SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Cumulus Media Inc.
(Name of Registrant as Specified In Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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[Logo]
CUMULUS
Cumulus Media Inc.
ANNUAL MEETING OF SHAREHOLDERS
November 2, 1999
--------------------
NOTICE AND PROXY STATEMENT
<PAGE>
Table of Contents
Notice of Annual Meeting of Shareholders 3
Proxy Statement 4
Proposals You May Vote On 6
Security Ownership of Certain Beneficial Owners and Management 8
Section 16(a) Beneficial Ownership Reporting Compliance 9
Non-Employee Director Compensation 9
Compensation Committee Interlocks and Insider Participation 9
Certain Relationships and Related Transactions 10
Nominees for Election to the Board of Directors 11
Information about the Board of Directors 13
Compensation Committee Report on Executive Compensation 14
Executive Compensation 17
Performance Graph 24
Submission of Shareholder Proposals 25
Pending Legal Proceedings 25
Other Matters 26
<PAGE>
CUMULUS MEDIA INC.
111 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
_____________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 2, 1999
TO THE SHAREHOLDERS OF CUMULUS MEDIA INC.:
The 1999 Annual Meeting of Shareholders of Cumulus Media Inc.
will be held at the Hotel Metro at 411 E. Mason Street,
Milwaukee, Wisconsin, 53202 on Tuesday, November 2, 1999 at 1:30
p.m., local time, for the following purposes:
(1) To elect six directors;
(2) To ratify the Board's selection of PricewaterhouseCoopers LLP as
Cumulus' independent auditors for 1999;
(3) To approve the Cumulus Media Inc. 1998 Amended and Restated
Employee Stock Purchase Plan;
(4) To approve the Cumulus Media Inc. 1999 Stock Incentive Plan;
(5) To approve the Cumulus Media Inc. 1999 Executive Stock Incentive Plan;
(6) To amend Cumulus Media Inc.'s Amended and Restated Articles
of Incorporation to increase the authorized Class A Common Stock
of the Company from 50,000,000 shares to 100,000,000 shares;
(7) To amend Cumulus Media Inc.'s Amended and Restated Articles
of Incorporation to provide for staggered, three-year terms of
directors; and
(8) To transact such other business as may properly come before the Annual
Meeting, all in accordance with the accompanying Proxy Statement.
Only holders of record of Class A Common Stock or Class C Common
Stock at the close of business on September 20, 1999 are entitled
to notice of and to vote at the Annual Meeting.
Your Board recommends that you vote in favor of the
proposals made in the enclosed proxy statement.
<PAGE>
At the meeting, members of Cumulus' senior management will report
on Cumulus' 1998 and year to date 1999 results. The Company's
Annual Report for the year ended December 31, 1998 is included
with or has preceded the Proxy Statement.
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF CLASS A COMMON
STOCK AND CLASS C COMMON STOCK MUST BE PRESENT IN PERSON OR BY
PROXY IN ORDER FOR THE MEETING TO BE HELD. THEREFORE,
SHAREHOLDERS ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE WHETHER OR NOT THEY EXPECT TO
ATTEND THE ANNUAL MEETING IN PERSON. IF YOU ATTEND THE MEETING
AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO BY
REVOKING YOUR PROXY AT ANY TIME PRIOR TO THE VOTING THEREOF.
Terrence J. Leahy, Secretary
September 30, 1999
<PAGE>
CUMULUS MEDIA INC.
111 East Kilbourn Avenue
Milwaukee, Wisconsin 53202
September 30, 1999
Proxy Statement
The enclosed proxy is solicited by the Board of Directors of
Cumulus Media Inc. (the "Company") for use at the Annual Meeting
of Shareholders to be held on Tuesday, November 2, 1999 (the
"Annual Meeting").
The expense of printing and mailing proxy materials, including
expenses involved in forwarding materials to beneficial owners of
common stock held in the name of another person, will be borne by
the Company. The Company does not expect to pay any fees for the
solicitation of proxies but may pay brokers, fiduciaries and
other custodians their reasonable fees and expenses for sending
proxy materials to beneficial owners and obtaining their
instructions. No solicitation other than by mail is
contemplated, except that officers or employees of the Company or
its subsidiaries may solicit the return of proxies from certain
shareholders in person or by telephone, facsimile transmission or
other means of electronic communication. The Proxy Statement and
the accompanying Proxy Card are being sent to the Company's
shareholders commencing on or about September 30, 1999.
Only holders of record of shares of Class A Common Stock, $.01
par value (the "Class A Common Stock") or shares of Class C
Common Stock, $.01 par value (the "Class C Common Stock") at the
close of business on September 20, 1999 (the "Record Date") are
entitled to notice of and to vote at the Annual Meeting. As of
the Record Date, the Company had outstanding 20,857,007 shares of
Class A Common Stock, 7,856,593 shares of Class B Common Stock,
$.01 par value (the "Class B Common Stock"), 2,151,277 shares of
Class C Common Stock and 143,069 shares of Series Cumulative
Redeemable Exchangable Preferred Stock, $.01
par value. The presence, in person or by proxy, of the holders
of a majority of the shares of Class A and Class C Common Stock
outstanding on the Record Date is required for a quorum with
respect to the matters on which action is to be taken at the
Annual Meeting.
Any shareholder executing and delivering the enclosed proxy may
revoke the same at any time prior to the voting thereof by
written notice of revocation given to the Secretary of the
Company.
The Company's Annual Report for the year ended December 31, 1998
is included or has preceded this Proxy Statement.
<PAGE>
Abstentions and broker non-votes (i.e., proxies from brokers or
nominees indicating that such persons have not received
instructions from the beneficial owners or other persons entitled
to vote shares as to a matter with respect to which brokers or
nominees do not have discretionary power to vote) will be treated
as present for purposes of determining the quorum. Each share of
Class A Common Stock entitles its holder to cast one vote on each
matter to be voted upon at the Annual Meeting. Subject to the
following exception, each share of Class C Common Stock entitles
its holder to cast 10 votes on each matter to be voted upon at
the Annual Meeting. During the period of time commencing with
the date of conversion of any Class B Common Stock to Class C
Common Stock by either BA Capital Company, LP or State of
Wisconsin Investment Board and ending with the date on which BA
Capital Company, LP or State of Wisconsin Investment Board
(together with their respective affiliates) each ceases to
beneficially own at least 5% of the aggregate shares of common
stock held by such holders immediately prior to the Company's
initial public offering in July, 1998, holders of Class C Common
Stock are entitled to one vote per share.
Unless otherwise directed, all proxies will be voted FOR the
election of each of the individuals nominated to serve as a
director and FOR each of the other proposals. Directors are
elected by a plurality of the votes cast by holders of the
Company's Class A and Class C Common Stock entitled to vote at a
meeting at which a quorum is present. In other words, the six
directors who receive the largest number of votes will be elected
as directors. Any shares not voted, whether by withheld
authority, broker non-vote or otherwise, will have no effect in
the election of directors except to the extent that the failure
to vote for an individual results in another individual receiving
a larger number of votes.
A majority of the votes entitled to be cast by the present or
represented shares entitled to vote is required to ratify the
appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for 1999 and to approve the Company's 1998
Amended and Restated Employee Stock Purchase Plan, the Company's
1999 Stock Incentive Plan and the Company's 1999 Executive Stock
Incentive Plan. Broker non-votes will have no effect on the
outcome of the voting on these matters but abstentions will have
the effect of a vote against.
The affirmative vote of a majority of the shares of Class A
Common Stock outstanding and entitled to vote, as well as a
majority of the votes entitled to be cast by the outstanding
shares (Class A and Class C Common Stock) entitled to vote, is
required to approve the amendment to the Company's Amended and
Restated Articles of Incorporation increasing the authorized
shares of Class A Common Stock. A majority of the votes entitled
to be cast by the outstanding shares entitled to vote is required
to approve the amendment to the Company's Amended and Restated
Articles of Incorporation providing for staggered terms for
directors. Broker non-votes and abstentions will have the effect
of a vote against the proposals to amend the Company's Amended
and Articles Restated Articles of Incorporation.
<PAGE>
PROPOSALS YOU MAY VOTE ON
1. Election of Directors
The entire Board of Directors, consisting of six members, will be
elected at the Annual Meeting. Each director will serve until the
next annual meeting of the shareholders or until he is succeeded
by another qualified director who has been elected. If, however,
the proposal to amend the Amended and Restated Articles of
Incorporation to provide for a staggered board is adopted, as
described below, the directors will be divided into three classes
with staggered terms expiring in 2000, 2001 and 2002. Detailed
information about each nominee is provided below.
The Board has no reason to believe that any nominee will be
unable to serve as a director. If for any reason a nominee
becomes unable to serve, the persons named in the proxy will vote
for the election of such person or persons as the Board may
recommend.
Your Board recommends a vote FOR each of the nominees.
2. Ratification of the Appointment of PricewaterhouseCoopers LLP
as Independent Auditors
Upon recommendation of the Audit Committee and subject to
ratification by the Company's shareholders, the Board has
appointed PricewaterhouseCoopers LLP as the Company's independent
auditors for the fiscal year ending December 31, 1999.
PricewaterhouseCoopers LLP has served as the Company's
independent auditors since the incorporation of the Company on
May 22, 1997. During 1998, PricewaterhouseCoopers LLP also
provided non-audit services to the Company. Representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting
to make any statement they may desire and to respond to questions
from shareholders.
Your Board recommends a vote FOR the ratification of
PricewaterhouseCoopers LLP as the Company's independent auditors.
3. Approval of the 1998 Amended and Restated Employee Stock Purchase Plan
The complete text of the 1998 Amended and Restated Employee Stock
Purchase Plan is set forth in Appendix A. The following summary
of the material features of the1998 Amended and Restated Employee
Stock Purchase Plan is qualified in its entirety by reference to
Appendix A.
The Board of Directors approved the Company's Employee Stock
Purchase Plan on November 23, 1998 and amended it on August 30,
1999, subject to approval by the Company's shareholders. The
purpose of the Employee Stock Purchase Plan is to provide
employees of the Company and its subsidiaries with an incentive
to work for the continued success of the Company by granting such
employees the opportunity to purchase the Company's Class A
Common Stock through one or more offerings. The aggregate number
of shares of Class A Common Stock subject to the Employee Stock
Purchase Plan is 1,000,000. No one person may purchase shares of
Class A Common Stock under the Amended and Restated Employee
Stock Purchase Plan or any other employee stock purchase plan of
the Company or its subsidiaries having a fair market value in
excess of $25,000 for each calendar year, and
<PAGE>
no employee may be granted an option if, immediately after the grant, such
employee would own 5% or more of the total combined voting power or value
of all classes of stock of the Company or its subsidiaries as
defined by statute.
The term of each offering under the Amended and Restated Employee
Stock Purchase Plan is 12 months, commencing on January 1, 1999.
Eligible employees who elect to participate in the Employee Stock
Purchase Plan authorize periodic payroll deductions from their
compensation. A payroll deduction account is maintained for each
participating employee. At the end of an offering period, the
payroll deduction account is totaled and the employee is deemed
to have purchased whole shares of the Company's Class A Common
Stock at the offering price, which is 85% of the lesser of the
fair market value of the Company's Class A Common Stock on the
first and last days of the 12-month offering period.
The Board of Directors recommends a vote FOR approval of the 1998
Amended and Restated Employee Stock Purchase Plan
4. Approval of the 1999 Stock Incentive Plan
The complete text of the 1999 Stock Incentive Plan is set
forth in Appendix B. The following summary of the material
features of the 1999 Stock Incentive Plan is qualified in its
entirety by reference to Appendix B.
The Board of Directors approved the 1999 Stock Incentive
Plan on August 30, 1999, subject to approval by the Company's
shareholders. The purpose of the 1999 Stock Incentive Plan is to
attract and retain certain selected officers, key employees, non-
employee directors and consultants whose skills and talents are
important to the Company's operations and reward them for making
major contributions to the success of the Company. The aggregate
number of shares of Class A Common Stock subject to the 1999
Stock Incentive Plan is 900,000, all of which may be granted as
incentive stock options. In addition, no one person may receive
options over more than 300,000 shares of Class A Common Stock in
any one calendar year.
The 1999 Stock Incentive Plan permits the Company to grant
nonqualified stock options and incentive stock options ("ISOs"),
as defined in Sections 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). No options may be granted under the 1999
Stock Incentive Plan after August 30, 2009.
The Compensation Committee administers the 1999 Stock
Incentive Plan. The Compensation Committee has full and exclusive
power to interpret the 1999 Stock Incentive Plan and to adopt
rules, regulations and guidelines for carrying out the 1999 Stock
Incentive Plan as it may deem necessary or proper.
<PAGE>
Under the 1999 Stock Incentive Plan, current and prospective
employees, non-employee directors, consultants or other persons
who provide services to the Company are eligible to participate.
As of August 30, 1999, approximately 100 individuals are eligible
to participate in the 1999 Stock Incentive Plan. The following
table provides information on options that have been granted to
the Named Executive Officers as defined hereinafter, to all current
executive officers as a group, to all non-executive directors as a
group and to all other employees as of September 15, 1999.
NEW PLAN BENEFITS TABLE
Name Number of Securities Underlying Options Granted
Richard W. Weening
Lewis W. Dickey
William M. Bungeroth
Richard J. Bonick, Jr.
John Dickey
All current executive officers as a group (5)
All non-executive directors as a group (3)
All other employees as a group ( )
The 1999 Stock Incentive Plan may be amended by the approval
of the Board of Directors, but certain amendments adversely
affecting the rights of a participant under any existing option
grant may not be made without obtaining the participant's written
consent, and amendments increasing the number of shares of Class
A Common Stock which may be granted under the 1999 Stock
Incentive Plan may not be made without obtaining shareholder
approval.
The exercise price for options granted under the 1999 Stock
Incentive Plan may be no less than 100% of the fair market value
of the Class A Common Stock on the date of grant of the option
(or 110% in the case of ISOs granted to participants who are 10%
shareholders of the Company). Options will be exercisable during
the period specified in each award agreement and will generally
be exercisable in installments pursuant to a vesting schedule to
be designated by the Compensation Committee. No option will
remain exercisable later than ten years after the date of grant
(or five years from the date of grant in the case of ISOs granted
to 10% shareholders of the Company). The closing sale price of
the Class A Common Stock on the Nasdaq National Market on
September 16, 1999 was $29.50.
The federal income tax consequences of nonqualified stock
options and ISOs granted under the 1999 Stock Incentive Plan are
generally as follows:
Nonqualified Stock Options. The grant of a nonqualified
option will have no federal income tax consequences to the
Company or to a participant. A participant will recognize taxable
ordinary income at the time of exercise of the option in an
amount equal to the excess of the fair market value of the shares
acquired at the time of exercise over the option price, and the
Company will ordinarily be entitled to a deduction for such
amount.
The holders of shares acquired upon exercise of a
nonqualified option will, upon a subsequent disposition of such
shares, generally recognize a short-term or long-term capital
gain or loss, depending upon the holding period of the shares,
equal to the difference between the amount realized on the sale
and the basis in such shares (the sum of the option price and the
amount taxed as ordinary income at the time of exercise).
ISOs. Neither the grant nor exercise of an ISO will
generally have any federal income tax
<PAGE>
consequences for a participant. The amount by which the fair market value
of the shares acquired upon the exercise of any ISO exceeds the option
price at the date of exercise, however, is an item of "tax
preference" for purposes of computing the alternative minimum tax
on individuals. If a participant has held the shares acquired on
the exercise of an ISO for at least two years from the date of
the grant of the option and at least one year from the date of
exercise, the participant will recognize taxable long-term
capital gain or loss upon a subsequent disposition of the shares.
In such circumstances, no deduction would be allowed to the
Company for federal income tax purposes in connection with the
grant or exercise of the option or the transfer of shares
acquired upon such exercise.
If, however, the participant disposes of his or her shares
within the holding periods described above, (i) the participant
will recognize ordinary income in an amount equal to the
difference between the fair market value of such shares on the
date of exercise and the option price, provided that, if the
amount realized from such sale of exchange is less than the fair
market value on the exercise date, then the ordinary income will
be limited to the excess of the amount realized upon the sale or
exchange or shares over the option price; (ii) the Company will
be entitled to a deduction from such year in the amount of the
ordinary income so recognized; and (iii) the participant will
recognize capital gain or loss, as the case many be in an amount
equal to the difference between the amount realized upon such
sale or exchange of shares and the sum of the option price plus
the amount of ordinary income, if any, recognized upon such
disposition.
The Board of Directors recommends a vote FOR approval of the
1999 Stock Incentive Plan.
5. Approval of the 1999 Executive Stock Incentive Plan
The completed text of the 1999 Executive Stock Incentive
Plan is set forth in Appendix C. The following summary of the
material features of the 1999 Executive Stock Incentive Plan is
qualified in its entirety by reference to Appendix C.
The Board of Directors approved the 1999 Executive Stock
Incentive Plan on August 30, 1999, subject to approval by the
Company's shareholders. The 1999 Executive Stock Incentive Plan
governs the stock options to be granted to Messrs. Weening and L.
Dickey. The aggregate number of shares of Class C Common Stock
subject to the 1999 Executive Stock Incentive Plan is 1,000,000,
300,000 of which may be granted as ISOs. In addition, no one
person may receive options over more than 500,000 shares of Class
C Common Stock in any one calendar year.
The 1999 Executive Stock Incentive Plan permits the Company to
grant nonqualified stock options and ISOs to Messrs. Weening and
L. Dickey. No options may be granted under the 1999 Executive
Stock Incentive Plan after August 30, 2009.
The Compensation Committee administers the 1999 Executive
Stock Incentive Plan. The Compensation Committee has full and
exclusive power to interpret the 1999 Executive Stock Incentive
Plan and to adopt rules, regulations and guidelines for carrying
out the 1999 Executive Stock Incentive Plan as it may deem
necessary or proper.
As of August 30, 1999, Messrs. Weening and L. Dickey were
each granted options to purchase 500,000 shares of Class C Common
Stock under the 1999 Executive Stock Incentive Plan.
The 1999 Executive Stock Incentive Plan may be amended by
the approval of the Board of Directors, but certain amendments
adversely affecting the rights of a participant under any
existing option grant may not be made without obtaining the
participant's written consent, and amendments increasing the
number of shares of Class C Common Stock which may be granted
under the 1999 Executive Stock Incentive Plan may not be made
without obtaining shareholder approval.
The exercise price for nonqualified stock options granted under
the 1999 Executive Stock
<PAGE>
Incentive Plan may be no less than 100% of the fair market value of the Class
A Common Stock on the date of grant of the option. The exercise price for
ISOs granted under the 1999 Executive Stock Incentive Plan may be no less
than 100% of the fair market value of the Class A Common on the date
of grant (or 110% in the case of ISOs granted to participants who
are 10% shareholders of the Company). The vesting schedule for
options is 25% per year with each option being fully exercisable
four years from the date of the grant. The closing sale price of
the Class A Common Stock on the Nasdaq National Market on
September 16, 1999 was $29.50.
The federal income tax consequences of nonqualified stock
options and ISOs granted under the 1999 Executive Stock Incentive
Plan are the same as for the 1999 Stock Incentive Plan as
described above.
The Board of Directors recommends a vote FOR approval of the
1999 Executive Stock Incentive Plan.
6. Approval of an Amendment to the Amended and Restated Articles
of Incorporation Increasing the Authorized Class A Common Stock
The proposed amendment to the Company's Amended and Restated
Articles of Incorporation increases the number of authorized
shares of the Class A Common Stock from 50,000,000 shares to
100,000,000 shares. As of the Record Date, of the 50,000,000
shares of Class A Common Stock presently authorized, 20,857,007
shares were issued and outstanding and an aggregate of _____
shares were reserved for issuance pursuant to the Company's
1998 Stock Incentive Plan, 1998 Executive Stock Incentive Plan,
1998 Employee Stock Purchase Plan, 1999 Stock Incentive Plan and
1999 Executive Stock Incentive Plan.
The additional authorized shares of the Company's Class A
Common Stock may be used for any proper corporate purpose
approved by the Board of Directors of the Company. Their
availability would enable the Company's Board of Directors to act
with flexibility when favorable opportunities arise to expand or
strengthen the Company's business through the issuance of Class A
Common Stock. Among the reasons for issuing additional shares
would be to increase the Company's capital through sale of the
Company's Class A Common Stock, to engage in other types of
capital transactions, to undertake acquisitions and to satisfy
contractual commitments, including the Company's 1998 Stock
Incentive Plan, 1998 Executive Stock Incentive Plan, 1998 Amended
and Restated Employee Stock Purchase Plan, 1999 Stock Incentive
Plan and 1999 Executive Stock Incentive Plan and to pay stock
dividends or stock splits. The Board of Directors of the Company
has not proposed the increase in authorized capital stock with
the intention of discouraging tender offers or takeover attempts.
However, the availability of authorized shares for issuance could
render more difficult or discourage a merger, tender offer, proxy
contest or other attempt to obtain control of the Company.
The Company regularly reviews a range of financing
transactions including the issuance of the Company's Class A
Common Stock. Except for shares reserved for issuance as
described above, the Company has no present intention of issuing
or selling Class A Common stock for any purpose, but may do so if
market and other conditions indicate that such a course of action
is advisable.
If the amendment to the Company's Amended and Restated
Articles of Incorporation is approved, the Board of Directors of
the Company generally may issue the additional authorized shares
of [Class A] Common Stock without further shareholder approval.
In some instances, shareholder approval for the issuance of
additional shares may be required by law or by the requirements
of the Nasdaq National Market, on which the Class A Common Stock
is listed, or may otherwise be necessary or desirable. Except in
such cases, the Company does not anticipate that further
shareholder authorization will be solicited. Shareholders are
not entitled to preemptive rights to purchase any new issue of
Class A
<PAGE>
Common Stock.
The Board of Directors recommends a vote FOR approval of an
amendment to the Company's Amended and Restated Articles of
Incorporation Increasing the Authorized Class A Common Stock.
7. Approval of an Amendment to the Amended and Restated Articles
of Incorporation Providing for Staggered Terms of Directors
Presently, all directors of the Company are elected annually. If
approved, the amendment provides for staggered terms of directors
by dividing the Board of Directors into three groups, designated
as Class I, Class II and Class III. Class I will initially
consist of two directors, each to hold office until the Annual
Meeting of Shareholders in 2000; Class II will initially consist
of two directors, each to hold office until the annual Meeting of
Shareholders in 2001; Class III will initially consist of two
directors, each to hold office until the Annual Meeting of
Shareholders in 2002. Starting with the 2000 Annual Meeting of
Shareholders, one class of directors would be elected for a three-
year term at each Annual Meeting, with the remaining directors
continuing in office. The directors of each class initially
would be as follows:
Class I Class II Class III
William M. Bungeroth Robert H. Sheridan, III Richard W. Weening
Ralph B. Everett Eric P. Robison Lewis W. Dickey, Jr.
A staggered Board of Directors, which prevents more than one-
third of the Board from being replaced at any one meeting, will
help to assure the continuity and stability of the Company's
management and policies since a majority of the directors will
have prior experience as directors of the Company.
A classified Board of Directors should discourage certain types
of activity that involve an actual or threatened change in
control of the Company by making it more difficult and time
consuming to change majority control of the Board.
Over the past several years, third parties have attempted to
accumulate substantial stock positions in public companies with a
view toward using a control block of stock to force a merger,
consolidation, restructuring or to force a corporation to
repurchase a control block of stock at a premium. Such actions
are taken without advance notice to, or consultation with, the
board or directors or management of the corporation. In many
cases, such third parties seek representation on the
corporation's board or directors in order to increase the
likelihood that their proposals will be implemented. If the
corporation resists their efforts to obtain representation on the
corporation's board, such parties may commence proxy contests to
have themselves or their nominees elected to the board of
directors in place of certain directors or the entire board. In
some cases, the third party may not be interested in taking over
the corporation, but uses the threat of a proxy fight or takeover
bid as means of forcing the corporation to repurchase its
<PAGE>
holdings at a substantial premium over market price.
The Board believes that the threat of removal of the Company's
management in such situations would curtail management's ability
to negotiate effectively with such purchasers. Management would
be deprived of the time and information necessary to evaluate the
takeover proposal, to study alternative proposals and to help
ensure that the best price is obtained in any transaction
involving the Company that may be ultimately undertaken.
A classified Board of Directors would have the effect of making
it more difficult to change the composition of the Board. A
staggered Board upon which directors serve three-year terms
requires at least two annual shareholder meetings in order to
effect a change in control of the Board.
By stabilizing the composition of the Board, a classified Board
should encourage any person who might seek to acquire control of
the Company to consult with the Company's Board and to negotiate
the terms of any proposed business combination or tender offer.
The Board believes that any takeover attempt or business
combination in which the Company is involved should be thoroughly
studied by the Company's management and its Board to assure that
all of the Company's shareholders are treated fairly and that shareholder
value is maximized.
Takeover or changes in management of the Company that are
proposed and effected without prior consultation and negotiation
with the Company's Board and management may not necessarily be
detrimental to the Company and its shareholders. The adoption of
this amendment could discourage or frustrate future attempts to
acquire control of the Company that are not approved by the
incumbent Board, but which a majority of shareholders may deem to
be in their best interests. One of the effects of a classified
Board may be to discourage prospective acquirers from making
tender offers for, or open market purchases of, shares of the
Company's capital stock. Because tender offers are often made at
a premium above market price, and large purchases made in the
open market often result in temporary fluctuations in the market
price of such shares, shareholders may be denied the opportunity
to sell their shares at prices in excess of historic market
prices if the proposed amendment discourages such tender offers
or open market purchases. A classified Board could also delay or
frustrate the assumption of control by a holder of a large block
of the Company's shares or the removal of incumbent directors,
even if shareholders considered such event to be beneficial.
However, the Board feels that the benefits to shareholdes of
seeking to protect its ability to negotiate with the proponent
of an unfriendly or unsolicited proposal to take over or restructure
the Company outweigh the disadvantages to shareholders of discouraging
such proposals.
The Board of Directors recommends a vote FOR approval of an
amendment to the Amended and Restated Articles of Incorporation
providing for staggered terms of directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table lists information concerning the beneficial
ownership of the Common Stock of the
<PAGE>
Company on September 15, 1999 (unless otherwise noted) by (i) each Director
and Named Executive Officer of the Company and their affiliates, (ii) all
directors and executive officers as a group, and (iii) each
person known to the Company to own beneficially more than 5% of
the Common Stock of the Company.
<TABLE>
<CAPTION>
Name of Stockholder Class A Class B Class C
Common Stock Common Stock (1) Common Stock (2)
- ------------------- -------------------- ------------------ ----------------------
Number of Number of Number of
Shares Percentage Shares Percentage Shares Percentage
<S> <C> <C> <C> <C> <C> <C>
Richard W. Weening (3) 181,000 * - -
QUAESTUS Management
Corporation (4) 101,000 * - - 337,313 15.7%
CML Holdings, LLC (5) 201,100 1.0% - - 1,522,422 70.8%
QUAESTUS Partner Fund 80,000 * - - - -
Lewis W. Dickey, Jr. (3) 149,740 1.5% - - - -
DBBC of Georgia, LLC (6) - - - - 376,542 13.6%
William M. Bungeroth (7) 135,466 1.4% - - - -
Richard J. Bonick, Jr. (7) 94,590 1.0% - - - -
John Dickey (7) 65,542 - - - - -
BA Capital Company, LP - - 3,371,246 42.9% - -
State of Wisconsin
Investment Board (8) - - 3,791,619 48.3% - -
The Northwestern Mutual
Life Ins. Co. (9) - - 693,728 8.8% - -
Putnam Investments,
Inc. (10) 1,123,900 - - - - -
Robert H. Sheridan,
III (11) 6,000 * - - - -
Ralph B. Everett (11) 8,000 * - - - -
Eric P. Robison - - - - - -
All directors and
executive officers
as a group (8 persons) 640,338 3.1% - - 2,151,277 100.00%
</TABLE>
* Indicates less than one percent
(1) Except upon the occurrence of certain events, holders of
Class B Common Stock are not entitled to vote, whereas each share
of Class A Common Stock entitles its holders to one vote and
subject to certain exceptions, each share of Class C Common Stock
entitles its holders to ten votes. Under certain conditions and
subject to prior governmental approval, shares of Class B Common
Stock are convertible into shares of Class A Common Stock and/or
Class C Common Stock.
(2) Subject to certain exceptions, each share of Class C Common
Stock entitles its holders to ten votes. Under certain
conditions and subject to prior governmental approval, shares of
Class C Common Stock are convertible into shares of Class A
Common Stock.
(3) Represents beneficial ownership attributable to Mr. Weening
as a result of his controlling interests in QUAESTUS Management
Corporation and QUAESTUS Partner Fund and beneficial ownership
attributable to Lewis W. Dickey, Jr. as a result of his
controlling interest in DBBC of Georgia, LLC. Includes options
to purchase 250,173 shares of Class C Common Stock exercisable
within 60 days granted to each of Messrs. Weening and Lewis W.
Dickey, Jr. under the 1998 Executive Stock Incentive Plan.
(4) The address of QUAESTUS Management Corporation is 111 East
Kilbourn Avenue, Suite 2700, Milwaukee, Wisconsin 53202. This
information is based on a Schedule 13G dated February 16, 1999.
(5) The address of CML Holdings, LLC is 111 East Kilbourn
Avenue, Suite 2700, Milwaukee, Wisconsin 53202.
(6) The address of DBBC of Georgia, LLC is 3060 Peachtree Road,
N.W., Suite 730, Atlanta, Georgia 30305. This information is
based on a Schedule 13G dated February 16, 1999.
(7) Includes options to purchase 47,000, 6,124 and 30, 452
shares of Class A Common Stock exercisable within 60 days granted
to Messrs. Bungeroth, Bonick, and John Dickey, respectively,
under the 1998 Stock Incentive Plan.
(8) The address of the State of Wisconsin Investment Board is
P.O. Box 7842, Madison, Wisconsin 53707. This information is
based on a Schedule 13G dated February 4, 1999.
(9) The address of The Northwestern Mutual Life Insurance
Company is 720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
This information is based on a Schedule 13G dated February 10, 1999.
(10) The address of Putnam Investments, Inc. is One Post Office
Square, Boston, Massachusetts 02109. This information is based
on a Schedule 13G dated May 5, 1999. Of these shares, Putnam
Investments, Inc. has shared voting power as to 592,000 shares
and shared dispositive power as to all 1,123,900 shares of Common
Stock.
(11) Include options to purchase 6,000 shares of Class A Common
Stock exercisable within 60 days granted to each of Messrs.
Sheridan and Everett upon their election to Board of Directors.
Section 16 (a) Beneficial Ownership Reporting Compliance
Under U.S. securities laws, directors, certain executive officers
and persons holding more than 10% of the Company's common stock
must report their initial ownership of the Class A Common Stock and any
changes in that ownership to the Securities and Exchange
Commission. The Commission has designated
specific due dates for these reports and the Company must identify in this
proxy statement those persons for whom these reports were not filed
when due. The Company believes, based upon a review of copies of
such reports and written materials, that no other reports were
required, and that during 1998 all Section 16 filing requirements
applicable to the Company's directors, executive officers and
greater than 10% beneficial owners were complied with, except for
the following: (i) the original Form 3 filed for Lewis W. Dickey,
Jr. did not include certain shares purchased for his personal
account; (ii) the original Form 3 reports for CML Holdings did
not include one transaction and was not filed on a timely basis;
and (iii) the Form 4 report for one transaction of CML Holdings
for the month end September 30, 1998 was filed shortly after the
due date of October 10, 1998. Each of these matters was
subsequently reported correctly as required.
NON-EMPLOYEE DIRECTOR COMPENSATION
Directors of the Company who are not employees receive a fee of
$1,000 for each Board meeting which they attend, plus out-of-
pocket expenses incurred in connection with attendance at each
such meeting. In addition, in 1998, Messrs. Sheridan and Everett
each received options to purchase a total of 30,000 shares of
Class A Common Stock. Such options are exercisable at the fair
market value of the Class A Common Stock at the date of grant.
These options will vest 20% per year with each option being fully
exercisable five years from the date of grant. On August 30,
1999, Messrs. Sheridan And Everett each received additional
options to purchase a total of 10,000 shares of Class A Common
Stock, and Mr. Robison received options to purchase a total of
50,000 shares of Class A Common Stock. Such options are
exercisable at the fair market value of the Class A Common Stock
at the date of grant. These options will vest 20% over year with
each option being fully exercisable five years from the date of
grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Everett was a member of the Compensation Committee in
1998 but is no longer a member of such committee. Mr. Everett is
a partner with the Washington, D.C. office of the law firm of
Paul, Hastings, Janofsky & Walker LLP, where he heads the firm's
Federal Legislative Practice Group. The Company engages the law
firm of Paul, Hastings, Janofsky & Walker LLP in numerous matters
dealing with compliance with federal regulation and corporate
finance activities. Total expenses paid to Paul, Hastings,
Janofsky & Walker LLP during fiscal 1998 and 1997 were
approximately $1,190,000 and $0, respectively. Of these expenses
paid in 1998 and 1997, $1,131,000 and $0 were capitalized as
acquisition or financing costs. The remaining expenses have been
included as part of the corporate general and administrative
expenses in the statement of operations. At December 31, 1998
and 1997, amounts payable to Paul, Hastings, Janofsky & Walker
LLP were approximately $642,000 and $22,000, respectively.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
<PAGE>
Lewis W. Dickey, Jr. and John Dickey each have a 25% ownership
interest in Stratford Research, Inc. ("Stratford"), an entity
that provides programming consulting and market research services
to the Company. Under an agreement with Stratford, Stratford
receives $25,000 to evaluate programming at target radio
stations. Annual strategic studies cost the Company a minimum
of $25,000 negotiable depending on competitive market conditions.
Additionally, Stratford provides program-consulting services for
contractually specified amounts over the three years of the
agreement. Total fees paid to Stratford by the Company during
1998 and 1997 were $2,735,000 and $184,000 respectively.
QUAESTUS & Company Inc. ("QUAESTUS"), an investment firm
specializing in media and new media controlled by Richard W.
Weening, performs due diligence on the Company's proposed
transactions as well as certain other consulting services
including internet strategy consulting, research support for
Department of Justice inquiries and analytic services in support
of the Treasury and corporate finance function. During 1998 and
1997, the Company paid QUAESTUS $1,423,000 and $297,000
respectively, for services. Under an Agreement reviewed and
approved by the independent directors, for specified due
diligence services QUAESTUS receives a specified flat rate per
transaction between $15,000 and $60,000 depending on the amount
of work involved as reflected in the number of FM stations
proposed to be acquired in the transaction. For other services
QUAESTUS is paid an hourly rate per person-hour. QUAESTUS is not
paid based on the value of any transaction. The Company is
obligated to reimburse QUAESTUS for all of its out-of-pocket
expenses incurred in connection with the performance of services
under such agreement.
The Company also paid to Cumulus Media, LLC fees in 1998 and 1997
consisting of (i) a non-recurring organizational fee of $300,000
in 1997 (with QUAESTUS receiving $180,000 of such fee and DBBC of
Georgia, LLC, receiving $120,000 of such fee) and (ii) management
fees of $150,000 and $206,000 (with QUAESTUS receiving $90,000
and $123,000 respectively, of such fees from Cumulus Media, LLC
and DBBC of Georgia, LLC, receiving $60,000 and $834,000,
respectively, of such fees from Cumulus Media, LLC). The fees
paid to Cumulus Media, LLC have terminated. Lewis W. Dickey, Jr.
and John Dickey have a 75% and 25% ownership interest in DBBC of
Georgia LLC, respectively.
As noted above, one of the Company's directors is Mr. Ralph B.
Everett. Mr. Everett is a partner with the Washington, D.C.
office of the law firm of Paul, Hastings, Janofsky & Walker LLP,
which the Company has engaged.
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
Name Principal Occupation and Directorships
Richard W. Weening Mr. Weening, age 53, has served as Executive
Chairman, Treasurer and Director of the Company since
March 1998. Mr. Weening served as Chairman of the
Company from its inception on May 22, 1997 until March
1998. Mr. Weening was a founder and an initial
investor in Cumulus Media, LLC through his ownership
interest in CML Holdings LLC ("CML"), an investment
fund managed by QUAESTUS, a private equity investment
and advisory firm specializing in information services
and media and new media companies. QUAESTUS was also
a Managing Member of Cumulus Media, LLC. Mr. Weening
served as Chairman and Chief Executive Officer of
Cumulus Media, LLC from its inception in April 1997
until its dissolution in June 1998. Mr. Weening
founded QUAESTUS in 1989 and served as Chairman and
Chief Executive Officer until March 1998. Mr. Weening
has over 20 years experience as a chief executive
officer and investor in the information and media
industry, including text and reference book publishing,
business magazine publishing, radio broadcasting,
interactive information services and electronic
commerce software and services. In 1985, Mr. Weening
founded Caribbean Communications Company Ltd., a radio
broadcasting company acquired by the Company in May
1997. He currently serves as a director of QUAESTUS
and ARI Network Services, Inc. He holds a Bachelor
of Arts degree from St. John's University.
Lewis W. Dickey, Jr. Mr. Dickey, age 37, has served as Executive Vice
Chairman and Director of the Company since March
1998. Mr. Dickey was a founder and an initial
investor in Cumulus Media, LLC through his interest
in CML and owns 75% of the outstanding capital stock
of DBBC of Georgia, LLC, a Managing Member of Cumulus
Media, LLC. He served as Executive Vice Chairman
and a Director of Cumulus Media, LLC from its
inception in April 1997 until its dissolution in
June 1998. Mr. Dickey is the founder and was
President of Stratford from September 1985 to
March 1998 and owns 25% of the outstanding capital
stock of Stratford. Stratford is a strategy
consulting and market research firm advising radio
and television broadcasters as well as other media
related industries. From January 1988 until March
1998, Mr. Dickey served as President and Chief
Operating Officer of Midwestern Broadcasting, which
operated two stations in Toledo, Ohio that were
acquired by the Company in November 1997. He also
has an ownership interest (along with members of his
family and Mr. Weening) in three stations in Nashville,
Tennessee: WQQK-FM, WNPL-FM and WVOL-AM. Mr. Dickey
is a nationally regarded consultant on radio strategy
and the author of The Franchise-Building Radio Brands,
published by the National Association of Broadcasters,
one of the industry's leading texts on competition
and strategy. He holds Bachelor of Arts and Master
of Arts degrees from Stanford University and a Master
of Business Administration degree from Harvard
University. Mr. Dickey is the brother of John Dickey,
the Company's Senior Vice President of Programming.
<PAGE>
William M. Bungeroth Mr. Bungeroth, age 52, has served as President and
Director of the Company and President and Chief
Executive Officer of Cumulus Broadcasting, Inc. since
the companies began operations in May 1997. Mr.
Bungeroth joined the Company from WPNT Radio in
Chicago where he was Vice President and General
Manager of this flagship property of Century
Broadcasting Corporation. Prior to joining Century
Broadcasting Corporation in 1992, he was President
of Consulting Partners, which specialized in improving
the operations of radio stations in smaller and
mid-size markets. From August 1989 to July 1990,
Mr. Bungeroth was Vice President of Major Market
Affiliations at Unistar Radio Networks. From August
1987 to August 1989, he was President and Chief
Operating Officer of Sunbelt Communications. From
1982 to 1987, he was Vice President of Sales and
Operations at Century Broadcasting. He holds a
Bachelor of Arts degree from Lafayette College.
Robert H. Sheridan, III Mr. Sheridan, age 36, has served as a Director of
the Company since July 1, 1998. Mr. Sheridan served
as a member of the Investment Committee of Cumulus
Media, LLC from April 1997 until its dissolution in
June 1998. Mr. Sheridan has served as a Managing
Director of Bank of America Capital Investors or its
predecessor, the principal investment group within
Bank of America Corporation since January 1998, and
is a Senior Vice President of BA Capital Company,
L.P., formerly known as NationsBanc Capital Corp.
He was a Director of a predecessor of Bank of America
Capital Investors from January 1996 to January 1998.
BA Capital Company, L.P. is a stockholder of the
Company. Prior to joining a predecessor of Bank of
America Capital Investors in January 1994, Mr.
Sheridan worked in the corporate bank division of a
predecessor from June 1989 to January 1994. Mr.
Sheridan serves as a director of several privately held
companies. Mr. Sheridan holds a Bachelor of Arts
degree from Vanderbilt University and a Master of
Business Administration from Columbia University.
See "Security Ownership of Certain Beneficial Owners
and Management."
Ralph B. Everett Mr. Everett, age 48, has served as a Director of the
Company since July 1998. Since 1989, Mr. Everett has
been a partner with the Washington, D.C. office of the
law firm of Paul, Hastings, Janofsky & Walker LLP,
where he heads the firm's Federal Legislative Practice
Group. Prior to 1989, he was Chief Counsel and Staff
Director of the United States Senate Committee on
Commerce, Science and Transportation. He is a
Director and a member of the Investment Committee of
Shenandoah Life Insurance Company. He is also a
member of the Board of Visitors of Duke University
Law School and the Norfolk Southern Corporation
Advisory Board. Mr. Everett holds a Bachelor of Arts
degree from Morehouse College and a Juris Doctor
degree from Duke University.
Eric P. Robison Mr. Robison, age 40, has served as a Director of the
Company since August 1999. Since January 1994, Mr.
Robison has worked for Vulcan Northwest, Inc., the
holding company that manages all personal and business
interests for investor Paul G. Allen. In this role
Mr. Robison serves as a Business Development
Associate for Vulcan Ventures, Inc., the venture fund
division of Vulcan and investigates and secures
investment opportunities. Mr. Robison also serves
on the board of directors of C|NET, Inc., ARI
Network Services, Inc., Egghead.com, Inc., Liquid
Audio, Inc. Prior to joining Vulcan, Mr. Robison was
co-founder and vice president of The Stanton Robison
Group, Inc., a business development, marketing and
advertising consulting firm. Mr. Robison has served
in key marketing management positions with SGS, Inc.,
Ashton-Tate, Inc., and Denny's Inc. He has also
worked on the account staff of some of the nation's
most prestigious advertising agencies including
McCann Erickson, Doyle Dane Bernbach and Foote Cone
and Belding. Robison holds a Bachelor of Arts degree
in communication studies from California State
University,
<PAGE>
Sacramento, and a Master of Business Administration
in general management from the University of
California, Davis.
INFORMATION ABOUT THE BOARD OF DIRECTORS
The Board of Directors held three regularly scheduled
and special meetings during 1998. Each director attended at least
75% of his Board and committee meetings.
It is primarily the Board's responsibility to oversee
the management of the Company's business. To assist in carrying
out this responsibility, the Board has established the standing
committees listed below. The Company does not have a standing
nominating committee.
The Audit Committee (1) reviews management's
recommendation for selection of the Company's independent
auditors, (2) examines accounting processes and reporting
systems, (3) assesses the adequacy of internal controls and risk
management, (4) reviews and approves the Company's financial
disclosures and (5) reviews other similar matters. The Audit
Committee did not meet during 1998, but did meet during the first
quarter of 1999 to discuss the Company's fiscal year 1998 audit.
The current members of the Audit Committee are Messrs. Sheridan
(Chairman) and Everett.
The Compensation Committee oversees the determination
of all matters relating to employee compensation and benefits and
specifically reviews and approves salaries, bonuses and stock-
based compensation for the named executive officers. The
Compensation Committee met once in 1998, after the Company's
initial public offering. The current members of the Compensation
Committee are Messrs. Sheridan (Chairman) and Robison.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee was established after completion of
the Company's initial public offering in June 1998. The
Compensation Committee consists of Messrs. Sheridan and Robison,
neither of whom is an employee of the Company. The Compensation
Committee is responsible for making recommendations to the Board
concerning the compensation levels of the executive officers of
the Company. The Compensation Committee also administers the
Company's 1999 Stock Incentive Plan, the 1999 Executive Stock
Incentive Plan, the 1998 Stock Incentive Plan and the 1998
Executive Stock Incentive Plan and determines awards to be made
under such plans to the Company's executive officers and to other
eligible individuals. The Compensation Committee reviews
compensation programs for executive officers annually.
With respect to 1998, virtually all of the compensation decisions
for executive officers were made by the Company's Board of
Directors prior to the completion of the initial public offering.
The Company's executive compensation program aims to:
* Link managers' goals with shareholders' interests.
* Support business plans and long-term Company goals.
<PAGE>
* Tie executive compensation to Company performance.
* Attract and retain talented management.
Types of Compensation
There are two main types of compensation:
(1) Annual compensation. This includes salary and bonus. The
Company awards bonuses only when profits and other performance
criteria meet certain levels.
(2) Equity Based Compensation. The Company adopted the 1999
Stock Incentive Plan and the 1999 Executive Stock Incentive Plan
in connection with the Company's follow on equity offering in
July 1999. The Company adopted the 1998 Stock Incentive Plan and
the 1998 Executive Stock Incentive Plan in connection with the
Company's initial public offering. The Compensation Committee
expects that stock option grants will be the primary form of long-
term incentive compensation for the Company's executive officers.
The Compensation Committee believes stock options are an
effective means of incenting senior management to increase the
long-term value of the Company's Common Stock.
In making compensation decisions, it is the Compensation
Committee's current intention to recommend plans and awards which
will meet the requirements for deductibility for tax purposes
under Section 162(m) of the Internal Revenue Code of 1986, as amended.
Factors Considered in Determining Compensation
The Compensation Committee wants the compensation of the
Company's executives to be competitive in the broadcast industry
and with other U.S. media companies. The Committee conducts its
own review of various parts of the compensation program, and
using its assessment of the skills, experience, and achievements
of individual executives, the Committee decides the compensation
of executives.
The Committee looks at the size and success of other companies
and the types of jobs covered by these companies in determining
executive compensation. One goal of the Company's compensation
program is to approximate the survey group's average
compensation, adjusted for company size and performance.
The Committee also considers the tax deductibility of
compensation paid to the executive officers.
Annual Compensation
General
Annual compensation for the Company's executives includes salary
and bonus. This is similar to the compensation programs of most
leading companies.
The Committee aims to pay salaries at the average of the survey
companies, adjusted for company size and performance. The
Committee also looks at the specific job duties, the person's
achievements and other criteria.
Bonuses
<PAGE>
The Company provides cash awards to executives; market managers
and other key personnel based on the Company's achievement of the
overall financial performance plan and the achievement of
executive-specific performance goals in the applicable fiscal
year. Bonus awards are limited to a percentage of base salary
ranging from 10% to 50% depending on the participant's level of
responsibility. Awards are made at the sole discretion of the
Executive Chairman and the Compensation Committee taking into
account the above mentioned factors and such other factors as the
Compensation Committee may deem relevant.
Equity Based Compensation
General
Today's business decisions affect the Company over a number of
years. This is why the long-term incentive awards are tied to the
Company's performance and the value of the Company's Common Stock
over several years.
In general, the amount of the long-term incentive awards does not
change as much as the amount of the annual bonus awards.
Stock Options
Stock options are an important part of the Company's long-term
incentive program. The managers who receive them gain only when
the Common Stock value goes up.
In 1998, the executives and other employees received ten-year
options in amounts commensurate with rank and responsibility. In
deciding the size of individual option grants for 1998, the
Committee considered the responsibilities and title, as well as
the total number of options awarded to all employees.
<PAGE>
Executive Chairman Compensation
Annual Compensation
In determining Mr. Weening's salary, the Committee considered his
job duties, the pay practices of other companies and Mr.
Weening's preference for equity-based compensation.
Mr. Weening's bonus for 1998 was based on the terms of his
employment agreement and Company performance criteria set forth
therein, which provided for the full bonus of $150,000 if the
Company exceeded revenue and EBITDA thresholds. Such thresholds
were exceeded in 1998. The Committee also considered his job as
head of a significant U.S. media company with a wide area of
control and broad duties. The Committee reviewed his 1998
accomplishments, and the Committee considered these combined views.
Equity Based Compensation
The value of the stock options and granted to Mr. Weening in 1998
also depends on the Company's future success and whether that
success is reflected in the value of the Common Stock.
In deciding the number of stock options to grant Mr. Weening, the
Committee considered the value of his other long-term incentive
compensation compared with competitive long-term compensation
values. The Committee also considered the complexity and duties
of his job. Finally, the Committee considered the deductibility
of Mr. Weening's compensation under the tax laws.
Compensation Committee
Robert H. Sheridan III, Chairman
Ralph B. Everett
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued
for services rendered to the Company in all capacities, for the
past two years for the Chief Executive Officer and each of the
other executive officers of the Company employed as of December
31, 1998 (the ''Named Executive Officers'').
Summary Compensation Table
Annual Compensation Long-Term
Compensation
Awards
-------------------------- ---------------
Securities
Name and Principal Underlying All other
Position Year Salary Bonus Options(#) Compensations(3)
Richard W. Weening 1998 $300,000 $150,000(1) 1,000,690 $ ---
Executive Chairman
& Treasurer 1997(2) $ --- $ --- --- $ ---
Lewis W. Dickey 1998 $300,000 $150,000(1) 1,000,690 $ ---
Executive Vice
Chairman 1997(2) $ --- $ --- --- $ ---
William M. Bungeroth 1998 $275,000 $ --- 235,000 $ 2,160
President 1997 $170,000 $ 50,000 --- $ 205,000
Richard J.
Bonick, Jr. 1998 $250,000 $ --- 36,620 $ 2,145
Vice President
& CFO 1997 $170,000 $ 25,000 --- $ 205,000
John Dickey 1998 $250,000 $ --- 152,708 $ ---
Senior Vice
President of
Programming 1997(2) $ --- $ --- --- $ ---
(1) The Compensation Committee approached Messrs. Weening and L.
Dickey about substituting options for any cash bonus earned under
their employment agreements as a way of more closely tying their
compensation to the future growth in the Company. As a result,
Messrs. Weening and L. Dickey were each granted an option to
purchase 30,000 shares of Class A Common Stock in August 1999
under the 1999 Stock Incentive Plan.
(2) During 1997, Messrs. Weening, L. Dickey and J. Dickey
dedicated approximately 85%, 89% and 0% of their time,
respectively, to matters directly related to the Company and its
business, since the Company's inception. Messrs. Weening, L.
Dickey and J. Dickey did not receive any compensation directly
from the Company. However, during 1997, the Company paid
$297,000 to QUAESTUS, an entity controlled by Mr. Weening, for
acquisitions and corporate finance services performed on behalf
of the Company. In addition, the Company paid $184,000 to
Stratford Research, an entity controlled by L. Dickey and J.
Dickey, for programming research and broadcast strategy
consulting services. At December 31, 1997, the Company owed an
additional $240,000 to Stratford Research for services rendered.
During 1997, the Company also paid a nonrecurring
organization fee of $300,000 (with QUAESTUS receiving $180,000 of
such fee and DBBC, an entity controlled by L. Dickey, receiving
$120,000 of such fee), and a management fee of $206,000 (with
QUAESTUS receiving $123,600 of such fee and DBBC receiving
$82,400 of such fee).
(3) During the fiscal year ending December 31, 1998, Messrs.
Bungeroth and Bonick received $2,160 and $2,145, respectively, in
other compensation representing the matching Company contribution
under the Company's Defined Contribution Plan (the "401(k)
Plan"). No other executives were eligible to participate in the
401(k) Plan in 1998.
<PAGE>
Employment Agreements
As discussed more particularly below, the Company has entered
into employment agreements with certain of the Named Executive
Officers. If the Named Executive Officer voluntarily terminates
his employment with the Company for other than "good reason" or
is terminated following a "change in control" (both as defined in
the employment agreements) such employment agreements prohibit
each of the Named Executive Officers from competing with the
Company for a specified period after termination of employment
(18 months for Messrs. Weening and Dickey and 12 months for
Messrs. Bungeroth and Bonick).
Mr. Weening serves as Executive Chairman and Treasurer of the
Company under an employment agreement with the Company. Under
the terms of Mr. Weening's employment agreement, he is entitled
to receive an annual base salary of $300,000. Such base salary
will increase by a minimum of 5.0% during each year and may
increase further if the Compensation Committee deems appropriate.
The agreement provides that Mr. Weening may receive a bonus of up
to 50% of his base salary, with bonus targets to be based on
budgeted broadcast cash flow as determined by the Compensation
Committee. Mr. Weening's employment agreement has a three-year
term, which automatically extends each year for one additional
year, subject to non-renewal. The terms of the agreement also
provide that upon the death or disability of Mr. Weening, the
Company shall continue to pay Mr. Weening's base salary for the
twelve-month period immediately following such event, all
unvested time vested options will vest and the Company will
continue to provide certain welfare benefits to Mr. Weening and
his dependents for twelve months.
In addition, in the event (i) the death or disability occurs
after the mid-point of a particular vesting year and (ii) the
fair market value of the Class A Common Stock as of the date of
such death or disability equals or exceeds the exercise price per
share of the performance options scheduled to vest at the end of
such vesting year, such performance options will vest. The
agreement also provides that in the event Mr. Weening is
terminated by the Company without cause or terminates his
employment for good reason, the Company will pay to Mr. Weening
an amount equal to the greater of (i) the base salary owed to Mr.
Weening for the remainder of the term of the agreement and (ii)
one hundred percent of his annual base salary in effect as of the
date of termination plus the last bonus received by Mr. Weening,
all unvested time vested options will vest and the Company will
continue to provide benefits to Mr. Weening and his dependents
for twelve months. In addition, if the fair market value of the
Class A Common Stock as of the date of such termination equals or
exceeds the exercise price per share of the unvested performance
options; such performance options will vest.
Further, if the cumulative total return of the Class A Common
Stock from July 1, 1998 to the date of termination exceeds the
total return of the bottom quartile of an index of eight publicly
traded companies most comparable to the Company, the performance
options will vest. Such performance options that become vested
shall remain exercisable until 90 days following the date that
such performance options would otherwise have become vested and
exercisable. If, within the one-year period following a change
of control, the Company terminates Mr. Weening's employment for
any reason other than death or disability or for cause or Mr.
Weening terminates his employment for "good reason" (as defined
in the employemnt agreement), Mr. Weening will be paid the same
amount as if he were terminated without cause if no change of
control had occurred and all unvested time vested options and
performance options will vest.
Mr. Dickey serves as Executive Vice Chairman of the Company
under an employment agreement with the Company. Under the terms
of Mr. Dickey's employment agreement he is entitled to receive an
annual base salary of $300,000. Such base salary will increase
by a minimum of 5.0% during each year and may increase further if
the Compensation Committee deems it appropriate. The agreement
provides that Mr. Dickey may receive a bonus of up to 50% of his
base salary, with bonus targets to be based on budgeted Broadcast
Cash Flow as determined by the Compensation Committee. Mr. Dickey's
employment agreement has a three-year term, which automatically
extends each year for one additional year, subject to non-renewal.
<PAGE>
The terms of the agreement also provide that upon the death
or disability of Mr. Dickey, the Company shall continue to pay
Mr. Dickey's base salary for the twelve-month period immediately
following such event, all unvested time vested options will vest
and the Company will continue to provide certain welfare benefits
to Mr. Dickey and his dependents for twelve months. In addition,
if (i) the death or disability occurs after the mid-point of a
particular vesting year and (ii) the fair market value of the
Class A Common Stock as of the date of such death or disability
equals or exceeds the exercise price per share of the performance
options scheduled to vest at the end of such vesting year, such
performance options will vest.
The agreement also provides that in the event Mr. Dickey is
terminated by the Company without cause or terminates his
employment for good reason, the Company will pay to Mr. Dickey an
amount equal to the greater of (i) the base salary owed to Mr.
Dickey for the remainder of the term of the agreement and (ii)
one times annual base salary in effect as of the date of
termination plus the last bonus received by Mr. Dickey and all
unvested time vested options will vest. In addition, if the fair
market value of the Class A Common Stock as of the date of such
termination equals or exceeds the exercise price per share of the
unvested performance options; such performance options will vest.
Further, if the cumulative total return of the Class A Common
Stock from July 1, 1998 to the date of termination exceeds the
total return of the bottom quartile of an index of eight
publicly traded companies most comparable to the Company, the
performance options will vest. Such performance options that
become vested shall remain exercisable until 90 days following
the date that such performance options would otherwise have
become vested and exercisable. If, within the one-year period
following a change of control, the Company terminates Mr.
Dickey's employment for any reason other than death or disability
or for cause, or Mr. Dickey terminates his employment for "good
reason" (as defined in the employment agreement), Mr. Dickey will
be paid the same amount as if he were terminated without cause if
no change of control had occurred and all unvested time vested
options and performance options will vest.
Mr. Bungeroth serves as President and Chief Executive
Officer of the Company and President and Chief Executive Officer
of Cumulus Broadcasting, Inc. under an employment agreement with
the Company. Under the terms of Mr. Bungeroth's employment
agreement, he is entitled to receive an annual base salary of
$300,000 and is eligible to receive a bonus of up to 50% of his
annual base salary based on goals agreed upon by Mr. Bungeroth
and the Company's Board of Directors. Mr. Bungeroth's employment
agreement is terminable by either party.
Mr. Bonick is a party to an employment agreement with the
Company, pursuant to which he serves as Vice President and Chief
Financial Officer of the Company and Cumulus Broadcasting, Inc.
Under the terms of Mr. Bonick's employment agreement, he is
entitled to receive an annual base salary of $250,000 and is
eligible to receive a bonus of up to 50% of his annual base
salary based on goals agreed upon by Mr. Bonick and the Company's
Board of Directors. Mr. Bonick's employment agreement is
terminable by either party.
<PAGE>
Option Grants for the Twelve Months Ended December 31, 1998
The following table sets forth information regarding options to
purchase Common Stock granted by the Company to the Named
Executive Officers in the Summary Compensation Table during the
1998 calendar year:
<TABLE>
Number of Securities % of Total Options Exercise or
Underlying Granted to Employees Base Price Expiration Grant Date
Name Options Granted in Fiscal Year Per Share Date Present Value(1)
<S> <C> <C> <C> <C> <C>
Richard W. Weening(2)
Group #1 312,715 9.95% $14.00 June 22, 2008 $2,040,465
Group #2 312,715 9.95% (3) June 22, 2008 $1,823,128
Group #3 375,260 11.94% (3) June 22, 2008 $2,191,518
Lewis W. Dickey, Jr.(2)
Group #1 312,715 9.95% $14.00 June 22, 2008 $2,040,465
Group #2 312,715 9.95% (3) June 22, 2008 $1,823,128
Group #3 375,260 11.94% (3) June 22, 2008 $2,191,518
William M. Bungeroth(4) 235,000 7.48% $14.00 June 22, 2008 $1,688,710
Richard J. Bonick, Jr.(4) 36,620 1.17% $14.00 June 22, 2008 $ 263,151
John Dickey(4) 152,708 4.86% $14.00 June 22, 2008 $1,097,360
</TABLE>
(1) The present value of each grant is estimated on the date of
grant using the Black-Scholes option pricing model with the
following weighted average assumptions: dividend yield of 0.00%
for all years; expected volatility of 65.59%; risk-free interest
rate of 4.73%; and expected life of four years for the 1998
Executive Stock Incentive Plan and five years for the 1998 Stock
Incentive Plan.
(2) All options relate to shares of Class C Common Stock.
(3) Stock options under the 1998 Executive Stock Incentive Plan
were granted on July 1, 1998 and are divided into three groups.
Group 1 consists of time vested options with an exercise price
equal to $14.00 per share and vest quarterly in equal
installments over a four-year period (subject to accelerated
vesting in certain circumstances as described under "-Employment
Agreements"). Group 2 and Group 3 also consist of time-vested
options which vest in four equal annual installments on July 1,
1999, July 1, 2000, July 1, 2001 and July 1, 2002 (subject to
accelerated vesting in certain circumstances as described below
above "Employment Agreements"). The first installment of both
the Group 2 options and Group 3 options are exercisable at a
price of $14.00 per share on July 1, 1999 and subsequent
installments are exercisable at a price 15% (or 20% in the case
of Group 3 options) greater than the prior year's exercise price
for each of the next three years. All options vest upon a change
of control of the Company as described below above "Employment
Agreements."
(4) All options relate to shares of Class A Common Stock.
<PAGE>
Aggregated Option Exercises for the twelve months ending December 31, 1998
and Year-End Values
The following table sets forth information concerning option
exercises for the year ended December 31, 1998 by the Named
Executive Officers in the Summary Compensation Table, and the
value of each such executive officer's unexercised options at
December 31, 1998. No options were exercised in 1998.
Number of Securities Value of Unexercised In-the
Underlying Unexercised Money Options at
Options at December 31, 1998 (#) December 31, 1998 ($)(1)
Exercisable Unexercisable Exercisable Unexercisable
Richard W. Weening (3) 0 1,000,690 $0 $1,272,363(2)
Lewis W. Dickey, Jr. (3) 0 1,000,690 $0 $1,272,363(2)
William M. Bungeroth (4) 0 235,000 $0 $ 616,875
Richard J. Bonick, Jr. (4) 0 36,620 $0 $ 96,128
John Dickey (4) 0 152,708 $0 $ 400,858
(1) Based upon a per share price for Common Stock of $16.625.
This price represents the closing price for the Common Stock on
the NASDAQ National Market System on December 31, 1998.
(2) Represents the value of 484,710 in-the-money options for
each individual, respectively, at December 31, 1998.
(3) Unexercised options related to shares of Class C Common Stock.
(4) Unexercised options related to shares of Class A Common Stock.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the total stockholder return on the
Company's Common Stock since the Company's initial public
offering on June 26, 1998 with that of the (i) Standard & Poors
500 Stock Index; (ii) the NASDAQ Stock Market Index and (iii) an
index comprised of radio broadcast and media companies. See note
(a) below. The total return calculations set forth below assume
$100 invested on June 26, 1998, with reinvestment of dividends
into additional shares of the same class of securities at the
frequency with which dividends were paid on such securities
through December 31, 1998. Since the Company effected its
initial public offering in June 1998, the information in the
graph is provided in twenty-three or twenty-four day intervals from
June 26, 1998 through December 31, 1998. The stock price
performance shown in the graph below should not be considered
indicative of potential future stock price performance.
[Graph]
(a) Index comprised of radio broadcast, outdoor and other media
companies with the following trading symbols: Chancellor Media
Corporation (AMFM), Clear Channel Communications Corporation
(CCU), Citadel Broadcasting Company (CITC), Capstar Broadcasting
Partners, Inc. (CRB), Cox Radio Inc. (CXR), Emmis Broadcasting
Corporation (EMMS), Hefterl Broadcasting Corporation (HBCCA),
Jacor Communications Inc. (JCOR) and Saga Communications Inc.
(SGA).
<TABLE>
Cumulative Total Return
6/26/98 7/19/98 8/12/98 9/04/98 9/28/98 10/21/98 11/14/98 12/07/98 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cumulus $100.00 $114.29 $121.43 $78.57 $65.18 $63.84 $65.18 $ 94.64 $118.75
S & P 500 100.00 104.72 95.68 85.94 92.54 94.41 99.34 104.81 108.47
NASDAQ 100.00 107.45 97.65 83.79 93.03 89.58 98.85 109.15 117.29
Radio Index (a) 100.00 112.35 99.92 83.79 88.76 79.83 83.89 92.61 95.31
</TABLE>
<PAGE>
SUBMISSION OF SHAREHOLDER PROPOSALS
In accordance with the Company's Amended and Restated By-Laws,
nominations, other than by or at the direction of the Board of
Directors, of candidates for election as directors at the 2000
Annual Meeting of Shareholders and any other shareholder proposed
business to be brought before the 2000 Annual Meeting of
Shareholders must be submitted to the Company not later than
August 4, 2000. Shareholder proposed nominations and other
shareholder proposed business must be made in accordance with the
Company's Amended and Restated By-Laws which provide, among other
things, that shareholder proposed nominations must be accompanied
by certain information concerning the nominee and the shareholder
submitting the nomination, and that shareholder proposed business
must be accompanied by certain information concerning the
proposal and the shareholder submitting the proposal. To be
considered for inclusion in the proxy statement solicited by the
Board of Directors, shareholder proposals for consideration at
the 2000 Annual Meeting of Shareholders of the Company must be
received by the Company at its principal executive offices, 111
East Kilbourn Avenue, Milwaukee, Wisconsin 53202 on or before
June 2, 2000. Proposals should be directed to Mr. Terrence J.
Leahy, Secretary. To avoid disputes as to the date of receipt,
it is suggested that any shareholder proposal be submitted by
certified mail, return receipt requested.
If the Company's annual meeting in 2000 is changed by more than
30 days from the anniversary date of the 1999 Annual Meeting, the
Company will notify shareholders of such change and the new
deadlines for submitting shareholder proposals for consideration
at the meeting and for inclusion in the Company's proxy
statement. Such notice will be included in the Company's
Quarterly Report on Form 10-Q under Item 5.
PENDING LEGAL PROCEEDINGS
No director or executive officer of the Company is an adverse
party or has an interest adverse to the Company or its
subsidiaries in any material pending legal proceeding.
OTHER MATTERS
Although management is not aware of any other matters that may
come before the Annual Meeting, if any such matters should be
presented, the persons named in the accompanying proxy intend to
vote such proxy in accordance with their best judgment.
The Company's financial statements, supplementary financial
information, management's discussion and analysis of financial
condition and results of operations, and quantitative and
qualitative disclosures about market risk are incorporated herein
by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 and the Company's Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1999 and
June 30, 1999. Shareholders may obtain a copy of the Company's
Annual Report for the year ended December 31, 1998 as filed on
Form 10-K at no cost by writing to Mr. Terrence J. Leahy,
Secretary, Cumulus Media, Inc., 111 East Kilbourn Avenue,
Milwaukee, Wisconsin 53202.
By Order of the Board of Directors,
Terrence J. Leahy, Secretary
<PAGE>
Appendix A
CUMULUS MEDIA INC.
AMENDED AND RESTATED
1998 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of this Plan is to provide eligible
employees of Cumulus Media Inc. (the "Company") and its
Subsidiaries (as defined in Paragraph 12 hereof) (collectively,
the "Employer"), with an opportunity to purchase $.01 par value
Class A common stock of the Company (the "Class A Common Stock")
through annual offerings to be made commencing on the 1st day of
January, 1999 (the "Effective Date of the Offering"), and thus
develop a stronger incentive to work for the continued success of
the Employer. The aggregate number of shares of Common Stock
authorized to be sold pursuant to options granted under this Plan
is 1,000,000 shares, subject to adjustment as provided in
Paragraph 17 hereof. In computing the number of shares available
for grant, any shares relating to options which are granted, but
which subsequently lapse, are canceled, or are otherwise not
exercised by the final date for exercise, shall be deemed
available for future grants of options. The Plan is intended to
qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the" Code") and,
therefore, the provisions of the Plan shall be construed so as to
govern participation in a manner consistent with the requirements
of Section 423(b) of the Code.
2. Administration. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company
(the "Committee"). Any expenses of the Committee shall be paid
by the Company. The Committee may adopt regulations not
inconsistent with the provisions of this Plan for the
administration thereof, and its interpretation and construction
of the Plan and the regulations shall be final, conclusive and
binding on all participants in the Plan.
3. Eligibility.
(a) All employees of the Employer will be eligible to
participate in the Plan, provided they have a minimum period of
continuous service with the Employer of one (1) month as of the
Effective Date of the Offering, subject to the additional
limitations imposed herein.
(b) Any provision of this Plan to the contrary notwithstanding,
no employee shall be granted an option:
(i) if, immediately after the grant, such employee would own,
and/or hold outstanding options to purchase stock possessing 5%
or more of the total combined voting power or value of all
classes of stock of the Company or of any parent or Subsidiary of
the Company as provided in Section 423(b)(3) of the Code; or
(ii) which permits the employee's rights to purchase stock under
all employee stock purchase plans, as defined in Section 423 of
the Code, of the Company and any parent or Subsidiaries to accrue
at a rate which exceeds
<PAGE>
$25,000 of Fair Market Value of the stock
(determined at the time such option is granted) for each calendar
year in which such stock option is outstanding at any time as
provided in Section 423(b)(8) of the Code.
4. Offerings. The Board of Directors of the Company may
authorize the Committee to make one or more annual offerings to
employees (through the grant of options) to purchase Common Stock
under this Plan. The term of any offering shall be for a period
of twelve (12) months' duration.
5. Participation. An employee eligible on the Effective Date of
any Offering (as defined in paragraph 1 hereof) may participate
in such offering by completing and forwarding a payroll deduction
authorization form to his appropriate payroll location before
September 30th of the offering period. The form will authorize a
regular payroll deduction from the employee's pay.
6. Deductions. The Employer will maintain payroll deduction
accounts for all participating employees. With respect to any
offering made under this Plan, an employee may authorize a
payroll deduction in terms of whole number percentages up to a
maximum of 15% of the compensation an employee received during
the offering period (or during such portion thereof as an
employee may elect to participate).
7. Deduction Changes. An employee may increase or decrease his
payroll deduction by filing a new payroll deduction authorization
form before September 30th of the offering period. The change
may not become effective sooner than the next pay period after
receipt of the form. A payroll deduction may be increased only
once and reduced only once during the term of any offering
period.
8. Withdrawal of Funds. Upon written notice to the Committee,
an employee may at any time and for any reason permanently draw
out the balance accumulated in his account, and thereby withdraw
from participation in an offering. The only right of an employee
withdrawing from an offering shall be to be paid the entire
amount credited to his account. He may thereafter begin
participating again only once, provided it is before September
30th, during the remainder of the offering period. Partial
withdrawals will not be permitted.
9. Purchase of Shares.
(a) Each employee participating in an offering under this Plan
will be granted an option, upon the Effective Date of the
Offering, to purchase as many whole shares of Common Stock of the
Company as can be purchased with the total payroll deductions
credited to his account during the specified offering period in
the manner and on the terms herein provided.
(b) The purchase price for a share granted under any offering
will be the Offering Price of 85% of the lesser of the Fair
Market Value (as defined in Section 12 hereof) of a share of
Class A Common Stock on the Effective Date of the Offering and
December 31
<PAGE>
of the year which includes the Effective Date of the
Offering, provided, however, that the purchase price shall not be
less than par value.
(c) As of December 31st of each year, the account of each
participating employee shall be totaled and the Offering Price
determined. If a participating employee shall have sufficient
funds in his account to purchase one or more full shares at the
Offering Price as of that date, the employee shall be deemed to
have exercised his option to purchase such share or shares at
such price, his account shall be charged for the amount of the
purchase and a stock certificate shall be issued to him as of
such day. The balance of any payroll deductions credited to his
account during the offering shall be returned to the
participating employee.
10. Interest. Interest will not accrue on any employee payroll
deduction accounts.
11. Registration of Certificates. Certificates will be
registered only in the name of the employee. If an employee
makes a written request to the Committee, the Committee may cause
the certificates to be issued in his name jointly with a member
of his family with right of survivorship.
12. Definitions
(a) "Fair Market Value" shall be the closing sale price of the
Common Stock of the Company on the Nasdaq National Market (the
"Nasdaq") as reported in the Midwest Edition of The Wall Street
Journal on the date in question, provided that, if no sales of
Common Stock of the Company were made on the Nasdaq on any such
date, Fair Market Value shall mean the closing sale price of the
Common Stock of the Company as reported for the most recent
preceding day on which sales of Common Stock were made on the
Nasdaq, or, failing any such sales, such other price as the
Committee may determine in conformity with pertinent law and
regulations of the Treasury Department.
(b) "Subsidiary" means any corporation of which the Company or a
Subsidiary owns 50% or more of the combined voting power of all
classes of stock unless the Board determines that such
corporation shall not be a "Subsidiary" for purposes hereof.
Only subsidiaries that satisfy the requirements of Section 424(f)
of the Code shall be entitled to participate in the Plan.
13. Rights as a Shareholder. None of the rights or privileges
of a shareholder of the Company shall exist with respect to
shares purchased under this Plan unless and until such full
shares shall have been duly issued.
14. Rights on Retirement, Death, or Termination of Employment.
In the event of a participating employee's retirement, death, or
termination of employment, no payroll deduction shall be taken
from any pay due and owing to him at such time and the balance in
his account shall be paid to him or, in the event of his death,
to his estate. Transfer of a participating employee from the
Company to a parent or Subsidiary thereof or vice versa shall not
constitute
<PAGE>
termination of employment.
15. Rights Not Transferable. Rights under this Plan are not
transferable by a participating employee, otherwise than by will
or the laws of descent and distribution, and are exercisable,
during his lifetime, only by him. In addition, rights under the
Plan may not be subject to any attachment, garnishment or
encumbrance of any kind by creditors of the participating
employee.
16. Application of Funds. All funds received or held by the
Company under this Plan may be used for any corporate purpose and
need not be segregated.
17. Adjustment in Case of Changes Affecting the Common Stock of
the Company. In the event of any stock dividend, split-up,
recapitalization, merger, consolidation, combination or exchange
of shares, or the like, as a result of which shares of any class
shall be issued in respect of the outstanding Common Stock, or
the Common Stock shall be changed into the same or different
number of the same or another class of stock, or into securities
of another person, cash or other property (not including a
regular cash dividend), the total number of shares authorized to
be offered in accordance with Paragraph 1, the number of shares
subject to each outstanding option, the option price applicable
to each such option, and/or the consideration to be received upon
exercise of each such option shall be adjusted in a fair and
reasonable manner by the Committee. In addition, the Committee
shall, in its sole discretion, have authority to provide, in
appropriate cases, for (i) acceleration of the exercise date of
outstanding options, or (ii) the conversion of outstanding
options into cash or other property to be received in certain of
the transactions specified in the preceding sentence upon
effectiveness of such transactions.
18. Amendment of the Plan.
(a) The Board of Directors of the Company may at any time, or
from time to time, amend this Plan in any respect; provided,
however, that no amendment shall be made without the approval of
the shareholders of the Company to increase the aggregate number
of shares which may be issued under this Plan (other than as
provided in Paragraph 17 hereof) or for which shareholder
approval is required under applicable tax, securities or other
laws.
(b) In the event that the Board of Directors determines that the
ongoing operation of the Plan may result in unfavorable financial
accounting consequences, the Board of Directors may, in its
discretion and, to the extent necessary or desirable, amend the
Plan to reduce or eliminate such accounting consequence
including, but not limited to:
(i) altering the purchase price for any offering period
including an offering period underway at the time of the change
in purchase price;
(ii) shortening any offering period such that the offering
period ends on a new exercise date, including an offering period
underway at the time of the action of the Board of Directors; and
<PAGE>
(iii) allocating shares.
Such amendments shall be made without the approval of the
shareholders of the Company or the consent of any participating, employees.
19. Termination of the Plan.
(a) This Plan and all rights of employees under any offering
hereunder shall terminate:
(i) on the day that participating employees become entitled to
purchase a number of shares equal to or greater than the number
of shares remaining available for purchase. If the number of
shares so purchasable is greater than the shares remaining
available, the available shares shall be allocated by the
Committee among such participating employees in such manner as it
deems fair and consistent with Section 423 of the Code; or
(ii) at any time, at the discretion of the Board of Directors
of the Company.
(b) Upon termination of this Plan, all amounts in the accounts
of participating employees shall be either (i) promptly refunded
in total or (ii) refunded to the extent not used to purchase
shares of Class A Common Stock, in the sole discretion of the
Board of Directors of the Company.
20. Governmental Regulations. The obligation to sell and
deliver shares of the Class A Common Stock under this Plan is
subject to the approval of any governmental authority required in
connection with the authorization, issuance, or sale of such
stock.
<PAGE>
Appendix B
CUMULUS MEDIA INC.
1999 STOCK INCENTIVE PLAN
1. Objectives. The Cumulus Media Inc. 1999 Stock
Incentive Plan is designed to attract and retain certain selected
officers, key employees, non-employee directors and consultants
whose skills and talents are important to the Company's
operations, and reward them for making major contributions to the
success of the Company. These objectives are accomplished by
making awards under the Plan, thereby providing Participants
with a proprietary interest in the growth and performance of the
Company.
2. Definitions.
(a) "Award" shall mean the grant of a Stock
Option to a Plan Participant pursuant to such terms, conditions,
performance requirements, and limitations as the Committee may
establish in order to fulfill the objectives of the Plan.
(b) "Award Agreement" shall mean an agreement
between Cumulus Media Inc. and a Participant that sets forth the
terms, conditions, performance requirements, and limitations
applicable to an Award.
(c) "Board" shall mean the Board of Directors of
Cumulus Media Inc.
(d) "Cause" shall mean termination of a
Participant's employment with the Company for (i) any failure of
the Participant to substantially perform his duties with the
Company (other than by reason of illness) which occurs after the
Company has delivered to the Participant a demand for performance
which specifically identifies the manner in which the Company
believes the Participant has failed to perform his duties, and
the Participant fails to resume performance of his duties on a
continuous basis within 14 days after receiving such demand, (ii)
the commission by the Participant of any act of dishonesty or
disloyalty involving the Company or its business, or (iii) the
conviction of the Participant of a felony or misdemeanor which,
in the reasonable judgment of the Committee, is substantially
related to the employee's position with the Company or
substantially impairs the Participant's ability to perform his
duties with the Company.
(e) "Change in Control" shall mean any of the following events:
(i) the acquisition by an individual, entity or
group (within the meaning of Section 13(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (a
"Person"), after the date hereof, of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
35% or more of either (a) the then outstanding shares of common
stock of Cumulus Media Inc. (the "Outstanding Company Common
Stock") or (b) the combined voting power of the then outstanding
voting securities of Cumulus Media Inc. entitled to vote
generally in the election of directors
<PAGE>
(the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: (a) any acquisition
directly from Cumulus Media Inc., (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company, or (d) any acquisition by
any corporation pursuant to a transaction which complies with
clauses (a), (b) and (c) of subsection (iii) of this Section
2(e); or
(ii) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by
Cumulus Media Inc.'s shareholders, was approved by a vote of at
least a majority of the directors then constituting the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Board; or
(iii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or
substantially all of the assets of the Company for which approval
of the shareholders of Cumulus Media Inc. is required (a
"Business Combination"), in each case, unless, immediately
following such Business Combination, (a) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction
owns Cumulus Media Inc. or all or substantially all of the
Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (b) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 35% or more of,
respectively, the then outstanding common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities
of such corporation except to the extent that such ownership
existed prior to the Business Combination and (c) at least a
majority of the members of the Board of Directors of the
corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of he initial
agreement, or of the action of the Board, providing for such
Business Combination; or
<PAGE>
iv) approval by the shareholders of Cumulus Media Inc.
of a complete liquidation or dissolution of Cumulus Media Inc.
(f) "Class A Common Stock" shall mean the
authorized and issued or unissued $.01 par value Class A common
stock of Cumulus Media Inc.
(g) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(h) "Committee" shall mean the Compensation Committee
of the Board of Directors of Cumulus Media Inc. which shall be
comprised of at least two non-employee directors.
(i) "Company" shall mean Cumulus Media Inc. and
its subsidiaries including subsidiaries of subsidiaries and
partnerships and other business ventures in which Cumulus Media
Inc. has a significant equity interest, as determined in the sole
discretion of the Committee.
(j) "Fair Market Value" shall mean the closing
sale price of the Class A Common Stock on the Nasdaq National
Market as reported in the Midwest Edition of the Wall Street
Journal for the date in question, provided that, if no sales of
Class A Common Stock were made on said exchange on that date,
"Fair Market Value" shall mean the closing sale price of Class A
Common Stock as reported for the most recent preceding day on
which sales of Class A Common Stock were made on such exchange,
or, failing any such sales, such other price as the Committee may
determine in conformity with pertinent law and regulations of the
Treasury Department. Notwithstanding the foregoing, in the case
of Awards which are effective on the date the Company sells
shares of Class A Common Stock in an underwritten public
offering, Fair Market Value shall mean the price per share at
which the Class A Common Stock is initially sold to the public
pursuant to the offering.
(k) "Participant" shall mean a current or
prospective employee, non-employee director, consultant or other
person who provides services to the Company to whom an Award has
been made under the Plan. Notwithstanding the foregoing, if a
director is serving on the Board to represent the interests of a
corporate shareholder of the Company, the option which otherwise
would be awarded to the director may be awarded to the director's
employer.
(l) "Plan" shall mean the Cumulus Media Inc. 1999
Stock Incentive Plan.
(m) "Retirement" shall mean termination of
employment with the Company or service as a member of the Board
on or after the attainment of age 65.
(n) "Stock Option" shall mean a grant of a right to purchase a
specified number of shares of Class A Common Stock, the purchase
price of which shall be not
<PAGE>
less than 100% of Fair Market Value
on the date of grant. A stock option may be in the form of a
nonqualified stock option or an incentive stock option ("ISO").
A nonqualified stock option is an option that does not meet the
criteria of an ISO. An ISO, in addition to being subject to
applicable terms, conditions and limitations established by the
Committee, complies with Section 422 of the Code which, among
other limitations, provides that the aggregate Fair Market Value
(determined at the time the option is granted) of Class A Common
Stock for which ISOs are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000;
that ISOs shall be priced at not less than 100% of the Fair
Market Value on the date of the grant (110% in the case of a
Participant who is a 10% shareholder of the Company within the
meaning of Section 422 of the Code); and that ISOs shall be
exercisable for a period of not more than ten years (five years
in the case of a Participant who is a 10% shareholder of the Company).
3. Eligibility. Current and prospective employees,
non-employee directors, consultants or other persons who provide
services to the Company eligible for an Award under the Plan are
those who hold, or will hold, positions of responsibility and
whose performance, in the judgment of the Committee or the
management of the Company (if such responsibility is delegated
pursuant to Section 6 hereof), can have a significant effect on
the success of the Company.
4. Common Stock Available for Awards. Subject to
adjustment as provided in Section 14 hereof, the number of shares
that may be issued under the Plan for Awards during the term of
the Plan is 900,000 shares of Class A Common Stock, all of which
may be in the form of incentive stock options. Any shares
subject to an Award which are used in settlement of tax
withholding obligations shall be deemed not to have been issued
for purposes of determining the maximum number of shares
available for issuance under the Plan. Likewise, if any Stock
Option is exercised by tendering shares, either actually or by
attestation, to the Company as full or partial payment for such
exercise under this Plan, only the number of shares issued net of
the shares tendered shall be deemed issued for purposes of
determining the maximum number of shares available for issuance
under the Plan. No individual shall be eligible to receive
Awards aggregating more than 300,000 shares of Class A Common
Stock reserved under the Plan in any one calendar year, subject
to adjustment as provided in Section 14 hereof. Cumulus Media
Inc. shall take whatever actions are necessary to file required
documents with the U.S. Securities and Exchange Commission and
any other appropriate governmental authorities and stock
exchanges to make shares of Class A Common Stock available for
issuance pursuant to Awards.
5. Administration. The Plan shall be administered by
the Committee, which shall have full and exclusive power to
interpret the Plan, to determine which current and prospective
employees, non-employee directors and consultants are Plan
Participants, to grant waivers of Award restrictions, to
determine the provisions of Award Agreements and to adopt such
rules, regulations and guidelines for carrying out the Plan as it
may deem necessary or proper, all of which powers shall be
executed in the best interests of the Company and in keeping with
the objectives of the Plan.
6. Delegation of Authority. Except to the extent
prohibited by applicable law or
<PAGE>
the applicable rules of a stock exchange, the Committee may delegate to the
chief executive officer and to other senior officers of the Company its duties
under the Plan pursuant to such conditions or limitations as the
Committee may establish. Any such delegation may be revoked by
the Committee at any time.
7. Awards. The Committee shall set forth in the
related Award Agreement the terms, conditions, performance
requirements, and limitations applicable to each Award including,
but not limited to, continuous service with the Company,
conditions under which acceleration of vesting will occur and
achievement of specific business objectives.
8. Deferred Payment of Awards. The Committee may
permit selected Participants to elect to defer payment of Awards
in accordance with procedures established by the Committee which
are intended to permit such deferrals to comply with applicable
requirements of the Code including, at the choice of
Participants, the capability to make further deferrals for
payment after retirement. Dividends or dividend equivalent
rights may be extended to and made part of any Award denominated
in stock, subject to such terms, conditions and restrictions as
the Committee may establish. The Committee may also establish
rules and procedures for the crediting of dividend equivalents
for deferred payments denominated in stock.
9. Stock Option Exercise. The price at which shares
of Class A Common Stock may be purchased under a Stock Option
shall be paid in full at the time of the exercise in cash or, if
permitted by the Committee, by means of tendering shares of Class
A Common Stock, which have been held by the Participant for more
than six months and have not been used within the prior six-month
period to exercise an option, either directly or by attestation,
valued at Fair Market Value on the date of exercise, or any
combination thereof.
10. Tax Withholding. The Company shall have the right
to deduct applicable taxes from any Award payment and withhold,
at the time of delivery or vesting of shares under the Plan, an
appropriate number of shares for payment of taxes required by law
or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such
taxes. The Company may defer making delivery with respect to
Class A Common Stock obtained pursuant to an Award hereunder
until arrangements satisfactory to it have been made with respect
to any such withholding obligation. If Class A Common Stock is
used to satisfy tax withholding, such stock shall be valued based
on the Fair Market Value when the tax withholding is required to
be made.
11. Amendment or Termination of the Plan. The Board may,
at any time, but only with unanimous consent or approval, amend
or terminate the Plan; provided, however, that
(a) subject to Section 14 hereof, no amendment or termination
may, in the absence of written consent to the change by the
affected Participant (or, if the Participant is not then living,
the affected beneficiary), adversely affect the rights of any
Participant or beneficiary under any Award granted under the Plan
prior to the date such amendment is adopted by the Board; and
<PAGE>
(b) without further approval of the shareholders of the Company,
no amendment shall increase the number of shares of Class A
Common Stock which may be delivered pursuant to Awards hereunder,
except for increases resulting from Section 14 hereof.
12. Termination of Employment. If the employment of a
Participant terminates, or a non-employee director no longer
serves on the Board, other than pursuant to paragraphs (a)
through (c) of this Section 12, all unvested Awards shall
immediately terminate and all vested but unexercised, deferred or
unpaid Awards shall terminate 90 days after such termination of
employment or service, unless the Award Agreement provides
otherwise, and during such 90-day period shall be exercisable
only to the extent provided in the Award Agreement.
Notwithstanding the foregoing, if a Participant's employment is
terminated for Cause, to the extent the Award is not effectively
exercised or has not vested prior to such termination, it shall
lapse or be forfeited to the Company immediately upon
termination. In all events, an Award will not be exercisable
after the end of its term as set forth in the Award Agreement.
(a) Retirement. When a Participant's employment
or service terminates as a result of Retirement, or early
retirement with the consent of the Committee, the Committee (in
the form of an Award Agreement or otherwise) may permit Awards to
continue in effect beyond the date of Retirement, or early
retirement, and/or the exercisability and vesting of any Award
may be accelerated.
(b) Resignation in the Best Interests of the
Company. When a Participant resigns from the Company or the
Board and, in the judgment of the Committee, the acceleration
and/or continuation of outstanding Awards would be in the best
interests of the Company, the Committee may (i) authorize, where
appropriate, the acceleration and/or continuation of all or any
part of Awards granted prior to such termination and (ii) permit
the exercise, vesting and payment of such Awards for such period
as may be set forth in the applicable Award Agreement.
(c) Death or Disability of a Participant.
(i) In the event of a Participant's death,
the Participant's estate or beneficiaries shall have a period
specified in the Award Agreement within which to receive or
exercise any outstanding Award held by the Participant under such
terms, and to the extent, as may be specified in the applicable
Award Agreement. Rights to any such outstanding Awards shall
pass by will or the laws of descent and distribution in the
following order: (a) to beneficiaries so designated by the
Participant; if none, then (b) to a legal representative of the
Participant; if none, then (c) to the persons entitled thereto as
determined by a court of competent jurisdiction. Subject to
subparagraph (iii) below, Awards so passing shall be exercised or
paid out at such times and in such manner as if the Participant
were living.
(ii) In the event a Participant is deemed by
the Company to be
<PAGE>
disabled within the meaning of Cumulus Media
Inc.'s group long-term disability plan, or if Cumulus Media Inc.
does not have such a plan, Section 22(e)(3) of the Code, the
Award shall be exercisable for the period, and to the extent,
specified in the Award Agreement. Awards and rights to any such
Awards may be paid to or exercised by the Participant, if legally
competent, or a legally designated guardian or representative if
the Participant is legally incompetent by virtue of such
disability.
(iii) After the death or disability of a
Participant, the Committee may in its sole discretion at any time
(1) terminate restrictions in Award Agreements and (2) accelerate
any or all installments and rights.
(iv) In the event of uncertainty as to
interpretation of or controversies concerning this paragraph (c)
of Section 12, the Committee's determinations shall be binding
and conclusive.
(d) No Employment Rights. The Plan shall not
confer upon any Participant any right with respect to
continuation of employment by the Company or service on the
Board, nor shall it interfere in any way with the right of the
Company to terminate any Participant's employment or service on
the Board at any time.
13. Nonassignability. Except as provided in
subsection (c) of Section 12 and this Section 13, no Award under
the Plan shall be assignable or transferable, or payable to or
exercisable by anyone other than the Participant to whom it was
granted. Notwithstanding the foregoing, the Committee (in the
form of an Award Agreement or otherwise) may permit Awards, other
than incentive stock options within the meaning of Section 422 of
the Code, to be transferred to members of the Participant's
immediate family, to trusts for the benefit of the Participant
and/or such immediate family members, and to partnerships or
other entities in which the Participant and/or such immediate
family members own all the equity interests. For purposes of the
preceding sentence, "immediate family" shall mean a Participant's
spouse, issue, and spouses of his issue.
14. Adjustments. In the event of any change in the
outstanding Class A Common Stock of the Company by reason of a
stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger, or similar event, the Committee
may adjust proportionally (a) the number of shares of Class A
Common Stock (i) reserved under the Plan, (ii) available for
ISOs, (iii) for which Awards may be granted to an individual
Participant, and (iv) covered by outstanding Awards denominated
in stock; (b) the stock prices related to outstanding Awards; and
(c) the appropriate Fair Market Value and other price
determinations for such Awards. In the event of any other change
affecting the Class A Common Stock or any distribution (other
than normal cash dividends) to holders of Class A Common Stock,
such adjustments as may be deemed equitable by the Committee,
including adjustments to avoid fractional shares, shall be made
to give proper effect to such event. In the event of a corporate
merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Committee shall be
authorized to issue or assume Stock Options, whether or not in a
transaction to which Section
<PAGE>
424(a) of the Code applies, by means of substitution of new Stock Options
for previously issued Stock Options or an assumption of previously issued
Stock Options.
15. Notice. Any notice to the Company required by any
of the provisions of the Plan shall be addressed to the director
of finance of the Company in writing, and shall become effective
when it is received by his office.
16. Unfunded Plan. The Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Class A Common Stock or
rights thereto under the Plan, any such accounts shall be used
merely as a bookkeeping convenience. The Company shall not be
required to segregate any assets that may at any time be
represented by cash, Class A Common Stock or rights thereto, nor
shall the Plan be construed as providing for such segregation,
nor shall the Company nor the Board nor the Committee be deemed
to be a trustee of any cash, Class A Common Stock or rights
thereto to be granted under the Plan. Any liability of the
Company to any Participant with respect to a grant of cash, Class
A Common Stock or rights thereto under the Plan shall be based
solely upon any contractual obligations that may be created by
the Plan and any Award Agreement; no such obligation of the
Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any
security or bond for the performance of any obligation that may
be created by the Plan.
17. Governing Law. The Plan and all determinations
made and actions taken pursuant hereto, to the extent not
otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Wisconsin, without giving
effect to principles of conflicts of laws, and construed
accordingly.
18. Effective and Termination Dates. The effective
date of the Plan is August 30, 1999. The Plan shall terminate on
August 30, 2009 subject to earlier termination by the Board
pursuant to Section 11, after which no Awards may be made under
the Plan, but any such termination shall not affect Awards then
outstanding or the authority of the Committee to continue to
administer the Plan.
19. Other Benefit and Compensation Programs. Payments
and other benefits received by a Participant pursuant to an Award
shall not be deemed a part of such Participant's regular,
recurring compensation for purposes of the termination, indemnity
or severance pay law of any country and shall not be included in,
nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement,
unless the Committee expressly determines otherwise.
<PAGE>
Appendix C
CUMULUS MEDIA INC.
1999 EXECUTIVE STOCK INCENTIVE PLAN
1. Objectives. The Cumulus Media Inc. 1999 Executive
Stock Incentive Plan is designed to be a plan which governs the
stock options to be granted to Richard W. Weening ("Mr. Weening")
and Lewis W. Dickey, Jr. ("Mr. Dickey").
2. Definitions.
(a) "Award" shall mean the grant of a Stock
Option to a Participant pursuant to such terms, conditions,
performance requirements, and limitations as the Committee may
establish in order to fulfill the objectives of the Plan.
(b) "Award Agreement" shall mean an agreement
between Cumulus Media Inc. and a Participant that sets forth the
terms, conditions, performance requirements, and limitations
applicable to an Award.
(c) "Board" shall mean the Board of Directors of
Cumulus Media Inc.
(d) "Cause" shall have the same meaning as in
Section 6(c) of the Employment Agreements.
(e) "Change of Control" shall have the same
meaning as in Section 8 of the Employment Agreements.
(f) "Class A Common Stock" shall mean the
authorized and issued or unissued $.01 par value Class A common
stock of Cumulus Media Inc.
(g) "Class C Common Stock" shall mean the
authorized and issued or unissued $.01 par value Class C common
stock of Cumulus Media Inc.
(h) "Code" shall mean the Internal Revenue Code
of 1986, as amended from time to time.
(i) "Committee" shall mean the Compensation Committee
of the Board of Directors of Cumulus Media Inc. comprised of at
least two non-employee directors.
(j) "Company" shall mean Cumulus Media Inc. and
its subsidiaries including subsidiaries of subsidiaries and
partnerships and other business ventures in which Cumulus Media
Inc. has a significant equity interest, as determined in the sole
discretion of the Committee.
(k) "Employment Agreements" shall mean the
employment agreements
<PAGE>
between the Company and Mr. Weening and Mr.
Dickey, respectively, dated as of July 1, 1998.
(l) "Fair Market Value", as regards the Class A
Common Stock shall mean the closing sale price of the Class A
Common Stock on the Nasdaq National Market as reported in the
Midwest Edition of the Wall Street Journal for the date in
question, provided that, if no sales of Class A Common Stock were
made on said exchange on that date, "Fair Market Value" shall
mean the closing sale price of Class A Common Stock as reported
for the most recent preceding day on which sales of Class A
Common Stock were made on such exchange, or, failing any such
sales, such other price as the Committee may determine in
conformity with pertinent law and regulations of the Treasury
Department. Notwithstanding the foregoing, in the case of Awards
which are effective on the date the Company sells shares of Class
A Common Stock in an underwritten public offering, Fair Market
Value shall mean the price per share at which the Class A Common
Stock is initially sold to the public pursuant to the offering.
"Fair Market Value" as regards the Class C Common Stock from time
to time, shall mean the Fair Market Value of the Class A Common
Stock at such same time unless the Committee determines otherwise
because of a determination that the Fair Market Value of the
Class A Common Stock is not indicative of the Fair Market Value
of the Class C Common Stock. In the event of such a
determination, the Committee shall determine the Fair Market
Value of the Class C Common Stock in conformity with pertinent
law and regulations of the Treasury Department.
(m) "Participant" shall mean Mr. Weening and/or Mr. Dickey.
(n) "Plan" shall mean the Cumulus Media Inc. 1999
Executive Stock Incentive Plan.
(o) "Stock Option" shall mean a grant of a right
to purchase a specified number of shares of Class C Common Stock
the purchase price of which shall be not less than 100% of Fair
Market Value on the date of grant, as determined by the
Committee. A stock option may be in the form of a nonqualified
stock option or an incentive stock option ("ISO"). A
nonqualified stock option is an option that does not meet the
criteria of an ISO. An ISO, in addition to being subject to
applicable terms, conditions and limitations established by the
Committee, complies with Section 422 of the Code which, among
other limitations, provides that the aggregate Fair Market Value
(determined at the time the option is granted) of Class C Common
Stock for which ISOs are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000;
that ISOs shall be priced at not less than 100% of the Fair
Market Value on the date of the grant (110% in the case of a
Participant who is a 10% shareholder of the Company within the
meaning of Section 422 of the Code); and that ISOs shall be
exercisable for a period of not more than ten years (five years
in the case of a Participant who is a 10% shareholder of the
Company).
3. Eligibility. Mr. Weening and Mr. Dickey are the
only employees eligible to
<PAGE>
participate in the Plan.
4. Common Stock Available for Awards. Subject to adjustment as
provided in Section 14 hereof, the number of shares that may be
issued under the Plan for Awards during the term of the Plan is
1,000,000 shares of Class C Common Stock, provided that not more
than 300,000 shares of Class C Common Stock may be subject to
incentive stock options. Any shares subject to an Award which
are used in settlement of tax withholding obligations shall be
deemed not to have been issued for purposes of determining the
maximum number of shares available for issuance under the Plan.
Likewise, if any Stock Option is exercised by tendering shares,
either actually or by attestation, to the Company as full or
partial payment for such exercise under this Plan, only the
number of shares issued net of the shares tendered shall be
deemed issued for purposes of determining the maximum number of
shares available for issuance under the Plan. No individual
shall be eligible to receive Awards aggregating more than 500,000
shares of Class C Common Stock reserved under the Plan in any one
calendar year, subject to adjustment as provided in Section 14
hereof. Cumulus Media Inc. shall take whatever actions are
necessary to file required documents with the U.S. Securities and
Exchange Commission and any other appropriate governmental
authorities and stock exchanges to make shares of Class C Common
Stock available for issuance pursuant to Awards."
5. Administration. The Plan shall be administered by
the Committee, which shall have full and exclusive power to
interpret the Plan, to determine which persons are Participants,
to grant waivers of Award restrictions, to determine the
provisions of Award Agreements and to adopt such rules,
regulations and guidelines for carrying out the Plan as it may
deem necessary or proper, all of which powers shall be executed
in the best interests of the Company and in keeping with the
objectives of the Plan.
6. Delegation of Authority. Except to the extent
prohibited by applicable law or the applicable rules of a stock
exchange, the Committee may delegate to the chief executive
officer and to other senior officers of the Company its duties
under the Plan pursuant to such conditions or limitations as the
Committee may establish. Any such delegation may be revoked by
the Committee at any time.
7. Awards. The Committee shall set forth in the
related Award Agreement the terms, conditions, performance
requirements, and limitations applicable to each Award including,
but not limited to, continuous service with the Company,
conditions under which acceleration of vesting will occur and
achievement of specific business objectives.
8. Deferred Payment of Awards. The Committee may
permit selected Participants to elect to defer payments of some
or all types of Awards in accordance with procedures established
by the Committee which are intended to permit such deferrals to
comply with applicable requirements of the Code including, at the
choice of Participants, the capability to make further deferrals
for payment after retirement. Dividends or dividend equivalent
rights may be extended to and made part of any Award denominated
in stock, subject to such terms,
<PAGE>
conditions and restrictions as
the Committee may establish. The Committee may also establish
rules and procedures for the crediting of dividend equivalents
for deferred payments denominated in stock.
9. Stock Option Exercise. The price at which shares
of Class C Common Stock may be purchased under a Stock Option
shall be paid in full at the time of the exercise in cash or, if
permitted by the Committee, by means of tendering shares of Class
A Common Stock or Class C Common Stock which have been held by
the Participant for more than six months and have not been used
within the prior six-month period to exercise an option, either
directly or by attestation, valued at Fair Market Value on the
date of exercise, or any combination thereof.
10. Tax Withholding. The Company shall have the right
to deduct applicable taxes from any Award payment and withhold,
at the time of delivery or vesting of shares under the Plan, an
appropriate number of shares for payment of taxes required by law
or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such
taxes. The Company may defer making delivery with respect to
Class C Common Stock obtained pursuant to an Award hereunder
until arrangements satisfactory to it have been made with respect
to any such withholding obligation. If Class C Common Stock is
used to satisfy tax withholding, such stock shall be valued based
on the Fair Market Value when the tax withholding is required to
be made.
11. Amendment or Termination of the Plan. The Board
may, at any time, but only by unanimous consent or approval,
amend or terminate the Plan; provided, however, that
(a) subject to Section 14 hereof, no amendment or termination
may, in the absence of written consent to the change by the
affected Participant (or, if the Participant is not then living,
the affected beneficiary), adversely affect the rights of any
Participant or beneficiary under any Award granted under the Plan
prior to the date such amendment is adopted by the Board; and
(b) without further approval of the shareholders of the Company,
no amendment shall increase the number of shares of Class C
Common Stock which may be delivered pursuant to Awards hereunder,
except for increases resulting from Section 14 hereof.
12. Termination of Employment.
(a) Termination of Options. The impact of a
Participant's termination of employment on the vesting and
exercisability of a Stock Option shall be governed by the Award
Agreement.
(b) Death or Disability of a Participant.
(i) In the event of a Participant's death,
the Participant's estate or
<PAGE>
beneficiaries shall have a period specified in the Award Agreement
within which to receive or exercise any outstanding Award held
by the Participant under such terms, and to the extent, as may be
specified in the applicable Award Agreement. Rights to any such
outstanding Awards shall pass by will or the laws of descent and
distribution in the following order: (a) to beneficiaries so
designated by the Participant; if none, then (b) to a legal
representative of the Participant; if none, then (c) to the persons
entitled thereto as determined by a court of competent jurisdiction.
Subject to subparagraph (iii) below, Awards so passing shall be
exercised or paid out at such times and in such manner as if the
Participant were living.
(ii) In the event a Participant suffers a
Disability as defined in Section 6(e) of the Employment
Agreements, the Award shall be exercisable for the period, and to
the extent, specified in the Award Agreement. Awards and rights
to any such Awards may be paid to or exercised by the
Participant, if legally competent, or a legally designated
guardian or representative if the Participant is legally
incompetent by virtue of such disability.
(iii) In the event of uncertainty as to
interpretation of or controversies concerning this paragraph (b)
of Section 12, the Committee's determinations shall be binding
and conclusive.
(c) No Employment Rights. The Plan shall not
confer upon any Participant any right with respect to
continuation of employment by the Company nor shall it interfere
in any way with the right of the Company to terminate any
Participant's employment at any time.
13. Nonassignability. Except as provided in Section
12(b) and this Section 13, no Award under the Plan shall be
assignable or transferable, or payable to or exercisable by
anyone other than the Participant to whom it was granted, except
that Awards, other than incentive stock options, within the
meaning of Section 422 of the Code, may be transferred to members
of the Participant's immediate family, to trusts for the benefit
of the Participant and/or such immediate family members, and to
partnerships or other entities in which the Participant and/or
such immediate family members own all the equity interests. For
purposes of the preceding sentence, "immediate family" shall mean
a Participant's spouse, issue, and spouses of his issue.
14. Adjustments. In the event of any change in the
outstanding Class C Common Stock of the Company by reason of a
stock split, stock dividend, combination or reclassification of
shares, recapitalization, merger, or similar event, the Committee
may adjust proportionally (a) the number of shares of Class C
Common Stock (i) reserved under the Plan, (ii) available for
ISOs, (iii) for which Awards may be granted to an individual
Participant, and (iv) covered by outstanding Awards denominated
in stock; (b) the stock prices related to outstanding Awards; and
(c) the appropriate Fair Market Value and other price
determinations for such Awards. In the event of any other change
affecting the Class C Common Stock or any distribution (other
<PAGE>
than normal cash dividends) to holders of Class C Common Stock,
such adjustments as may be deemed equitable by the Committee,
including adjustments to avoid fractional shares, shall be made
to give proper effect to such event. In the event of a corporate
merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Committee shall be
authorized to issue or assume Stock Options, whether or not in a
transaction to which Section 424(a) of the Code applies, by means
of substitution of new Stock Options for previously issued Stock
Options or an assumption of previously issued Stock Options.
15. Notice. Any notice to the Company required by any
of the provisions of the Plan shall be addressed to the director
of finance of the Company in writing, and shall become effective
when it is received by his office.
16. Unfunded Plan. The Plan shall be unfunded.
Although bookkeeping accounts may be established with respect to
Participants who are entitled to Class C Common Stock under the
Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any
assets that may at any time be represented by Class C Common
Stock , nor shall the Plan be construed as providing for such
segregation, nor shall the Company nor the Board nor the
Committee be deemed to be a trustee of any Class C Common Stock
granted under the Plan. Any liability of the Company to any
Participant with respect to a grant of Class C Common Stock under
the Plan shall be based solely upon any contractual obligations
that may be created by the Plan and any Award Agreement; and no
such obligation of the Company shall be deemed to be secured by
any pledge or other encumbrance on any property of the Company.
Neither the Company nor the Board nor the Committee shall be
required to give any security or bond for the performance of any
obligation that may be created by the Plan.
17. Governing Law. The Plan and all determinations
made and actions taken pursuant hereto, to the extent not
otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Wisconsin, without giving
effect to principles of conflicts of laws, and construed
accordingly.
18. Effective and Termination Dates. The effective
date of the Plan is August 30, 1999. The Plan shall terminate on
August 30, 2009 subject to earlier termination by the Board
pursuant to Section 11, after which no Awards may be made under
the Plan, but any such termination shall not affect Awards then
outstanding or the authority of the Committee to continue to
administer the Plan.
19. Other Benefit and Compensation Programs. Payments
and other benefits received by a Participant pursuant to an Award
shall not be deemed a part of such Participant's regular,
recurring compensation and shall not be included in, nor have any
effect on, the determination of benefits under any other employee
benefit plan, contract or similar arrangement, unless the
Committee expressly determines otherwise.
<PAGE>
Proxy Card
CUMULUS MEDIA INC.
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned appoints Richard W. Weening and Lewis W. Dickey,
Jr. and each of them, as proxies, each with the power to appoint
his substitute, and authorizes each of them to represent and to
vote, as designated below, all of the shares of stock of Cumulus
Media Inc. held of record by the undersigned on September 20,
1999 at the 1999 Annual Meeting of Shareholders of Cumulus Media
Inc. to be held on November 2, 1999 or at any adjournment
thereof.
This proxy when properly executed will be voted in th manner
directed herein by the undersigned shareholder. If no direction
is made, this proxy will be voted "FOR" the election
nominees for directors, "FOR" the approval of the ratification of
PricewaterhouseCoopers LLP as independent auditors for 1999,
"FOR" the approval of the 1998 Amended and Restated Employee
Stock Purchase Plan, "FOR" the approval of the 1999 Stock
Incentive Plan, "FOR" the approval of the 1999 Executive Stock
Incentive Plan, "FOR" the approval of an amendment to the Amended
and Restated Articles of Incorporation increasing the authorized
Class A Common Stock and "FOR" the approval of an amendment to
the Amended and Restated Articles of Incorporation providing for
staggered terms for directors.
(Detach below and return using the envelope provided.)
<PAGE>
Cumulus Media Inc. 1999 Annual Meeting
1. ELECTION OF DIRECTORS:
1-Richard W. Weening [] FOR all nominees [] "WITHHOLD AUTHORITY
2-Lewis W. Dickey, Jr. listed to the left to vote for all
3-William M. Bungeroth (except as specified nominees listed
4-Robert M. Sheridan, III below). to the left.
5-Ralph B. Everett
6. Eric P. Robison
(Instructions: To withhold authority to vote for any indicated nominee,
write the number(s) of the nominee(s) in the box provided to the right.)
2. PROPOSAL TO APPROVE THE 1998 AMENDED AND RESTATED EMPLOYEE
STOCK PURCHASE PLAN:
[ ] FOR approval of the 1998 Amended and Restated Employee Stock Purchase
Plan.
[ ] AGAINST approval of the 1998 Amended and Restated Employee Stock
Purchase Plan.
[ ] ABSTAIN from voting on the 1998 Amended and Restated
Employee Stock Purchase Plan.
3. PROPOSAL TO APPROVE THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT AUDITORS FOR 1999:
[ ] FOR approval of the ratification of PricewaterhouseCoopers LLP as
independent auditors for 1999.
[ ] AGAINST approval of the ratification of PricewaterhouseCoopers LLP
as independent auditors for 1999.
[ ] ABSTAIN from voting on the ratification of PricewaterhouseCoopers LLP
as independent auditors for 1999.
4. PROPOSAL TO APPROVE THE 1999 STOCK INCENTIVE PLAN:
[ ] FOR approval of the 1999 Stock Incentive Plan.
[ ] AGAINST approval of the 1999 Stock Incentive Plan.
[ ] ABSTAIN from voting on the 1999 Stock Incentive Plan.
5. PROPOSAL TO APPROVE THE 1999 EXECUTIVE STOCK INCENTIVE PLAN:
[ ] FOR approval of the 1999 Executive Stock Incentive Plan.
[ ] AGAINST approval of the 1999 Executive Stock Incentive Plan.
[ ] ABSTAIN from voting on the 1999 Executive Stock Incentive Plan.
6. PROPOSAL TO APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION INCREASING THE AUTHORIZED CLASS A COMMON STOCK:
[ ] FOR approval of an amendment to the Amended and
Restated Articles of Incorporation increasing the authorized
Class A Common Stock.
[ ] AGAINST approval of an amendment to the Amended and
Restated Articles of Incorporation increasing the authorized
Class A Common Stock.
[ ] ABSTAIN from voting on the amendment to the Amended and
Restated Articles of Incorporation increasing the authorized
Class A Common Stock.
7. PROPOSAL TO APPROVE AN AMENDMENT TO THE AMENDED AND RESTATED
ARTICLES OF INCORPORATION PROVIDING FOR STAGGERED TERMS FOR DIRECTORS:
[ ] FOR approval of an amendment to the Amended and Restated Articles
of Incorporation providing for staggered terms for directors.
[ ] AGAINST approval of an amendment to the Amended and Restated
Articles of Incorporation providing for staggered terms for directors.
[ ] ABSTAIN from voting on the amendment to the Amended and Restated
Articles of Incorporation providing for staggered terms for directors.
8. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON
SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
No. of Shares ________
Date: _________________________________
Check appropriate box
Indicate changes below: _________________________________
Address Change? [ ] (Signature of Shareholder)
Name Change? [ ]
_________________________________
(Signature of Shareholder- if
held jointly)
Please sign exactly as name appears hereon. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in
full corporate name by President or other authorized officer.
If a partnership, please sign in partnership name by
authorized person.
