The aggregate Fair Market
Value of Common Stock (determined at the time an ISO is granted) for which an
ISO is exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company and its subsidiaries or parent) shall not exceed
$100,000 or such other amount as may be prescribed under the Code or applicable
regulations and rulings from time to time. To the extent that the aggregate Fair
Market Value of Common Stock (determined at the time an ISO is granted) with
respect to Options designated as ISOs exercisable for the first time by a
Grantee during any calendar year (under all plans of the Company and its
subsidiaries or parent) exceeds $100,000, such Options shall be treated as
NQSOs. The foregoing shall be applied by taking Options into account in the
order in which they were granted.
(e) DURATION OF OPTIONS. Options may be granted for terms of up to but not
exceeding ten (10) years from the effective date the particular Option is
granted; provided, however, that an ISO granted to a 10% Stockholder may be
granted for a term not exceeding five (5) years from the effective date the
particular ISO is granted.
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If the stockholders of the Company have not approved the adoption of the
Plan prior to the end of one (1) year from the date the Plan is approved by the
Board, any Option granted under the Plan prior to such date shall be null and
void and the Company shall rescind the issuance of any shares of Common Stock
issued upon the exercise of such Options by a Grantee prior to such date. In the
event of such rescission, the Company shall refund the price paid per share of
Common Stock by the Grantee upon exercise of the Options upon receipt of the
certificate representing such shares.
(f) MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and
conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding Options granted under the Plan, or accept the
surrender of outstanding Options (up to the extent not theretofore exercised)
and authorize the granting of new Options in substitution therefor (up to the
extent not theretofore exercised). In addition to the limitations set forth in
Section 15, the Committee shall not, however, with respect to ISOs, modify any
outstanding Award so as to specify a lower Award price or accept the surrender
of outstanding Awards and authorize the granting of new Awards in substitution
therefor specifying a lower price. Notwithstanding the foregoing or anything
herein, no modification of an Award shall, without the consent of the Grantee,
alter or impair any rights or obligations under any Award theretofore granted
under the Plan nor shall any modification be made which shall adversely affect
the status of an ISO under Code Section 422; provided, however, that any such
provision shall remain in effect with respect to other Awards, and there shall
be no further effect on the Plan.
(g) OTHER TERMS AND CONDITIONS. Awards may contain such other provisions,
which shall not be inconsistent with any of the foregoing terms, as the
Committee shall deem appropriate.
7. TERMINATION OF EMPLOYMENT. Upon the termination of a Grantee's
employment with the Company, any Award then held by such Grantee or Grantee's
estate may only be exercised as follows:
(a) RETIREMENT. If the Grantee's employment is terminated because he or she
has attained age 65, or in accordance with the age specified in an employment
agreement with a Grantee, he or she may within three (3) months following such
termination, exercise the Award to the extent such Award is otherwise
exercisable. However, in the event of his or her death prior to the end of the
three (3) month period after the aforesaid termination of his or her employment,
his or her estate shall have the right to exercise the Award within one (1) year
(but in no event after the scheduled expiration of the term of the Award)
following such termination with respect to all or any part of the stock subject
thereto, to the extent such Award is exercisable.
(b) DEATH. If the Grantee's employment with the Company is terminated by
death, his or her estate shall have the right to exercise the Award within one
(1) year (but in no event after the scheduled expiration of the term of the
Award) following such termination with respect to all or any part of the stock
subject thereto, to the extent such Award is exercisable.
(c) DISABILITY. If the Grantee's employment with the Company is terminated
by disability, as defined in Code Section 22(e)(3), he or she or his or her
legal representative shall have the right for a period of one (1) year (but in
no event after the scheduled expiration of the term of the Award) following the
date of such termination of employment to exercise any Award with respect to all
or any part of the stock subject thereto, to the extent such Award is
exercisable.
(d) OTHER REASONS. If the Grantee's employment with the Company is
terminated for any reason other than those provided above under "Retirement",
"Death" or "Disability", the Grantee or Grantee's estate in the event of his or
her death shall have the right for a period of three (3) months (but in no event
after the scheduled expiration of the term of the Award) following the date of
such termination of employment to exercise any Award, with respect to all or any
part of the stock subject thereto, to the extent such Award is exercisable. All
other Awards may be exercised within such other period of time as determined by
the Committee in its sole discretion.
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For purposes of this Section 7, "termination of employment" shall mean the
termination of a Grantee's employment with the Company or a subsidiary or a
parent within the meaning of Code Section 424. A Grantee employed by a
subsidiary shall also be deemed to have a termination of employment if the
subsidiary ceases to be a subsidiary of the Company, and the Grantee does not
immediately thereafter become an employee of the Company or of a subsidiary or
of a parent. A Grantee who is a member of the Board but who is not also an
employee of the Company shall be considered to have terminated his or her
employment at such time as he or she is no longer a member of the Board. Any
other Grantee who is not otherwise an employee of the Company shall be
considered to have terminated employment when substantial services, as
determined by the Committee, are no longer provided to the Company by the
Grantee.
Also for purposes of this Section 7, a Grantee's "estate" shall mean his or
her legal representatives upon his or her death or any person who acquires the
right to exercise an Award by reason of the Grantee's death. The Committee may
in its discretion require the transferee of a Grantee to supply it with written
notice of the Grantee's death or disability and to supply it with a copy of the
will (in the case of the Grantee's death) or such other evidence as the Board
(or, following its appointment, the Committee) deems necessary to establish the
validity of the transfer of an Option.
If a Grantee's employment with the Company is terminated after a Change in
Control, the provisions of Section 8 shall supersede the provisions of this
Section 7.
8. CHANGE IN CONTROL. In the event of a Change in Control and at the sole
discretion of the Board, each Grantee with an outstanding Option shall have the
right at any time thereafter to exercise the Option in full notwithstanding any
waiting period, installment period or other limitation or restriction in any
agreement or in the Plan.
9. ADJUSTMENT OF THE CHANGES IN THE STOCK.
(a) The total number and character of shares of Common Stock subject to
Awards, the number and character of shares of Common Stock subject to
outstanding Awards and/or the exercise price of such shares will be
appropriately adjusted by the Committee if the shares of Common Stock are
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split, reverse split,
combination of shares, or otherwise. The Committee may also make appropriate
adjustments in the event of a merger, consolidation, or other transaction or
event having a similar effect.
(b) The Company shall not be required to issue any fractional shares of
Common Stock pursuant to the Plan. Fractional shares resulting from any
adjustment in Awards pursuant to this Section 9 may be settled in cash or
otherwise as the Board shall determine.
(c) Notice of any adjustment shall be given by the Company to each holder of
an Award which shall have been so adjusted and such adjustment (whether or not
such notice is given) shall be effective and binding for all purposes of the
Plan.
(d) If another corporation is merged into the Company or the Company
otherwise acquires another corporation, the Board may elect to assume under the
Plan any or all outstanding stock options or other awards granted by such
corporation under any stock option or other plan adopted by it prior to such
acquisition. Such assumptions shall be on such terms and conditions as the
Committee may determine; provided, however, that the awards as so assumed do not
contain any terms, conditions or rights that are inconsistent with the terms of
this Plan. Unless otherwise determined by the Board, such awards shall not be
taken into account for purposes of the limitations contained in Section 5 of the
Plan.
10. TRANSFERABILITY OF AWARDS. An Award shall be transferable only by will
or the laws of descent and distribution and shall be exercisable during the
Grantee's lifetime only by the Grantee or by the guardian or legal
representative of the Grantee acting in a fiduciary capacity on behalf of the
Grantee under state
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law and court supervision. An Award is not subject, in whole or in part, to
attachment, execution or levy of any kind.
11. ADMINISTRATION.
(a) The Plan shall be administered by the Committee appointed by the Board
which shall be composed of not less than two (2) members of the Board, each of
whom shall be a "Non-Employee Director" within the meaning of Rule 16b-3 and an
"outside director" within the meaning of Proposed Treasury Regulation Section
1.162-27(e)(3) or such other regulations as may be issued in proposed, temporary
or final form under Code Section 162(m).
(b) The Committee shall act by a majority of its members at the time in
office and eligible to vote on any particular matter, and such action may be
taken either by a vote at a meeting or in writing without a meeting.
(c) Subject to the provisions of the Plan, the Committee shall from time to
time and at its discretion take the following actions:
(i) grant Awards;
(ii) determine which employees, officers, directors and other
individuals performing substantial and important services may be granted
Awards under the Plan;
(iii) determine the type of awards to be granted;
(iv) determine the number of shares subject to each Award;
(v) determine the term of each Award granted under the Plan;
(vi) determine the date or dates on which the Award granted shall be
exercisable;
(vii) determine the exercise price of any Award granted;
(viii) determine the Fair Market Value of the Common Stock subject to the
Awards granted;
(ix) determine the terms of any agreement pursuant to which Awards are
granted;
(x) amend any such agreement with the consent of the Grantee;
(xi) extend the exercise period of any Award;
(xii) accelerate the vesting period of any Award except in the event of a
Change in Control;
(xiii) establish performance-based goals within the meaning of Code
Section 162(m);
(xiv) establish such procedures as it deems appropriate for a recipient
of an Award hereunder to designate a beneficiary to whom any benefits
payable in the event of his or her death are to be made; and
(xv) determine any other matters specifically delegated to it under the
Plan or necessary for the proper administration of the Plan.
The Committee shall also have the final authority and discretion to
interpret and construe the terms of the Plan and of any Award granted and such
interpretation and construction by the Committee shall be final, binding and
conclusive upon all persons including, without limitation, the Company,
stockholders of the Company or any subsidiary, the Plan, and all persons
claiming an interest in the Plan. Notwithstanding anything contained in this
Section 11 to the contrary, no term of the Plan relating to ISOs shall be
interpreted, nor shall any discretion or authority of the Committee be
exercised, so as to disqualify the Plan under Code Section 422 or, without the
consent of the Grantee, to disqualify any ISO under Code Section 422 or in a
manner inconsistent with Rule 16b-3.
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(d) No member of the Committee or director of the Board shall be liable for
any action, interpretation or construction made in good faith with respect to
the Plan or any Award granted hereunder.
12. TAX WITHHOLDING. It shall be a condition to the obligation of the
Company to deliver shares or securities of the Company upon exercise of an
Award, that the Grantee of such Award pay to the Company such amount as may be
requested by the Company for the purpose of satisfying any liability for such
withholding taxes. The Committee may, in its sole discretion, permit the Grantee
of an Award, in accordance with any applicable regulations of the authority
issuing such regulations, to pay a portion or all of the amount of such minimum
required or additional permitted withholding taxes in shares. At the Committee's
sole discretion, the Grantee shall be permitted to authorize the Company to
withhold, or shall agree to surrender back to the Company, on or about the date
such withholding tax liability is determinable, shares previously owned by such
Grantee or a portion of the shares that were or otherwise would be distributed
to such Grantee pursuant to such Award having a Fair Market Value equal to the
amount of such required or permitted withholding taxes to be paid in shares.
13. SECURITIES LAW REQUIREMENTS.
(a) No Award granted pursuant to this Plan shall be exercisable in whole or
in part, nor shall the Company be obligated to acquire or sell any shares of
Common Stock subject to any such Option, if such exercise, acquisition and sale
would, in the opinion of counsel for the Company, violate the Act (or other
federal or state statutes having similar requirements), as it may be in effect
at that time. In this regard, the Committee may demand the representations
described in Sections 6(b) and 21.
(b) Each Award shall be subject to the further requirement that, if at any
time the Committee shall determine in its discretion that the listing or
qualification of the shares of Common Stock subject to such Award under any
securities exchange requirements or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary as a condition of, or
in connection with, the granting of such Award or the issue of shares
thereunder, such Award may not be exercised in whole or in part, unless such
listing, qualification, consent or approval shall have been affected or obtained
free of any conditions not acceptable to the Board.
(c) No person who acquires shares of Common Stock under the Plan may, during
any period of time that such person is an affiliate of the Company within the
meaning of the rules and regulations of the Securities and Exchange Commission
under the Act, sell such shares of Common Stock, unless such offer and sale is
made (i) pursuant to an effective registration statement under the Act, which is
current and includes the shares to be sold, or (ii) pursuant to an appropriate
exemption from the registration requirement of the Act, such as that set forth
in Rule 144 promulgated under the Act.
(d) With respect to any Reporting Person, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3. To the extent
any provision of the Plan or any action by an authority under the Plan fails to
so comply, such provision or action shall, without further action by any person,
be deemed to be automatically amended to the extent necessary to effect
compliance with Rule 16b-3, provided that if such provision or action cannot be
amended to effect such compliance, such provision or action shall be deemed null
and void, to the extent permitted by law and deemed advisable by the appropriate
authority. Each Award to a Reporting Person under the Plan shall be deemed
issued subject to the foregoing qualification.
14. FOREIGN PARTICIPANTS. In order to facilitate the making of an Award and
to foster and promote achievement of the purposes of the Plan, the Committee may
provide for such special terms for Awards to Grantees who are foreign nationals,
or who are employed by the Company outside of the United States of America, as
the Committee may consider necessary or appropriate to accommodate differences
in local law, tax policy or custom. Moreover, the Committee may approve such
supplements to, or amendments, restatements or alternative versions of this Plan
as in effect for any other purpose, and the Secretary or other appropriate
officer of the Company may certify any such document as having been approved and
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adopted in the same manner as the Plan; provided, however, that no such
supplements, amendments, restatements or alternative versions shall include any
provisions that are inconsistent with the terms of the Plan, as then in effect,
unless the Plan could have been amended to eliminate the inconsistency without
further approval by the stockholders of the Company.
15. AMENDMENT OR TERMINATION OF THE PLAN. The Board may amend or terminate
the Plan at any time, except that approval of the holders of a majority of the
outstanding voting stock of the Company is required for amendments which:
(i) decrease the minimum exercise price for ISOs;
(ii) extend the term of the Plan beyond ten (10) years;
(iii) extend the maximum terms of the Awards granted hereunder beyond ten
(10) years;
(iv) withdraw the administration of the Plan from the Committee
appointed pursuant to Section 11;
(v) change the class of eligible employees, officers, directors and
other Grantees;
(vi) increase the aggregate number of shares of Common Stock which may
be issued pursuant to the provisions of the Plan;
(vii) otherwise require stockholder approval to comply with Rule 16b-3 or
any other applicable law, regulation, or listing requirement or to qualify
for an exemption or characterization that is deemed desirable by the Board.
Notwithstanding the foregoing, the Board may, without the need for
stockholders' approval, amend the Plan in any respect to qualify ISOs as
incentive stock options under Code Section 422.
No amendment or termination of the Plan shall, without the written consent
of the Grantee, alter the terms of Options already granted and such options
shall remain in full force and effect as if the Plan had not been terminated.
Any Award that may be made pursuant to an amendment to the Plan that shall
have been adopted without the approval of the stockholders of the Company shall
be null and void as to persons subject to Section 16(a) of the Act if it is
subsequently determined that such approval was required in order for the Plan to
continue to satisfy the applicable conditions of Rule 16b-3.
Furthermore, technical or clarifying amendments shall be made by the
Committee and not by the Board.
16. NO OBLIGATION TO EXERCISE OPTION. The granting of an Award shall impose
no obligation upon the Grantee (or upon a transferee of a Grantee) to exercise
such Award.
17. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of any Award shall
not in any way affect the right or power of the Company to make adjustments,
reclassification, or changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
18. PLAN NOT A CONTRACT OF EMPLOYMENT. The Plan is not a contract of
employment, and the terms of employment of any recipient of any Award hereunder
shall not be affected in any way by the Plan or related instruments except as
specifically provided therein. The establishment of the Plan shall not be
construed as conferring any legal rights upon any recipient of any Award
hereunder for a continuation of employment, nor shall it interfere with the
right of the Company or any subsidiary to discharge any recipient of any Award
hereunder and to treat him or her without regard to the effect which such
treatment might have upon him or her as the recipient of any Award hereunder.
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19. EXPENSES OF THE PLAN. All of the expenses of the Plan shall be paid by
the Company.
20. FUNDING. The Plan shall be unfunded and shall not create (or be
construed to create) a trust or a separate fund or funds. The Plan shall not
establish any fiduciary relationship between the Company and any Grantee or
other person. To the extent any person holds any rights by virtue of an Award
granted under the Plan, such rights shall be no greater than the rights of an
unsecured general creditor of the Company.
21. COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or delivered
any certificates for shares of Common Stock pursuant to the exercise of an
Option, unless and until the Company is advised by its counsel that the issuance
and delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authority and the requirements of any exchange upon
which shares of Common Stock are traded including, without limitation, any
legends that are required on such stock certificates. The Company shall in no
event be obligated to register any securities pursuant to the Act (as now in
effect or as hereafter amended) or to take any other action in order to cause
the issuance and delivery of such certificates to comply with any such law,
regulation or requirement.
The Committee may require, as a condition of the issuance and delivery of
such certificates and in order to ensure compliance with such laws, regulations
and requirements, that the recipient of any Award hereunder make such covenants,
agreements and representations as the Committee, in its sole discretion, deems
necessary or desirable, including, without limitation, a written representation
from a stockholder that the stock is being purchased for investment and not for
distribution, acknowledging that such shares have not been registered under the
Act, as amended, and agreeing that such shares may not be sold or transferred
unless there is an effective registration statement for them under the Act, or,
in the opinion of counsel to the Company, that such sale or transfer is not in
violation of the Act.
22. EFFECT UPON OTHER COMPENSATION. Nothing contained herein shall prevent
the Company or any subsidiary from adopting other or additional compensation
arrangements for its employees or directors. The effect under any other benefit
plan of the Company of an inclusion in income by virtue of an Award hereunder
shall be determined under such other plan.
23. GRANTEE TO HAVE NO RIGHTS AS A STOCKHOLDER. No Grantee of any Option
shall have any rights as a stockholder with respect to any shares subject to his
or her Option prior to the date on which he or she is recorded as the holder of
such shares on the records of the Company. No Grantee of any Option shall have
the rights of a stockholder until he or she has paid in full the Option price.
24. NOTICE. Notice to the Company shall be deemed given if in writing and
mailed to Arnold Wadler, Esq., Metromedia Company, One Meadowlands Plaza, East
Rutherford, New Jersey 07073, by first class, certified mail. Notice to the
Grantee or the Grantee's estate, if applicable, shall be given by registered
mail to such person's last known address.
25. GOVERNING LAW. Except to the extent preempted by federal law, this Plan
and all Option agreements entered into pursuant thereto shall be construed and
enforced in accordance with, and governed by, the laws of the State of New York
determined without regard to its conflict of law rules.
26. SUCCESSORS AND ASSIGNS. The Plan shall be binding on and inure to the
benefit of the Company and the employees to whom an Award is granted hereunder,
and such employees' heirs, executors, administrators, legatees, trustees,
personal representatives, assignees and transferees (where permitted).
27. DELIVERY OF THE PLAN. A copy of this Plan shall be delivered to the
Secretary of the Company and shall be shown by him to each eligible person
making reasonable inquiry concerning it. A copy of this Plan shall also be
delivered to each Grantee at the time his or her Award is granted.
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APPENDIX B--PROXY CARD
PROXY PROXY
BIG CITY RADIO, INC.
11 Skyline Drive
Hawthorne, New York 10532
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF SHAREHOLDERS TO BE HELD ON MAY 12, 1998, 10:00 A.M.
The undersigned hereby appoints Michael Kakoyiannis and Arnold L. Wadler,
and each of them as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated below, all of the
shares of Common Stock of Big City Radio, Inc. held of record by the undersigned
on March 27, 1998, at the Annual Meeting of Shareholders to be held on May 12,
1998, or any adjournment or postponement thereof.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE
(continued on reverse side)
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BIG CITY RADIO, INC.
1. Election of Director--Nominees. Leonard White, Michael H. Boyer.
/ / FOR / / WITHHELD / / FOR ALL EXCEPT
_____________________
Nominee Exception
2. Proposal to approve the 1998 Stock Incentive Plan
/ / FOR / / AGAINST / / ABSTAIN
3. The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for the year ending December 31, 1998
/ / FOR / / AGAINST / / ABSTAIN
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE ABOVE LIST.)
Date______________________, 1998
________________________________
(Signature)
________________________________
Please Print Name Here
________________________________
Signature
________________________________
Please Print Name Here
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<S> <C>
THIS PROXY WHEN PROPERLY EXECUTED WILL VOTE IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED IMPORTANT: Please sign
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES FOR exactly as name appears on
DIRECTOR AND FOR PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER this card. Each joint
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT THEREOF. owner should sign.
Executors, administrator
trustees, etc. should give
full title.
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