<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[X] PRELIMINARY PROXY STATEMENT
[ ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SEC. 240.14A-11(C) OR SEC. 240.14A-12
LIN BROADCASTING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LIN BROADCASTING CORPORATION
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
CALCULATION OF FILING FEE
<TABLE>
<S> <C> <C> <C>
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PER UNIT PRICE OR
OTHER UNDERLYING
VALUE OF
TRANSACTION
TITLE OF EACH CLASS OF AGGREGATE NUMBER OF COMPUTED PURSUANT PROPOSED MAXIMUM
SECURITIES TO WHICH SECURITIES TO WHICH TO EXCHANGE AGGREGATE VALUE
TRANSACTION APPLIES: TRANSACTION APPLIES: ACT RULE 0-11: OF TRANSACTION:
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.............. $ $ $
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</TABLE>
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount previously paid:
Filing party:
Form, schedule or registration statement no.:
Date filed:
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<PAGE> 2
PRELIMINARY COPY
LIN BROADCASTING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 1994
To the Stockholders of LIN Broadcasting Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LIN
Broadcasting Corporation, a Delaware corporation, will be held at The Woodmark
Hotel, Moss Bay Room, 1200 Carillon Point, Kirkland, Washington 98033, on
Tuesday, May 17, 1994, at 11:00 a.m., local time, for the following purposes:
(1) To elect nine directors to serve until the next Annual Meeting or
until their successors are duly elected and qualified;
(2) To approve the adoption of amendments to the Company's Amended and
Restated 1969 Stock Option Plan;
(3) To approve the adoption of amendments to the Company's By-Laws
regarding indemnification of directors and officers; and
(4) To transact such other business as may properly be brought before
the Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on Monday, March 21,
1994, as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. Accordingly, only stockholders of
record on that date will be entitled to vote.
By Order of the Board of Directors
Roberta R. Katz
Secretary
March 31, 1994
Kirkland, Washington
TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL
MEETING, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY
MAIL THE ENCLOSED PROXY CARD, FOR WHICH A
RETURN STAMPED ENVELOPE IS PROVIDED.
<PAGE> 3
LIN BROADCASTING CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1994
The accompanying proxy is solicited on behalf of the Board of Directors of
LIN Broadcasting Corporation, a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on Tuesday, May 17, 1994, at 11:00
a.m., local time (the "Annual Meeting"), notice of which is attached hereto, and
any adjournment or postponement thereof.
Shares represented by a properly executed proxy in the accompanying form
will be voted at the Annual Meeting and, when instructions have been given by
the stockholder, will be voted in accordance with those instructions. If no
instructions are given, the stockholder's shares will be voted according to the
recommendations of the Board of Directors of the Company (the "Board of
Directors").
A stockholder may revoke his or her proxy at any time before its exercise
by sending written notice of revocation to the Secretary of the Company, or by
signing and delivering a proxy that is dated later, or, if the stockholder
attends the Annual Meeting in person, either by giving notice of revocation to
the inspectors of election at the Annual Meeting or by voting at the Annual
Meeting.
The Board of Directors has fixed the close of business on Monday, March 21,
1994, as the record date for the Annual Meeting or any adjournment or
postponement thereof. On that date, the Company had [ ] shares of
Common Stock, $.01 par value per share (the "Common Stock"), outstanding. Only
stockholders of record at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting or any adjournment or postponement
thereof.
Each share of Common Stock outstanding on the record date is entitled to
one vote per share, by person or by proxy authorized in writing, at the Annual
Meeting. Under Delaware law, applicable Securities and Exchange Commission
("SEC") interpretations, the Company's Restated Certificate of Incorporation,
the Company's By-Laws (the "By-Laws") and the Company's Amended and Restated
1969 Stock Option Plan (the "1969 Plan"), if a quorum is present at the Annual
Meeting: (i) the nine nominees for election as directors who receive the
greatest number of votes cast for the election of directors at the Annual
Meeting by the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon will be elected directors, (ii) approval of
the proposed amendments to the 1969 Plan requires the affirmative vote of the
majority of outstanding shares, and (iii) approval of the proposed amendments to
the By-Laws requires the affirmative vote of the majority of the shares present
in person or represented by proxy at the Annual Meeting and entitled to vote
thereon. A majority of shares entitled to vote at the Annual Meeting present in
person or represented by proxy constitutes a quorum. Abstentions from voting and
broker nonvotes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. In the election of directors, any
action other than a vote for a nominee will have the practical effect of voting
against the nominee. Abstention from voting and broker nonvotes will have the
practical effect of voting against the proposals to approve amendments to the
1969 Plan and amendments to the By-Laws since such abstentions and nonvotes are
less votes for approval.
The principal executive offices of the Company are located at 5295 Carillon
Point, Kirkland, Washington 98033. This Proxy Statement and the enclosed proxy
card will be sent to stockholders commencing on or about March 31, 1994.
<PAGE> 4
PRINCIPAL STOCKHOLDERS
Based upon filings with the SEC, the following persons are known to the
Company to be "beneficial owners" of 5% or more of the Common Stock:
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY
OF BENEFICIAL OWNER OWNED PERCENT
------------------------------------------------------ ------------ -------
<S> <C> <C>
McCaw Cellular Communications, Inc.................... 26,989,500(1) 52.0%
5400 Carillon Point
Kirkland, Washington 98033
The Capital Group, Inc................................ 3,265,390(2) 6.4%
c/o Capital Research and
Management Company
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- ---------------
(1) McCaw Cellular Communications, Inc. ("McCaw") holds its shares of Common
Stock through its wholly owned subsidiary, MMM Holdings, Inc.
(2) Capital Guardian Trust Company and Capital Research and Management Company,
operating subsidiaries of The Capital Group, Inc., exercised, as publicly
reported as of December 31, 1993, investment discretion with respect to
220,890 and 3,044,500 shares, respectively, which were beneficially owned by
various institutional investors.
ELECTION OF DIRECTORS
NOMINEES FOR DIRECTOR
The Board of Directors proposes the election of the nine nominees listed
below to serve until the next Annual Meeting of Stockholders or until their
successors are duly elected and qualified. Unless contrary instructions are
received, it is intended that the shares represented by proxies solicited on
behalf of the Board of Directors will be voted in favor of the election as
directors of all such nominees. If, for any reason, any such nominee is not
available for election (which is not currently known or expected), the persons
named in the proxy card have advised that they will vote for such substitute
nominees as the Board of Directors may propose. The names and certain
information relating to the nine nominees are set forth below.
<TABLE>
<CAPTION>
NOMINEE AGE POSITION WITH THE COMPANY
<S> <C> <C>
Tom A. Alberg 54 President, Chief Operating Officer and
Director
James L. Barksdale 51 Director
Harold S. Eastman 55 Director
William G. Herbster 61 Director
Wilma H. Jordan 45 Director
Richard W. Kislik 66 Director
Craig O. McCaw 44 Chairman of the Board and Chief Executive
Officer
Wayne M. Perry 44 Vice Chairman of the Board
John W. Stanton 38 Director
</TABLE>
TOM A. ALBERG became a director of the Company in 1991. Mr. Alberg has been
the President and Chief Operating Officer of the Company since April 1991 and
has been Executive Vice President of McCaw since July 1990 and Secretary of
McCaw since March 1991. Prior to July 1990, Mr. Alberg was the Chairman of the
Executive Committee and a partner in the Perkins Coie law firm. He is a director
of Digital Systems International, Inc. and Active Voice Corporation.
JAMES L. BARKSDALE became a director of the Company in 1992. Mr. Barksdale
was appointed President and Chief Operating Officer of McCaw in November 1991.
From 1983 to December 1991,
2
<PAGE> 5
Mr. Barksdale was the Executive Vice President of Federal Express Corporation.
He is a director of McCaw, 3Com Corporation, ENVOY Corporation, the Promus
Companies Incorporated and Network Computing Devices, Inc.
HAROLD S. EASTMAN became a director of the Company in 1990. He was Vice
Chairman of the Board of the Company from March 1990 to April 1992. Mr. Eastman
is the President of Peregrine Capital Co., a private investment company. He has
been a director of McCaw since June 1989 and served as President of McCaw from
June 1989 to December 31, 1991 and thereafter as Vice Chairman of the Board of
McCaw until April 1, 1992. Prior to June 1989, Mr. Eastman was a Managing
Director -- Operations of The Henley Group, Inc. Mr. Eastman is also a director
of TJ International and TCW Funds, Inc.
WILLIAM G. HERBSTER became a director of the Company in 1976. Mr. Herbster
is a financial consultant. He is a director of Ithaca BanCorp, Inc. and Senior
Advisor to the Investment Fund for Foundations.
WILMA H. JORDAN became a director of the Company in 1987. Ms. Jordan is
Co-Chairman of The Jordan, Edmiston Group, Inc., an investment banking and
management consulting firm for publishing companies. She is a director of
Ringier America and Guideposts Associates, Inc.
RICHARD W. KISLIK became a director of the Company in 1969. Mr. Kislik has
been a publishing consultant since 1985.
CRAIG O. MCCAW became a director of the Company in 1990. Mr. McCaw has been
Chairman of the Board and Chief Executive Officer of the Company since March
1990. Mr. McCaw is also the Chairman of the Board and Chief Executive Officer of
McCaw and prior to December 1985 was President of McCaw. Mr. McCaw has been a
director of McCaw since it was organized. In March 1988, Mr. McCaw was appointed
to the President's National Security Telecommunications Advisory Committee.
WAYNE M. PERRY became a director of the Company in 1990. Mr. Perry has been
Vice Chairman of the Board of the Company since March 1990 and Vice Chairman of
the Board of McCaw since June 1989. From December 1985 to June 1989, Mr. Perry
served as President of McCaw. He is currently an executive officer and director
of Iberia Cellular Telephone Company and a member of the Board of Directors and
Chairman of the Cellular Telecommunications Industry Association, a nationwide
cellular industry association.
JOHN W. STANTON became a director of the Company in 1990. Mr. Stanton is
Chairman of the Board and Chief Executive Officer of Stanton Communications,
Inc., Pacific Northwest Cellular and General Cellular Corporation, has been a
director of McCaw since it was organized and was Vice Chairman of the Board of
McCaw from April 1988 to November 1991. Mr. Stanton joined McCaw in 1983 as a
Vice President and from 1985 to April 1988, served as an Executive Vice
President. He is also a director of Interpoint Corporation.
JOHN E. MCCAW, JR. decided not to stand for reelection and will no longer
serve on the Board of Directors effective as of the date of the Annual Meeting.
Mr. McCaw became a director of the Company in 1990. Mr. McCaw held various
positions with McCaw and its predecessors dating from 1969, most recently
serving as Executive Vice President--Acquisitions until January 1, 1992. Mr.
McCaw is Mr. Craig McCaw's brother.
ARRANGEMENTS WITH MCCAW
Pursuant to a tender offer (the "Offer"), on March 5, 1990, McCaw acquired
21,900,000 shares of Common Stock at a purchase price of $154.11 per share, for
an aggregate purchase price of $3.375 billion. Including the 5,089,500 shares
previously owned by McCaw and its affiliates, McCaw beneficially owns a total of
26,989,500 shares of Common Stock, representing approximately 52% of the Common
Stock outstanding as of February 28, 1993.
In accordance with the Agreement (the "McCaw Agreement") dated as of
December 11, 1989 among McCaw, an affiliate of McCaw and the Company, and the
Private Market Value Guarantee (the "PMVG") dated the same date, the directors
listed in "-- Nominees for Director" (other than Messrs. Alberg, Stanton
3
<PAGE> 6
and Barksdale) were elected by the written consent of McCaw after the closing of
the Offer (the "McCaw Closing"). The PMVG requires that three members of the
Board of Directors be Independent Directors, as defined therein. Ms. Jordan and
Messrs. Herbster and Kislik constitute the existing and nominated Independent
Directors, having been selected in accordance with the PMVG by the Board of
Directors in office prior to the McCaw Closing. Pursuant to the terms of the
PMVG, the Independent Directors nominated for election at the meeting were
nominated by the existing Independent Directors and are required to be elected
by the affirmative vote of the holders of at least a majority of the shares of
Common Stock not owned by McCaw or any of its affiliates or any members of a
"group" of which McCaw or any of its affiliates are members with respect to
securities of the Company (collectively, "Group Members") who are present in
person or represented by proxy and entitled to vote at the Annual Meeting (a
"Majority Vote of the Public Stockholders"), and McCaw will vote its and its
subsidiaries' shares of Common Stock for the election of the Independent
Director nominees receiving such a Majority Vote of the Public Stockholders.
Vacancies among the Independent Directors occurring prior to the expiration of
their respective terms of office will be filled in accordance with a vote of a
majority of the remaining Independent Directors (or, if there are none, a
majority of the directors then in office) or by a Majority Vote of the Public
Stockholders. Independent Directors will be subject to removal only (i) for
cause, (ii) if a majority of the Independent Directors approve such removal, or
(iii) if such removal is approved by a Majority Vote of the Public Stockholders
without any solicitation of votes by McCaw, its affiliates or its Group Members.
Pursuant to the terms of the PMVG, on or about January 1, 1995 (the
"Initiation Date"), McCaw will have the opportunity to proceed with an
acquisition (the "Acquisition") of all the shares of Common Stock not owned by
McCaw or any of its affiliates or Group Members at the Private Market Price (as
defined in and determined in accordance with the terms of the PMVG). The
Acquisition may be completed only if approved by a Majority Vote of the Public
Stockholders.
If McCaw determines not to proceed with the Acquisition or if, despite
McCaw's good-faith efforts, the Acquisition has not been completed within 12
months following the Initiation Date (or, if the Acquisition has been approved
by a Majority Vote of the Public Stockholders and is being pursued in good faith
by McCaw but has not been completed due to regulatory delays or litigation,
within 20 months following the Initiation Date), McCaw will put the entire
Company up for sale under the direction of the Independent Directors in a manner
intended by the Independent Directors to maximize the value of all Common Stock.
If one or more transactions are approved by a Majority Vote of the Public
Stockholders, McCaw will cause all Common Stock owned by it or its affiliates to
be voted in favor thereof.
Except as described above, neither McCaw nor any of its affiliates other
than the Company may (i) engage in a merger or consolidation with the Company,
or purchase all or substantially all of the Company's assets, unless the
transaction is approved by (A) a majority of the Independent Directors and (B) a
Majority Vote of the Public Stockholders, (ii) purchase additional shares of
Common Stock if, after giving effect thereto, they would beneficially own in the
aggregate more than 75% of the outstanding Common Stock on a fully diluted
basis, or (iii) sell more than 25% of the outstanding Common Stock on a fully
diluted basis to a third party or group unless such third party or group agrees
in writing to be bound by the provisions of the PMVG.
The PMVG also provides that no transaction will be undertaken, and the
Company will not take any action, whether or not approved by a majority of the
Board of Directors, if the Independent Directors determine in their good-faith
judgment by unanimous vote that such transaction or action would likely depress
the value of the Company on the Initiation Date. In addition, the Company will
not acquire or dispose of any business (other than acquisitions of additional
cellular interests in markets in which the Company has an interest), whether or
not approved by a majority of the Board of Directors, if the Independent
Directors determine in their good-faith judgment by unanimous vote that such
acquisition or disposition is not in the Company's best interests.
The PMVG will cease to be in effect if at any time (i) McCaw, its
affiliates and its Group Members beneficially own in the aggregate less than 25%
of the outstanding Common Stock on a fully diluted basis and McCaw's designees
no longer constitute a majority of the Board of Directors (provided that in such
event the
4
<PAGE> 7
PMVG shall come back into effect if, at any time within two years thereafter,
(A) McCaw, its affiliates and its Group Members shall beneficially own in the
aggregate 25% or more (but less than 100%) of the outstanding Common Stock on a
fully diluted basis or (B) McCaw's designees shall again constitute a majority
of the Board of Directors) or (ii) McCaw, its affiliates and its Group Members
beneficially own in the aggregate 100% of the outstanding Common Stock.
BOARD COMMITTEES AND MEETINGS
During 1993, the Board of Directors held five meetings. No director
attended fewer than 75% of the meetings of the Board of Directors and committees
of the Board on which the director served, except Mr. Perry, who attended three
of the five Board of Directors meetings.
The Board of Directors has an audit committee (the "Audit Committee"),
presently consisting of Ms. Jordan and Messrs. Kislik and Stanton, which held
two meetings in 1993. The functions of the Audit Committee include evaluating
the services of the Company's independent auditors and reviewing with management
and the independent auditors the Company's system of internal controls.
The Board of Directors also has a compensation committee (the "Compensation
Committee"), presently consisting of Ms. Jordan and Messrs. Herbster and Kislik,
which held two meetings in 1993. The functions of the Compensation Committee are
to determine compensation policies and act on remuneration arrangements with
respect to all employees, including executive officers. Until November 1993, the
Board of Directors had a Compensation Committee consisting of Messrs. Eastman,
Kislik, Perry and Stanton that determined policies with respect to the Company's
employees in general, and a special compensation committee (the "Special
Compensation Committee") consisting of Ms. Jordan and Messrs. Kislik and
Herbster that reviewed and approved remuneration arrangements with respect to
the Company's executive officers.
DIRECTOR COMPENSATION
Directors who are not also officers of the Company or its affiliates are
compensated at the rate of $30,000 per annum. In addition, directors who are not
also officers of the Company or its affiliates receive $1,500 for each Board of
Directors meeting attended and $1,000 for each committee meeting attended, as
long as that meeting is not held in conjunction with a board meeting. Directors
are also reimbursed for any travel expenses incurred in connection with such
meetings. In addition, each Independent Director receives $1,500 for each
meeting attended by him or her exclusive of full board meetings. Ms. Jordan and
Messrs. Herbster and Kislik each receive $250 per hour, or $2,000 per eight-hour
day, for requested additional services in their capacities as Independent
Directors. All directors of the Company have the option of deferring their
compensation under the Company's Deferred Compensation Plan.
EXECUTIVE OFFICERS
The executive officers of the Company are:
<TABLE>
<CAPTION>
NAME AGE OFFICE
- --------------------- ----
<S> <C> <C>
Craig O. McCaw 44 Chairman of the Board and
Chief Executive Officer
Tom A. Alberg 54 President, Chief Operating Officer and
Director
Wayne M. Perry 44 Vice Chairman of the Board
James L. Barksdale 51 President -- McCaw
Gary R. Chapman 50 President -- LIN Television Group
Donald Guthrie 38 Senior Vice President -- Finance
</TABLE>
5
<PAGE> 8
The following information describes the executive officers of the Company
who are not also directors.
GARY R. CHAPMAN became President -- LIN Television Group in January 1989.
Prior to January 1989, Mr. Chapman was employed by Freedom Newspapers, Inc.,
where he served as Senior Vice President of its Broadcasting Division from May
1984 to December 1988.
DONALD GUTHRIE became Vice President -- Finance of the Company in March
1990 and was promoted to Senior Vice President -- Finance in June 1992. Since
February 1986, Mr. Guthrie has been a Senior Vice President and the Treasurer of
McCaw.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of Common Stock as of
February 28, 1994 by the Company's (i) directors, (ii) nominees for election as
directors, (iii) Chief Executive Officer and other four most highly compensated
executive officers, and (iv) directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
NAME OWNED(1) PERCENT
---------------------------------------------------- ------------------- -------
<S> <C> <C>
Tom A. Alberg....................................... 23,896(2) *
James L. Barksdale.................................. 0 0
Harold S. Eastman................................... 0 0
William G. Herbster................................. 3,900(3) *
Wilma H. Jordan..................................... 578 *
Richard W. Kislik................................... 8,410 *
Craig O. McCaw...................................... 45,000(4) *
John E. McCaw, Jr................................... 0 0
Wayne M. Perry...................................... 30,000(4) *
John W. Stanton..................................... 0 0
Gary R. Chapman..................................... 48,383(5) *
Donald Guthrie...................................... 11,623(6) *
All directors and executive officers as a group (12
persons) ......................................... 171,790(7) *
</TABLE>
- ---------------
* Less than 1%.
(1) Craig O. McCaw and certain other of the directors who are also officers of
McCaw may be deemed beneficial owners of the 26,989,500 shares of Common
Stock owned by McCaw as a result of their being affiliates of McCaw,
although such individuals have disclaimed beneficial ownership of such
shares.
(2) Includes options exercisable within 60 days to purchase 22,500 shares of
Common Stock.
(3) Represents shares held of record by William G. Herbster's wife.
(4) Represents options exercisable within 60 days.
(5) Includes options exercisable within 60 days to purchase 47,220 shares of
Common Stock. Gary R. Chapman shares with his wife voting and investment
power with respect to 53 shares of Common Stock.
(6) Includes options exercisable within 60 days to purchase 11,250 shares of
Common Stock.
(7) Includes options exercisable within 60 days to purchase 155,970 shares of
Common Stock.
6
<PAGE> 9
BENEFICIAL OWNERSHIP OF COMMON STOCK OF MCCAW
The following table shows the beneficial ownership of all equity securities
of McCaw, the Company's parent, as of February 28, 1994 by the Company's (i)
directors, (ii) nominees for election as directors, (iii) Chief Executive
Officer and other four most highly compensated executive officers, and (iv)
directors and executive officers as a group.
CLASS B COMMON STOCK(1)
<TABLE>
<CAPTION>
PERCENT
SHARES BENEFICIALLY OF
NAME OWNED(1) CLASS
------------------------------------------------ ------------------- -------
<S> <C> <C>
Tom A. Alberg................................... 0 *
James L. Barksdale.............................. 0 *
Harold S. Eastman............................... 0 *
William G. Herbster............................. 0 *
Wilma H. Jordan................................. 0 *
Richard W. Kislik............................... 0 *
Craig O. McCaw.................................. 47,746,873(1)(2) 77.3
John E. McCaw, Jr............................... 8,959,950(1)(3) 14.9
Wayne M. Perry.................................. 2,020,808(1)(4) 3.3
John W. Stanton................................. 551,263(1)(5) *
Gary R. Chapman................................. 0 *
Donald Guthrie.................................. 0 *
All directors and executive officers
as a group (12 persons)....................... 48,552,982(6) 77.6
</TABLE>
CLASS A COMMON STOCK(1)(7)
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
NAME OWNED CLASS
----------------------------------------------- ------------------ -------
<S> <C> <C>
Tom A. Alberg.................................. 73,453(8) *
James L. Barksdale............................. 110,000(9) *
Harold S. Eastman.............................. 225,000(9) *
William G. Herbster............................ 0 *
Wilma H. Jordan................................ 700(10) *
Richard W. Kislik.............................. 0 *
Craig O. McCaw................................. 16,345,376(1)(2) 9.9
John E. McCaw, Jr.............................. 9,013,200(1)(3) 5.7
Wayne M. Perry................................. 2,164,994(1)(4) 1.4
John W. Stanton................................ 551,263(1)(5) *
Gary R. Chapman................................ 28 *
Donald Guthrie................................. 53,251(11) *
All directors and executive officers
as a group (12 persons)...................... 28,584,765(12) 16.2
</TABLE>
- ---------------
* Less than 1%
(1) Craig O. McCaw and John E. McCaw, Jr. and certain members of their family
and McCaw management are parties to a shareholders agreement (the "McCaw
Shareholders Agreement") pursuant to which Craig O. McCaw is entitled to
vote all shares of McCaw's Class B Common Stock (the "Class B Common
Stock") owned by the other parties thereto (a total of 32,056,997 shares of
Class B Common Stock). Craig O. McCaw and John E. McCaw, Jr. are also
parties to a separate
7
<PAGE> 10
shareholders agreement with BT USA Holdings, Inc. ("BT USA"), a significant
stockholder of McCaw. For the Class B Common Stock, the number set forth
above opposite Craig O. McCaw's name includes the Class B Common Stock
described in footnotes 2, 3, 4 and 5 below and such other additional shares
of Class B Common Stock subject to the McCaw Shareholders Agreement and the
options to purchase Class B Common Stock described in footnote 2 below, but
does not include such options to purchase Class B Common Stock described in
footnote 4 below or any other options to purchase Class B Common Stock held
by other parties to the McCaw Shareholders Agreement. Such number also does
not include the Class B Common Stock held by BT USA, which Craig O. McCaw
is not entitled to vote. If all the foregoing shares of Class B Common
Stock and options to purchase Class B Common Stock were included, such
number would be 62,924,183 shares, representing 99.5% of the Class B Common
Stock. For McCaw's Class A Common Stock (the "Class A Common Stock"), the
number set forth above opposite Craig O. McCaw's name includes the Class A
Common Stock and the Class B Common Stock and the options to purchase Class
A Common Stock and Class B Common Stock held by Craig O. McCaw described in
footnote 2 below, but does not include such Class B Common Stock or options
to purchase Class B Common Stock described in footnotes 3, 4 and 5 below or
any other Class B Common Stock or options to purchase Class B Common Stock
held by parties to the McCaw Shareholders Agreement. Such number also does
not include the Class A Common Stock and options held by BT USA, which
Craig O. McCaw is not entitled to vote. If all the foregoing shares of
Class B Common Stock and Class A Common Stock and options to purchase Class
B Common Stock and Class A Common Stock were included, such number would
equal 72,020,756 shares, representing 36.4% of the Class A Common Stock.
(2) Craig O. McCaw owns outright 13,709,172 shares of Class B Common Stock and
400,000 shares of Class A Common Stock and has options exercisable within
60 days to purchase 1,610,289 shares of Class B Common Stock and 255,000
shares of Class A Common Stock. Includes 370,415 shares of Class B Common
Stock and 500 shares of Class A Common Stock held by The McCaw Foundation,
as to which Craig O. McCaw maintains sole dispositive power.
(3) John E. McCaw, Jr. owns outright 8,917,000 shares of Class B Common Stock
and 4,500 shares of Class A Common Stock and has options exercisable within
60 days to purchase 48,750 shares of Class A Common Stock. Includes 32,950
shares of Class B Common Stock held in trusts for the benefit of John E.
McCaw, Jr.'s children, of which trusts he is the sole trustee, and 10,000
shares of Class B Common Stock held by a corporation wholly owned by him.
(4) Wayne M. Perry owns outright 1,214,699 shares of Class B Common Stock and
2,936 shares of Class A Common Stock and has options exercisable within 60
days to purchase 806,109 shares of Class B Common Stock and 141,250 shares
of Class A Common Stock.
(5) John W. Stanton owns outright 531,263 shares of Class B Common Stock.
Includes 20,000 shares of Class B Common Stock held in trust for the
benefit of John W. Stanton's child, of which trust he is one of the
trustees, as to which Mr. Stanton disclaims beneficial ownership.
(6) Includes options exercisable within 60 days to purchase 2,416,398 shares of
Class B Common Stock.
(7) Class B Common Stock is convertible into Class A Common Stock. In
calculating the percentages set forth above, it is assumed that an
individual's Class B Common Stock and options to purchase Class B Common
Stock are converted into Class A Common Stock, but that no other
outstanding Class B Common Stock or options are so converted.
(8) Includes options exercisable within 60 days to purchase 73,000 shares of
Class A Common Stock.
(9) Represents options exercisable within 60 days.
(10) Includes 100 shares held by Wilma H. Jordan as custodian for her daughter.
(11) Includes options exercisable within 60 days to purchase 53,151 shares of
Class A Common Stock.
(12) Includes options exercisable within 60 days to purchase 906,151 shares of
Class A Common Stock.
McCaw has entered into an Agreement and Plan of Merger with American
Telephone and Telegraph Company ("AT&T") pursuant to which, subject to the
satisfaction of several conditions, including the receipt of necessary
governmental consents, McCaw will merge with a subsidiary of AT&T and thereby
become a wholly owned subsidiary of AT&T (the "McCaw/AT&T Merger"), and the
Class A Common Stock and the Class B Common Stock of McCaw will be exchanged for
the common stock of AT&T.
8
<PAGE> 11
EXECUTIVE COMPENSATION
The three tables set forth below provide information with respect to the
annual and long-term compensation for services in all capacities to the Company
for fiscal years 1993, 1992 and 1991 and the option grants, exercises and values
in and at the end of fiscal year 1993 of those persons who were, during fiscal
year 1993, the Company's Chief Executive Officer and four other most highly
compensated executive officers based on salary and bonus (the "named executive
officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)
- ------------------------------ ----- --------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Craig O. McCaw(2) 1993 $ 100,000 $ 0 0 $ 2,308
Chairman of the Board and 1992 100,200 0 0 2,225(3)
Chief Executive Officer 1991 153,162 0 90,000
Tom A. Alberg(4) 1993 235,000 200,000 50,000 12,517(3)
President and Chief 1992 225,000 150,200 50,000 10,912(3)
Operating Officer 1991 224,561 100,000 40,000
James L. Barksdale(5) 1993 525,000 400,000 0 14,506
President -- McCaw 1992 500,200 300,000 0 4,167
1991 96,354 100,000
Gary R. Chapman 1993 404,600 150,000 20,000 163,014(6)
President -- LIN Television 1992 385,000 125,000 20,000 160,839(7)
Group 1991 375,000 125,000 20,000
Donald Guthrie(8) 1993 190,000 75,200 35,200 2,919(3)
Senior Vice President -- 1992 180,000 60,200 30,000 2,650(3)
Finance 1991 164,571 50,000 15,000
</TABLE>
- ---------------
(1) Disclosure for 1991 not called for by applicable rules of the SEC.
(2) Amounts shown for Mr. McCaw are paid by McCaw. Pursuant to the intercompany
reimbursement program approved by the Independent Directors, the Company
reimbursed McCaw for a portion of Mr. McCaw's total compensation. See
"Certain Transactions." In addition to the options shown, Mr. McCaw received
options to purchase 210,000 shares of McCaw's Class A Common Stock in 1991.
(3) Represents amounts paid for life and disability insurance premiums.
(4) Mr. Alberg became an executive officer of the Company effective as of April
18, 1991. The salary and bonus shown for 1991 are for a partial year's
employment. Pursuant to the intercompany reimbursement program approved by
the Independent Directors, McCaw reimburses the Company for a portion of Mr.
Alberg's total compensation. See "Certain Transactions."
(5) Mr. Barksdale became an executive officer of McCaw effective as of November
15, 1991. The salary and bonus shown for 1991 are for a partial year's
employment. Amounts shown for Mr. Barksdale are paid by McCaw. Pursuant to
the intercompany reimbursement program approved by the Independent
Directors, the Company reimburses McCaw for a portion of Mr. Barksdale's
total compensation. See "Certain Transactions." In addition to the options
shown, Mr. Barksdale received options to purchase 200,000, 340,000 and
400,842 shares of McCaw's Class A Common Stock in 1993, 1992 and 1991,
respectively.
(6) Represents $13,014 paid for life and disability insurance premiums and a
$150,000 payment in consideration of Mr. Chapman's agreeing in 1990 to
forego certain benefits under a severance agreement.
(7) Represents $10,839 paid for life and disability insurance premiums and a
$150,000 payment in consideration of Mr. Chapman's agreeing in 1990 to
forego certain benefits under a severance agreement.
9
<PAGE> 12
(8) Pursuant to the intercompany reimbursement program approved by the
Independent Directors, McCaw reimburses the Company for a portion of Mr.
Guthrie's total compensation. See "Certain Transactions."
OPTION GRANTS IN FISCAL YEAR 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT
SECURITIES PERCENT OF ASSUMED ANNUAL RATES OF
UNDERLYING TOTAL OPTIONS STOCK PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM(2)
GRANTED EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------------------ ---------- -------------- -------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Craig O. McCaw................ 0 0 N/A N/A $ 0 $ 0
Tom A. Alberg................. 50,000 10.564% $110.50 12/31/2003 3,474,643 8,805,427
James L. Barksdale(3)......... 0 0 N/A N/A 0 0
Gary R. Chapman............... 20,000 4.225% $110.50 12/31/2003 1,389,857 3,522,171
Donald Guthrie................ 35,000 7.395% $110.50 12/31/2003 2,432,250 6,163,799
All stockholders.............. N/A N/A N/A N/A 3,579,198,012 9,070,390,494
Named executive officers' gain
as % of all stockholders'
gain........................ N/A N/A N/A N/A .14 .14
</TABLE>
- ---------------
(1) All options granted to the named executive officers become exercisable in
five annual installments of 10%, 15%, 20%, 25% and 30% beginning one year
after the grant date. The per share option exercise prices represent the
fair market value of the Common Stock on the date of grant. The option term
is 10 years. In the event of a change in control of the Company, other than
certain transactions with McCaw and certain transactions pursuant to the
PMVG, officers of the Company who are subject to Section 16 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), may surrender
vested options in exchange for a cash payment by the Company. Options to
purchase Common Stock held by the named executive officers will vest (if not
otherwise vested prior thereto pursuant to their terms) if the optionee's
employment with the Company is terminated under certain circumstances on or
after the earlier of (i) the time McCaw or any affiliate consummates any
acquisition of all or substantially all the remaining shares of Common Stock
or the Company is otherwise sold, whether pursuant to the PMVG or otherwise,
and (ii) the closing of the McCaw/AT&T Merger. See "-- Employment Contracts
and Termination of Employment and Change-in-Control Arrangements."
(2) The dollar amounts under these columns are the result of calculations at the
5% and 10% assumed appreciation rates set by the SEC and therefore are not
intended to forecast possible future appreciation, if any, of the Common
Stock price. At the 5% and 10% assumed appreciation rates, the price per
share of Common Stock would be $180 and $287, respectively.
(3) Mr. Barksdale received an option to purchase 200,000 shares of McCaw's Class
A Common Stock at an exercise price of $50.50 per share, which will expire
on December 31, 2003. The option becomes exercisable in five equal annual
installments beginning January 1, 1995. The per share option exercise price
represents the fair market value of McCaw's Class A Common Stock on the date
of grant. McCaw's Compensation Committee may, in its sole discretion,
accelerate vesting of outstanding options prior to the occurrence of a
merger, consolidation, acquisition, liquidation or dissolution of McCaw. The
potential realizable value at assumed annual rates of stock price
appreciation of 5% and 10% is $6,351,835 and $16,096,798, respectively. This
option grant represented 8.1% of total options granted to McCaw employees.
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1993
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
ON VALUE YEAR-END(#) AT FISCAL YEAR-END($)(2)
EXERCISE REALIZED --------------------------- -----------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- -------- -------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Craig O. McCaw............ N/A N/A 45,000 45,000 $1,755,000.00 $1,755,000.00
Tom A. Alberg(3).......... 10,000 $400,000 22,500 107,500 815,000.00 2,055,000.00
James L. Barksdale(4)..... N/A N/A 0 0 0 0
Gary R. Chapman........... N/A N/A 47,220 45,000 2,542,818.44 900,000.00
Donald Guthrie............ 3,750 150,000 11,250 65,000 410,250.00 1,057,500.00
</TABLE>
- ---------------
(1) This amount represents the aggregate of the number of shares acquired on
exercise multiplied by the difference between the closing price of the
Common Stock on the Nasdaq National Market on the respective option exercise
date minus the exercise price for the relevant option.
(2) This amount represents the aggregate of the number of in-the-money options
multiplied by the difference between the closing price of the Common Stock
on the Nasdaq National Market on December 31, 1993 and the exercise prices
for the relevant options.
(3) During 1993, Mr. Alberg exercised options representing 40,000 shares of
McCaw's Class A Common Stock for a value realized of $1,186,875. At the end
of 1993, Mr. Alberg held options to purchase 73,000 and 52,000 shares of
McCaw's Class A Common Stock that are exercisable and unexercisable,
respectively. The value of unexercised in-the-money options at the end of
1993 was $1,702,500 for exercisable options and $1,032,500 for unexercisable
options.
(4) During 1993, Mr. Barksdale exercised options representing 133,333 shares of
McCaw's Class A Common Stock for a value realized of $3,987,500. At the end
of 1993, Mr. Barksdale held options to purchase 110,000 and 656,667 shares
of McCaw's Class A Common Stock that are exercisable and unexercisable,
respectively. The value of unexercised in-the-money options at the end of
1993 was $2,380,000 for exercisable options and $12,020,017 for
unexercisable options.
PENSION PLANS
The Company maintains a defined benefit retirement plan (the "Pension
Plan") that covers certain employees of the Company and its subsidiaries. On
December 31, 1992, the Company amended the Pension Plan to provide, in part,
that, effective January 1, 1993, any employees treated by the Company as
employed by a component of the Company that maintains an Internal Revenue Code
(the "Code") Section 401(k) plan providing for employer-matching contributions
are no longer eligible to participate in, or accrue benefits under, the Pension
Plan. After retirement from or other termination with the Company, however, any
employee who was participating in the Pension Plan as of December 31, 1992, will
be entitled to receive monthly payments under the Pension Plan based on his or
her average compensation and years of credited service as of December 31, 1992,
provided that he or she completes five years of vesting service with the Company
after attaining age 17. Such payments begin at age 65, subject to the employee's
election to terminate from employment and receive reduced monthly payments
beginning at any time between ages 55 and 65.
Due to the amendment discussed above, Messrs. Alberg and Guthrie are no
longer eligible to accrue additional benefits under the Pension Plan, but will
be entitled to receive monthly payments of $459 and $329, respectively, under
the Pension Plan at age 65, provided they each become vested. Messrs. McCaw and
Barksdale did not participate in the Pension Plan. Mr. Chapman continues to
participate in the Pension Plan.
The following table shows the estimated annual retirement benefits payable
under the Pension Plan and the Company's Supplemental Benefit Retirement Plan as
an annuity for life upon normal retirement for specified compensation and years
of credited service classifications, assuming retirement at age 65 on December
31, 1992. Benefits are computed by multiplying (i) 1.25% of the employee's
average annual compensation for the three consecutive years producing the
highest average (excluding benefits or payments
11
<PAGE> 14
received under any other benefit plan) times (ii) the employee's number of years
of credited service, up to a maximum of 32 years. Sections 401(a)(17) and 415 of
the Code limit the annual benefits that may be paid from a tax-qualified
retirement plan such as the Pension Plan. As permitted by the Employee
Retirement Income Security Act of 1974 ("ERISA"), the Company's Supplemental
Benefit Retirement Plan authorizes the payment out of the Company's general
funds of any benefits calculated under the provisions of the Pension Plan that
may be above the limits of Sections 401(a)(17) and 415 of the Code.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
THREE-YEAR
AVERAGE YEARS OF CREDITED SERVICE
ANNUAL --------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
- ------------------------------------ ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 70,000.......................... $ 8,750 $ 13,125 $ 17,500 $ 21,875 $ 26,250 $ 30,625
100,000.......................... 12,500 18,750 25,000 31,250 37,500 43,750
150,000.......................... 18,750 28,125 37,500 46,875 56,250 65,625
200,000.......................... 25,000 37,500 50,000 62,500 75,000 87,500
300,000.......................... 37,500 56,250 75,000 93,750 112,500 131,250
400,000.......................... 50,000 75,000 100,000 125,000 150,000 175,000
500,000.......................... 62,500 93,750 125,000 156,250 187,500 218,750
750,000.......................... 93,750 140,625 187,500 234,375 281,500 328,125
</TABLE>
As of December 31, 1993, Mr. Chapman had five years of credited service
under the Pension Plan and his three-year average annual compensation was
$521,533. Benefit amounts under the Pension Plan are not subject to any
deduction for Social Security benefits or other offset amounts. In the event of
a change in control of the Company (as defined in the Pension Plan), the accrued
benefit of each participant and each joint annuitant at the time of the change
in control will be increased by a predetermined factor based upon the
recipient's age to the extent that the assets of the Pension Plan exceed the
amount of plan assets required to satisfy the actuarial value of accrued
benefits immediately prior to the change in control. The consummation of the
Offer constituted a change in control under the Pension Plan.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Employment Agreements. In 1990, Mr. Chapman entered into an employment
agreement with the Company, which replaced an already existing severance
compensation agreement. Mr. Chapman's employment agreement provides for: (i) a
term that currently ends on December 31, 1994, subject to subsequent renewals;
(ii) a minimum base salary of $375,000, commencing on January 1, 1991; (iii) a
target annual bonus award at least equal to $125,000 per year beginning after
December 31, 1991, the actual amount payable being determined by the Company
based on performance guidelines; and (iv) a retention bonus of $600,000, payable
in four equal annual installments beginning December 31, 1990. The agreement
also provides for options, participation in certain of the Company's incentive
compensation programs, and additional severance benefits upon termination
without cause, including the right to require the Company to purchase certain of
its shares and vested options owned by Mr. Chapman as of the date of the
employment agreement based on a value of the greater of $112 per share and the
Private Market Price. The agreement also requires the Company to purchase on
January 1, 1995, certain of its shares and vested options owned by Mr. Chapman
as of the date of the employment agreement based on a value of the greater of
$112 per share and the Private Market Price.
In 1991, Mr. Guthrie entered into an employment agreement with the Company.
Mr. Guthrie's employment agreement provides for (i) a term that currently ends
on April 30, 1994, subject to subsequent renewals; (ii) a minimum base salary of
$175,000, commencing on January 1, 1991; and (iii) options and bonuses as
determined by the Board of Directors.
1969 Stock Option Plan. Pursuant to the 1969 Plan, in the event of a change
in control of the Company (as defined in the 1969 Plan), other than certain
transactions with McCaw and certain transactions pursuant
12
<PAGE> 15
to the PMVG, officers of the Company who are subject to Section 16 of the 1934
Act may surrender vested options in exchange for a cash payment by the Company.
The amount of the cash payment per share is determined by taking the difference
between the exercise price of the shares covered by the options so surrendered
and the greater of (i) the highest market price of the Common Stock during the
90-day period prior to the day of surrender and (ii) the highest price paid to
any stockholder of the Company in the transaction or group of transactions
resulting in the change in control. Such options may be surrendered during the
60-day period following the change in control.
In the event that the McCaw/AT&T Merger is consummated, options to purchase
shares of Common Stock outstanding on August 14, 1993 held by the named
executive officers will vest (if not otherwise vested prior thereto pursuant to
their terms) at the time McCaw or any affiliate consummates any acquisition of
all or substantially all the remaining shares of the Common Stock or the Company
is otherwise sold, whether pursuant to the PMVG or otherwise. In addition,
options to purchase Common Stock held by the named executive officers will vest
(if not otherwise vested prior thereto pursuant to their terms) if the
optionee's employment with the Company is terminated under certain circumstances
on or after the earlier of (i) the time McCaw or any affiliate consummates any
acquisition of all or substantially all the remaining shares of the Common Stock
or the Company is otherwise sold, whether pursuant to the PMVG or otherwise, and
(ii) the closing of the McCaw/AT&T Merger.
Bonus and Severance Arrangements in Connection With the McCaw/AT&T
Merger. In connection with the McCaw/AT&T Merger, the Company established an
aggregate $7.75 million bonus pool for certain persons employed by the Company
and its subsidiaries as of August 15, 1993, conditioned upon both consummation
of the McCaw/AT&T Merger (the "McCaw/AT&T Closing") and the closing of any
acquisition of all or substantially all the remaining shares of Common Stock by
McCaw or of a sale of the Company (pursuant to the PMVG or otherwise) (the "LIN
Closing"). Except as provided under the Executive Plan, as hereinafter defined,
all bonuses payable to executive officers will be payable in three installments
(50% at the McCaw/AT&T Closing, 25% on the first anniversary of the McCaw/AT&T
Closing and 25% on the second anniversary of the McCaw/AT&T Closing), in each
case to persons who remain employed by the Company, its ultimate parent or any
of their subsidiaries at such times, provided, that if the LIN Closing has not
occurred by any of the foregoing dates, such payments will not be made until the
date of the LIN Closing. The amounts payable at the McCaw/AT&T Closing under the
bonuses allocated to Messrs. Alberg and Guthrie are each less than $900,000
(including amounts payable under a similar bonus program implemented by McCaw).
Except as provided under the Executive Plan, the remaining two installments of
the bonus allocated to each such officer, each such installment equal to 50% of
the amount payable to such officer at the McCaw/AT&T Closing, are payable to
such officer on the first and second anniversaries of the McCaw/AT&T Closing if
he remains employed by the Company, its ultimate parent entity or any of their
subsidiaries at such times. Messrs. McCaw and Barksdale are eligible to receive
bonuses under a similar bonus program implemented by McCaw.
Also in connection with the McCaw/AT&T Merger, the Company established an
Executive Separation Plan (the "Executive Plan"). The Executive Plan provides
benefits to certain executives in the event that they are terminated (other than
for cause, as defined in the Executive Plan) on or after the McCaw/AT&T Closing
or in the event that they terminate their employment within six months following
an adverse change in working conditions (including a reduction in salary or
bonus opportunities in the absence of overall poor performance, a material
reduction in scope of responsibility, authority or other conditions of
employment, a notice that an executive's employment location will be moved more
than 40 miles or certain decreases in executive perquisites or other employee
benefits) on or after the McCaw/AT&T Closing. Under the Executive Plan,
executives are entitled to a benefit payment equal to any unpaid installments
under the bonus pool, unless terminated for consistently poor performance
documented by substantially contemporaneous notices. In the event that any
payment or portion thereof under the Executive Plan would subject any executive
to an excise tax under Section 4999 of the Code, such executive would be
entitled to receive a tax gross-up payment to cover such excise tax and related
penalties and interest (including any taxes payable in connection with the
gross-up payment). Messrs. McCaw and Barksdale are entitled to severance
benefits, and
13
<PAGE> 16
Messrs. Alberg and Guthrie are entitled to additional severance benefits, in
certain circumstances under a severance program established by McCaw in
connection with the McCaw/AT&T Merger.
COMPENSATION COMMITTEE INTERLOCKS
The Board of Directors has a Compensation Committee, presently consisting
of Ms. Jordan and Messrs. Herbster and Kislik. The functions of the Compensation
Committee are to determine compensation policies with respect to all employees
and to act on remuneration arrangements with respect to certain employees,
including executive officers. Until November 1993, the Board of Directors had a
Compensation Committee consisting of Messrs. Eastman, Kislik, Perry and Stanton
that determined compensation policies with respect to the Company's employees in
general and a Special Compensation Committee consisting of Ms. Jordan and
Messrs. Kislik and Herbster that reviewed and approved remuneration arrangements
with respect to the Company's executive officers.
Mr. Eastman is a director of the Company and was an executive officer of
the Company from March 1990 to April 1992. He is also a director of McCaw and
served as a member of the Stock Option Committee of McCaw until November 1993,
and served as an executive officer of McCaw from June 1989 to April 1992.
Mr. Perry is a director and an executive officer of the Company. He is also
a director and an executive officer of McCaw and served as a member of the
Compensation Committee and the Stock Option Committee of McCaw until November
1993. In addition, he is a director and an executive officer of Iberia Cellular
Telephone Company.
Mr. Stanton is the Chairman of the Board and Chief Executive Officer of
General Cellular Corporation ("GCC"). GCC owns and operates cellular systems
throughout the United States. The Company pays GCC for providing cellular
service to the Company's subscribers under roaming agreements, and GCC pays the
Company for similar services provided by the Company to GCC's subscribers.
During 1993, the Company and its consolidated subsidiaries paid GCC a total of
approximately $234,000 for roaming services and GCC paid the Company and its
consolidated subsidiaries a total of approximately $55,000 for such services.
The Company's unconsolidated affiliates have entered into similar roaming
arrangements with GCC. All roaming agreements between the Company and GCC are
on terms that the Company believes are as favorable to it as would have been
obtained with an unrelated third party.
Mr. Craig McCaw is a director and an executive officer of the Company. He
is also a director and an executive officer of McCaw and served as a member of
the Compensation Committee and the Stock Option Committee of McCaw until
November 1993.
Mr. Alberg is a director and an executive officer of the Company. He is
also an executive officer of McCaw.
Mr. Barksdale is a director of the Company. He is also a director and an
executive officer of McCaw.
BOARD COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee consists of the three nonemployee directors (Ms.
Jordan and Messrs. Herbster and Kislik). The Compensation Committee determines
compensation policies and remuneration arrangements with respect to all Company
employees. Until November 1993, a Compensation Committee (the "Former
Compensation Committee") consisting of Messrs. Eastman, Kislik, Perry and
Stanton determined compensation policies with respect to the Company's employees
in general, and a Special Compensation Committee consisting of Ms. Jordan and
Messrs. Herbster and Kislik reviewed and approved remuneration arrangements with
respect to the Company's executive officers.
Compensation Policies. The foundation of the Company's compensation
policies is the view that the Company's success is attributable to the efforts
of its employees, including its executive officers. Development of the Company's
cellular and broadcast television businesses has required its employees to excel
in the face of complicated and rapidly evolving technologies and strong and
increasingly diverse competition. Accordingly, the Company believes that the
compensation levels of its executive officers, who provide leadership and
14
<PAGE> 17
strategic direction to the Company, must be sufficiently high to attract to the
Company the best-qualified people in the cellular and broadcast-television
industries. It also believes that its compensation packages must include
sufficient long-term incentives to motivate its executive officers to remain
with the Company over time and to manage the Company for long-term growth,
thereby aligning the interests of the executive officers with those of the
stockholders.
During 1993, the Company compensated its executive officers through a
combination of base salaries, year-end cash bonuses, and year-end stock option
grants. In setting base salaries at the beginning of the fiscal year, the Former
Compensation Committee and the Special Compensation Committee made subjective
determinations that were not subject to specific criteria. The Former
Compensation Committee and the Special Compensation Committee considered such
variables as the officer's relative responsibilities, expertise, past year's
compensation, and past year's performance as reflected in periodic performance
reviews conducted by the Company. These individual criteria were then considered
in the context of the Company's overall salary structure as applicable to its
cellular and television businesses, respectively. In addition, the Company's
commitments under its employment agreements with Messrs. Chapman and Guthrie
were reflected in the base salaries of each such officer.
In setting year-end bonuses for 1993, the Compensation Committee focused on
the Company's performance during the year in a number of specific areas. In the
cellular business, the Compensation Committee focused on such factors as cash
flow, subscriber and revenue growth and subscriber churn, and then evaluated
each officer's relative contribution to the Company's results. Similarly, in the
broadcast business the Compensation Committee focused on such factors as
revenue, cash flow and audience ratings of the Company's television stations in
determining the relative contributions of the officers. In each case, except
that of Mr. Chapman, whose bonus compensation reflected the Company's
obligations under his employment agreement, the Compensation Committee did not
measure the individual's performance against any previously set bonus target;
rather it made its determination on the basis of the Compensation Committee's
views of the Company's 1993 performance and the respective contributions of the
officers to that performance.
The Company traditionally makes annual grants of stock options to its
executive officers. The factors described above were the basis for the year-end
stock option grants. The Company believes that stock option grants provide a key
incentive for executive officers not only to remain with the Company over time
but to manage the Company for long-term growth, thereby aligning their interests
with those of its stockholders. Although the Company does not have a target
equity-ownership level for its officers, it encourages such ownership for its
employees in general (for example, through the Company's Employee Stock Purchase
Plan), and therefore continues to view the year-end stock option grants as a
very important component of its compensation package for executive officers.
Compensation payments in excess of $1 million to the Chief Executive
Officer or four other most highly compensated executive officers are subject to
a limitation on deductibility for the Company under Section 162(m) of the Code.
Certain performance-based compensation is not subject to the limitation on
deductibility. The Company does not expect cash compensation in 1994 to its
Chief Executive Officer or any other executive officer to be in excess of $1
million. The Board has amended the 1969 Plan to qualify stock option awards for
the performance-based exception to the $1 million limitation on deductibility of
compensation payments.
15
<PAGE> 18
Chief Executive Officer Compensation. Mr. Craig McCaw received less than
$50,000 in cash compensation from the Company during 1993. Mr. McCaw's
compensation was considerably less than would have been warranted by the
Company's performance during 1993, and by Mr. McCaw's very significant
contribution to that performance as the Company's Chief Executive Officer.
However, in light of Mr. McCaw's substantial ownership interests in the Company
(indirectly through his stockholdings in McCaw), Mr. McCaw requested that the
Company not provide him with additional compensation during 1993, thereby
providing further benefit to the Company and its stockholders.
Compensation Committee and
Special Compensation
Committee
William G. Herbster
Wilma H. Jordan
Richard W. Kislik
Former Compensation Committee
Harold S. Eastman
Richard W. Kislik
Wayne M. Perry
John W. Stanton
STOCK PRICE PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Common Stock with the cumulative total return of the Nasdaq Stock Market (US)
Index and the Center for Research in Securities Prices ("CRSP") Index of Nasdaq
Telecommunications Stocks for the five-year period beginning January 1, 1989.
16
<PAGE> 19
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG THE
COMMON STOCK, NASDAQ STOCK MARKET (US) INDEX AND CRSP
NDEX OF NASDAQ TELECOMMUNICATIONS STOCKS
(FISCAL YEAR ENDING DECEMBER 31)
<TABLE>
<CAPTION>
CRSP INDEX OF
NASDAQ STOCK NASDAQ
MEASUREMENT PERIOD LIN BROAD- MARKET (US) TELECOMMUNI-
(FISCAL YEAR COVERED) CASTING INDEX CATIONS STOCKS
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 168.18 121.24 157.50
1990 148.03 102.96 106.17
1991 172.10 165.21 146.44
1992 184.14 192.10 179.85
1993 265.98 219.21 277.16
</TABLE>
Assumes $100 invested January 1, 1989 in the Common Stock, Nasdaq Stock
Market (US) Index, and CRSP Index of Nasdaq Telecommunications Stocks, with all
dividends reinvested. Assumes all shares are tendered immediately before the
close of the Offer, with the proceeds for shares accepted in the Offer
immediately reinvested. If shares had not been tendered in the Offer, the
cumulative total return for the Company as of December 31, 1990, 1991, 1992 and
1993 would have been $86, $100, $107 and $155, respectively.
Note: Stock price performance shown above for the Common Stock is historical and
not necessarily indicative of future price performance.
CERTAIN TRANSACTIONS
Six of the Company's existing 10 directors are also directors of McCaw, and
four of the Company's executive officers are also executive officers of McCaw.
McCaw owns approximately 52% of the outstanding shares of Common Stock.
After McCaw acquired its interest in the Company in March 1990, McCaw made
available the services of its employees, some of whom are elected to management
positions with the Company, with the understanding that the Company would
reimburse McCaw for these services. Under the PMVG discussed above, which the
Company and McCaw entered into in connection with the Offer, the approval of a
majority of the Independent Directors is required before the Company enters into
any material transaction with McCaw or its affiliates. McCaw requested
reimbursement from the Company for services rendered in 1993 in connection with
various engineering, research and development, marketing and other general
management activities. The Company similarly requested reimbursement from McCaw
for services rendered in 1993 in connection with various operations, marketing
and legal activities. The respective reimbursement amounts
17
<PAGE> 20
were based on labor costs (including fringe benefits and long-term incentive
compensation) and actual amounts paid to third parties. After discussions,
consultation with counsel and negotiations with McCaw, the Independent Directors
approved a payment from the Company to McCaw of approximately $6.7 million
(including reimbursements for payments to third parties) and a payment from
McCaw to the Company for expenses of approximately $1.9 million (including
reimbursements for payments to third parties).
McCaw and the Company expect to annually negotiate payments for the
reimbursement of expenses incurred on behalf of the Company by McCaw and on
behalf of McCaw by the Company for management assistance and other intercompany
services. The Company does not anticipate that the net amount of its payments to
McCaw will be material to the Company's business operations or financial
performance. The payments will continue to be negotiated on an arm's-length
basis with the assistance of counsel, and will be subject to the approval of the
Independent Directors.
In addition to the transactions described above, the Company (including its
subsidiaries and other entities it controls or manages) routinely enters into
transactions with McCaw (including its subsidiaries and other entities it
controls or manages, other than the Company) in the ordinary course of business.
The Company pays McCaw for providing cellular service to the Company's
subscribers under roaming agreements, and McCaw pays the Company for similar
services provided by the Company to McCaw's subscribers. For roaming services
provided during 1993, the Company paid McCaw approximately $27 million and McCaw
paid the Company approximately $15 million. In addition, an affiliate of the
Company provided switching, billing, and certain other services to an affiliate
of McCaw. Under this agreement, the Company's affiliate collects the revenues
generated by the subscribers of McCaw's affiliate and receives a contractually
determined fee. Such revenues amounted to approximately $862,000 during 1993,
and the payments to McCaw's affiliate amounted to approximately $648,000. The
Company also reimburses McCaw for the cost of programs, such as the North
American Cellular Network, national advertising campaigns and the National
Account Services Program (a sales force and support group that coordinates the
sale of cellular services to large companies), which McCaw manages for all of
its markets, as well as certain of the Company's markets. The Company paid McCaw
approximately $2 million for expenses in connection with such programs during
1993. The costs of such programs are shared by all markets benefited (including,
in certain cases, markets owned by third parties), with the allocation based on
actual per market costs incurred or such factors as relative market population
or numbers of subscribers. The Company also maintains a regional office that
oversees and provides certain centralized services for the Company's Dallas
cellular operations as well as a cluster of McCaw cellular markets located in
Texas and adjacent states. The costs of this office are allocated to all such
markets, based on their relative shares of population. McCaw's share of such
costs during 1993 was approximately $2.9 million. In 1993, the Company also
entered into an agreement with a McCaw operation pursuant to which it sold
cellular communications equipment to such operation for approximately $1
million. All such agreements and arrangements between the Company and McCaw are
on terms that the Company believes are as favorable to it as would have been
obtained with an unrelated third party.
On June 19, 1992, the Company, McCaw and certain other parties received
court approval of a Stipulation of Settlement setting forth terms by which
shareholder litigation in the United States District Court for the Southern
District of New York (Katz v. Pels) would be settled and shareholder litigation
in the Delaware Court of Chancery for New Castle County (In re LIN Broadcasting
Corp. Shareholders Litigation) would be dismissed. Such litigation arose out of
the McCaw Agreement. Under the terms of the settlement, the Company received
from McCaw a payment of $1.35 million in July 1992, received from McCaw a
further payment of $2 million on June 30, 1993 and will receive from McCaw
further payments of $2 million on each of June 30, 1994 and 1995. McCaw was also
required to transfer to the Company approximately a 2% interest in the
Galveston, Texas cellular market.
John W. Stanton, a director of the Company, has entered into certain
transactions with the Company. See "Executive Compensation -- Compensation
Committee Interlocks."
18
<PAGE> 21
AMENDMENT TO THE 1969 PLAN
The Board of Directors has unanimously approved, subject to stockholder
approval at the Annual Meeting, amendments to the 1969 Plan as described below.
The 1969 Plan, as amended, is set forth in Appendix A to this Proxy Statement.
The Board of Directors believes that the adoption of the amendments is in the
best interests of the Company and its stockholders and has directed that the
amendments be submitted to the stockholders for approval.
The first amendment provides that no participant in the 1969 Plan will be
granted in any fiscal year of the Company options to acquire in the aggregate
more than 300,000 shares of Common Stock. This limitation adjusts
proportionately in connection with any change in capitalization. The Board of
Directors believes that this amendment is desirable in light of Section 162(m)
of the Code, which was added to the Code pursuant to the Omnibus Budget
Reconciliation Act of 1993. Under Section 162(m), the allowable deduction for
compensation paid or accrued with respect to the chief executive officer and
each of the four other most highly compensated employees of a publicly held
corporation is limited to no more than $1 million per year for taxable years
beginning on or after January 1, 1994. This limitation does not apply to
compensation attributable to stock options if, among other things, the option
plan includes limits on option grants to employees such as the limitations
described above.
The second amendment grants authority to the Compensation Committee to
extend the post-termination exercise period for options held by terminated
optionees. Currently, the 1969 Plan provides for (i) immediate termination of
options held by optionees whose employment is terminated voluntarily without the
written consent of the Company or for cause and (ii) continued exercisability of
options for a period of three months after any other termination of employment,
to the extent such options were exercisable on the date of termination.
Additional post-termination exercisability periods apply to termination of
employment due to death or disability. The proposed amendment is desirable to
clarify that the Compensation Committee has the discretion to provide for
post-termination exercise periods other than those specified in the 1969 Plan,
either in the option agreement or by a resolution adopted by the Compensation
Committee at any time.
The third amendment clarifies the treatment of options if McCaw becomes a
subsidiary or division of another company. The 1969 Plan currently provides that
options granted under the 1969 Plan will not be affected if the employee becomes
an employee of McCaw, a subsidiary of McCaw or any successor corporation. The
proposed amendment provides that such options will also not be affected if the
employee becomes an employee of a parent of McCaw or of a subsidiary of a parent
of or successor to McCaw. In addition, the 1969 Plan currently provides that
options outstanding under the 1969 Plan will be converted into options to
purchase McCaw's Class A Common Stock if (i) a Change in Control (as defined in
the 1969 Plan) results in the consolidation or merger of the Company with McCaw
or a McCaw subsidiary and McCaw or a McCaw subsidiary is the surviving
corporation or (ii) McCaw becomes the beneficial owner of 80% or more of the
combined voting power of the Company's stock (other than pursuant to a Private
Market Sale, as defined in the PMVG). The proposed amendment provides that such
conversion will also occur if the Company merges or consolidates with a
successor to McCaw under the PMVG or if a successor to McCaw under the PMVG
acquires 80% of the combined voting power of the Company's stock. The proposed
amendment further provides that if McCaw or any such successor is not a publicly
traded corporation then options outstanding under the 1969 Plan will be
converted into options to purchase the stock of the ultimate publicly traded
parent of McCaw or such successor.
DESCRIPTION OF THE 1969 PLAN
The 1969 Plan provides for the granting of nonqualified stock options.
Although the 1969 Plan also originally provided for the granting of incentive
stock options (as defined under Section 422 of the Code), incentive stock
options are no longer issuable under the 1969 Plan. During 1993, options to
purchase 105,000 shares of Common Stock were granted under the 1969 Plan to all
executive officers of the Company as a group and options to purchase 368,300
shares of Common Stock were granted to all other employees of the Company as a
group. Options granted during 1993 to the named executive officers are set forth
under "Executive Compensation--Option Grants in Fiscal Year 1993." No options
were granted under the 1969
19
<PAGE> 22
Plan to directors who are not also executive officers of the Company. At
February 28, 1994, options to purchase 1,590,023 shares of Common Stock were
outstanding under the 1969 Plan. At that date, options to purchase 954,840
shares of Common Stock remained available for grant under the 1969 Plan. On
February 28, 1994, the reported closing transaction price of a share of Common
Stock on the Nasdaq National Market was $111.75. The principal features of the
1969 Plan are as follows:
1. The 1969 Plan is administered by a committee of the Board of
Directors. The Compensation Committee, which consists of three directors
who are "disinterested persons" for purposes of Section 16 of the 1934 Act,
currently administers the 1969 Plan.
2. Options may be granted only to officers and other key employees of
the Company and its subsidiaries and to officers and other key employees of
any other organization (including, but not limited to, partnerships and
joint ventures) of which the Company owns more than a 50% equity interest
(an "affiliate"). Other than Messrs. Alberg, Craig O. McCaw and Perry, no
present nominee for election as director is eligible to receive options
under the 1969 Plan. As amended subject to stockholder approval, the
maximum number of shares of Common Stock with respect to which an option or
options may be granted in any fiscal year to any participant under the 1969
Plan may not exceed 300,000 shares. At February 28, 1994, the total group
to whom options may be granted under the 1969 Plan consisted of
approximately 280 key employees, including 10 officers.
3. The exercise price of options granted may not be less than 100% of
the fair market value of the Common Stock at the time of grant.
4. Unless otherwise provided by the Compensation Committee in the
option agreement, options are exercisable in installments as set forth in
the 1969 Plan. The 1969 Plan permits the Compensation Committee to
prescribe different exercise installments by resolution adopted at any
time.
5. The purchase price for Common Stock purchased pursuant to options
must be paid in full at the time of exercise either (i) in cash or its
equivalent, (ii) by delivery to the Company of shares of Common Stock owned
by the person exercising the option for a period of at least six months,
with a fair market value equal to such purchase price, (iii) partly in cash
or its equivalent and partly by delivery of such shares of Common Stock,
such that the sum of the amount of such cash and fair market value of such
shares equals such purchase price, or (iv) by delivery of an exercise
notice, together with irrevocable instructions to a broker to deliver to
the Company sufficient loan or sale proceeds to pay the option exercise
price and any tax obligations arising in connection with such exercise.
6. The Compensation Committee determines the key employees to receive
options and the number of shares to be covered by, and the exercise price
of, such options.
7. Each optionee is required to agree to remain in the service of the
Company, a subsidiary or an affiliate for a period of at least one year
from the date on which the option is granted or for a period expiring one
year after the expiration of the longest period of service called for by
any other contract theretofore entered into by the optionee with the
Company, whichever is longer (or until the optionee's compulsory retirement
date, if earlier).
8. Options are not transferable other than by will or the laws of
descent and distribution, and an option may only be exercised by the holder
during his or her lifetime.
9. If an optionee's employment is terminated either (i) for cause or
(ii) voluntarily by the employee and without the written consent of the
Company, his or her options, to the extent not theretofore exercised, will
immediately terminate. On any other termination of employment (other than
by reason of disability or death), the employee may exercise his or her
options at any time within three months after such termination to the
extent of the number of shares purchasable by the employee at the date of
such termination. In the case of termination of employment due to
disability (as defined in Section 22(e)(3) of the Code), the optionee may
exercise his or her options at any time within one year after such
termination to the extent of the number of shares purchasable at the date
of such termination. In case of death during employment, the optionee's
legatees or personal representatives generally may exercise the
20
<PAGE> 23
options within two years after the optionee's death, to the extent of the
remaining shares covered by the options, whether or not such shares had
become purchasable at the date of the optionee's death. If death occurs
during the three-month or one-year post-termination period discussed above,
the options are exercisable within two years after the date of death, but
only to the extent of the number of shares purchasable on that date. As
amended subject to stockholder approval, the 1969 Plan permits the
Compensation Committee at any time to provide for post-termination exercise
periods other than those set forth in the 1969 Plan. For purposes of the
1969 Plan, an employment relationship is deemed to exist between an
optionee and the Company or one of its subsidiaries or affiliates so long
as the optionee continues to be an employee of the Company or of a parent
corporation as defined in the Code or of a subsidiary or affiliate or of
McCaw, or a subsidiary of McCaw, or any successor company. As amended
subject to stockholder approval, an employment relationship will also be
deemed to exist between an optionee and the Company so long as the optionee
continues to be an employee of a parent of McCaw or of any subsidiary of a
parent of or successor to McCaw. In no event, however, may any option be
exercised more than 10 years from the date of grant.
10. The 1969 Plan may be terminated, modified or amended by the
stockholders of the Company. The Board of Directors may also terminate the
1969 Plan, or make such modifications or amendments thereto as it deems
advisable, including such modifications or amendments as it deems advisable
to conform to any change in any law or regulation applicable thereto. The
1969 Plan requires stockholder approval only for the adoption of any
amendment that would otherwise require stockholder approval under any
applicable law or regulation, including, but not limited to, Rule 16b-3
under Section 16(b) of the 1934 Act. Termination, modification or amendment
of the 1969 Plan may not, without the consent of the employee, adversely
affect the employee's rights under an option theretofore granted to the
employee.
11. Pursuant to the 1969 Plan, in the event of a change in control of
the Company (as defined in the 1969 Plan), officers of the Company who are
subject to Section 16 of the 1934 Act may surrender vested options in
exchange for a cash payment by the Company. The amount of the cash payment
per share is determined by taking the difference between the exercise price
of the shares covered by the options so surrendered and the greater of (i)
the highest market price of the Common Stock during the 90-day period prior
to the date of surrender and (ii) the highest price paid to any stockholder
of the Company in the transactions or group of transactions resulting in
the change of control. Such options may be surrendered during the 60-day
period following the change in control.
12. Notwithstanding the foregoing, if (a) the change in control
results in the consolidation or merger of the Company with McCaw or a McCaw
subsidiary and McCaw or a McCaw subsidiary is the surviving company or (b)
McCaw or a McCaw subsidiary becomes the beneficial owner of 80% or more of
the combined voting power of the Company's stock (other than pursuant to a
Private Market Sale, as defined in the PMVG), each outstanding option will
be converted into an option to purchase a number of shares of McCaw's Class
A Common Stock determined by multiplying the number of unexercised
outstanding options by a fraction, the numerator of which is the fair
market value of a share of Common Stock and the denominator of which is the
fair market value of a share of McCaw's Class A Common Stock on the date of
the change in control. The option price for McCaw's Class A Common Stock
will be equal to the exercise price of the option multiplied by a fraction,
the numerator of which is the fair market value of a share of McCaw's Class
A Common Stock and the denominator of which is the fair market value of a
share of Common Stock on the date of the change in control. As amended
subject to stockholder approval, this provision also applies to a merger or
consolidation with or acquisition by a successor to McCaw under the PMVG,
and clarifies that if McCaw or any such successor is not publicly traded,
then the options will convert into options to purchase shares of McCaw's or
any such successor's ultimate publicly traded parent.
13. If a change in control results from a Private Market Sale, upon a
vote by a majority of the Independent Directors, each outstanding option
will be converted into an option to purchase the common stock of the
ultimate parent of the acquiring entity if such stock is publicly traded.
If the Independent Directors do not approve the conversion, the Company has
the right to cancel each such option in
21
<PAGE> 24
exchange for a payment in cash equal to the excess of the purchase price of
stock in the Private Market Sale over the exercise price of such option.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE 1969 PLAN
The federal income tax consequences of an employee's participation in the
1969 Plan are complex and subject to change. The following discussion is only a
summary of the general rules applicable to options. An employee's particular
situation may be such that some variation of the general rules is applicable.
Options granted under the 1969 Plan do not qualify as "incentive stock
options" and will not qualify for any special tax benefits to the optionee. An
optionee will not recognize any taxable income at the time he or she is granted
a nonqualified stock option. Upon exercise of the option, however, the optionee
will recognize ordinary income for federal income tax purposes measured by the
excess of the then fair market value of the shares over the option price. The
income realized by the optionee will be subject to tax withholding by the
Company.
Upon a resale of any shares acquired pursuant to the exercise of a
nonqualified stock option, the difference between the sale price and the
optionee's basis in the shares will be treated as a capital gain or loss and
will be characterized as long-term capital gain or loss if the shares have been
held for more than one year at the date of their disposition. The optionee's
basis for determination of gain or loss upon any subsequent disposition of
shares acquired upon the exercise of a nonqualified stock option will be the
amount paid for such shares plus any ordinary income recognized as a result of
the exercise of such option.
In general, there will be no federal income tax consequences to the Company
upon the grant or termination of a nonqualified stock option or a sale or
disposition of the shares acquired upon the exercise of a nonqualified stock
option. Upon the exercise of a nonqualified stock option, however, the Company
will be entitled to a deduction for federal income tax purposes equal to the
amount of ordinary income, if any, recognized by the optionee as a result of the
exercise, provided the Company has satisfied any applicable withholding
obligations under the Code.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR approval of the
amendments to the 1969 Plan.
PROPOSED AMENDMENTS TO THE COMPANY'S BY-LAWS
RELATING TO DIRECTOR AND OFFICER INDEMNIFICATION
BACKGROUND
The Board of Directors has unanimously approved, subject to approval by the
stockholders at the Annual Meeting, amendments to the indemnification provisions
of the By-Laws to expand the indemnification available to the Company's
directors and officers (and, at the option of the Company, employees and agents)
to the fullest extent permitted under Delaware law and to provide additional
procedural protection for directors and officers. The text of the
indemnification provisions, as amended, is set forth in Appendix B to this Proxy
Statement.
The Board of Directors believes that the proposed amendments are desirable
so that the Company can continue to attract and retain responsible individuals
to serve as its directors and officers in light of the present difficult
environment in which such persons must serve. In recent years, investigations,
claims, actions, suits or proceedings (including stockholder derivative actions)
("Proceedings") seeking to impose liability on, or involving as witnesses,
directors and officers of publicly held corporations have become the subject of
much public discussion. Such Proceedings are typically extremely expensive
whatever their eventual outcome. Even in Proceedings in which a director or
officer is not named as a defendant, such individual may incur substantial
expenses or attorneys' fees if he or she is called as a witness or becomes
involved in the Proceeding in any other way. As a result, an individual may
conclude that potential exposure to the costs and risks of Proceedings
22
<PAGE> 25
in which he or she may become involved exceeds any benefit to him or her from
serving as a director or officer of a publicly held corporation.
AMENDMENTS TO BY-LAWS
The first amendment expands the indemnification in the By-Laws by providing
that directors and officers will be indemnified to the fullest extent permitted
by the Delaware General Corporation Law as the same currently exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than permitted prior thereto) or by other applicable law as then in
effect. The By-Laws currently provide that directors and officers will be
indemnified to the fullest extent permitted by applicable law as then in effect.
The second amendment provides that the Company will hold harmless its
directors and officers as well as indemnify them.
The third amendment clarifies that directors and officers may be
indemnified in Proceedings arising by virtue of the fact that an individual was
serving as a director, officer, employee or agent even if the basis of the
Proceeding is not an action in the individual's official capacity as a director,
officer, employee or agent.
The fourth amendment clarifies that a director or officer may be
indemnified for liabilities, losses and ERISA excise taxes or penalties and that
the Company may purchase insurance to cover liabilities and losses.
The fifth amendment clarifies that indemnification will continue as to an
indemnitee who has ceased to be a director, officer, employee or agent.
The sixth amendment provides that directors and officers will not be
indemnified with respect to proceedings commenced by any such director or
officer unless any such proceeding has been authorized by the Board of
Directors. The By-Laws currently provide that directors and officers will not be
indemnified with respect to proceedings commenced by any such director or
officer prior to a change in control (as defined in the By-Laws). The By-Laws
continue to provide that directors and officers will be indemnified with respect
to proceedings seeking to enforce their rights to indemnification.
The seventh amendment clarifies that the Company may purchase and maintain
directors' and officers' liability insurance to protect directors, officers,
employees and agents of the Company or another corporation, partnership, joint
venture, trust or other enterprise.
The eighth amendment clarifies that the ultimate determination of whether
indemnitees must repay amounts advanced under the indemnification provisions
must be by final judicial decision from which there is no right to appeal. The
By-Laws currently provide that indemnitees must repay amounts advanced under the
indemnification provisions if it is ultimately determined that the indemnitee is
not entitled to indemnification.
The ninth amendment establishes a presumption that an indemnitee is
entitled to indemnification upon submission of a written claim for
indemnification, and provides that the Company shall bear the burden of proof to
overcome such presumption. The By-Laws currently provide for such a presumption
and burden of proof only following a change in control (as defined in the
By-Laws). Prior to such change in control, the indemnitee's right to
indemnification currently must be determined by disinterested directors,
independent counsel (both as defined in the By-Laws) or the Company's
stockholders.
The tenth amendment provides that in proceedings brought by an indemnitee
to enforce indemnification rights in which the indemnitee is only partially
successful, the Company will pay such indemnitee's expenses in full. The By-Laws
currently provide that in any such proceeding, the Company will only pay a
prorated amount of the indemnitee's expenses.
The eleventh amendment limits the effect of amendment or repeal of, or the
adoption of provisions inconsistent with, the indemnification provisions of the
By-Laws and provides that the directors' and officers' indemnification rights
will not be adversely affected with respect to any Proceeding arising out of any
act or omission occurring prior to such amendment, repeal or adoption. The
By-Laws currently provide that neither the amendment or repeal of, nor the
adoption of a provision inconsistent with, the indemnification provisions
23
<PAGE> 26
of the By-Laws will adversely affect directors' and officers' indemnification
rights with respect to proceedings commenced or threatened prior to such
amendment or adoption or, if such amendment, repeal or adoption occurs after a
change in control (as defined in the By-Laws), with respect to proceedings
arising out of actions or omissions occurring prior to such amendment or
adoption.
The final amendment clarifies that any person serving as a director,
officer or employee of an entity controlled by the Company will be deemed to be
serving at the request of the Company.
Although the proposed amendments to the By-Laws do not require stockholder
approval, the Board of Directors believes that it is appropriate to submit them
to a stockholder vote because of the personal interest members of the Board of
Directors may have in the adoption of such amendments. It is unclear whether a
stockholder who votes in favor of the proposed amendments would be estopped from
later asserting that the By-Law or an indemnification agreement between the
Company and a person who may be indemnified pursuant to such By-Law is invalid.
If the proposed amendments to the By-Laws are not approved by the stockholders,
the Board of Directors reserves the right to adopt similar amendments to the
By-Laws without stockholder approval. The Board of Directors has not, however,
made any decision whether to adopt similar amendments without stockholder
approval.
The Company has not received notice of any Proceeding against an executive
officer or director of the Company to which the protections and benefits under
the new By-Law provisions might apply. In addition, these provisions are not
being proposed in response to any specific resignation, threat of resignation or
refusal to serve by any director or potential director.
The By-Laws as amended would cover acts and omissions that occurred before
its adoption, even though suit is not filed until later. The By-Laws as amended
may be amended, altered or repealed at any time in the future by the vote of the
Board of Directors without stockholder approval.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENTS TO THE BY-LAWS REGARDING INDEMNIFICATION OF DIRECTORS AND OFFICERS.
INDEPENDENT AUDITORS
The firm of Ernst & Young, 999 Third Avenue, Seattle, Washington 98104,
which has been the independent auditor of the Company since 1969, has been
selected to continue as the Company's auditor for the current year.
Representatives of Ernst & Young will be present at the Annual Meeting to
respond to questions and to make a statement if they so desire.
PROPOSALS OF STOCKHOLDERS
Proposals that stockholders wish to include in the Company's proxy
statement and form of proxy for presentation at the 1995 Annual Meeting of
Stockholders must be received by the Company at 5295 Carillon Point, Kirkland,
Washington 98033, Attention of Secretary, no later than December 1, 1994.
AVAILABILITY OF ADDITIONAL INFORMATION
The Annual Report of the Company to the SEC on Form 10-K, which includes
financial statements of the Company and its consolidated subsidiaries, is
available (without exhibits) to stockholders without charge upon written request
to the Secretary of the Company at 5295 Carillon Point, Kirkland, Washington
98033. There is a nominal charge for reproduction of the exhibits to the Form
10-K.
24
<PAGE> 27
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
other matters that are to be brought to a vote at the Annual Meeting. If any
other matter does come before the Annual Meeting, however, the persons appointed
in the enclosed form of proxy or their substitutes will vote in accordance with
their best judgment on such matters.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company, including
expenses in connection with preparing, assembling and mailing this Proxy
Statement. Proxies may be solicited by the Company's officers and regular
employees. Such solicitations may be made personally or by mail, telephone or
telegram. In addition, Corporate Investor Communications, Inc. will assist in
the solicitation of proxies by the Company for a fee not expected to exceed
$2,000. The Company may reimburse brokers, custodians and nominees for their
expenses in sending proxies and proxy materials to beneficial owners.
By Order of the Board of Directors
Roberta R. Katz
Secretary
March 31, 1994
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<PAGE> 28
APPENDIX A
LIN BROADCASTING CORPORATION
AMENDED AND RESTATED
1969 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
The general purpose of this 1969 Stock Option Plan (hereinafter called the
Plan) is to aid in maintaining and developing a management and staff capable of
assuring the future success of LIN Broadcasting Corporation (hereinafter called
the Company) by providing to employees of the Company and its subsidiaries
additional incentives to enlarge their proprietary interest in the Company, to
continue and increase their efforts on the Company's behalf, and to remain in
the employ of the Company or its subsidiaries. Options granted under the Plan
may be "incentive stock options" under Section 422 of the Internal Revenue Code
of 1986, as amended (hereinafter called the Internal Revenue Code), or
"nonqualified stock options".
2. STOCK RESERVED FOR OPTIONS
An aggregate of 3,778,941 shares of Common Stock, $.01 par value, of the
Company (hereinafter called the Common Stock) will be reserved for issuance or
transfer upon the exercise of options granted under the Plan. Such shares may be
in whole or in part, as the Board of Directors of the Company shall from time to
time determine, authorized but unissued shares of Common Stock or issued shares
of Common Stock which shall have been reacquired by the Company. If any option
granted under the Plan shall expire or terminate for any reason without having
been exercised in full, the unpurchased shares subject thereto shall (unless the
Plan shall have been terminated) again be available for other options to be
granted under the Plan.
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee (hereinafter called the
Committee) consisting solely of two or more persons appointed from time to time
by the Board of Directors; provided, however, that with respect to officers and
directors of the Company who are subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), such Committee shall
consist solely of three or more persons appointed from time to time by the Board
of Directors out of those members of the Board of Directors of the Company who
have not at any time within one year prior to service as a Committee member or
during such service been eligible to be granted or awarded equity securities
pursuant to the Plan or any other plan of the Company or any of its affiliates
except pursuant to certain formula, broad-based or fee election plans specified
in Rule 16b-3(c) under the Exchange Act.
The Committee shall have plenary authority in its discretion, but subject
to the express provisions of the Plan, to determine the purchase price of the
Common Stock covered by each option, whether each option shall be an incentive
stock option or a nonqualified stock option, the employees to whom, and the time
or times at which, options shall be granted, and the number of shares to be
subject to each option; to interpret the Plan; to prescribe, amend, and rescind
rules and regulations relating to it; to determine the terms and provisions (and
amendments thereof) of the respective option agreements (which need not be
identical), including such terms and provisions (and amendments) as shall be
required in the judgment of the Committee to provide that options under the Plan
will be incentive stock options under the Internal Revenue Code or nonqualified
stock options, or to conform to any change in any law or regulation applicable
thereto; and to make all other determinations deemed necessary or advisable for
the administration of the Plan. The Committee's determination on the foregoing
matters shall be conclusive.
The Committee shall select one of its members as its Chairman and shall
hold its meetings at such times and places as it may determine. A majority of
its members shall constitute a quorum. All determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all the members shall be fully as
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary, shall keep minutes
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of its meetings, and shall make such rules and regulations for the conduct of
its business as it shall deem advisable.
4. ELIGIBILITY: FACTORS TO BE CONSIDERED IN GRANTING OPTIONS
Options may be granted only to key employees (which term as used herein
includes officers) of the Company, its subsidiary corporations as defined in
Section 425 of the Internal Revenue Code and any other organization (including,
but not limited to, partnerships and joint ventures) of which the Company owns
more than a 50% equity interest (herein called subsidiaries). A director of the
Company or of a subsidiary who is not also an employee of the Company or one of
its subsidiaries will not be eligible to receive an option. The maximum number
of shares of Common Stock with respect to which an option or options may be
granted to any eligible employee in any one fiscal year of the Company shall not
exceed 300,000 shares (the "Maximum Annual Employee Grant"). In determining the
employees to whom options shall be granted and the number of shares to be
covered by each option, the Committee may take into account the nature of the
services rendered by the respective employees, the present and potential
contributions to the success of the Company, and such other factors as the
Committee in its discretion shall deem relevant. An employee who has been
granted an option under the Plan may be granted an additional option or options
under the Plan if the Committee shall so determine. The aggregate fair market
value (determined as of the time the option is granted) of the stock for which
any employee may be granted incentive stock options in any calendar year after
1980 and before 1987 (under all plans of the Company or any subsidiary) shall
not exceed $100,000 plus any unused limit carryover to such year. If $100,000
exceeds the aggregate fair market value (determined at the time the option is
granted) of the stock for which an employee was granted incentive stock options
in any calendar year (under all plans of the Company or any subsidiary) one-half
of such excess shall be unused limit carryover to each of the three succeeding
calendar years, under the rules of former Section 422A(c)(4) of the Internal
Revenue Code of 1954. Notwithstanding the foregoing, to the extent that the
aggregate fair market value (determined as of the time the option is granted) of
the stock for which incentive stock options granted after December 31, 1986 are
exercisable for the first time by the holder of the option during any calendar
year (under all plans of the Company, a parent or subsidiary or predecessor
corporation) exceeds $100,000, such options shall be treated as nonqualified
stock options. No incentive stock option shall be granted to any person who, at
the time the option is granted, owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary,
unless at the time the option is granted the option price is at least 110% of
the fair market value of the stock subject to the option and the option by its
terms is not exercisable for more than 5 years from the date it is granted.
5. OPTION PRICES
The purchase price of the Common Stock under each option shall be
determined by the Committee, but shall not be less than 100% of the fair market
value of the Common Stock at the time of granting the option. Such fair market
value shall be determined by the Committee. The purchase price shall be paid in
full at the time of exercise as provided in the option agreement (i) in cash or
the equivalent in the amount of such purchase price, (ii) by surrender or
delivery to the Company of whole shares of Common Stock owned by the persons
exercising the option for a period of at least six months with a fair market
value (as determined by the Committee) at the close of business on the date the
option is exercised equal to such purchase price, (iii) partly in cash or the
equivalent and partly by delivery to the Company of whole shares of Common Stock
owned by the person exercising the option, such that the sum of the amount of
such cash and the fair market value of such shares (as determined by the
Committee) at the close of business on the date the option is exercised equals
such purchase price or (iv) delivery of a properly executed exercise notice,
together with irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price and any federal, state
or local withholding tax obligations that may arise in connection with the
exercise. Any provision specifying form of payment in any option agreement
related to a nonqualified option outstanding prior to February 11, 1981, shall
be waived to the extent necessary to permit the holder of the option covered
thereby to pay the purchase price specified therein as provided in clauses (ii),
(iii) and (iv) of the preceding sentence. The purchase price specified under
each option, as from time to time amended, will remain constant during
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the term of such option (subject to adjustment pursuant to paragraph 11 hereof).
The cash proceeds are to be added to the general funds of the Company and used
for its general corporate purposes.
6. EXERCISE OF OPTIONS
Unless otherwise provided in the option agreement or by resolution of the
Committee adopted at any time, an option granted under the Plan shall become
exercisable in installments as follows: To the extent of 30% of the number of
shares originally covered thereby, at any time after the grant of the option; to
the extent of an additional 20% of such number of shares, at any time after the
commencement of each of the second, third and fourth years of the term of the
option; and to the extent of an additional 10% of such number of shares subject
to the option, at any time after the commencement of the fifth year of the term
of the option; and such installments shall be cumulative. The Committee shall
have authority in its discretion to prescribe in any option agreement or by
resolution adopted at any time that the option may be exercised in different
installments during the term of the option, including installments that will
make all shares subject to the option become purchasable prior to the employee's
compulsory retirement date as prescribed from time to time by the Company.
Anything to the contrary notwithstanding, shares of Common Stock obtained upon
exercise of the option may not be sold by persons subject to Section 16 of the
Exchange Act until six months after the date the option was granted. An option
may be exercised, at any time or from time to time during the term of the
option, as to any or all full shares which have become purchasable under the
provisions of the option, but not at any time as to less than 25 shares unless
the remaining shares which have become so purchasable are less than 25 shares.
The term of each option shall not be more than 10 years from the date of
granting thereof, or such shorter period as is prescribed in paragraph 9 or 10
hereof. Except as provided in said paragraphs 9 and 10, no option may be
exercised at any time unless the holder thereof is then an employee of the
Company or one of its subsidiaries. Anything herein to the contrary
notwithstanding, an incentive stock option granted prior to 1987 shall not be
exercisable while there is outstanding any incentive stock option which was
granted before the granting of such option to such individual to purchase stock
of the Company or a subsidiary (determined at the time of granting of such
option) or a predecessor of any such corporations. An option shall be treated as
outstanding for this purpose until it is exercised in full or expires by reason
of lapse of time. The holder of an option shall not have any of the rights of a
stockholder with respect to the shares subject to option until such shares shall
be issued to him upon the due exercise of his option.
If the holder of an option at the occurrence of a Change in Control (as
defined below) is (or has been at any time within the six months prior to the
Change in Control) an officer of the Company within the meaning of Section 16 of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and if the
option has been held by the officer for at least six months, the officer shall,
during the 60-day period following such occurrence, be entitled to surrender the
option to the extent it is exercisable on the date of surrender to the Company
for cancellation as to all shares covered by the portion so surrendered and to
accept in exchange therefor a cash payment equal to the product of (x) the
difference between the purchase price of such shares under the portion of the
option so surrendered and the fair market value of such shares, which will be
the greater of (i) the highest selling price of the Common Stock on the National
System of NASDAQ (or any other principal market on which the Common Stock is
then traded) during the 90-day period prior to the date of surrender of such
option, and (ii) the highest price paid to any holder of Common Stock in the
transaction or group of transactions resulting in such Change in Control, times
(y) the number of such shares. The Company shall make payment to the
optionholder within five (5) business days after the date on which the
optionholder delivers notice to the Company of his election to utilize the cash
payment procedure provided herein. For purposes of this Section, "Change in
Control" shall mean any of the following events: (i) approval by the holders of
the Common Stock of any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Common Stock are converted into cash, securities or other
property, other than a merger of the Company in which the holders of the Common
Stock immediately prior to the merger have substantially the same proportionate
ownership of common stock of the surviving corporation immediately after the
merger, (ii) approval by the holders of the Common Stock of any sale, lease,
exchange or other transfer in one transaction or a series of related
transactions of all or substantially all the assets of the Company other than a
transfer of the Company's assets to a majority-owned subsidiary of the Company,
(iii) approval by the holders of the Common Stock of any
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plan or proposal for the liquidation or dissolution of the Company, (iv) any
person (as such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than the Company or a majority-owned subsidiary of the Company or any
employee benefit plan sponsored by the Company or a majority-owned subsidiary of
the Company, becomes the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company representing 80% or more of
the combined voting power of the Company's then outstanding securities
ordinarily (and apart from rights accruing in special circumstances) having the
right to vote in the election of directors, or (v) at any time during a period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election (or the nomination
for election by the Company's stockholders) of each new director during such
two-year period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two-year
period; provided, however, that no such event or occurrence shall constitute a
"Change in Control" if, prior to or concurrently with such event or occurrence,
a resolution is adopted by the affirmative vote of 80% or more of the
Disinterested Directors then in office declaring that such event or occurrence
shall not constitute a Change in Control for purposes of the Plan. For purposes
hereof, the term "Disinterested Directors" shall mean any member of the Board of
Directors of the Company who is not an officer or employee of the Company or any
of its subsidiaries or a participant in the Plan and who, if elected by
stockholders, was elected at a regularly scheduled meeting of stockholders prior
to the Change in Control and/or, if not elected by stockholders, was recommended
for election by a majority of the Disinterested Directors then on the Board of
Directors of the Company.
7. EMPLOYEE'S AGREEMENT TO SERVE
Each employee receiving an option shall, as one of the terms of the option
agreement or of an employment agreement in connection with which such option is
granted, agree that he will remain in the service of the Company or one of its
subsidiaries for a period of at least one year from the date the option is
granted to him or for a period expiring one year after the expiration of the
longest period of service called for by any other contract theretofore entered
into by him with the Company, whichever is longer (or until his earlier
compulsory retirement date as prescribed from time to time by the Company) and
that he will, during such employment, devote his entire time, energy, and skill
to the service of the Company or such subsidiary and the promotion of its
interests, subject to vacations, sick leave, and other absences in accordance
with the policies of the Company and its subsidiaries. Such employment shall
(subject to the terms of any contract between the Company or any such subsidiary
and such employee) be at the pleasure of the Company or of such subsidiary, and
at such compensation as the Company or such subsidiary shall reasonably
determine from time to time.
8. NONTRANSFERABILITY OF OPTIONS
No option granted under the Plan shall be transferable otherwise than by
will or the laws of descent and distribution, and an option may be exercised,
during the lifetime of the holder thereof, only by him.
9. TERMINATION OF EMPLOYMENT
Unless otherwise provided in an option holder's option agreement or by
resolution of the Committee adopted at any time, (A) in the event of termination
of the employment of the holder of an option, other than (a) a termination that
is either (i) for cause or (ii) voluntary on the part of the employee and
without the written consent of the Company, or (b) a termination by reason of
death, the employee may exercise his option at any time within three months
after such termination of employment (or within one year if the termination is
by reason of disability within the meaning of Section 22(e)(3) of the Internal
Revenue Code), but not after ten years from the date of granting thereof, to the
extent of the number of shares covered by his option which were purchasable by
him at the date of the termination of his employment and (B) in the event of the
termination of the employment of the holder of an option that is either (x) for
cause or (y) voluntary on the part of the employee without the written consent
of the Company, any option held by him under the Plan, to the extent not
theretofore exercised, shall forthwith terminate. For purposes of this Plan, an
employment
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relationship shall be deemed to exist between an optionee and the Company or one
of its subsidiaries so long as the optionee continues to be an employee of the
Company or of a parent corporation as defined in the Internal Revenue Code or a
subsidiary or of McCaw Cellular Communications, Inc., a Delaware corporation, or
any subsidiary ("McCaw"), or any successor or parent corporation or any
subsidiary of any such successor or parent corporation. The option agreements
may contain such provisions as the Committee shall approve with reference to the
effect of approved leaves of absence. Nothing in the Plan or in any option
granted pursuant thereto shall confer on any employee any right to continue in
the employ of the Company or any of its subsidiaries or affect in any way the
right of the Company or any of its subsidiaries to terminate his employment at
any time.
10. DEATH OF AN EMPLOYEE
If an employee to whom an option has been granted under the Plan shall die
while he is employed by the Company or a parent corporation as defined in the
Internal Revenue Code or a subsidiary or by McCaw or any successor corporation
or within three months after the termination of his employment, such option
(unless it shall have previously terminated pursuant to the provisions of
paragraph 9 hereof or unless otherwise provided in his option agreement) may be
exercised by a legatee or legatees of the option holder under his last will, or
by his personal representatives or distributees, at any time within a period of
two years after his death, but not after ten years from the date of granting
thereof, (i) if death occurs while he is employed by the Company or a parent
corporation as defined in the Internal Revenue Code or a subsidiary or by McCaw
or any successor corporation, to the extent of the remaining shares covered by
his option, whether or not such shares had become purchasable by such employee
at the date of his death, but subject to the ordering rule in paragraph 6, or
(ii) if death occurs during such three-month period, to the extent of the number
of shares purchasable by such employee pursuant to the provisions of paragraph 9
hereof at the date of his death.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
Notwithstanding any other provision of the Plan, each option agreement may
contain such provision as the Committee shall determine to be appropriate for
the adjustment of the number, class and purchase price of shares subject to and
purchasable upon any exercise of such option in the event of changes in the
outstanding Common Stock of the Company by reason of any stock dividend,
split-up, recapitalization, merger, consolidation, combination or exchange of
shares, and the like or in the event of a Change in Control of the Company, and
in the event of any such change in the outstanding Common Stock of the Company
or Change in Control of the Company, the aggregate number and class of shares of
the Company or of the parent of the Company available under the Plan, the
Maximum Annual Employee Grant and the purchase price of such shares shall be
appropriately adjusted by the Committee, whose determination shall be
conclusive.
12. MCCAW TRANSACTIONS
Notwithstanding anything contained in this Plan to the contrary, if (i) a
Change in Control, as defined in paragraph 6 hereof, results in the
consolidation or merger of the Company with McCaw or a successor to McCaw's
rights and obligations under the Private Market Value Guarantee dated December
11, 1989 (a "PMVG Successor") and McCaw or a PMVG Successor is the continuing or
surviving corporation as described in paragraph 6 hereof or (ii) McCaw or a PMVG
Successor becomes the beneficial owner of securities of the Company representing
80% or more of the combined voting power of the Company's then outstanding
securities as described in paragraph 6 hereof (other than by reason of the sale
of the Company in accordance with Section 2(f) of the Private Market Value
Guarantee dated December 11, 1989 (the "Private Market Sale")), in lieu of any
other benefit payable under this Plan, each option outstanding under this Plan
shall be converted into an option to purchase a number of shares of Class A
Common Stock of McCaw or common stock of any such PMVG Successor (or, in the
event that McCaw or any such PMVG Successor is not publicly traded, the common
stock of the ultimate publicly traded parent thereof) ("McCaw Stock") determined
by multiplying the number of shares subject to that portion of the option which
remains outstanding but unexercised by a fraction, the numerator of which is the
fair market value on the date of the Change in Control of a share of the Common
Stock and the denominator of which is the fair market value of a
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share of McCaw Stock on the date of the Change in Control. The option price per
share of McCaw Stock shall be equal to the product of the per share exercise
price of the option multiplied by a fraction, the numerator of which is the fair
market value of a share of McCaw Stock and the denominator of which is the fair
market value of a share of the Common Stock on the date of the Change in
Control. For purposes of this paragraph 12, the fair market value of Common
Stock and McCaw Stock shall be equal to the closing price thereof on the
relevant date or, if no such shares have been traded on the relevant date, the
average of the last reported bid and asked price thereof on the relevant date.
Similarly, if a Change in Control results from a Private Market Sale, upon a
vote by a majority of the Independent Directors (as defined in the Private
Market Value Guarantee) each option outstanding under this Plan shall be changed
into an option to purchase the common stock of the ultimate parent of the
acquiring entity, the common stock of which is publicly traded on the same basis
as set forth above in this paragraph; provided that if no such conversion is
approved by the Independent Directors, the Company shall have the right (but not
the duty) to cancel each such option in exchange for a payment in cash equal to
the excess of the purchase price in the Private Market Sale over the exercise
price of such option. For purposes of this paragraph 12, a Change in Control
shall be deemed to have occurred regardless of whether the Disinterested
Directors adopt a resolution declaring that such event or occurrence shall not
constitute a Change in Control.
13. ADOPTION OF PLAN
The Plan shall be adopted as of the date of its approval by the Board of
Directors.
14. TERMINATION AND AMENDMENT
Unless the Plan shall theretofore have been terminated as hereinafter
provided, it shall terminate on, and no option shall be granted thereunder
after, February 28, 1999. The Plan may be terminated, modified, or amended by
the stockholders of the Company. The Board of Directors of the Company may
terminate the Plan or make such modifications or amendments thereof as it shall
deem advisable, including such modifications or amendments as it shall deem
advisable in order to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board of Directors may not, without further
approval by the holders of a majority of the voting stock of the Company voting
in person or by proxy at a duly held meeting of stockholders, adopt any
amendment which would require stockholder approval under any applicable law or
regulation including but not limited to Rule 16-3 under Section 16(b) of the
Exchange Act. No termination, modification or amendment of the Plan may, without
the consent of the employee to whom any option shall theretofore have been
granted, adversely affect the rights of such employee under such option. Any
amendment made to the Plan which would constitute a "modification" to incentive
stock options outstanding on the date of such amendment, shall not be applicable
to such outstanding incentive stock options, but shall have prospective effect
only, unless the holder of the option agrees otherwise.
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APPENDIX B
LIN BROADCASTING CORPORATION
ARTICLE XII OF AMENDED AND RESTATED BYLAWS
SECTION 1. Indemnification
The Corporation shall to the fullest extent permitted by the Delaware
General Corporation Law as the same exists or may hereafter be amended (but, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than permitted prior
thereto) or by applicable law as then in effect indemnify and hold harmless any
person (the "Indemnitee") who is or was a director or officer of the Corporation
and who is or was involved in any manner (including, without limitation, as a
party or a witness) or is threatened to be made so involved in any threatened,
pending or completed investigation, claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative (including, without limitation,
any action, suit or proceeding by or in the right of the Corporation to procure
a judgment in its favor) (a "Proceeding") by reason of the fact that such person
is or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise (including, without limitation, any employee benefit plan) whether
the basis of such Proceeding is alleged action in an official capacity as such a
director, officer, employee or agent or in any other capacity while serving as
such a director, officer, employee or agent, against all expenses (including
attorneys' fees and ERISA excise taxes or penalties), liabilities, losses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such Proceeding and such indemnification shall
continue as to an Indemnitee who has ceased to be a director, officer, employee
or agent; provided, however, except as provided in Section 4(d), the foregoing
shall not apply to a director or officer of the Corporation with respect to a
Proceeding (or part thereof) that was commenced by such director or officer
unless the Proceeding (or part thereof) was authorized or ratified by the Board.
Such indemnification shall be a contract right and shall include the right to
receive payment in advance for any expenses incurred by the Indemnitee in
accordance with Section 4 of this Article.
SECTION 2. Insurance, Contracts and Funding
The Corporation may purchase and maintain insurance to protect itself and
any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise, including,
without limitation, any employee benefit plan, against any expenses,
liabilities, losses, judgments, fines and amounts paid in settlement whether or
not the Corporation would have the power to indemnify such person against such
expenses, liabilities, losses, judgments, fines or amounts paid in settlement
under the Delaware General Corporation Law. The Corporation may enter into
contracts with any person entitled to indemnification under this Article in
furtherance of the provisions of this Article and may create a trust fund, grant
a security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Article.
SECTION 3. Indemnification; Not Exclusive Right
The indemnification provided for in this Article shall not be exclusive of
any other rights to which those seeking indemnification may otherwise be
entitled, and the provisions of this Article shall inure to the benefit of the
heirs and legal representatives of any person entitled to indemnity under this
Article and shall be applicable to Proceedings commenced or continuing after the
adoption of this Article, whether arising from acts or omissions occurring
before or after such adoption.
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SECTION 4.Advancement of Expenses; Procedures; Presumptions and Effect of
Certain Proceedings; Remedies
In furtherance, but not in limitation, of the foregoing provisions, the
following procedures, presumptions and remedies shall apply with respect to
advancement of expenses and the right to indemnification under this Article:
(a) Advancement of Expenses. All reasonable expenses incurred by or on
behalf of the Indemnitee in connection with any Proceeding shall be
advanced to the Indemnitee by the Corporation within 20 days after the
receipt by the Corporation of a statement or statements from the Indemnitee
requesting such advance or advances from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or statements
shall reasonably evidence the expenses incurred by the Indemnitee and, if
required by law at the time of such advance, shall include or be
accompanied by an undertaking by or on behalf of the Indemnitee to repay
the amounts advanced if it should ultimately be determined by final
judicial decision from which there is no further right to appeal that the
Indemnitee is not entitled to be indemnified against such expenses pursuant
to this Article.
(b) Procedure for Determination of Entitlement to Indemnification. To
obtain indemnification under this Article, an Indemnitee shall submit to
the Secretary of the Corporation a written request, including such
documentation and information as is reasonably available to the Indemnitee
and reasonably necessary to determine whether and to what extent the
Indemnitee is entitled to indemnification (the "Supporting Documentation").
The determination of the Indemnitee's entitlement to indemnification shall
be made not later than 60 days after receipt by the Corporation of the
written request for indemnification together with the Supporting
Documentation. The Secretary of the Corporation shall, promptly upon
receipt of such a request for indemnification, advise the Board of
Directors in writing that the Indemnitee has requested indemnification.
(c) Presumptions. The Indemnitee shall be presumed to be entitled to
indemnification under this Article upon submission of a request for
indemnification together with the Supporting Documentation in accordance
with Section 4(b) of this Article, and the Corporation shall have the
burden of proof to overcome that presumption in reaching a contrary
determination. Neither the failure of the Corporation (including its Board,
independent legal counsel or its stockholders) to have made a determination
that indemnification of the Indemnitee is proper in the circumstances prior
to the commencement of a judicial proceeding under the provisions of
Section 4(d) of this Article nor an actual determination by the Corporation
(including its Board, independent legal counsel or its stockholders) that
the Indemnitee is not entitled to indemnification shall be a defense to the
judicial proceeding or create a presumption that the Indemnitee is not so
entitled. The termination of any Proceeding described in Section 1, or of
any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, adversely affect the right of the Indemnitee to indemnification
or create a presumption that the Indemnitee did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the
best interests of the Corporation or, with respect to any criminal
Proceeding, that the Indemnitee had reasonable cause to believe that his
conduct was unlawful.
(d) Remedies of Indemnitee.
(i) If a claim under this Article is not paid in full by the
Corporation within 60 days after a written request has been submitted to
the Corporation in accordance with the provisions of Section 4(b) of
this Article or, in the case of a claim for an advancement of expenses,
20 days after the receipt by the Corporation of a statement requesting
such advance in accordance with the provisions of Section 4(a) of this
Article, then the Indemnitee shall be entitled to seek an adjudication
of his entitlement to such indemnification in an appropriate court of
the State of Delaware or any other court of competent jurisdiction.
(ii) The Corporation shall be precluded from asserting in any
judicial proceeding commenced pursuant to this Section 4(d) that the
procedures and presumptions of this Article are not valid,
B-2
<PAGE> 36
binding and enforceable and shall stipulate in any such court that the
Corporation is bound by all the provisions of this Article.
(iii) In the event that the Indemnitee, pursuant to this Section
4(d), seeks a judicial adjudication to enforce his rights under, or to
recover damages for breach of, this Article, the Indemnitee shall be
entitled to recover from the Corporation, and shall be indemnified by
the Corporation against, any expenses actually and reasonably incurred
by the Indemnitee if the Indemnitee prevails in such judicial
adjudication in whole or in part.
SECTION 5. Effect of Amendments
Neither the amendment or repeal of, nor the adoption of a provision
inconsistent with, any provision of this Article (including, without limitation,
this Section 5) shall adversely affect the rights of any director or officer
under this Article with respect to any Proceeding arising out of any action or
omission occurring prior to such amendment, repeal or adoption of an
inconsistent provision, in either case without the written consent of such
director or officer.
SECTION 6. Severability
If any provision or provisions of this Article shall be held to be invalid,
illegal or unenforceable for any reason whatsoever, (a) the validity, legality
and enforceability of the remaining provisions of this Article (including,
without limitation, all portions of any paragraph of this Article containing any
such provision held to be invalid, illegal or unenforceable, that are not
themselves invalid, illegal or unenforceable) shall not in any way be affected
or impaired thereby; and (b) to the fullest extent possible, the provisions of
this Article (including, without limitation, all portions of any paragraph of
this Article containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
be construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
SECTION 7. Indemnification of Employees and Agents
Notwithstanding any other provision or provisions of this Article, the
Corporation may indemnify any person (other than a director or officer of the
Corporation) who is or who was involved in any manner (including, without
limitation, as a party or a witness) or is threatened to be made so involved in
any Proceeding by reason of the fact that such person is or was an employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise (including, without limitation, any
employee benefit plan) against all expenses (including attorneys' fees and ERISA
excise taxes or penalties), liabilities, losses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such Proceeding.
SECTION 8. Persons Serving Other Entities
Any person who is or was a director, officer or employee of the Corporation
who is or was serving (a) as a director or officer of another corporation of
which a majority of the shares entitled to vote in the election of its directors
is held by the Corporation or (b) in an executive or management capacity in a
partnership, joint venture, trust or other enterprise of which the Corporation
or a wholly owned subsidiary of the Corporation is a general partner or has a
majority ownership shall be deemed to be so serving at the request of the
Corporation and entitled to indemnification and advancement of expenses as
provided under this Article.
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<PAGE> 37
PRELIMINARY COPY
LIN BROADCASTING CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 17, 1994
The undersigned hereby appoints Donald Guthrie and Roberta R. Katz, and each
of them, as Proxies, with full power of substitution, and hereby authorizes them
to represent and to vote, as designated below, all the shares of Common Stock of
LIN Broadcasting Corporation held of record by the undersigned on March 21,
1994, at the Annual Meeting of Stockholders to be held on May 17, 1994, or any
adjournment thereof.
The Board of Directors recommends a vote "FOR all nominees" in Item 1 and
"FOR" Items 2 and 3.
1. ELECTION OF DIRECTORS. Election of the following nine nominees to serve
as directors for the ensuing year:
Tom A. Alberg, James L. Barksdale, Harold S. Eastman, William G. Herbster,
Wilma H. Jordan, Richard W. Kislik, Craig O. McCaw,
Wayne M. Perry and John W. Stanton
<TABLE>
<S> <C> <C>
/ / FOR all nominees / / WITHHOLD AUTHORITY to / / WITHHOLD vote for the following
vote for all nominees nominee(s) only (write the name(s)
in the space below):
</TABLE>
- --------------------------------------------------------------------------------
2. APPROVAL OF AMENDMENTS TO THE AMENDED AND RESTATED 1969 STOCK OPTION
PLAN.
/ / FOR / / AGAINST / / ABSTAIN
3. APPROVAL OF AMENDMENTS TO BY-LAWS REGARDING INDEMNIFICATION OF DIRECTORS
AND OFFICERS.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This Proxy, when properly
executed and delivered, will be voted in the manner directed herein by the
undersigned. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR ALL
NOMINEES" IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
Please sign below exactly
as your name appears on
your stock certificate.
When shares are held
jointly, each person
should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give
full title as such. An
authorized person should
sign on behalf of
corporations,
partnerships and
associations and give his
or her title.
Dated: , 1994
-------------------------
Signature
-------------------------
Signature if held jointly
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF THIS PROXY WILL
HELP SAVE THE EXPENSE OF ADDITIONAL SOLICITATION EFFORTS.
