<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Jacor Communications, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
JACOR COMMUNICATIONS, INC.
50 EAST RIVERCENTER BOULEVARD
12TH FLOOR
COVINGTON, KENTUCKY 41011
April 30, 1997
Dear Jacor Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
of Jacor Communications, Inc. to be held on Wednesday, May 28, 1997 at 10:30
a.m., local time, in the Buckeye AB Room of the Hyatt Regency Hotel, 151 W.
Fifth Street, Cincinnati, Ohio.
Business items to be acted upon at the Annual Meeting are the election of
ten directors to serve for a one-year term, the approval of the Amended and
Restated 1995 Employee Stock Purchase Plan, the approval of the 1997 Long-Term
Incentive Stock Plan, the approval of the 1997 Short-Term Incentive Plan, the
approval of the 1997 Non-Employee Directors Stock Purchase Plan, the approval of
the 1997 Non-Employee Directors Stock Plan, and the transaction of any other
business properly brought before the meeting. Additionally, we will report on
the progress of Jacor Communications, Inc. and stockholders will have the
opportunity to present questions of general interest.
We encourage you to read the accompanying Proxy Statement carefully and
complete, sign and return your Proxy in the postage prepaid envelope provided,
even if you plan to attend the meeting. Returning your proxy to us will not
prevent you from voting in person at the meeting, or from revoking your Proxy
and changing your vote at the meeting, if you are present and intend to do so.
The directors and officers of Jacor Communications, Inc. appreciate your
continuing interest in the business of the Company. We hope you can join us at
the Annual Meeting.
Sincerely,
[SIG]
Samuel Zell
CHAIRMAN OF THE BOARD
<PAGE>
JACOR COMMUNICATIONS, INC.
50 EAST RIVERCENTER BOULEVARD, 12TH FLOOR
COVINGTON, KENTUCKY 41011
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1997
---------------------
The Annual Meeting of Stockholders of Jacor Communications, Inc., a Delaware
corporation (the "Company"), will be held on Wednesday, May 28, 1997 at 10:30
a.m., local time, in the Buckeye AB Room of the Hyatt Regency Hotel, 151 W.
Fifth Street, Cincinnati, Ohio for the purposes of considering and acting on the
following proposals:
1. A proposal to elect ten (10) directors to serve until the next annual
meeting of stockholders and until their respective successors are elected
and qualified;
2. A proposal to approve the Amended and Restated 1995 Employee Stock
Purchase Plan, including the issuance of up to an additional 500,000
shares of Jacor Common Stock thereunder;
3. A proposal to approve the 1997 Long-Term Incentive Stock Plan, including
the issuance of up to 1,800,000 shares of Jacor Common Stock thereunder;
4. A proposal to approve the 1997 Short-Term Incentive Plan;
5. A proposal to approve the 1997 Non-Employee Directors Stock Purchase
Plan, including the issuance of up to 150,000 shares of Jacor Common
Stock thereunder;
6. A proposal to approve the 1997 Non-Employee Directors Stock Plan,
including the issuance of up to 350,000 shares of Jacor Common Stock
thereunder; and
7. To transact such other business as may properly be presented at the
Annual Meeting or any adjournment or adjournments thereof.
Holders of record of the Company's Common Stock at the close of business on
April 11, 1997 are entitled to notice of and to vote at the Annual Meeting.
Enclosed herewith is a Proxy Statement, Proxy, and an Annual Report for the
year ended December 31, 1996.
By Order of the Board of Directors:
[SIG]
Paul F. Solomon
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
April 30, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE. YOU MAY REVOKE YOUR PROXY IN WRITING OR AT THE ANNUAL MEETING IF
YOU WISH TO VOTE IN PERSON. YOUR COOPERATION IN SIGNING AND PROMPTLY
RETURNING YOUR PROXY IS GREATLY APPRECIATED.
<PAGE>
JACOR COMMUNICATIONS, INC.
50 EAST RIVERCENTER BOULEVARD, 12TH FLOOR
COVINGTON, KENTUCKY 41011
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 28, 1997
The Board of Directors of Jacor Communications, Inc. ("Jacor" or the
"Company") is soliciting the enclosed Proxy from stockholders for use at the
Annual Meeting of Stockholders to be held on May 28, 1997, and at any
adjournments thereof. This Proxy Statement and the accompanying Proxy are first
being mailed to stockholders on or about April 30, 1997. The record date for
purposes of determining those stockholders entitled to notice of and to vote at
the Annual Meeting has been fixed by the Board of Directors as April 11, 1997
(the "Record Date").
All properly executed proxies received pursuant to this solicitation (and
not revoked before they are voted) will be voted as designated at the Annual
Meeting, and those not designated will be voted FOR the proposals set forth
herein, FOR the director nominees named herein and, in the proxy holders' best
judgment, on any other matter that may properly come before the Annual Meeting.
Any stockholder giving the enclosed Proxy may revoke it at any time before it is
voted by giving to the Company notice of its revocation, in writing or in open
meeting, or a duly executed proxy bearing a later date.
The expense of this solicitation, which will include the cost of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. Proxies will be solicited primarily by mail but may also be
solicited through personal interview, telephone and telecopy by directors,
officers and regular employees of Jacor, without special compensation therefor.
The Company expects to reimburse banks, brokers and other persons for their
reasonable out-of-pocket expenses in handling proxy materials for beneficial
owners of the Company's Common Stock, $.01 par value ("Jacor Common Stock").
The Annual Report for the year ended December 31, 1996, including financial
statements, is being mailed with this Proxy Statement.
As of April 11, 1997, there were outstanding 34,900,539 shares of Jacor
Common Stock, and each such share is entitled to one vote, either in person or
by proxy, on each matter of business to be considered at the Annual Meeting. A
majority of the outstanding shares entitled to vote at the Annual Meeting will
constitute a quorum.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The number of members of the Board of Directors of the Company has been
fixed at ten, pursuant to the Company's Bylaws, and resolutions adopted by the
Board of Directors at its meetings on March 24, 1997 and April 28, 1997. At its
March 24, 1997 meeting, the Board unanimously appointed Peter C.B. Bynoe and
Maggie Wilderotter to fill two of the vacancies on the Board created due to
increasing size of the Board of Directors from seven to nine members. At its
April 28, 1997 meeting, the Board unanimously appointed Samuel Zell to fill the
remaining vacancy on the Board created due to increasing the size of the Board
of Directors from nine to ten members, and also appointed Mr. Zell as Chairman
of the Board, and appointed Mrs. Rosenberg as Vice Chairman. At the Annual
Meeting, ten directors will be elected and will hold office until the next
annual meeting of stockholders and until their respective successors are duly
elected and qualified. The Board of Directors has nominated the ten incumbent
directors for election by the stockholders at the Annual Meeting.
<PAGE>
It is the intention of the persons named as proxy holders in the Proxy to
vote for the election of all nominees named. The Board of Directors does not
know of any nominee who will be unable to stand for election or otherwise serve
as a director. If for any reason any nominee shall be unable to serve, which is
not now contemplated, the shares represented by proxy will be voted for such
substitute nominee as the Board of Directors recommends, unless an instruction
to the contrary is indicated on the proxy card.
Delaware law, under which the Company is incorporated, does not require a
minimum number of votes for the election of a director. The Company's Bylaws,
however, provide that directors shall be elected by a plurality of votes cast by
the holders of Jacor Common Stock, meaning that the individuals who receive the
largest number of votes cast are elected, up to the maximum number of number of
directors to be elected at the meeting. Those nominees receiving the greatest
number of votes will be elected as directors. Thus, abstentions and shares not
voted by brokers and other entities holding shares on behalf of the beneficial
owners will have no effect in the election of directors.
Below please find, with respect to each nominee for director of the Company,
his or her age, principal occupation during the past five years, other positions
he or she holds with the Company, if any, and the year in which he or she first
became a director of Jacor. Each of the nominees is currently a director of the
Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION
OF THE TEN NOMINEES FOR DIRECTOR.
NOMINEES FOR DIRECTOR
JOHN W. ALEXANDER (Age 50)
Mr. Alexander has been President of Mallard Creek Capital Partners, Inc.,
which is primarily an investment company with interests in real estate and
development companies, since February 1994. Mr. Alexander has also been a
partner of Meringoff Equities, a real estate and investment company, since 1987.
Mr. Alexander has been a director of Jacor since 1993. Mr. Alexander is also a
Trustee of Equity Residential Properties Trust, a real estate investment trust.
PETER C. B. BYNOE (Age 46)
Mr. Bynoe has been a partner in the law firm of Rudnick & Wolfe since 1995.
Prior to joining Rudnick & Wolfe, Mr. Bynoe founded Telemat Ltd., a business
consulting firm, in 1982. From March 1988 to June 1992, Mr. Bynoe served as
Executive Director of the Illinois Sports Facilities Authority, a joint venture
of the City of Chicago and the State of Illinois created to develop the new
Comiskey Park for the Chicago White Sox baseball club. From November 1989 to
August 1992, he was Managing General Partner of the National Basketball
Association's Denver Nuggets. Mr. Bynoe has been a director of Jacor since March
1997. He is also a director of Uniroyal Technology Corporation.
ROD F. DAMMEYER (Age 56)
Mr. Dammeyer is the Managing Director of Equity Group Investments, Inc., a
privately owned investment and management company. Mr. Dammeyer is also
President, Chief Executive Officer and a director of Anixter International,
Inc., a Chicago-based provider of integrated networking and cable solutions. Mr.
Dammeyer has been a director of Jacor since 1993. He is also a director of Antec
Corporation, Revco D.S., Inc., Capsure Holdings Corp., Falcon Building Products,
Inc., IMC Global, Inc., Lukens Inc., Sealy Corporation and Teletech Holdings,
Inc.. Mr. Dammeyer is also a trustee of several Van Kampen American Capital,
Inc. closed-end funds and trusts.
2
<PAGE>
F. PHILIP HANDY (Age 53)
Mr. Handy has been a Partner of Winter Park Capital Company, a private
investment firm, since 1980. Mr. Handy has been a Director of Jacor since 1993.
Mr. Handy is also a director of Anixter International, Inc., Q-Tel, S.A. de
C.V., Chart House Enterprises, Inc. and Banca Quadrum, S.A. (formerly Servicios
Financieros Quadrum, S.A.).
MARC LASRY (Age 37)
Mr. Lasry has been Executive Vice President of Amroc Investments, Inc., a
private investment firm, since 1990. Mr. Lasry was the director and Senior Vice
President of the corporate reorganization department of Cowen & Co., a
privately-owned brokerage firm, from 1987 to 1989. From January 1989 to
September 1990, he was a portfolio manager for Amroc Investments, L.P., a
private investment fund. Mr. Lasry has been a director of Jacor since 1993.
ROBERT L. LAWRENCE (Age 44)
Mr. Lawrence has been President and Chief Operating Officer of the Company
since November 1996. Mr. Lawrence also served as Co-Chief Operating Officer from
May 1990 to November 1996. He has been an officer of Jacor since 1986, and a
director of Jacor since 1993. From July 1983 until he joined Jacor, Mr. Lawrence
was Executive Vice President--Sales and Marketing at Republic Broadcasting
Corporation (acquired by Jacor in December 1986).
RANDY MICHAELS (Age 44)
Mr. Michaels has been Chief Executive Officer of the Company since November
1996. Mr. Michaels, whose legal name is Benjamin L. Homel, also served as
President from June 1993 to November 1996 and Co-Chief Operating Officer from
May 1990 to November 1996. He has served as an officer of Jacor since 1986, and
has been a director of Jacor since 1993. From July 1983 until he joined Jacor,
Mr. Michaels was Executive Vice President--Programming and Operations at
Republic Broadcasting Corporation (acquired by Jacor in December 1986).
SHELI Z. ROSENBERG (Age 55)
Mrs. Rosenberg has been Vice Chairman of the Board of the Company since
April 1997, and served as Board Chair from February 1996 to April 1997. Mrs.
Rosenberg is Chief Executive Officer, President and a director of Equity Group
Investments, Inc., a privately owned investment and management company. She is a
Principal of the law firm of Rosenberg & Liebentritt, P.C., and was Chairman of
the firm until September 1996. Mrs. Rosenberg has been a director of Jacor since
1994. Mrs. Rosenberg is also a director of American Classic Voyages Co., Anixter
International, Inc., Capsure Holdings Corp., Falcon Building Products, Inc.,
Manufactured Home Communities, Inc., Revco D.S., Inc. and Sealy Corporation.
Mrs. Rosenberg was a vice president of First Capital Benefits Administrators,
Inc., which filed a petition under the federal bankruptcy laws on January 3,
1995, which resulted in its liquidation on November 15, 1995.
MAGGIE WILDEROTTER (Age 42)
Ms. Wilderotter has been President and Chief Executive Officer of Wink
Communications, Inc., a leading interactive media company, since 1996. Ms.
Wilderotter was the Executive Vice President of National Operations for AT&T
Wireless Services, Inc. and Chief Executive Officer of AT&T's Aviation
Communications Division, from 1995 to 1997. She was also Senior Vice President
of McCaw Cellular Communications, Inc. and Regional President of its
California/Nevada/Hawaii Region from 1991 to 1995. Ms. Wilderotter served 12
years at Cable Data/US Computer Services, Inc., including the role of Senior
3
<PAGE>
Vice President and General Manager from 1985 to 1991. Ms. Wilderotter has been a
director of Jacor since March 1997. She is also a director of Airborne Express
and ANTEC Corporation.
SAMUEL ZELL (Age 55)
Mr. Zell has been Chairman of the Board of Directors of the Company since
April 1997. He was President of Great American Management and Investment, Inc.,
a diversified manufacturing company, and Equity Group Investments, Inc. and its
subsidiary, Equity Financial and Management Company, both real estate investment
firms, from 1990 to 1994. Mr. Zell has been Chairman of the Board and Chief
Executive Officer of Capsure Holdings Corp. since 1987, and Chairman of the
Board since 1995, and Chief Executive Officer from 1995 to 1996, of Manufactured
Home Communities, Inc. Mr. Zell is also Chairman of the Board of Directors of
Revco D.S., Inc. and American Classic Voyages Co. He is also a director of Sealy
Corporation, Chart House Enterprises, Inc. and Quality Food Centers, Inc., and
he is Chairman of the Trustees of Equity Residential Properties Trust. Mr. Zell
was a director of Jacor from January 1993 to May 1995.
There are no family relationships among any of the above-named nominees for
directors nor among any of the nominees and any executive officers of the
Company.
THE BOARD OF DIRECTORS, ITS COMMITTEES,
MEETINGS AND FUNCTIONS
During the year ended December 31, 1996, the Board of Directors held four
regularly scheduled meetings and twelve special meetings. Each director attended
or participated in at least 75% of the meetings of the Board of Directors and
all committees on which he or she served in 1996. Standing committees of the
Board of Directors include a Compensation Committee and an Audit Committee. The
Board of Directors does not have a Nominating Committee.
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive in lieu of an annual cash
retainer, on July 1 of each year, a number of common stock units equal in value
to $50,000, based upon the fair market value of an equal number of shares of
Jacor Common Stock on the date of grant. Thus, in July 1996, Jacor's five non-
employee directors were each awarded 3,740 stock units in lieu of their annual
cash retainer and a special bonus (equal in value to $50,000). Such units are
convertible into Jacor Common Stock at the time a director ceases his or her
service on the Board, except in the case of Mr. Dammeyer, in which case the
units convert into Jacor Common Stock upon the earlier to occur of such a
director no longer serving as a director, or when the value of Jacor Common
Stock equals or exceeds $53.50 per share for five consecutive trading days. In
1996, non-employee directors of the Company also received an additional $1,000
for each Board of Directors meeting attended in person or by telephone.
Directors are reimbursed for all reasonable expenses incurred in connection with
their services.
In February 1996, Jacor granted nonqualified stock options to purchase up to
5,000 shares of Jacor Common Stock to each of Messrs. Alexander, Dammeyer, Handy
and Lasry and to Mrs. Rosenberg at a minimum exercise price of $17.25 per share.
These options are exercisable for ten years from the grant date and vest 30%
upon grant, 30% upon the first anniversary of the grant date and 20% per year
for each of the next two years thereafter. The exercise price of the options
that vested upon grant is $17.25 per share, and the options that subsequently
vest on each anniversary date of the grant have an exercise price 4% greater
than the options that vested in the previous year. Once an option vests, the
exercise price for that option is fixed for the remaining term of the option.
Mr. Michaels and Mr. Lawrence receive no additional compensation for serving on
the Board of Directors.
4
<PAGE>
COMPENSATION COMMITTEE AND LTIP/STIP COMMITTEE
In 1996, the Compensation Committee consisted of three Directors, Messrs.
Handy and Dammeyer and Mrs. Rosenberg. In 1996, the Compensation Committee
determined stock option and stock unit grants to executive officers and other
key employees, as well as reviewed salaries, bonuses and other elements of
compensation of executive officers and made recommendations to the Board of
Directors. The Compensation Committee held three meetings during 1996. In 1997,
the Compensation Committee will consist of three directors, Messrs. Handy and
Dammeyer and Mrs. Rosenberg.
The Company has taken steps in an effort to ensure that all of the
compensation paid to its executive officers will be deductible under Section
162(m) of the Internal Revenue Code, as amended ("Section 162"), for the
foreseeable future, including the establishment of a committee made up entirely
of "outside directors," as required under Section 162(m) (the "LTIP/STIP
Committee"), which will administer the Long-Term Incentive Stock Plan and the
Short-Term Incentive Plan. These two plans are each set forth in their entirety
as Annexes 2 and 3 to this Proxy Statement, respectively, and are summarized on
pages 14 to 22 of this Proxy Statement. For 1997, Mr. Bynoe and Ms. Wilderotter
will serve as the two outside directors comprising the LTIP/STIP Committee, and
will make all option grants under the Long-Term Incentive Stock Plan and
establish all performance goals for grants made under both the Long-Term
Incentive Stock Plan and the Short-Term Incentive Plan. In addition, because the
LTIP/STIP Committee is also made up of "non-employee directors," as that term is
defined and used under Rule 16b-3 promulgated under Section 16 of the Securities
Exchange Act of 1934, as amended ("the Exchange Act"), the LTIP/ STIP Committee
will administer the Amended and Restated 1995 Employee Stock Purchase Plan as
well.
The Compensation Committee will continue to establish base salaries for all
executive officers and key employees, and will continue to make option grants to
employees (other than executive officers) under the Company's 1993 Stock Option
Plan. In addition, the Compensation Committee will continue to administer most
of the other employee compensation plans of the Company.
AUDIT COMMITTEE
In 1996, the Audit Committee consisted of three Directors, Messrs.
Alexander, Dammeyer and Lasry. The Audit Committee reviews the financial
statements of the Company, consults with the Company's independent auditors and
considers such other matters with respect to the internal and external audit of
the financial affairs of the Company as may be necessary or appropriate in order
to facilitate accurate financial reporting. The Audit Committee held one meeting
during 1996. Beginning in April 1997, the Audit Committee will consist of three
directors, Messrs. Alexander and Lasry and Ms. Wilderotter.
EXECUTIVE OFFICERS
The executive officers of the Company, their ages, and the positions they
hold with the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Samuel Zell.......................... 55 Chairman of the Board
Sheli Z. Rosenberg................... 55 Vice Chairman of the Board
Randy Michaels....................... 44 Chief Executive Officer and Director
Robert L. Lawrence................... 44 President, Chief Operating Officer and Director
David H. Crowl....................... 43 President/Radio Division
R. Christopher Weber................. 41 Senior Vice President and Chief Financial Officer
Jon M. Berry......................... 50 Senior Vice President and Treasurer
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
John Hogan........................... 40 Senior Vice President
Jerome L. Kersting................... 47 Senior Vice President
Paul F. Solomon...................... 37 Senior Vice President, General Counsel and Secretary
Alfred Kenyon III.................... 46 Vice President--Engineering
Nicholas Jan Miller.................. 44 Vice President--Marketing
Thomas P. Owens...................... 42 Vice President--Programming
William P. Suffa..................... 39 Vice President--Strategic Development
Pamela C. Taylor..................... 42 Vice President--Corporate Communications
</TABLE>
Executive officers are elected annually by the Board of Directors and serve
at the discretion of the Board. Information with respect to the business
experience, principal occupations during the past five years and affiliations of
the executive officers of Jacor who are not also directors is set forth below.
Information regarding Messrs. Zell, Michaels and Lawrence and Mrs. Rosenberg is
set forth above.
David H. Crowl has been President/Radio Division of the Company since
September 1996. From 1991 to September 1996, Mr. Crowl served as President/Radio
Group of Citicasters, Inc.
R. Christopher Weber has been Senior Vice President and Chief Financial
Officer of the Company since 1990, and has served as an officer of Jacor since
1986. Mr. Weber also served as Secretary of the Company from 1993 to March 1997,
and has been Assistant Secretary since March 1997. From December 1985 until he
joined Jacor, Mr. Weber was Chief Financial Officer of Republic Broadcasting
Corporation. Prior to that time, Mr. Weber was employed by the accounting firm
of Peat Marwick & Mitchell.
Jon M. Berry has been Senior Vice President and Treasurer of the Company
since 1988, and has served as an officer of Jacor since 1982. From September
1979 until October 1982, Mr. Berry was controller of United Western Corporation,
a real estate holding company.
John E. Hogan has been Senior Vice President of the Company since November
1996. From 1992 to November 1996, Mr. Hogan was Vice President and General
Manager of the Company's radio station WPCH-FM in Atlanta, Georgia.
Jerome L. Kersting has been Senior Vice President of the Company since
September 1996. From January 1994 to September 1996, Mr. Kersting served as
Senior Vice President--Business Affairs of Citicasters, Inc., and from 1987 to
January 1994, Mr. Kersting served as Vice President Business Affairs, Broadcast
Group, of Citicasters, Inc.
Paul F. Solomon has been Senior Vice President and General Counsel of the
Company since February 1997, as well as Secretary since March 1997. From October
1992 to February 1997, Mr. Solomon was a partner in the Cincinnati-based law
firm of Graydon, Head & Ritchey.
Alfred S. Kenyon III has been Vice President since November 1996. From 1991
to November 1996, Mr. Kenyon was the director of engineering for the Company.
Nicholas J. Miller has been Vice President--Marketing of the Company since
September 1996. Mr. Miller served as Vice President--Marketing Radio & TV of
Citicasters, Inc. from 1991 to September 1996.
Thomas P. Owens has been Vice President--Programming of the Company since
September 1996, and has been an officer of a subsidiary of the Company since
1994. From 1986 to 1994, Mr. Owens was the Program Director of the Company's
radio station WEBN-FM in Cincinnati, Ohio.
William P. Suffa has been Vice President--Strategic Development of the
Company since August 1996. From 1989 to August 1996, Mr. Suffa was President and
Managing Principal of Suffa and Cavell, Inc., an independent consulting firm.
Pamela C. Taylor will join the Company in May 1997 as Vice
President--Corporate Communications. From 1982 to April 1997, Ms. Taylor was
Director of Investor and Financial Media Relations for The Kroger Company, the
country's largest retail food company.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 11, 1997, the number of shares
and percentage of Jacor Common Stock beneficially owned by each person who is
known to the Company to be the beneficial owner of more than 5% of Jacor's
Common Stock, by each of the Company's directors and nominees for election as
directors, by the Company's named executive officers, and by all of the
Company's executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS(2)
- ------------------------------------------------------------------------------ ------------------------ -----------
<S> <C> <C>
5% OR MORE BENEFICIAL OWNERS
Zell/Chilmark Fund L.P........................................................ 13,349,720(3) 38.3%
David M. Schulte.............................................................. 13,349,720(4) 38.3%
FMR Corp. and related reporting persons....................................... 3,052,943(5) 8.6%
Massachusetts Financial Services Company...................................... 2,759,849(6) 7.9%
American Financial Group, Inc. and related reporting persons.................. 2,182,589(7) 5.9%
Marsh and McLennan Companies, Inc. and related reporting persons.............. 2,164,673(8) 6.2%
DIRECTORS AND EXECUTIVE OFFICERS
John W. Alexander............................................................. 40,000(9) *
Peter C.B. Bynoe.............................................................. 0 *
Rod F. Dammeyer............................................................... 13,366,720(4)(10) 38.4%
F. Philip Handy............................................................... 60,100(11) *
Marc Lasry.................................................................... 27,000(9) *
Robert L. Lawrence............................................................ 533,255(12) 1.5%
Randy Michaels................................................................ 691,857(13)(14) 2.0%
Sheli Z. Rosenberg............................................................ 13,420,513(4)(15) 38.4%
Maggie Wilderotter............................................................ 200 *
Samuel Zell................................................................... 13,409,963(3)(4)(16) 38.4%
Jon M. Berry.................................................................. 237,437(14)(17) *
Thomas P. Owens............................................................... 48,455(18) *
R. Christopher Weber.......................................................... 471,836(14)(19) 1.2%
All executive officers and directors as a group (21 persons).................. 15,253,256(20) 41.8%
</TABLE>
- ------------------------
* Less than 1%
(1) The Securities and Exchange Commission (the "Commission") has defined
beneficial ownership to include sole or shared voting or investment power
with respect to a security or the right to acquire beneficial ownership of
a security within 60 days. The number of shares indicated are owned with
sole voting and investment power unless otherwise noted and includes
certain shares held in the name of family members, trusts and affiliated
companies as to which beneficial ownership may be disclaimed. The number of
shares indicated includes shares of Common Stock issuable pursuant to
options granted under the Company's 1993 Stock Option Plan and which have
vested.
(2) Under rules promulgated by the Commission, any securities not outstanding
that are subject to options or warrants exercisable within 60 days are
deemed to be outstanding for the purpose of computing the percentage of the
class owned by such person but are not deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other person.
(3) The address of Zell/Chilmark Fund L.P. ("Zell/Chilmark") is Two North
Riverside Plaza, Suite 600, Chicago, Illinois 60606. Zell/Chilmark is a
Delaware limited partnership controlled by Samuel Zell,
7
<PAGE>
Chairman of the Board of the Company, and David M. Schulte, a former
director of the Company, as follows: the sole general partner of
Zell/Chilmark is ZC Limited Partnership ("ZC Limited"); the sole general
partner of ZC Limited is ZC Partnership; the sole general partners of ZC
Partnership are ZC, Inc. and CZ, Inc.; Mr. Zell is the sole stockholder of
ZC, Inc.; and Mr. Schulte is the sole stockholder of CZ, Inc.
(4) All shares beneficially owned by Zell/Chilmark (See Note (3) above) are
included in the shares beneficially owned by Messrs. Zell, Schulte and
Dammeyer and Mrs. Rosenberg, who constitute all of the members of the
management committee of ZC Limited. The address of Mr. Schulte is 875 N.
Michigan Avenue, Suite 2200, Chicago, Illinois 60611. The address of Mr.
Zell is Two North Riverside Plaza, Suite 600, Chicago, Illinois 60606. Mr.
Schulte indirectly shares beneficial ownership of a 20% limited partnership
interest in ZC Limited, and Mr. Zell indirectly shares beneficial ownership
of an 80% limited partnership interest in ZC Limited.
(5) On February 14, 1997, FMR Corp. ("FMR"), Fidelity Management and Research
Company ("Fidelity"), a wholly-owned subsidiary of FMR Corp., and the
affiliates of FMR Corp. set forth below, as a group, filed with the
Commission a Schedule 13G reporting beneficial ownership of Jacor Common
Stock as of December 31, 1996. FMR reported beneficial ownership of
3,052,943 shares of Jacor Common Stock. Fidelity reported beneficial
ownership of 2,942,185 shares of Jacor Common Stock as a result of acting
as an investment advisor to various investment companies. This number of
shares includes 249,785 shares of Jacor Common Stock resulting from the
assumed conversion of $18,624,000 principal amount of Liquid Yield Option
Notes ("LYONs") (13.412 shares of Jacor Common Stock for each $1,000
principal amount of LYONs). Edward C. Johnson 3d, Chairman of FMR Corp.,
and FMR Corp., through their control of Fidelity, each reported having the
sole power to dispose of the 2,942,185 shares owned by the various
investment funds ("Fidelity Funds'). Neither FMR Corp. nor Mr. Johnson
reported the sole power to vote or direct the voting of the shares owned
directly by the Fidelity Funds, which power reportedly resides in the
Fidelity Funds' Boards of Trustees. Fidelity Management Trust Company, a
wholly-owned subsidiary of FMR Corp, reported having beneficial ownership
of 110,757 shares of Jacor Common Stock as a result of its serving as
investment manager of institutional accounts. This number of shares
includes 55,257 shares of Jacor Common Stock resulting from the assumed
conversion of $4,120,000 principal amount of the LYONs. Mr. Johnson and FMR
Corp., through their control of Fidelity Management Trust Company, each
reported having the sole power to dispose of 110,757 shares, the sole power
to vote or to direct the voting of 62,884 shares, and no power to vote or
to direct the vote of 47,873 shares owned by the institutional accounts.
Members of Mr. Johnson's family and trusts for their benefit are the
predominant owners of the Class B shares of common stock of FMR Corp.,
representing approximately 49% of the voting power of FMR Corp. Mr. Johnson
owns 12% and Abigail P. Johnson owns 24.5% of the aggregate outstanding
voting stock of FMR Corp. Mr. Johnson is the Chairman of FMR Corp., and
Mrs. Johnson is a director of FMR Corp. The Johnson family group and all
other Class B shareholders of FMR Corp. have entered into a shareholders'
voting agreement under which all Class B shares of FMR Corp. will be voted
in accordance with the majority vote of Class B shares. Accordingly,
members of the Johnson family may be deemed to for a controlling group with
respect to FMR Corp. under the Investment Company Act of 1940. The address
of such entities and persons is 82 Devonshire Street, Boston, Massachusetts
02109.
(6) On February 12, 1997, Massachusetts Financial Services Company ("MFS")
filed with the Commission a Schedule 13G reporting beneficial ownership of
Jacor Common Stock as of December 31, 1996. MFS reported having sole voting
power with respect to 2,687,349 shares of Jacor Common Stock and sole
dispositive power over 2,759,849 shares of Jacor Common Stock. In the
aggregate, MFS reported beneficial ownership of 2,759,849 shares of Jacor
Common Stock, which are also beneficially owned by other non-reporting
entities as well as MFS. The address of MFS is 500 Boylston Street, Boston,
Massachusetts 02116-3741.
8
<PAGE>
(7) On September 20, 1996, American Financial Group, Inc., American Financial
Corporation, American Enterprises, Inc., Carl H. Lindner, Carl H. Lindner
III, S. Craig Lindner and Keith E. Lindner, as a group, filed with the
Commission a Schedule 13D reporting beneficial ownership as of September
18, 1996, of 2,182,589 shares of Jacor Common Stock issuable upon the
exercise of 10,723,949 warrants issued to such entities and persons in the
merger of Citicasters, Inc. with and into the Company in September 1996.
The address of such entities and persons is One East Fourth Street,
Cincinnati, Ohio 45202.
(8) Marsh & McLennan Companies, Inc. ("MMC"), a Delaware corporation, 1166
Avenue of the Americas, New York, New York 10036 is the parent holding
company of Putnam Investments, Inc. ("Putnam"), a Massachusetts
corporation, One Post Office Square, Boston, Massachusetts 02109, which
owns two registered investment advisors, Putnam Investment Management, Inc.
("PIM"), a Massachusetts corporation, One Post Office Square, Boston,
Massachusetts 02109, and The Putnam Advisory Company, Inc. ("PAC"), a
Massachusetts corporation, One Post Office Square, Boston, Massachusetts
02109. On January 27, 1997, MMC, Putnam, PAC and PIM, filed as a group,
filed with the Commission a Schedule 13G reporting beneficial ownership of
Jacor Common Stock as of December 31, 1996. MMC reported having no voting
or dispositive power over any shares of Jacor Common Stock. Putnam reported
beneficially owning 2,164,673 shares of Jacor Common Stock, of which
1,921,173 shares were also beneficially owned by PIM, and 243,500 shares
were also beneficially owned by PAC. Of the 1,921,173 shares of Jacor
Common Stock beneficially owned by Putnam and PIM, Putnam and PIM reported
sharing voting power over none of the shares, and sharing dispositive power
over all 1,921,173 shares. Of the 243,500 shares of Jacor Common Stock
reportedly beneficially owned by Putnam and PAC, Putnam and PAC reported
sharing voting power over 116,800 shares, and sharing dispositive power
over all 243,500 shares.
(9) Includes vested options to purchase 17,000 shares.
(10) Includes vested options to purchase 17,000 shares. Mr. Dammeyer indirectly
shares beneficial ownership of an 80% limited partnership interest in ZC
Limited. See Note (4) above.
(11) Includes vested options to purchase 17,000 shares. Of the shares
indicated, 100 shares are held by Mr. Handy's spouse, as to which Mr. Handy
disclaims beneficial ownership. Also includes 13,000 shares held by H.H.
Associates Trust, of which Mr. Handy is co-trustee.
(12) Includes vested options to purchase 523,010 shares. Of the shares
indicated, 397 shares are owned by members of Mr. Lawrence's family.
(13) Includes vested options to purchase 467,200 shares. The number of shares
indicated includes shares held as co-trustee under the Jacor
Communications, Inc. Retirement Plan (the "Retirement Plan"). See Note (15)
below. Also includes 15 shares owned by Mr. Michaels' wife, as to which Mr.
Michaels disclaims beneficial ownership. Does not include 300,000 shares
subject to a contingent right of acquisition held by a corporation owned by
Mr. Michaels. See "Certain Relationships and Related Transactions."
(14) Includes 214,270 shares held under the Retirement Plan with respect to
which Messrs. Michaels, Weber and Berry as co-trustees, share voting and
investment power. Of these 214,270 shares, 10,803 shares are beneficially
owned by the named executives.
(15) Includes vested options to purchase 7,000 shares. Mrs. Rosenberg
indirectly shares beneficial ownership of an 80% limited partnership
interest in ZC Limited. See Note (4) above. Also, Mrs. Rosenberg is a
partner in SZ2 (IGP) Partnership, an Illinois general partnership ("SZ2"),
which beneficially owns 60,243 shares issuable upon the exercise of certain
warrants. Other partners of SZ2 include trusts created for the benefit of
Mr. Zell. As a result, Mrs. Rosenberg and Mr. Zell may be deemed to be the
beneficial owners of the warrants. Mrs. Rosenberg and Mr. Zell disclaim
beneficial ownership of such warrants. See Note (16) below.
9
<PAGE>
(16) Includes 60,243 shares issuable pursuant to warrants. The warrants are
beneficially owned by SZ2. Certain partners of SZ2 include Mrs. Rosenberg
and trusts created for the benefit of Mr. Zell. As a result, Mrs. Rosenberg
and Mr. Zell may be deemed to be beneficial owners of the warrants reported
herein. Mrs. Rosenberg and Mr. Zell disclaim beneficial ownership of such
warrants. See Note (15) above.
(17) Includes vested options to purchase 22,912 shares. The number of shares
indicated includes shares and warrant shares held as co-trustee under the
Retirement Plan. See Note (14) above.
(18) Includes vested options to purchase 47,400 shares.
(19) Includes vested options to purchase 254,500 shares. The number of shares
indicated includes shares held as co-trustee under the Retirement Plan. See
Note (14) above.
(20) Includes 115,583 shares issuable pursuant to warrants (beneficial
ownership of 60,258 shares of which is disclaimed, as described in Notes
(15) and (16) above), vested options to purchase 1,477,173 shares and
214,270 shares held under the Retirement Plan. Does not include an
aggregate of 18,700 stock units granted in July 1996 to Jacor's five
non-employee directors (3,740 stock units to each director) in lieu of cash
director fees and a special bonus. Such units are convertible into Jacor
Common Stock upon the earlier of such a director no longer serving as a
director or, except for units issued to Mr. Dammeyer, when the value of
Jacor Common Stock equals or exceeds $53.50 per share for five consecutive
trading days. Also does not include an aggregate of 22,487 stock units
granted in November 1996 to certain executive officers of Jacor (9,569
stock units to each of Messrs. Michaels and Lawrence, 1,914 stock units to
Mr. Owens and 1,435 stock units to Mr. Berry). Such units are convertible
into Jacor Common Stock at the earlier of the executive officer's
retirement, death, permanent disability or separation from service or upon
a change in control of Jacor.
No agreements, formal or informal, exist among the various officers and
directors to vote their shares collectively.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the best of the Company's knowledge, the following directors, officers
and 10% or more stockholders of the Company have filed with the Securities and
Exchange Commission late reports pursuant to Section 16 of the Securities
Exchange Act of 1934 for the Company's 1996 fiscal year: Messrs. Crowl,
Kersting, Miller and Suffa each filed one late Form 3 and one late Form 4, the
latter of which for each officer relates to an option grant in November 1996.
Mr. Owens filed one late Form 3, and Frank A. DeFrancesco and John T. Lynch,
former officers of the Company, each filed one late Form 3.
10
<PAGE>
PROPOSAL NO. 2
PROPOSAL TO APPROVE THE AMENDED AND RESTATED 1995 EMPLOYEE STOCK
PURCHASE PLAN, INCLUDING THE ISSUANCE OF UP TO AN ADDITIONAL
500,000 SHARES OF COMMON STOCK THEREUNDER
The Board of Directors of the Company, at its meeting on October 30, 1994,
adopted the Jacor Communications, Inc. 1995 Employee Stock Purchase Plan (the
"Original Stock Purchase Plan"), subject to approval of the Company's
stockholders. The Company's stockholders approved the Original Stock Purchase
Plan, including the issuance of 200,000 shares of Jacor Common Stock thereunder,
at the 1995 Annual Meeting.
Stockholders are now being asked to approve an Amended and Restated Employee
Stock Purchase Plan ("Amended and Restated Stock Purchase Plan"). The Board of
Directors amended and restated the Original Stock Purchase Plan at its meeting
on January 30, 1997, primarily in order to provide employees who are hired by
the Company after January 1 but before June 30 of a particular Plan year, the
opportunity to participate in a six-month offering during the last half of such
Plan Year. In addition, the Board of Directors authorized the issuance of up to
an additional 500,000 shares of Jacor Common Stock under the plan at its meeting
on April 28, 1997. These changes, as well as other minor amendments, are
discussed more fully below.
Set forth below is a summary of certain important features of the Amended
and Restated Stock Purchase Plan, which summary is qualified in its entirety by
reference to the actual plan attached as Annex 1 to this Proxy Statement. All
capitalized terms which are not defined herein are defined in the Amended and
Restated Stock Purchase Plan.
PURPOSE OF PLAN. The Board of Directors believes that the Original Stock
Purchase Plan has been useful in increasing employee ownership of Jacor Common
Stock, thereby increasing employee interest in the operating results of the
Company. In addition, the Board believes that the plan has enhanced the
Company's ability to retain and motivate its employees. The plan provides
eligible employees with an opportunity to purchase Company Common Stock through
payroll deductions.
SHARES RESERVED FOR ISSUANCE UNDER THE STOCK PURCHASE PLAN. The Amended and
Restated Stock Purchase Plan provides eligible employees of the Company with a
means to purchase in the aggregate up to 700,000 shares of Jacor Common Stock
(including 500,000 authorized by the Board of Directors at its April 28, 1997,
meeting) at a discount, subject to adjustments under certain circumstances such
as stock splits, stock dividends, recapitalization or other changes in the
outstanding Common Stock. The reserved shares consist of authorized but unissued
Jacor Common Stock or shares of Jacor Common Stock reacquired by the Company,
including any shares purchased by the Company in the open market. In the event
such shares would be purchased on the open market, the Company will bear all
brokerage costs and will pay any difference between the actual stock purchase
price and the amount paid by employees under the Amended and Restated Stock
Purchase Plan.
ELIGIBLE EMPLOYEES. The Original Stock Purchase Plan provided that any
person who was employed by the Company on the first day of each calendar year (a
"Plan Year") and had timely completed an enrollment form for that Plan Year was
eligible to participate in the plan. The Amended and Restated Stock Purchase
Plan provides that, beginning with the 1997 Plan Year, persons who become
eligible employees between January 1 and June 30 of any Plan Year shall be
entitled to participate in an offering that commences on July 1 of the Plan Year
and ends on December 31 of the Plan Year. Thus, employees employed by the
Company on or before January 1 of a particular Plan year are eligible to receive
options granted on January 1, but only employees who first become employed
between January 1 and June 30 of a particular Plan Year are eligible to receive
options granted on July 1 of that particular Plan Year. January 1 and July 1, as
applicable, are hereafter referred to as the "Offering Date." To participate in
the plan, each eligible employee must complete an Enrollment Agreement and
related documents at least ten days prior
11
<PAGE>
to the commencement of the initial offering in which he or she desires to
participate. Pursuant to the Amended and Restated Stock Purchase Plan, effective
beginning with the 1997 Plan Year, any timely filed Enrollment Agreement shall
be effective for all subsequent offerings, unless earlier terminated by the
employee under the terms of the plan. However, participation in one offering
does not limit, or require, participation in any other offering. Notwithstanding
the above, no employee who, after the grant of options under the plan, owns
shares possessing 5% or more of the total combined voting power or value of all
classes of shares of the Company or its parent, if any, or any subsidiary
corporation, after taking into account outstanding options and certain
attribution rules, shall be eligible to receive an option. Of the approximately
3,800 employees eligible to participate in the Original Stock Purchase Plan as
of January 1, 1997, approximately 900 employees were participating in the plan.
COMMON STOCK PURCHASES. The Amended and Restated Stock Purchase Plan
authorizes the grant of options to purchase Jacor Common Stock to eligible
participating employees at the beginning of each Plan Year, and on July 1 of
each Plan Year (with respect to persons who become eligible employees between
January 1 and June 30 of the Plan Year). The option exercise price is payable by
the employee thorough automatic payroll deductions during the Plan Year, which
deductions may not be less than $10 or more than 10% of his or her base pay. No
employee may subscribe for or receive options to purchase shares of Jacor Common
Stock with an aggregate Fair Market Value of $25,000 or more in any Plan Year.
The purchase price for each share of Jacor Common Stock subject to an option
granted under the Amended and Restated Stock Purchase Plan will be the lesser of
(i) 85% of the Fair Market Value of Jacor Common Stock on the first business day
of the Plan Year, or July 1 of each Plan Year, whichever date is applicable (or
such other date as determined by the plan administrator (the "Offering Date")),
or (ii) 85% of the Fair Market Value of the Common Stock on the last business
day of the Plan Year. "Fair Market Value" is defined in the plan as the closing
price for Jacor Common Stock on a national stock exchange or, if the stock is
not traded on an exchange, the last sale price for Jacor Common Stock as
reported on the Nasdaq National Market.
On the Offering Date, each eligible employee who elects to participate in an
offering receives an option to purchase the number of shares of Jacor Common
Stock that he or she will be able to purchase with the payroll deduction
credited to his or her account during such offering period. These options will
be automatically exercised as of the last business day of the offering.
Subject to certain limitations set forth in the Amended and Restated Stock
Purchase Plan, an employee is permitted, at any time prior to the end of an
offering, to terminate or to withdraw all of the amounts in his or her account,
without interest. Upon the termination of the employee's employment with the
Company prior to the last day of an offering for any reason other than death,
disability or retirement, the employee's only right will be to receive the
amount of cash that is in his or her account, without interest. If an employee's
employment is terminated by reason of retirement, death or disability prior to
the end of the current offering period, he or she will have the right within 90
days thereafter, to elect to have the balance of his or her account either paid
to him or her in cash or applied at the end of the current offering toward the
purchase of Jacor Common Stock. Other than as set forth in this paragraph, an
employee may not change the amount of his or her payroll deductions during an
offering.
The Amended and Restated Stock Purchase Plan may be amended from time to
time by the Board of Directors; provided, however, that no amendment will be
effective without the prior approval of the stockholders to increase the
aggregate number of shares to be issued under the Plan, change the class of
employees eligible to receive options, or if approval is required to comply with
Rule 16b-3 promulgated under the Exchange Act. The Amended and Restated Stock
Purchase Plan may be terminated at any time by the Board of Directors.
FEDERAL INCOME TAX CONSEQUENCES. The Amended and Restated Stock Purchase
Plan is intended to qualify as an employee stock purchase plan under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code"), such that the
transfer of a share of Jacor Common Stock to an employee pursuant
12
<PAGE>
to the plan will generally be entitled to the benefits of Section 421(a) of the
Code. Under Section 421(a), an employee will not be required to recognize income
at the time the option is granted or at the time the option is exercised. The
Company will not be entitled to any deduction with respect to the plan, except
in connection with a disqualifying disposition (as discussed below).
When a plan participant disposes of Jacor Common Stock acquired under the
plan (or in the event of death of the employee while owning such Jacor Common
Stock whether or not the holding period requirements are met), he or she will
recognize compensation income (taxed as ordinary income) in an amount equal to
the lesser of (i) the excess of the fair market value of the Jacor Common Stock
at the time of such disposition or death over the amount paid for the Jacor
Common Stock, or (ii) the excess of the fair market value of Jacor Common Stock
on the date the option was granted over an amount equal to 85% of the fair
market value of Jacor Common Stock on the date the option was granted. Any
additional gain or any loss resulting from the disposition will be taxed as
long-term capital gain or loss.
In order to receive such favorable tax treatment, the Code requires that the
employee make no disposition of the Jacor Common Stock within two years from the
date the option was granted nor within one year from the date the option was
exercised and the Common Stock transferred to him or her. If an employee
disposes of Jacor Common Stock acquired under the plan before the expiration of
these holding periods, the employee will recognize ordinary income in an amount
equal to the excess of the fair market value of the Jacor Common Stock on the
date the option was exercised over the option price. The amount recognized as
ordinary income will increase the employee's basis in such shares. Any gain or
loss resulting from the disposition will be taxed as capital gain or loss. At
the time of such a disqualifying disposition, the Company would be allowed a
deduction equal to the amount included in the employee's income as ordinary
income.
NEW PLAN BENEFITS AND 1997 AWARDS. As of January 1, 1997, the Company
approved option grants under the plan for an aggregate of 83,434 shares of Jacor
Common Stock to participating eligible employees. As described above, the
exercise price of these options will be the lower of 85% of the closing sale
price of Jacor Common Stock as reported on the Nasdaq National Market on
December 31, 1997 or $23.27 (i.e., 85% of $27.375, the closing sale price on
January 2, 1997). These options will be exercised automatically on December 31,
1997. The last reported sale price of Jacor Common Stock on the Nasdaq National
Market on April 11, 1997 was $28.063. None of these options were granted
conditioned upon approval of the Amended and Restated Stock Purchase Plan by the
Company's stockholders at the Annual Meeting, because such option grants are
expressly permitted pursuant to the Original Stock Purchase Plan. Should the
Company's stockholders not vote to approve the Amended and Restated Stock
Purchase Plan, the Original Stock Purchase Plan will continue to remain in
effect until terminated pursuant to its terms. The table on page 36 of this
Proxy Statement sets forth the number of options granted under the plan to the
named executives, all executive officers as a group and all other employees as a
group. Non-employee directors are not eligible to participate in the plan.
It cannot be determined what benefits or amounts, if any, will be allocated
to employees pursuant to the new eligibility and offering provisions of the
Amended and Restated Stock Purchase Plan. Such amounts depend entirely on the
number of new Company employees hired between January 1 and June 30 of the 1997
Plan Year and subsequent Plan Years, and whether such employees desire to
participate in the plan.
VOTE REQUIRED. The proposal to adopt the Amended and Restated Stock
Purchase Plan in the form attached to this Proxy Statement as Annex 1 will be
submitted to the stockholders for adoption at the Annual Meeting. Adoption of
this proposal requires an affirmative vote by the majority of the shares of
Jacor Common Stock entitled to vote and present in person or by proxy at the
Annual Meeting. Abstentions from voting and broker nonvotes on this particular
proposal are treated as votes against, while shares not voted by brokers on any
matters presented to stockholders will have no effect on the adoption of this
proposal. Proxies received by the Company and not revoked prior to or at the
Annual Meeting will be voted FOR Proposal No. 2 and the adoption of the Amended
and Restated Stock Purchase Plan.
THE BOARD OF DIRECTORS HAS ADOPTED THE AMENDED AND RESTATED STOCK PURCHASE PLAN
AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 2.
13
<PAGE>
PROPOSAL NO. 3
PROPOSAL TO APPROVE THE 1997 LONG-TERM INCENTIVE STOCK PLAN,
INCLUDING THE ISSUANCE OF UP TO 1,800,000 SHARES THEREUNDER
On April 28, 1997, the Board of Directors of the Company adopted the 1997
Long-Term Incentive Stock Plan, effective April 28, 1997 (the "Long-Term Plan"),
including the issuance of up to 1,800,000 shares of Jacor Common Stock
thereunder, subject to stockholder approval. The Long-Term Plan permits a
committee of the Company's Board of Directors to grant non-qualified stock
options (NQSO), incentive stock options (ISOs), restricted stock, stock
appreciation rights (SARs), performance units, performance shares and other
stock units to executive officers and other key employees.
The Long-Term Plan has been designed to comply with Section 162(m) of the
Code, which generally denies a corporate tax deduction for annual compensation
exceeding $1,000,000 paid to the chief executive officer and the four other most
highly compensated officers of a public company ("Covered Employees"). Certain
types of compensation, including "performance-based compensation," are generally
excluded from this deduction limit. It is contemplated that all stock awards
made under the Long-Term Plan, with the exception of the other stock unit
awards, will constitute "performance-based compensation" under Section 162(m) of
the Code. Other stock unit awards will count toward the annual $1,000,000
deduction limit. In an effort to ensure that most stock awards under the plan
will qualify as "performance-based compensation," the Long-Term Plan is being
submitted to stockholders for approval at the Annual Meeting. While the Company
believes that compensation payable pursuant to the Long-Term Plan generally will
be deductible for federal income tax purposes, under certain circumstances such
as death, disability and change in control, compensation not qualified under
Section 162(m) of the Code may be payable pursuant to the provisions of the
Long-Term Plan. By approving the Long-Term Plan, the stockholders will be
approving, among other things, the performance measures, eligibility
requirements and limits on various stock awards contained therein.
Set forth below is a summary of certain important features of the Long-Term
Plan, which summary is qualified in its entirety by reference to the actual plan
attached as Annex 2 to this proxy statement. All capitalized terms which are not
defined herein are defined in the Long-Term Plan.
PURPOSE. The purpose of the Long-Term Plan is to promote the success of the
Company and its Subsidiaries by providing incentives to key employees that link
their compensation to the long-term financial success of the Company and its
Subsidiaries and to growth in stockholder value. The plan is designed to provide
flexibility to the Company and its Subsidiaries in their ability to motivate,
attract and retain the services of key employees upon whose judgment, interest
and special effort the successful conduct of their operations is largely
dependent.
ADMINISTRATION. The Long-Term Plan will be administered by a committee (the
"Committee") of the Board of Directors which will be composed solely of not less
than two directors, who, to the extent required by Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"), qualify as "non-employee
directors" for purposes of Rule 16b-3 and who, to the extent required by Section
162(m) of the Code, also qualify as "outside directors" for purposes of Section
162(m). Among other things, the Committee will have the authority to select
officers and employees to whom awards may be granted, to determine the type of
awards as well as the number of shares of Jacor Common Stock to be covered by
each award, and to determine the terms and conditions of any such awards. The
Committee will also have the authority to construe and interpret the plan,
establish, amend or waive rules and regulations for its administration,
accelerate the exercisability of any award, and amend the terms and conditions
of any outstanding option, stock appreciation right or other award. However, the
Committee shall have no authority to adjust upward any amounts payable to a
Covered Employee with respect to a particular award or to take any action to the
extent that such action or the Committee's ability to take such action would
cause any award to any Covered Employee to fail to qualify as "performance-based
compensation" under
14
<PAGE>
Section 162(m) of the Code. All decisions made by the Committee will be final
and binding. For 1997, the Committee will be the LTIP/STIP Committee, as
discussed under the caption "THE BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS
AND FUNCTIONS--Compensation Committee and LTIP/STIP Committee" on page 5 of this
Proxy Statement.
ELIGIBILITY. Participants in the plan will be employees of the Company or
any Subsidiary, including officers of the Company or any Subsidiary who, in the
opinion of the Committee, contribute significantly to the growth and
profitability of the Company and its Subsidiaries.
NUMBER OF SHARES. The Long-Term Plan authorizes the issuance of up to
1,800,000 shares of Common Stock pursuant to the grant or exercise of stock
options, including ISOs and NQSOs, SARs, restricted stock, performance units,
performance shares and other stock units, but no more than one-half of such
aggregate number may be issued as restricted stock and no more than 500,000
shares may be issued upon the exercise of ISOs. No single participant may be
granted options (NQSOs or ISOs) for in excess of 200,000 shares of Jacor Common
Stock in any calendar year, or SARs for in excess of 200,000 shares of Jacor
Common Stock in any calendar year. Also, no Covered Employee may be granted any
performance unit or performance share award with respect to any performance
period (i) in an aggregate amount payable in cash in excess of $1,000,000, or
(ii) in excess of 100,000 shares. The exercise of SARs, whether paid in cash or
Jacor Common Stock, is an issuance of shares under the Long-Term Plan. The
payment of performance shares, performance units or other stock units is an
issuance of shares under the plan only to the extent payment is made in Jacor
Common Stock. Subject to the foregoing limits, the shares available under the
Long-Term Plan can be divided among the various types of awards and among the
participants as the Committee sees fit. Such shares are to be made available
from authorized but unissued shares of Common Stock or shares of Jacor Common
Stock reacquired by the Company in the open market. The number of shares subject
to the Long-Term Plan and subject to awards outstanding under the plan will
adjust with any stock dividend or split, recapitalization, reclassification,
merger, consolidation, combination or exchange of shares, or similar corporate
change.
DESCRIPTION OF AWARDS
STOCK OPTIONS. The Long-Term Plan permits the award of ISOs and NQSOs. Each
option granted under the plan must be evidenced by a written agreement
specifying terms, including the type, the number of shares covered, the exercise
price, when it is exercisable, any restriction on transferability of shares
obtained from the exercise of the option and the duration. The purchase price
per share of Jacor Common Stock covered by an option shall be determined by the
Committee, but, in the case of grants to executive officers, may not be less
than 100% of the Fair Market Value of the underlying Jacor Common Stock on the
date of grant. Notwithstanding the above, all ISOs must be granted at Fair
Market Value, whether granted to executive officers or otherwise. No ISOs shall
be exercisable more than ten years after their date of grant. Payment of an
option may be made with cash, with previously owned shares of Jacor Common
Stock, by foregoing compensation in accordance with Committee rules or by a
combination of these. The principal difference between ISOs and NQSOs is their
tax treatment. See "--Federal Income Tax Consequences."
STOCK APPRECIATION RIGHTS. The Long-Term Plan authorizes the Committee to
grant SARs in lieu of options, in addition to options, independent of options or
as a combination of the foregoing. A holder of SARs is entitled upon exercise to
receive a number of shares of Jacor Common Stock, or cash or a combination of
both, as the Committee may determine, equal in value on the date of exercise to
the amount by which the Fair Market Value of one share of Common Stock on the
date of exercise exceeds the exercise price fixed by the Committee on the date
of grant multiplied by the number of shares in respect of which the SARs are
exercised. If granted in lieu of an option, the SAR is exercisable at the same
time as the related option and, when exercised, the related option must be
surrendered and ceases to be exercisable. If granted in addition to an option,
the exercise of the related option causes the SAR also to be
15
<PAGE>
exercised. If granted independently of an option, the SAR will be exercisable at
such time as the Committee determines and its exercise will be unrelated to any
option. The term of any SAR will not exceed ten years.
RESTRICTED STOCK. The Long-Term Plan authorizes the Committee to grant
restricted stock to individuals with such Periods of Restriction as the
Committee may designate. In the case of Covered Employees, the Committee may
condition the vesting or lapse of such Periods of Restriction upon the
attainment of one or more performance goals established by the Committee within
the time period prescribed by Section 162(m) of the Code. These performance
goals must be based on the attainment, by the Company or its Subsidiaries, of
certain objective performance measures, which shall include one or more of the
following: broadcast cash flow, total stockholder return, return on equity,
return on capital, earnings per share, cash flow per share, market share, stock
price, revenues, costs, net income, cash flow and retained earnings (the
"Performance Goals"). Such Performance Goals may also be based upon the
attainment of specified levels of performance of the Company or one or more
Subsidiaries relative to the performance of other corporations. With respect to
Covered Employees, all Performance Goals shall be objective performance goals
satisfying the requirements for "performance-based compensation" within the
meaning of Section 162(m)(4)(C) of the Code.
Each grant of restricted stock will be evidenced by a restricted stock
agreement that shall specify the Period of Restriction, the number of shares of
restricted stock granted and such other provisions determined by the Committee.
Generally, all rights with respect to the restricted stock granted to a
participant under the Long-Term Plan shall be exercisable only during his
lifetime and only by the participant. Restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered. During the Period of
Restriction, participants holding restricted stock may exercise full voting
rights with respect to the shares and are entitled to all dividends and other
distributions paid on those shares. Upon the lapse of the applicable Period of
Restriction, the shares of restricted stock will become freely transferrable.
PERFORMANCE UNITS, PERFORMANCE SHARES AND OTHER STOCK UNITS. The Long-Term
Plan authorizes the Committee to grant performance units and performance shares
which may be earned if specified long-term corporate goals are achieved over a
period of time selected by the Committee (a "Performance Period"). Prior to the
grant of performance units or performance shares, the Committee must establish
the Performance Goals (from among the objective performance measures described
above relating to restricted stock) that must be satisfied before a payout of
such awards is made. At the conclusion of a particular Performance Period, the
Committee will determine the extent to which the Performance Goals have been
met. It will then determine the applicable percentage (which may exceed 100%) to
be applied to, and will apply such percentage to, the value of the performance
units or performance shares awarded to determine the payout to be received by
the participant; provided that no payout will be made thereunder except upon
written certification by the Committee that the applicable Performance Goal(s)
have been satisfied to a particular extent. As a result, depending upon the
Company's performance in relation to the Performance Goals, a participant may
earn less or more than the number of performance shares or performance units
initially awarded. In addition, to the extent that the value of a performance
share or performance unit is related to a share of Jacor Common Stock, the value
of any payout will be dependent upon the changing value of the Jacor Common
Stock. Payments may be made in cash, Jacor Common Stock or a combination as
determined by the Committee. With respect to Covered Employees, all Performance
Goals will be objective performance goals satisfying the requirements for
"performance-based compensation" within the meaning of Section 162(m)(4)(C).
The Long-Term Plan also authorizes the grant of other stock units at any
time and from time to time on such terms as shall be determined by the
Committee. The Committee shall have complete discretion in determining the
number of stock units granted to each participant. Prior to the grant of a stock
unit award, each participant must elect to either (i) convert all or part of his
or her stock unit award into cash, equivalent to the cash value of the stock
units established by the Committee on the date of grant, receive a
16
<PAGE>
cash award for the corresponding number of stock units converted to cash, and
receive the remaining stock units in shares of Jacor Common Stock payable upon
the occurrence of certain trigger events set forth on the participant's election
form in his or her complete discretion ("Trigger Events"); or (ii) receive his
or her entire stock unit award in shares of Jacor Common Stock payable upon the
occurence of the Trigger Events. The terms and conditions of the Trigger Events
may vary by stock unit award, by the participant, or both. Any portion of a
participant's stock unit award which is not converted to cash shall be credited
by the Company to a bookkeeping account to reflect the Company's liability to
that participant. Each stock unit is credited as a Jacor Common Stock equivalent
on the date so credited. Additional stock equivalents may be added to the stock
unit account equal to the amount of Jacor Common Stock that could be purchased
with dividends equal to that paid on one share of Jacor Common Stock, multiplied
by the number of stock equivalents then existing in the stock unit account,
based on the Fair Market Value of the Jacor Common Stock on the date a dividend
is paid on the Jacor Common Stock. Stock unit awards will not constitute
"performance-based compensation" within the meaning of Section 162(m)(4)(C) of
the Code and, as such, will count toward the annual $1,000,000 deduction limit.
CHANGE IN CONTROL. Upon a Change in Control of the Company, all stock-based
awards, such as ISOs, NQSOs, SARs, stock units and restricted stock shall vest
100%, and all performance-based awards, such as performance units and
performance shares, shall immediately be paid out in cash, based upon the
extent, as determined by the Committee, to which the Performance Goals have been
met through the effective date of the change in control or based upon the
assumed achievement of such goals, whichever is higher.
LIMITS ON TRANSFERABILITY AND EXERCISABILITY. No award granted under the
Long-Term Plan may be sold, transferred, assigned, pledged or hypothecated,
other than by will or by the laws of descent and distribution. All rights to any
award granted to an employee shall be exercisable during the employee's lifetime
only by the employee or the employee's guardian or legal representative. All
awards granted under the plan will be forfeited immediately if the employee is
terminated for cause. Generally, upon termination of any employee due to death,
disability or retirement, all options and SARs will be immediately exercisable
and remain so until their expiration date, any Restricted Period with respect to
restricted stock will lapse and restricted stock will become freely
transferrable, outstanding performance units and performance shares will entitle
the employee to receive pro-rated payments based upon the full months of service
during the Performance Period and all other stock units will immediately vest
and be payable to the employee as if the Trigger Events had occurred. Upon the
termination of any employee for any other reason (other than for cause), the
employee generally may exercise then exercisable options or SARs for 90 days or
until their expiration date, all other stock units will immediately vest and be
payable to the employee as if the Trigger Events had occurred, and restricted
stock, performance units and performance shares will be forfeited (subject, in
each case, to the discretion of the Committee).
AMENDMENT AND DISCONTINUANCE. The Long-Term Plan may be amended, altered or
discontinued by the Board of Directors, but except as specifically provided
therein, no amendment, alteration or discontinuance may be made which would in
any manner adversely affect any award theretofore granted under the plan,
without the written consent of the participant. Except as expressly provided in
the Long-Term Plan, the plan may not be amended without stockholder approval to
the extent such approval is required by law, rules of an exchange on which the
Company is listed.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion is intended only
as a brief discussion of the federal income tax rules relevant to stock options,
SARs, restricted stock, performance units, performance shares and other stock
units. The laws governing the tax aspects of awards are highly technical and
such laws are subject to change.
NQSOS AND SARS. Upon the grant of a NQSO (with or without an SAR), the
optionee will not recognize any taxable income and the Company will not be
required to record an expense. Upon the exercise of such an option or an SAR,
the excess of the fair market value of the shares acquired on the exercise of
the option over the purchase price (the "spread"), or the consideration paid to
the optionee
17
<PAGE>
upon the exercise of the SAR, will constitute compensation taxable to the
optionee as ordinary income. In determining the amount of the spread or the
amount of consideration paid to the optionee, the fair market value of the stock
on the date of exercise is used, except that in the case of an optionee subject
to the six month short-swing profit recovery provisions of Section 16(b) of the
Exchange Act (generally executive officers), the fair market value will
generally be determined at the expiration of the six-month period, unless such
optionee elects to be taxed based on the fair market value at the date of
exercise. Any such election (a "Section 83(b) election") must be made and filed
with the Internal Revenue Service within 30 days after exercise in accordance
with the regulations under Section 83(b) of the Code. The Company, in computing
its federal income tax, will generally be entitled to a deduction in an amount
equal to the compensation taxable to the optionee in the Company's taxable year
in which the amount is included as income to the optionee.
ISOS. An optionee will not recognize taxable income on the grant or
exercise of an ISO. However, the spread at exercise will constitute an item
includible in alternative minimum tax. Such alternative minimum tax may be
payable even though the optionee receives no cash upon the exercise of his ISO
with which to pay such tax. Upon the disposition of shares of stock acquired
pursuant to the exercise of an ISO after the later of (i) two years from the
date of grant of the ISO or (ii) one year after the transfer of the shares to
the optionee (the "ISO Holding Period"), the optionee will recognize long-term
capital gain or loss, as the case may be, measured by the difference between the
stock's selling price and the exercise price. The Company is not entitled to any
tax deduction by reason of the grant or exercise of an ISO, or by reason of a
disposition of stock received upon exercise of an ISO if the ISO Holding Period
is satisfied. Different rules apply if the optionee disposes of the shares of
stock acquired pursuant to the exercise of an ISO before the expiration of the
ISO Holding Period. Option grants for shares which are exercisable for the first
time by an optionee during any calendar year (under all plans of the Company and
any parent corporation or Subsidiary of the Company), which have a fair market
value in excess of $100,000, shall be treated as options which are not ISO's,
and will be subject to the same tax treatment as for the grant of NQSO's, as
discussed above.
RESTRICTED STOCK. A participant who is granted restricted stock may make a
Section 83(b) election to have the grant taxed as compensation income at the
date of receipt, with the result that any future appreciation (or depreciation)
in the value of the shares of stock granted shall be taxed as capital gain (or
loss) upon a subsequent sale of the shares. However, if the participant does not
make a Section 83(b) election, the grant will be taxed as compensation income at
the full fair market value on the date that the restrictions imposed on the
shares expire. Unless a participant makes a Section 83(b) election, any
dividends paid on stock subject to the restrictions are compensation income to
the participant and compensation expense to the Company. The Company is
generally entitled to a tax deduction for any compensation income taxed to the
participant, subject to the provisions of Section 162(m) of the Code.
PERFORMANCE UNITS, PERFORMANCE SHARES AND OTHER STOCK UNITS. A participant
who has been granted a performance unit, performance share or other stock unit
award will not realize taxable income until the units or shares vest and the
participant is in receipt of the Jacor Common Stock and/or cash distributed in
payment of the award, at which time such participant will realize ordinary
income equal to the fair market value of the shares delivered or the amount of
cash paid. At that time, the Company generally will be allowed a corresponding
tax deduction equal to the compensation taxable to the award recipient, subject
to the provisions of Section 162(m) of the Code.
NEW PLAN BENEFITS. It cannot be determined at this time what benefits or
amounts, if any, will be received by or allocated to any persons or group of
persons under the Long-Term Plan if the plan is adopted. Such determinations are
subject to the discretion of the Committee. However, similar long-term awards
that were paid or allocated to the named executive officers in 1996 and prior
years are described in the Summary Compensation Table, Option/SAR Grants Table
and Option/SAR Exercises, Year-End Value Table and Long-Term Incentive Plan
Awards Table on pages 33-36 of this Proxy Statement.
18
<PAGE>
VOTE REQUIRED. The affirmative vote of a majority of the votes entitled to
be cast by the holders of the Company's Common Stock present or represented at
the Annual Meeting and entitled to vote thereon is required to approve the
Long-Term Plan with respect to Section 162(m) of the Code. Abstentions from
voting and broker nonvotes on this particular proposal are treated as votes
against, while shares not voted by brokers on any matters presented to
stockholders will have no effect on the adoption of this proposal. Such vote
will also satisfy the stockholder approval requirements of Section 422 of the
Code with respect to the grant of ISOs. Proxies received by the Company and not
revoked prior to or at the Annual Meeting will be voted FOR Proposal No. 3 and
the adoption of the Long-Term Incentive Plan.
THE BOARD OF DIRECTORS HAS ADOPTED THE LONG-TERM INCENTIVE STOCK PLAN AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 3.
19
<PAGE>
PROPOSAL NO. 4
PROPOSAL TO ADOPT THE 1997 SHORT-TERM INCENTIVE PLAN
Stockholders are being asked to approve the 1997 Short-Term Incentive Plan
(the "Short-Term Plan"). The Board of Directors of the Company unanimously
adopted the Short-Term Plan on April 28, 1997. Set forth below is a summary of
certain important features of the Short-Term Plan, which summary is qualified in
its entirety by reference to the actual plan attached as Annex 3 to this proxy
statement. All capitalized terms which are not defined herein are defined in the
Short-Term Plan.
PURPOSE. The purpose of the Short-Term Plan is to provide key employees of
the Company and its Subsidiaries with a meaningful annual incentive opportunity
geared toward the achievement of specific corporate and/or individual goals. The
Short-Term Plan provides for the grant of Company Performance Awards and
Individual Performance Awards. The Short-Term Plan is designed to take into
account Section 162(m) of the Code, which generally denies a corporate tax
deduction for annual compensation exceeding $1,000,000 paid to the chief
executive officer and the four other most highly compensated officers of a
public company ("Covered Employees"). Certain types of compensation, including
performance-based compensation, are generally excluded from this deduction
limit. In an effort to ensure that certain compensation payable under the plan
will qualify as performance-based compensation, the Short-Term Plan is being
submitted to stockholders for approval at the Annual Meeting. By approving the
Short-Term Plan, the stockholders will be approving, among other things, the
performance measures, eligibility requirements and limits on annual incentive
awards contained therein relating to the Company Performance Awards.
As stated above, the Short-Term Plan also provides for the establishment and
payment of Individual Performance Awards. Individual Performance Awards payable
under the Short-Term Plan will not qualify as "performance-based compensation"
under Section 162(m) of the Code, and thus, will count toward the annual
$1,000,000 deduction limit. The Company will continue to pay at least a portion
of its executive compensation based on the individual performance of key
employees. If the stockholders approve the Long-Term Incentive Stock Plan and
the Short-Term Incentive Plan, the Committee believes that all compensation paid
to executives will be deductible by the Company for 1997 and for the foreseeable
future, and the payment of the Individual Performance Awards will not affect the
deductibility of such executive compensation.
ADMINISTRATION. The Short-Term Plan will be administered by a committee of
two or more persons appointed by the Board of Directors (the "Committee"). To
the extent required to comply with Section 162(m) of the Code, each such member
will qualify as an "outside director" for purposes of Section 162(m) of the
Code. Among other things, the Committee will have the authority to select
officers and employees to whom awards may be granted and to determine the terms
and conditions of any such awards. The Committee will also have the authority to
construe and interpret the plan, and establish, amend or waive rules and
regulations for its administration. However, the Committee shall have no
authority to adjust upward any amounts payable to a Covered Employee with
respect to a particular award or to take any action to the extent that such
action or the Committee's ability to take such action would cause any award to
any Covered Employee to fail to qualify as "performance-based compensation"
under Section 162(m) of the Code. All decisions made by the Committee will be
final and binding. For 1997, the Committee will be the LTIP/STIP Committee, as
discussed under the caption "THE BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS
AND FUNCTIONS--Compensation Committee and LTIP/STIP Committee" on page 5 of this
Proxy Statement.
ELIGIBILITY. Officers and salaried employees of the Company and its
Subsidiaries who, in the opinion of the Chief Executive Officer, can contribute
significantly to the growth and profitability of the Company and its
Subsidiaries, are eligible to be selected by the Committee to be granted awards
under the Short-
20
<PAGE>
Term Plan. Specific criteria for participation shall be established by the
Committee prior to the beginning of each incentive period (generally a calendar
year, but in 1997 such period would begin on June 1 and end on December 31), and
selected employees will be notified in writing of their selection, and of their
performance goals and related Company Performance Awards and Individual
Performance Awards, as soon as practicable. Under certain circumstances,
individuals who become eligible after an incentive period has commenced may
participate in the plan. The Committee may withdraw its approval for
participation in the plan with respect to an incentive period at any time during
such period (except where a Change in Control occurs during an incentive
period), and the employee will not be entitled to the payment of any Award for
such incentive period. No participant or other employee shall have the right to
participate in the Short-Term Plan for any incentive period, despite having been
selected in a previous incentive period. No right or interest of any participant
in the Short-Term Plan may be assigned, transferred, pledged or encumbered.
DESCRIPTION OF AWARDS
COMPANY PERFORMANCE AWARDS. The Short-Term Plan permits the award of
Company Performance Awards (expressed as a percentage of base salary), which are
established independent of the Individual Performance Awards discussed below. On
or before the 90th day of each incentive period and in any event before 25% or
more of the incentive period has elapsed, the Committee shall establish for each
participant the Company Performance Award and specific objective performance
goals for the incentive period in writing, which will be based on one or more of
the following: broadcast cash flow, total stockholder return, return on equity,
return on capital, earnings per share, cash flow per share, market share, stock
price, revenues, costs, net income, cash flow and retained earnings. ("Company
Performance Goals"). At the time Company Performance Awards are established, the
Committee will specify the manner in which the Company Performance Goal(s) will
be calculated. In so doing, the Committee may exclude the impact of certain
specified events from the calculation of the Company Performance Goal(s). For
example, if a Company Performance Goal was earnings per share, the Committee
could, at the time the Company Performance Goal is established, specify that
earnings per share are to be calculated without regard to any subsequent change
in accounting standards required by the Financial Accounting Standards Board.
Company Performance Goals may also be based on the attainment of specified
performance levels of the Company relative to other corporations. Upon
establishing the Company Performance Awards, the Committee will establish a
minimum level of achievement of the Company Performance Goals that must be met
in order to receive any portion of such award.
The level of achievement of the Company Performance Goals at the end of the
incentive period will determine the amount of each participant's Company
Performance Award that such participant will receive (the "Earned Company
Award"), which may exceed 100% of the participant's Company Performance Award.
If the minimum level of achievement of Company Performance Goals for an
incentive period is not met, no payment of an Earned Company Award will be made
to the particular participant during the incentive period. To the extent that
minimum achievement levels are met or surpassed, and upon certification by the
Committee that the Company Performance Goals have been satisfied and that any
other material terms and conditions of the Company Performance Awards are met,
payment of an Earned Company Award will be made to the participant for that
incentive period. The payment of all Earned Company Awards is subject to
reduction by the Committee, in its sole discretion. However, the Committee will
have no additional discretion to modify the terms of Company Performance Awards.
The maximum amount payable to a participant during any fiscal year will not
exceed $1,000,000.
INDIVIDUAL PERFORMANCE AWARDS. The Short-Term Plan permits the award of
Individual Performance Awards (expressed as a percentage of base salary), which
are established independent of the Company Performance Awards discussed above.
At the beginning of each incentive period, the Chief Executive Officer will
establish individual performance goals for each plan participant; provided that
the Committee will establish the performance goals for the Chief Executive
Officer. The level of achievement of the
21
<PAGE>
individual performance goals at the end of the incentive period will determine
the amount of each participant's Individual Performance Award that such
participant will receive (the "Earned Individual Award"), which may range from
0% to 150% of the participant's Individual Performance Award. The payment of all
Earned Individual Awards is subject to approval by the Committee, and will in no
way be contingent upon the attainment of, or the failure to attain, the Company
Performance Goals for the Company Performance Awards granted to participants.
Because the individual performance goals described above are not objective in
nature, the award of Individual Performance Awards and the payout of Earned
Individual Awards do not qualify as "performance-based compensation" as defined
in Section 162(m) of the Code. Thus, the Earned Individual Award payouts will
count toward the $1,000,000 cap on the deductibility of executive compensation
paid by the Company. However, the Committee desires to retain the ability to
evaluate key employees on a subjective basis in order to promote effective
management of the Company.
TERMINATION OF EMPLOYMENT. In the event of termination due to death, total
and permanent disability or retirement, any Earned Awards (Earned Individual
Awards and/or Earned Company Awards) will be prorated to reflect participation
prior to termination. In the event of termination for any other reason, all of a
participant's rights to an Earned Award for the incentive period then in
progress will be forfeited; provided that the Committee may, in its discretion,
pay a prorated award for the portion of the incentive period that the
participant was employed.
CHANGE IN CONTROL. If any participant is terminated for any reason other
than for Cause, within 24 months after a Change in Control of the Company or its
Subsidiaries, all awards previously deferred (with earnings) will be paid to the
participant; along with a Company Performance Award and Individual Performance
Award established for the participant for the incentive period in progress at
the time of termination, which is prorated for the portion of the incentive
period the participant is employed.
AMENDMENT AND DISCONTINUANCE. The Board of Directors of the Company has
absolute discretion to modify or amend the Short-Term Plan in whole or in part,
or suspend or terminate the plan entirely. However, no such modification,
amendment, suspension or termination after an incentive period may, without the
consent of the participant, reduce the participant's right to a payment or
distribution to which the participant is entitled for such incentive period.
NEW PLAN BENEFITS. It cannot be determined at this time what benefits or
amounts, if any, will be allocated to or received by any persons or group of
persons under the Short-Term Plan if the plan is adopted. Such determinations as
to allocations are at the discretion of the Committee and as to receipt of
payouts is dependent upon future performance. However, the benefits and amounts
payable under the Company's cash bonus plan for 1996 and prior years are set
forth in the bonus column of the Summary Compensation Table on page 33 of this
proxy statement.
VOTE REQUIRED. The affirmative vote of a majority of the shares of Common
Stock entitled to vote and present in person or by proxy at the Annual Meeting
is required for the approval of the adoption of the Short-Term Plan with respect
to Section 162 of the Code. Abstentions from voting and broker nonvotes on this
particular proposal are treated as votes against, while shares not voted by
brokers on any matters presented to stockholders will have no effect on the
adoption of this proposal. Proxies received by the Company and not revoked prior
to or at the Annual Meeting will be voted FOR Proposal No. 4 and the adoption of
the Short-Term Incentive Plan.
THE BOARD OF DIRECTORS HAS ADOPTED THE SHORT-TERM INCENTIVE PLAN AND UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 4.
22
<PAGE>
PROPOSAL NO. 5
PROPOSAL TO ADOPT THE 1997 NON-EMPLOYEE DIRECTORS STOCK PURCHASE PLAN,
INCLUDING THE ISSUANCE OF UP TO 150,000 SHARES OF
COMMON STOCK THEREUNDER
The Board of Directors of the Company, at its meeting on April 28, 1997,
adopted the 1997 Non-Employee Directors Stock Purchase Plan (the "Directors
Stock Purchase Plan"), subject to approval of the Company's stockholders,
including the issuance of up to 150,000 shares of Jacor Common Stock thereunder.
Set forth below is a summary of certain important features of the Directors
Stock Purchase Plan, which summary is qualified in its entirety by reference to
the actual plan attached as Annex 4 to this Proxy Statement. All capitalized
terms which are not defined herein are defined in the Directors Stock Purchase
Plan.
PURPOSE OF PLAN. The purpose of the Directors Stock Purchase Plan is to
promote the success of the Company by providing incentives to directors that
link their director compensation to the long-term financial success of the
Company and to growth in stockholder value. The plan is designed to enable the
Company to attract and retain highly qualified directors upon whose judgment,
interest and special effort the successful conduct of the Company's operations
is largely dependent.
SHARES RESERVED FOR ISSUANCE UNDER THE STOCK PURCHASE PLAN. The Directors
Stock Purchase Plan provides directors of the Company with a means to purchase
in the aggregate up to 150,000 shares of Jacor Common Stock at a discount,
subject to adjustments under certain circumstances such as stock splits, stock
dividends, recapitalization or other changes in the outstanding Common Stock.
The reserved shares consist of authorized but unissued Jacor Common Stock or
shares of Jacor Common Stock reacquired by the Company, including any shares
purchased by the Company in the open market. In the event such shares would be
purchased on the open market, the Company will bear all brokerage costs and will
pay any difference between the actual stock purchase price and the amount paid
by employees under the Directors Stock Purchase Plan.
PARTICIPATION AND CONTRIBUTIONS. All of the Company's non-employee
directors are eligible to participate in the plan. The Directors Stock Purchase
Plan provides that each director must complete an Election Form setting forth
the amount of the director's contribution for the particular Purchase Period,
which begins on the first day of each quarter and ends on the last day of such
quarter (unless otherwise established by the Compensation Committee of the
Company), provided that, the aggregate maximum amount permitted to be
contributed in each calendar year shall be $100,000. All contributions must be
made no later than five (5) days prior to the last day of the Purchase Period
for which the contribution is being made.
A director also may, within five (5) days prior to the last day of a
Purchase Period, withdraw, without interest, all or any part of the
contributions credited to his or her account for such purchase, or increase his
or her contributions for such purchase, by delivering an amended Election Form
(and a check for the increased contributions, if applicable). All contributions
made by a director will be held by the Company as part of its general assets and
will not be segregated from the general assets of the Company or held in trust.
No interest will accrue on the contributions, and each director's rights to the
contributions credited to his or her account will be that of a general and
unsecured creditor of the Company. The entire balance of a director's account
will be refunded in the event the director ceases to become a director of the
Board for any reason.
23
<PAGE>
COMMON STOCK PURCHASES. At the end of the applicable Purchase Period, the
balance remaining in a director's account is applied to purchase shares of Jacor
Common Stock for 85% of the lesser of (a) the Closing Price for a share of Jacor
Common Stock on the last business day of the Purchase Period; and (b) the
greater of (i) the Closing Price for a share of Jacor Common Stock on the first
business day of the Purchase Period; and (ii) the average Closing Price for a
share of Jacor Common Stock for all the business days during the Purchase Period
(the "Purchase Price"). Jacor Common Stock is purchased in whole shares only,
and any remaining cash in the director's account is carried forward to the next
Purchase Period.
A book-entry record of the shares of Jacor Common Stock purchased will be
maintained by the Company's transfer agent, and no certificates will be issued,
unless a director so requests. However, when a refund is made at the time a
director leaves the Board, as discussed above, certificates will be delivered to
the director for all shares of Jacor Common Stock then held for the director
under the plan.
BENEFICIARY DESIGNATION. A director may designate on his or her Election
Form a beneficiary (a) who shall receive the balance credited to his or her
account if the participant dies before the end of a Purchase Period and (b) who
shall receive the shares of Jacor Common Stock, if any, purchased for the
director under the plan if the director dies after the end of a Purchase Period
but before either the certificate representing such shares has been delivered to
the director or before such shares have been credited to a brokerage account
maintained for the director. Such designation may be revised in writing at any
time by the director by filing an amended Election Form. If a deceased director
fails to designate a beneficiary or, if no person so designated survives a
director or, if after checking his or her last known mailing address, the
whereabouts of the person so designated are unknown, then the director's estate
shall be treated as his or her designated beneficiary.
TRANSFERABILITY AND DISPOSITIONS. Neither the balance credited to a
director's account nor any rights to receive shares under the plan may be
assigned, encumbered, alienated, transferred, pledged, or otherwise disposed of
in any way by a director during his or her lifetime or by his or her beneficiary
or by any other person during his or lifetime, and any attempt to do so shall be
without effect. However, a director may assign his or her rights to purchase
shares hereunder to any deferred compensation plan previously or hereafter
adopted by the Company.
No sale, transfer or other disposition may be made of any shares purchased
under the plan until the first anniversary of such purchase. If a director
violates the foregoing restriction, he or she shall remit to Jacor an amount of
cash equal to the difference between the amount he or she paid for such shares
and the Closing Price of such shares on the date they were purchased. However,
if a director who owns shares subject to the foregoing restriction is determined
by the Plan Administrator in its discretion to have a serious financial need for
the proceeds of the sale of such Shares, then upon application made by the
director, the Plan Administrator shall consent to a sale of such shares to the
extent necessary to satisfy the serious financial need, and the director will
not be required to make the remittance to the Company.
ADMINISTRATION. Except for the exercise of those powers expressly granted
to a committee of the Board of Directors to determine the Closing Price, and to
set the Purchase Period, the Plan Administrator shall be responsible for the
administration of the Directors Stock Purchase Plan and shall have the power in
connection with such administration as the Plan Administrator deems necessary or
equitable under the circumstances. The Plan Administrator also shall have the
power to delegate the duty to perform such administrative functions as the Plan
Administrator deems appropriate under the circumstances. Any action or inaction
by or on behalf of the Plan Administrator under the plan shall be final and
binding on each participant and on each other person who makes a claim under the
plan based on the rights, if any, of any such participant under this plan.
COMPLIANCE WITH RULE 16B-3. All elections and transactions under the plan
by persons subject to Rule 16b-3 are intended to comply with at least one of the
exemptive conditions under Rule 16b-3. The
24
<PAGE>
Plan Administrator shall establish such administrative guidelines to facilitate
compliance with at least one such exemptive condition under Rule 16b-3 as the
Plan Administrator may deem necessary or appropriate.
AMENDMENT OR TERMINATION. The plan may be amended by the Board from time to
time to the extent that the Board deems necessary or appropriate, and any such
amendment shall be subject to the approval of the Company's stockholders to the
extent such approval is required under applicable laws or the rules of an
exchange on which the Company is listed. The Board also may terminate the plan
and any Purchase Period at any time (together with any related contribution
election) or may terminate any Purchase Period (together with any related
contribution elections) at any time.
FEDERAL INCOME TAX CONSEQUENCES. A director will recognize ordinary income
at the end of the applicable Purchase Period in an amount equal to the
difference between the amount paid for shares of Jacor Common Stock purchased
and the Closing Price of such shares on the date they were purchased. Any future
appreciation (or depreciation) in the shares of Jacor Common Stock acquired
under the plan shall be taxed as capital gain (or loss) upon subsequent sale of
the shares.
NEW PLAN BENEFITS. It cannot be determined what benefits or amounts, if
any, will be allocated to directors pursuant to the Directors Stock Purchase
Plan. Such amounts depend entirely on whether and to what extent the Company's
directors desire to participate in the plan.
VOTE REQUIRED. The proposal to adopt the Directors Stock Purchase Plan in
the form attached to this Proxy Statement as Annex 4 will be submitted to the
stockholders for adoption at the Annual Meeting. Adoption of this proposal
requires an affirmative vote by the majority of the shares of Jacor Common Stock
entitled to vote and present in person or by proxy at the Annual Meeting.
Abstentions from voting and broker nonvotes on this particular proposal are
treated as votes against, while shares not voted by brokers on any matters
presented to stockholders will have no effect on the adoption of this proposal.
Proxies received by the Company and not revoked prior to or at the Annual
Meeting will be voted FOR Proposal No. 5 and the adoption of the Directors Stock
Purchase Plan.
THE BOARD OF DIRECTORS HAS ADOPTED THE DIRECTORS STOCK PURCHASE PLAN AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 5.
PROPOSAL NO. 6
PROPOSAL TO ADOPT THE 1997 NON-EMPLOYEE DIRECTORS STOCK PLAN,
INCLUDING THE ISSUANCE OF UP TO 350,000 SHARES THEREUNDER
On April 28, 1997, the Board of Directors of the Company adopted the 1997
Non-Employee Directors Stock Plan, effective April 28, 1997 (the "Directors
Stock Plan"), including the issuance of up to 350,000 shares of Jacor Common
Stock thereunder, subject to stockholder approval. The Directors Stock Plan
permits the Board of Directors of the Company to grant non-qualified stock
options (NQSOs), restricted stock, stock appreciation rights (SARs), performance
units, performance shares and other stock units to directors not employed by the
Company.
On April 28, 1997, the full Board of Directors granted NQSOs to non-employee
directors under the Directors Stock Plan. These awards are subject to the
approval of the Directors Stock Plan by the stockholders at the Annual Meeting.
In the event that stockholders do not approve the 1997 Directors Stock Plan, the
plan shall automatically terminate and the option grants made to current
participants shall be canceled. Specific grants to non-employee directors are
described in more detail under the caption "1997 Awards."
Set forth below is a summary of certain important features of the Directors
Stock Plan, which summary is qualified in its entirety by reference to the
actual plan attached as Annex 5 to this proxy statement. All capitalized terms
which are not defined herein are defined in the Directors Stock Plan.
25
<PAGE>
PURPOSE. The purpose of the Directors Stock Plan is to promote the success
of the Company by providing incentives to directors that link their director
compensation to the long-term financial success of the Company and to growth in
stockholder value. The plan is designed to provide flexibility to the Company in
its ability to attract and retain the services of directors upon whose judgment,
interest and special effort the successful conduct of the Company's operations
is largely dependent.
ADMINISTRATION. The Directors Stock Plan will be administered by the full
Board of Directors. Among other things, the Board will have the authority to
select directors to whom awards may be granted, to determine the type of awards
as well as the number of shares of Jacor Common Stock to be covered by each
award, and to determine the terms and conditions of any such awards. The Board
will also have the authority to construe and interpret the plan, establish,
amend or waive rules and regulations for its administration, accelerate the
exercisability of any award, and amend the terms and conditions of any
outstanding option, stock appreciation right or other award. All decisions made
by the Board will be final and binding.
ELIGIBILITY. Participants in the plan will be members of the Board of
Directors of the Company who are not, and have not been at any time within the
preceding three years, employees of the Company.
NUMBER OF SHARES. The Directors Stock Plan authorizes the issuance of up to
350,000 shares of Jacor Common Stock pursuant to the grant or exercise of
NQSO's, SARs, restricted stock, performance units, performance shares and other
stock units. The exercise of SARs, whether paid in cash or Jacor Common Stock,
is an issuance of shares under the Directors Stock Plan. The payment of
performance shares, performance units or other stock units is an issuance of
shares under the plan only to the extent payment is made in Jacor Common Stock.
Subject to the foregoing limits, the shares available under the Directors Stock
Plan can be divided among the various types of awards and among the participants
as the Board determines. Such shares are to be made available from authorized
but unissued shares of Jacor Common Stock or shares of Jacor Common Stock
reacquired by the Company in the open market. The number of shares subject to
the Directors Stock Plan and subject to awards outstanding under the plan will
adjust with any stock dividend or split, recapitalization, reclassification,
merger, consolidation, combination or exchange of shares, or similar corporate
change.
DESCRIPTION OF AWARDS
STOCK OPTIONS. The Directors Stock Plan permits the award of NQSOs. Each
option granted under the plan must be evidenced by a written agreement
specifying terms, the number of shares covered, the exercise price, when it is
exercisable, any restriction on transferability of shares obtained from the
exercise of the option and the duration. The purchase price per share of Jacor
Common Stock covered by an option shall be determined by the Board, but may not
be less than 100% of the Fair Market Value of the underlying Jacor Common Stock
on the date of grant. Payment of an option may be made with cash, with
previously owned shares of Jacor Common Stock, by foregoing compensation in
accordance with Board rules or by a combination of these. See "--Federal Income
Tax Consequences."
STOCK APPRECIATION RIGHTS. The Directors Stock Plan authorizes the Board to
grant SARs in lieu of options, in addition to options, independent of options or
as a combination of the foregoing. A holder of SARs is entitled upon exercise to
receive a number of shares of Jacor Common Stock, or cash or a combination of
both, as the Board may determine, equal in value on the date of exercise to the
amount by which the Fair Market Value of one share of Common Stock on the date
of exercise exceeds the exercise price fixed by the Board on the date of grant
multiplied by the number of shares in respect of which the SARs are exercised.
If granted in lieu of an option, the SAR is exercisable at the same time as the
related option and, when exercised, the related option must be surrendered and
ceases to be exercisable. If granted in addition to an option, the exercise of
the related option causes the SAR also to be exercised. If granted independently
of an option, the SAR will be exercisable at such time as the Board determines
and its exercise will be unrelated to any option. The term of any SAR will not
exceed ten years.
26
<PAGE>
RESTRICTED STOCK. The Directors Stock Plan authorizes the Board to grant
restricted stock to individuals with such Periods of Restriction as the Board
may designate. Each grant of restricted stock will be evidenced by a restricted
stock agreement that shall specify the Period of Restriction, the number of
shares of restricted stock granted and such other provisions determined by the
Board. Generally, all rights with respect to the restricted stock granted to a
participant under the Directors Stock Plan shall be exercisable only during his
lifetime and only by the participant. Restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered. During the Period of
Restriction, participants holding restricted stock may exercise full voting
rights with respect to the shares and are entitled to all dividends and other
distributions paid on those shares. Upon the lapse of the applicable Period of
Restriction, the shares of restricted stock will become freely transferrable.
PERFORMANCE UNITS, PERFORMANCE SHARES AND OTHER STOCK UNITS. The Directors
Stock Plan authorizes the Board to grant performance units and performance
shares which may be earned if specified long-term corporate goals are achieved
over a period of time selected by the Board (a "Performance Period"). Prior to
the grant of performance units or performance shares, the Board may establish
the Performance Goals, which may be objectively and/or subjectively based, to be
satisfied before a payout of such awards is made. At the conclusion of a
particular Performance Period, the Board will determine the extent to which such
Performance Goals have been met. It will then determine the applicable
percentage (which may exceed 100%) to be applied to, and will apply such
percentage to, the value of the performance units or performance shares awarded
to determine the payout to be received by the participant. As a result,
depending upon the Company's performance in relation to the Performance Goals, a
participant may earn less or more than the number of performance shares or
performance units initially awarded. In addition, to the extent that the value
of a performance share or performance unit is related to a share of Jacor Common
Stock, the value of any payout will be dependent upon the changing value of the
Jacor Common Stock. Payments may be made in cash, Jacor Common Stock or a
combination as determined by the Board.
The Directors Stock Plan also authorizes the grant of other stock units at
any time and from time to time on such terms as shall be determined by the Board
of Directors. The Board of Directors shall have complete discretion in
determining the number of stock units granted to each participant. Prior to the
grant of a stock unit award, each participant must elect to either (i) convert
all or part of his or her stock unit award into cash, equivalent to the cash
value of the stock units established by the Board on the date of grant, receive
a cash award for the corresponding number of stock units converted to cash, and
receive the remaining stock units in shares of Jacor Common Stock payable upon
the occurrence of certain trigger events set forth on the participant's election
form in his or her complete discretion ("Trigger Events"); or (ii) receive his
or her entire stock unit award in shares of Jacor Common Stock, payable upon the
occurrence of the Trigger Events. The terms and conditions of the Trigger Events
may vary by stock unit award, by the participant, or both. Any portion of a
participant's stock unit award which is not converted to cash shall be credited
by the Company to a bookkeeping account to reflect the Company's liability to
that participant. Each stock unit is credited as a Jacor Common Stock equivalent
on the date so credited. Additional stock equivalents may be added to the stock
unit account equal to the amount of Jacor Common Stock that could be purchased
with dividends equal to that paid on one share of Jacor Common Stock, multiplied
by the number of stock equivalents then existing in the stock unit account,
based on the Fair Market Value of the Jacor Common Stock on the date a dividend
is paid on the Jacor Common Stock. Stock units to be granted to the Company's
non-employee directors as part of their annual compensation will be stock units
of this type. See "THE BOARD OF DIRECTORS, ITS COMMITTEES, MEETINGS AND
FUNCTIONS--Compensation of Directors."
CHANGE IN CONTROL. Upon a Change in Control of the Company, all stock-based
awards, such as NQSOs, SARs, stock units and restricted stock shall vest 100%,
and all performance-based awards, such as performance units and performance
shares, shall immediately be paid out in cash, based upon the extent, as
determined by the Board, to which the Performance Goals have been met through
the effective date of the change in control or based upon the assumed
achievement of such goals, whichever is higher.
27
<PAGE>
LIMITS ON TRANSFERABILITY AND EXERCISABILITY. No award granted under the
Directors Stock Plan may be sold, transferred, assigned, pledged or
hypothecated, other than by will or by the laws of descent and distribution. All
rights to any award granted to a director shall be exercisable during the
director's lifetime only by the director or the director's guardian or legal
representative. All awards granted under the plan will be forfeited immediately
if the director is removed as a director. Generally, upon ceasing service as a
director due to death, disability or retirement, all options and SARs will be
immediately exercisable and remain so until their expiration date, any
Restricted Period with respect to restricted stock will lapse and restricted
stock will become freely transferrable, outstanding performance units and
performance shares will entitle the director to receive pro-rated payments based
upon the full months of service during the Performance Period and all other
stock units will immediately vest and be payable to the participant as if the
Trigger Events had occurred. Upon the termination of service as a director for
any other reason (other than for removal), the director generally may exercise
then exercisable options or SARs for 90 days or until their expiration date, all
other stock units will immediately vest and be payable to the participant as if
the Trigger Events had occurred and restricted stock, performance units and
performance shares will be forfeited (subject, in each case, to the discretion
of the Board).
AMENDMENT AND DISCONTINUANCE. The Directors Stock Plan may be amended,
altered or discontinued by the Board of Directors, but except as specifically
provided therein, no amendment, alteration or discontinuance may be made which
would in any manner adversely affect any award theretofore granted under the
plan, without the written consent of the participant. Except as expressly
provided in the Directors Stock Plan, the plan may not be amended without
stockholder approval to the extent such approval is required by law, rules of an
exchange on which the Company is listed.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion is intended only
as a brief discussion of the federal income tax rules relevant to stock options,
SARs, restricted stock and performance units. The laws governing the tax aspects
of awards are highly technical and such laws are subject to change.
NQSOS AND SARS. Upon the grant of a NQSO (with or without an SAR), the
optionee will not recognize any taxable income and the Company will not be
required to record an expense. Upon the exercise of such an option or an SAR,
the excess of the fair market value of the shares acquired on the exercise of
the option over the purchase price (the "spread"), or the consideration paid to
the optionee upon the exercise of the SAR, will constitute a payment for
services taxable to the optionee as ordinary income. In determining the amount
of the spread or the amount of consideration paid to the optionee, the fair
market value of the stock on the date of exercise is used, except that in the
case of an optionee subject to the six month short-swing profit recovery
provisions of Section 16(b) of the Exchange Act (generally officers and
directors), the fair market value will generally be determined at the expiration
of the six month period, unless such optionee elects to be taxed based on the
fair market value at the date of exercise. Any such election (a "Section 83(b)
election") must be made and filed with the Internal Revenue Service within 30
days after exercise in accordance with the regulations under Section 83(b) of
the Code. The Company, in computing its federal income tax, will generally be
entitled to a deduction in an amount equal to the amount included in the
optionee's gross income in the Company's taxable year in which the amount is
included as income to the optionee.
RESTRICTED STOCK. A participant who is granted restricted stock may make a
Section 83(b) election to have the grant taxed as ordinary income at the date of
receipt, with the result that any future appreciation (or depreciation) in the
value of the shares of stock granted shall be taxed as capital gain (or loss)
upon a subsequent sale of the shares. However, if the participant does not make
a Section 83(b) election, the grant will be taxed as ordinary income at the full
fair market value on the date that the restrictions imposed on the shares
expire. Unless a participant makes a Section 83(b) election, any dividends paid
on stock subject to the restrictions are income to the participant and a
deductible expense to the Company. The Company is generally entitled to a tax
deduction for any income taxed to the participant for the Restricted Stock.
28
<PAGE>
PERFORMANCE UNITS, PERFORMANCE SHARES AND OTHER STOCK UNITS. A participant
who has been granted a performance unit, performance share or other stock unit
award will not realize taxable income until the units or shares vest and the
participant is in receipt of the Common Stock and/or cash distributed in payment
of the award, at which time such participant will realize ordinary income equal
to the fair market value of the shares delivered or the amount of cash paid. At
that time, the Company generally will be allowed a corresponding tax deduction
equal to the amount taxable to the award recipient.
NEW PLAN BENEFITS. Apart from the NQSOs granted on April 28, 1997, and
described below, it cannot be determined at this time what benefits or amounts,
if any, will be received by or allocated to any persons or group of persons
under the Directors Stock Plan if the plan is adopted. Such determinations are
subject to the discretion of the Board.
1997 AWARDS. Subject to stockholder approval, the Board of Directors on
April 28, 1997, awarded 5,000 NQSOs to each of the following non-employee
directors: Messrs. Alexander, Bynoe, Dammeyer, Handy, Lasry, and Zell, and Mrs.
Rosenberg and Ms. Wilderotter. Twenty-five percent of these options vest on
April 28, 1997, but are not exercisable until six months following the date of
grant, and 25% of the options will vest one year from the date of grant, 25%
will vest two years from the date of grant and the remaining 25% will vest three
years from the date of grant. All of the options are exercisable at a purchase
price of $27.875 per share.
VOTE REQUIRED. The proposal to adopt the Directors Stock Plan in the form
attached to this Proxy Statement as Annex 5 will be submitted to the
stockholders for adoption at the Annual Meeting. Adoption of this proposal
requires an affirmative vote by the majority of the shares of Jacor Common Stock
entitled to vote and present in person or by proxy at the Annual Meeting.
Abstentions from voting and broker nonvotes on this particular proposal are
treated as votes against, while shares not voted by brokers on any matters
presented to stockholders will have no effect on the adoption of this proposal.
Proxies received by the Company and not revoked prior to or at the Annual
Meeting will be voted FOR Proposal No. 6 and the adoption of the Directors'
Stock Plan.
THE BOARD OF DIRECTORS HAS ADOPTED THE NON-EMPLOYEE DIRECTORS STOCK PLAN AND
UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL NO. 6.
29
<PAGE>
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The report of the 1996 Compensation Committee with respect to 1996 executive
compensation is as follows:
The primary function of the Compensation Committee, which consists entirely
of non-employee directors, is to oversee policies relating to executive
compensation including salary, incentive bonuses, fringe benefits and stock
option awards. Its objective is to attract and retain qualified individuals by
providing competitive compensation, while, at the same time, linking such
compensation to corporate objectives. The Compensation Committee believes that
providing a direct relationship between corporate results and executive
compensation will best serve stockholder interests.
This link between executive compensation and corporate performance is
facilitated through incentive bonuses based on earnings and also through stock
option awards. The Compensation Committee may grant stock options to individuals
to create additional economic incentives for these individuals to achieve
improved corporate performance goals so that they can thereby participate in any
resultant increases in stockholder value. The options are exercisable at the
fair market value of the stock on the date of grant and therefore only provide
benefits to the grantee if value increases through the increase in share price.
It is the Compensation Committee's policy to establish base salaries for its
executives at levels that it perceives to be fair and competitive with those of
executives with similar responsibilities at companies that are considered to be
comparable in terms of assets, net worth, revenue, operating cash flow and/or
cash flow per share, based upon such information as may be acquired by the
Compensation Committee from annual reports and proxy materials of such other
companies, business and industry publications and other sources as may be
available from time to time. Such comparisons of executive compensation are not
necessarily with the same companies included in the indices used in the
performance graph included in this Proxy Statement given that Jacor's
competitors for executive and/or broadcasting talent are not limited to the
entities included in such indices.
The Compensation Committee applied the above considerations in determining
the 1996 compensation for Jacor's Chief Executive Officer, Mr. Michaels, and
President, Mr. Lawrence. In March 1996, the Compensation Committee established
the base salary levels for Mr. Michaels and Mr. Lawrence and Jacor's other
executive officers. Consistent with the Compensation Committee's policy of
establishing competitive salary levels, Mr. Michaels and Mr. Lawrence each
received a salary increase for 1996 averaging $153,000. For Mr. Michaels and Mr.
Lawrence, the Compensation Committee established incentive performance targets
that created the potential for significant incentive bonuses if the Company
achieved or exceeded certain cash flow levels in 1996. Jacor exceeded the 1996
performance targets by a substantial margin. The Compensation Committee rewarded
Mr. Michaels and Mr. Lawrence accordingly by granting substantial bonuses for
1996 determined in accordance with the incentive formula.
In addition, Mr. Michaels, Mr. Lawrence and the other executive officers
received stock unit bonuses based upon the Compensation Committee's
determination that they were directly responsible for much of Jacor's growth
through mergers and acquisitions in 1996. The Compensation Committee also
awarded 407,500 stock options to executive officers in 1996 with Messrs.
Michaels and Lawrence receiving 112,000 and 95,000, respectively.
In March 1996, the Compensation Committee approved the base salary levels of
the Company's other executive officers upon recommendations by Mr. Michaels and
Mr. Lawrence. Also, based upon the recommendation of Mr. Michaels and Mr.
Lawrence, the Compensation Committee approved incentive performance targets for
the Company's other executive officers that created the potential for
significant incentive bonuses for the Company achieved or exceeded certain cash
flow levels in 1996. Jacor exceeded the 1996 performance targets by a
substantial margin, and the other executive officers were awarded accordingly by
receiving substantial bonuses for 1996 determined in accordance with the
incentive formula.
30
<PAGE>
Section 162(m) of the Code generally disallows a tax deduction to public
companies for compensation over $1,000,000 paid to the Company's Chief Executive
Officer and four other most highly compensated executive officers. However,
qualifying, "performance-based" compensation will not be subject to the
deduction limit if certain requirements are met. For 1996, the total
compensation for each of Mr. Michaels and Mr. Lawrence exceeded this limit or
deductibility. Thus, portions of these executive officers' salaries for 1996
were not deductible by the Company. In light of this development, the Company
has reviewed Section 162(m) and has determined that it is in the best interests
of the Company and its stockholders to design its Long-Term Incentive Stock Plan
and Short-Term Incentive Plan in order meet the criteria for deductibility under
Section 162(m). Although not all of the compensation paid to executive officers
under these two plans will constitute "performance-based compensation," the
Company anticipates that, if the stockholders approve the two plans, all
compensation paid to executive officers in 1997 will be deductible under the
Code.
1996 Compensation Committee:
Rod F. Dammeyer
Sheli Z. Rosenberg
F. Philip Handy
31
<PAGE>
COMMON STOCK PERFORMANCE
The following performance graph compares the Company's cumulative total
stockholder return (change in stock price plus reinvested dividends) to
stockholders of Jacor Common Stock from January 11, 1993 through December 31,
1996, with the Nasdaq Telecommunications Stock Index and the Nasdaq Total Return
Index (US). The graph assumes that an investment of $100 was made on January 11,
1993 in Jacor Common Stock and in each index. The comparisons in this table are
required by the Securities and Exchange Commission, and therefore, are not
intended to forecast or be indicative of the possible future performance of
Jacor Common Stock.
In January 1993, Jacor consummated a complete recapitalization and
restructuring of its capital structure, bank debt, subordinated debt and other
claims and interests (the "Restructuring"). As part of the Restructuring, all of
Jacor's formerly outstanding capital stock was exchanged for new securities of
Jacor, including the Jacor Common Stock which is now outstanding and warrants to
acquire Jacor Common Stock. Accordingly, a four-year comparison of cumulative
stockholder return, as opposed to the required five-year comparison, relating to
Jacor Common Stock, which was first registered under Section 12 of the Exchange
Act in connection with the Restructuring, is provided below.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
JACOR COMMUNICATIONS, NASDAQ TELECOMMUNICATIONS NASDAQ TOTAL RETURN
INC. STOCK INDEX INDEX (US)
<S> <C> <C> <C>
1/11/93 100 100 100
12/31/93 244 154 114
12/31/94 225 128 112
12/31/95 298 168 158
12/31/96 477 173 192
</TABLE>
32
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table is a summary of certain information concerning the
compensation awarded or paid to, or earned by, each person who served as the
Company's Chief Executive Officer during 1996 and each of the Company's other
four most highly compensated executive officers (the "named executives") during
each of the last three fiscal years or such shorter period during which the
named executive served as an executive officer of the Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
----------------------
ANNUAL SECURITIES UNDERLYING
COMPENSATION(1) ----------------------
-------------------- OTHER
SALARY BONUS OPTIONS UNITS(3) COMPENSATION
NAME AND PRINCIPAL POSITION YEAR (2)($) ($) (#) (#) (4)($)
- ----------------------------------------------- --------- --------- --------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Randy Michaels................................. 1996 446,154 750,000 112,000 9,569 2,250
Chief Executive Officer 1995 294,278 117,800 41,000 2,250
1994 269,993 142,000 -- 2,250
Robert L. Lawrence............................. 1996 446,154 650,000 95,000 9,569 2,250
President and Chief 1995 293,817 117,800 41,000 2,250
Operating Officer 1994 264,430 140,000 -- 2,250
R. Christopher Weber........................... 1996 253,440 515,000 69,000 -- 2,250
Senior Vice President 1995 190,979 76,575 25,000 2,250
and Chief Financial Officer 1994 171,892 98,000 -- 2,250
Thomas P. Owens(5)............................. 1996 203,908 157,500 46,000 1,914 2,250
Vice President--Programming
Jon M. Berry................................... 1996 148,731 92,100 17,500 1,435 2,250
Senior Vice President 1995 127,933 33,000 8,500 2,250
and Treasurer 1994 119,584 28,784 -- 2,250
</TABLE>
- ------------------------
(1) Does not include perquisites and other personal benefits, because the
aggregate amount of such compensation in each year for each named executive
did not exceed the lesser of $50,000 or 10% of his total salary and bonus
for that year.
(2) Includes amounts deferred at the election of the recipient under the
Retirement Plan.
(3) The common stock units were granted in November 1996 and are convertible
into Jacor Common Stock at the earlier of the executive officer's
retirement, death, permanent disability or separation from service or upon a
change in control of Jacor.
(4) The amounts shown in this column represent matching Company contributions
under the Retirement Plan.
(5) Mr. Owens first became an executive officer of the Company in September
1996.
33
<PAGE>
OPTION GRANTS TABLE
OPTION GRANTS IN 1996 FISCAL YEAR
The following table sets forth certain information regarding grants by the
Company of stock options to each of the named executives during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
SECURITIES ANNUAL RATES OF STOCK
UNDERLYING % OF TOTAL PRICE APPRECIATION FOR
OPTIONS OPTIONS GRANTED EXERCISE OR OPTION TERM(4)
GRANTED TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME (#) FISCAL YEAR(2) ($/SHARE) DATE 5%($) 10%($)
- -------------------------------- ------------ --------------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Randy Michaels.................. 73,000(3) 21.25 5/12/06 972,000 2,472,512
39,000(3) 23.375 5/12/06 438,164 1,238,056
------------ ---------- ----------
112,000 19.67% 1,413,444 3,710,568
Robert L. Lawrence.............. 62,000(3) 21.25 5/12/06 828,320 2,099,940
33,000(3) 23.375 5/12/06 370,756 1,047,584
------------ ---------- ----------
95,000 16.68% 1,199,076 3,147,524
R. Christopher Weber............ 45,000(3) 21.25 5/12/06 601,200 1,524,152
24,000(3) 23.375 5/12/06 269,640 716,880
------------ ---------- ----------
69,000 12.12% 870,840 2,286,032
Thomas P. Owens................. 30,000(3) 21.25 5/12/06 400,800 1,016,100
16,000(3) 23.375 5/12/06 179,760 507,920
------------ ---------- ----------
46,000 8.08% 580,560 1,524,020
Jon M. Berry.................... 11,252(3) 21.25 5/12/06 150,328 381,104
6,250(3) 23.375 5/12/06 70,208 198,406
------------ ---------- ----------
17,500 3.07% 220,518 579,442
</TABLE>
- ------------------------
(1) All grants were made under the Jacor 1993 Stock Option Plan during 1996. The
grants made at an exercise price of $21.25 were made at 100% of the fair
market value of a share of Jacor Common Stock on the grant date, and the
grants made at an exercise price of $23.375 were made at 110% of the fair
market value of a share of Jacor Common Stock on the grant date.
(2) Total options granted to all executive officers and other employees of the
Company in 1996 were for an aggregate of 569,500 shares of Jacor Common
Stock.
(3) 25% of the options granted vested upon grant, 25% of the options granted
vest on May 13, 1997, 25% of the options granted vest on May 13, 1998, and
the remaining 25% of the options granted vest on May 13, 1999.
(4) Calculated based upon assumed stock prices for Jacor's Common Stock of
$34.61 and $55.12, respectively, if 5% and 10% annual rates of stock
appreciation are achieved over the full term of the options. The potential
realizable gain equals the product of the number of shares underlying the
stock option grant and the difference between the assumed stock price and
the exercise price of each option.
34
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES TABLE
AGGREGATED OPTION EXERCISES IN 1996 FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding the fiscal
year-end values of all unexercised stock options held by the named executive
officers. With the exception of Messrs. Berry and Owens, the named executives
exercised no options in 1996.
<TABLE>
<CAPTION>
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT
12/31/96 12/31/96
-------------- ----------------
SHARES ACQUIRED VALUE EXERCISABLE/
ON REALIZED EXERCISABLE/ UNEXERCISABLE (2)
NAME EXERCISE (#) ($)(1) UNEXERCISABLE (#) ($)
- ----------------------------- ----------------- ------------- -------------- ----------------
<S> <C> <C> <C> <C>
Randy Michaels............... 0 -- 431,000/100,400 8,546,508/650,373
Robert L. Lawrence........... 0 -- 491,000/87,650 9,886,807/581,843
R. Christopher Weber......... 0 -- 232,250/61,750 4,550,228/399,468
Thomas P. Owens.............. 1,000 23,786 30,900/42,500 338,344/282,653
Jon M. Berry................. 1,000 15,776 16,836/16,524 246,283/111,479
</TABLE>
- ------------------------
(1) Value is calculated by determining the difference between the per share
exercise price and the per share fair market value of the stock as of the
exercise date, multiplied by the number of shares acquired upon exercise of
the options.
(2) The values unexercisable options are calculated by determining the
difference between $27.375 per share, the last reported sale price of Jacor
Common Stock on the Nasdaq National Market on December 31, 1996, and the
exercise price of such option as of such date, multiplied by the number of
shares subject to the option.
35
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLAN AWARDS IN 1996 FISCAL YEAR
The following table provides information concerning awards made in 1996 to
the named executive officers under the Company's Executive Stock Unit Plan,
which permits the grant of an aggregate maximum of 25,000 Stock Units to key
employees of the Company. The Plan was approved by the Board of Directors of
Jacor on November 7, 1996.
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE NON-STOCK PRICE BASED PLANS
NUMBER OF OR OTHER (NUMBER OF SHARES) (1)
SHARES, UNITS PERIOD UNTIL -----------------------------------
OR OTHER MATURATION OR THRESHOLD TARGET MAXIMUM
NAME RIGHTS PAYOUT (1) (#) (#) (#)
- ---------------------------------------------------- --------------- ------------------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Randy Michaels...................................... 9,569 (1) 9,569 9,569 9,569
Robert L. Lawrence.................................. 9,569 (1) 9,569 9,569 9,569
Thomas P. Owens..................................... 1,914 (1) 1,914 1,914 1,914
Jon M. Berry........................................ 1,435 (1) 1,435 1,435 1,435
</TABLE>
- ------------------------
(1) Each unit awarded represents the right to receive an amount payable 100% in
Jacor Common Stock on the date of payout. The units are convertible into
Jacor Common Stock at the earlier of the executive officer's retirement,
death, permanent disability or separation from service or upon a change in
control of Jacor.
SUMMARY OF BENEFITS UNDER
THE EMPLOYEE STOCK PURCHASE PLAN
It is not possible to determine the number of shares of Jacor Common Stock
that will in the future be purchased under the Employee Stock Purchase Plan by
any particular individual. The following table sets forth the number of shares
purchased during the 1996 annual offering by, and the number of options
conditionally granted under the Stock Purchase Plan for the January 1, 1997,
offering to the named executives, all executive officers of Jacor as a group and
all employees other than the executive officers as a group. Non-employee
directors are not eligible to participate in the Employee Stock Purchase Plan.
<TABLE>
<CAPTION>
JANUARY 1, 1997 OFFERING
1996 OFFERING
------------------------ ------------------------
NUMBER
NUMBER OF PER SHARE OF
SHARES PURCHASE OPTIONS DOLLAR
NAME AND PRINCIPAL POSITION PURCHASED PRICE ($) GRANTED VALUE ($)(1)
- ------------------------------------------------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Randy Michaels .......................................
Chief Executive Officer 703 14.24 1,073 24,986
Robert L. Lawrence ...................................
President and Chief Operating Officer 1,488 14.24 1,072 24,960
R. Christopher Weber .................................
Senior Vice President and Chief Financial Officer 1,367 14.24 1,073 24,986
Thomas P. Owens ......................................
Vice President--Programming 456 14.24 279 6,500
Jon M. Berry .........................................
Senior Vice President and Treasurer -0- -0- 223 5,200
Executive Officer Group (15 persons).................. 5,281 14.24 7,049 164,174
Non-Executive Officer Employee Group.................. 41,951 14.24 76,385 1,777,241
</TABLE>
- ------------------------
(1) Computed as the difference between $27.375, the last reported sale price on
the option grant date (January 2, 1997), and $23.27, the discounted stock
option price, times the number of options. If the market value of Jacor
Common Stock is greater than $27.375 on the exercise date (December 31,
1997), the value to the Stock Purchase Plan participants will increase
accordingly.
36
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Dammeyer and Handy and Mrs. Rosenberg comprised the Company's entire
Compensation Committee during 1996, and none served as employees of the Company.
No director or executive officer of the Company serves on any board of directors
or compensation committee of any entity which compensates Messrs. Dammeyer or
Handy or Mrs. Rosenberg.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT
ARRANGEMENTS AND CHANGE IN CONTROL PROVISIONS
The Company has no employment agreement with any of the named executives. In
November 1996, certain executive officers of the Company were awarded stock
units, as described under "Executive Compensation--Long-Term Incentive Plan
Awards Table". The stock units are convertible into Jacor Common Stock at the
earlier to occur of the executive officer's retirement, death, permanent
disability or separation of service or upon a change in control of Jacor.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 1, 1994, a subsidiary of Jacor and a corporation
wholly-owned by Randy Michaels, the Chief Executive Officer of Jacor, formed a
limited partnership (the "Partnership") in a transaction whereby the Partnership
now owns all of the stock of CMM, a marketing research and radio consulting
business. Mr. Michaels' corporation owns a 95% limited partnership interest in
the Partnership. Jacor's subsidiary obtained a 5% general partnership interest
in exchange for its contribution of approximately $126,000 cash to the
Partnership. Jacor initiated this transaction primarily to allow Mr. Michaels to
focus his full time and energy on Jacor and its business, and Jacor's subsidiary
is now the sole manager of the Partnership's business. In June 1996, Jacor
financed the purchase by CMM for $540,000 of a 40% interest in a newly formed
limited liability company that purchased the assets of Duncan American Radio,
Inc.
In connection with the formation of the Partnership, Jacor agreed that Mr.
Michaels' corporation has the right between January 1, 1999 and January 1, 2000
to put its limited partnership interest to the Partnership's general partner in
exchange for 300,000 shares of Jacor Common Stock. If the put is not exercised
by January 1, 2000, the general partner has the right to call the limited
partnership interest prior to the year 2001 in exchange for 300,000 shares of
Jacor Common Stock. In addition, if certain events occur prior to January 1,
1999, including, without limitation, Mr. Michaels' termination as Chief
Executive Officer of Jacor, a reduction of Mr. Michaels' annual base salary by
more than 10%, generally any transaction by which any person or group other than
Zell/Chilmark shall become the owner of more than 30% of the outstanding voting
securities of Jacor or Zell/Chilmark fails to have its designees constitute at
least a majority of the members of the Jacor Board of Directors, then Mr.
Michaels' corporation will have the right to either (a) purchase Jacor's general
partnership interest at a price generally equal to the balance of the
partnership capital account, or (b) sell its limited partnership interest to the
general partner in exchange for 300,000 shares of Jacor Common Stock.
In 1994, Jacor entered into a real estate lease for new office space for its
Atlanta operations from an affiliate of Zell/Chilmark. The annual rental rate is
approximately $330,000. Jacor believes that the terms of such lease were
negotiated at arm's length and were competitive with prevailing market rates for
similar space in the Atlanta market. During 1996, Jacor also paid legal fees to
the law firm of Rosenberg & Liebentritt, P.C., of which firm Mrs. Rosenberg,
Vice Chairman and a director of Jacor, is a principal.
Equity Group Investments, Inc., an affiliate of Zell/Chilmark ("Equity
Group"), has provided Jacor with certain investment banking, financial advisory
and other similar services in connection with Jacor's credit facility and
various financings and acquisitions. In consideration for such services, Jacor
paid Equity Group a fee of approximately $3,453,000 in 1996. The services that
have been and will continue to be provided by Equity Group could not otherwise
be obtained by Jacor without the engagement of outside professional advisors.
Jacor believes that such fee is less than what it would have had to pay outside
37
<PAGE>
professional advisors for similar services. Mrs. Rosenberg, Vice Chairman of
Jacor and a director of the Company since 1994, is Chief Executive Officer,
President and a director of Equity Group. Mr. Dammeyer, a director of the
Company since 1993, is the Managing Director of Equity Group.
In connection with Jacor's sale of its investment in warrants convertible
into 7,250,000 Preferred American Depository Receipts of News Corporation in
February 1996 for an aggregate sale price of $44,859,375, Jacor paid $362,500 in
commissions to Amroc Investments, Inc. a private investment firm ("Amroc"). Mr.
Lasry, a director of the Company since 1993, has been Executive Vice President
of Amroc since 1990. The sale of the warrants required the engagement of an
outside investment firm. Jacor believes that the fee paid to Amroc is comparable
with that charged by other investment firms for similar services.
In July 1996, Jacor acquired Noble Broadcast Group, Inc. ("Noble"). Upon the
completion of its acquisition of Noble, Noble's employment agreements with John
T. Lynch and Frank A. DeFrancesco, two executives of Noble, were assigned to
Jacor. Both Mr. Lynch's agreement (the "Lynch Agreement") and Mr. DeFrancesco's
agreement (the "DeFrancesco Agreement"), were for terms ending in September
1999. Under the terms of these Agreements, neither party could terminate the
agreement prior to February 1998, and in the event of termination after such
date, Jacor would be obligated to make a lump sum payment to the employee of the
compensation payable during the full term of the agreement.
The Lynch Agreement and the DeFrancesco Agreement were each amended on
December 20, 1996. Under the amendment to the Lynch Agreement, the agreement was
automatically terminated, and Jacor and Mr. Lynch entered into a Consulting
Agreement, also dated December 20, 1996, pursuant to which Mr. Lynch agreed to
serve as a consultant to Jacor until January 1, 1998, for a total consulting fee
of $853,000, plus travel and out-of-pocket expenses reasonably incurred in
connection with the consulting work, and various items of office furniture.
Jacor also made certain concessions to former stockholders of Noble with regard
to funds that had been reserved for the payment of possible indemnification
claims in connection with the acquisition of Noble. The survival period of
Noble's representations and warranties to Jacor under the definitive agreement
was changed from July 1997 to February 1997, and the escrow funds were released
to former stockholders of Noble in February 1997, as opposed to in July 1997 as
originally contemplated. Jacor also agreed to assign to Mr. Lynch its right,
title and interest in and to a life insurance policy on the life of Mr. Lynch in
the face amount of $3 million having a cash value of approximately $120,000.
Under the amendment to the DeFrancesco Agreement, the agreement was
automatically terminated in consideration for a lump sum gross payment of
$325,050 and COBRA health insurance benefits for up to 12 months, if eligible.
Messrs. Lynch and DeFrancesco each agreed to release and discharge Jacor and its
representatives from any and all liability arising out of their respective
employment with Jacor, and Jacor agreed to release and discharge each of them
from any and all liability arising out of any failure to discharge their
respective duties for the period after July 15, 1996, with respect to Mr. Lynch,
and after July 15, 1995, with respect to Mr. DeFrancesco.
INDEPENDENT PUBLIC ACCOUNTANTS
The independent public accounting firm of Coopers & Lybrand L.L.P. (the
"Auditors") was engaged by Jacor to audit Jacor's consolidated financial
statements for the year ended December 31, 1996. It is anticipated that a
representative of the Auditors will attend the Jacor Annual Meeting for the
purpose of responding to appropriate questions. At the meeting, a representative
of the Auditors will be afforded an opportunity to make a statement if the
Auditors so desire. The Audit Committee recommended that the Auditors be
retained as Jacor's principal accounting firm for 1997, and the Board of
Directors approved the appointment of the Auditors at its meeting on March 24,
1997.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders may submit proposals to be voted on at the 1998 Annual Meeting
of Stockholders. At the time any such proposal is submitted, the proponent must
be a record or beneficial owner of at least 1% or $1,000 in market value of
Jacor's shares entitled to vote on the proposal and must have held such shares
38
<PAGE>
for at least one year and continue to own such shares through the date of the
1998 Annual Meeting. In order for a stockholder proposal to be included in the
Proxy Statement and form of Proxy for the 1998 Annual Meeting, the proposal be
received at Jacor's principal executive offices no later than December 31, 1997,
and must otherwise comply with applicable requirements established by the
Securities and Exchange Commission.
OTHER MATTERS
At the Annual Meeting it is intended that the election of directors and the
various director, executive and employee compensation plans attached hereto as
Annexes 1 through 5, all as set forth in the accompanying Notice and described
in this Proxy Statement, will be presented. The Board of Directors of the
Company is not aware of any other matters which may be presented at the meeting.
If any other matters should be properly presented at the meeting, the persons
named in the enclosed Proxy intend to vote the Proxy according to their best
judgment.
You are urged to complete, sign, date and return your Proxy promptly to make
certain that your shares will be voted at the 1997 Annual Meeting. For your
convenience in returning the Proxy, an addressed envelope is enclosed, requiring
no additional postage if mailed in the United States.
A COPY OF JACOR'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE MAILED
WITHOUT CHARGE TO STOCKHOLDERS UPON REQUEST. REQUESTS SHOULD BE ADDRESSED TO THE
COMPANY AT 50 EAST RIVERCENTER BOULEVARD, 12TH FLOOR, COVINGTON, KENTUCKY 41011,
ATTENTION: INVESTOR SERVICES DEPARTMENT. THE FORM 10-K INCLUDES CERTAIN EXHIBITS
WHICH WILL BE PROVIDED ONLY UPON PAYMENT OF A FEE COVERING THE COMPANY'S
REASONABLE EXPENSES.
By Order of the Board of Directors:
[SIG]
Paul F. Solomon
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Covington, Kentucky
April 30, 1997
39
<PAGE>
ANNEX 1
JACOR COMMUNICATIONS, INC.
1995 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED AS OF JANUARY 1, 1997)
<PAGE>
JACOR COMMUNICATIONS, INC.
AMENDED AND RESTATED 1995 EMPLOYEE STOCK PURCHASE PLAN
1.1 AMENDMENT AND RESTATEMENT. Jacor Communications, Inc., a Delaware
corporation (the "Company") hereby amends and restates the 1995 Employee Stock
Purchase Plan as originally adopted effective January 1, 1995 (the "Plan") in
its entirety, effective as of January 1, 1997.
1.2 PURPOSE OF THE PLAN. The Plan is intended as an incentive and to
encourage stock ownership by all eligible employees of the Company and its
Subsidiaries, so that they may share in the fortunes of the Company by acquiring
or increasing their proprietary interest in the Company. The Plan is designed to
encourage eligible employees to remain in the employ of the Company. It is
intended that options issued pursuant to this Plan shall constitute options
issued pursuant to an "employee stock purchase plan" within the meaning of
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
2. DEFINITIONS.
2.1 "Agent" shall mean the stock transfer agent for the Common Stock.
2.2 "Base Pay" means regular straight time earnings or draw, but excludes
compensation for overtime, commissions, bonuses, amounts paid as reimbursement
of expenses and other additional compensation; provided, however Base Pay for
account executives means sales commissions for the most recent calendar year.
2.3 "Common Stock" means the Company's Common Stock, $.01 par value.
2.4 "Fair Market Value" means the closing price for the Common Stock on a
national stock exchange or, if the stock is not traded on an exchange, the last
sale price for the Common Stock as reported on the NASDAQ National Market.
2.5 "Investment Account" shall mean the separate account for each
participating employee reflecting the number of shares of Common Stock purchased
under the terms of the Plan that have not been withdrawn by the employee.
2.6 "Offering Date" means the commencement date of the offering if such date
is a regular business day or the first business day following such commencement
date. A different date may be set by resolution of the Board of Directors of the
Company (the "Board").
2.7 "Parent" means any corporation, other than the Company, in an unbroken
chain of corporations ending with the Company if each of the corporations other
than the Company owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
2.8 "Payroll Deduction Account" shall mean the funds accumulated with
respect to an individual employee as a result of deductions from his or her
paycheck for the purpose of purchasing stock under this Plan. The funds
allocated to an employee's Payroll Deduction Account shall remain the property
of the respective employee at all times during each offering.
2.9 "Plan Year" means the calendar year.
2.10 "Subsidiary" or "Subsidiaries" means any corporation or corporations
other than the Company in an unbroken chain of corporations beginning with the
Company if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
3. EMPLOYEES ELIGIBLE TO PARTICIPATE. All employees of the Company and its
Subsidiaries as may be designated for such purpose from time to time by the Plan
Administrator shall be eligible to participate in the Plan, provided each of
such employees:
(a) is employed on the applicable Offering Date and has a timely
completed Enrollment Agreement in effect for that offering; and
<PAGE>
(b) does not own, immediately after the right to purchase Shares under
the Plan is granted, stock possessing Five Percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or a
Subsidiary. In determining stock ownership for purposes of the preceding
sentence, the rules of Section 424(d) of the Code shall apply and stock
which the employee may purchase under outstanding options shall be treated
as stock owned by the employee.
4. OFFERINGS.
4.1 The first offering under this Plan shall commence on January 1, 1995 and
terminate on December 31, 1995. Thereafter, offerings shall commence on January
1 and terminate on the following December 31 until the Plan is terminated by the
Board or no additional shares of Common Stock of the Company are available for
purchase under the Plan.
4.2 In addition to the offerings described in Section 4.1 above, beginning
with 1997 Plan Year, persons who become eligible employees between January 1 and
June 30 of any Plan Year shall be entitled to participate in an offering that
commences on July 1 of that Plan Year and that ends on December 31 of that Plan
Year.
5. PRICE. The purchase price per share shall be the LESSER of (1) 85% of
the Fair Market Value of the Common Stock on the Offering Date; or (2) 85% of
the Fair Market Value of the Common Stock on the last business day of the
offering.
6. STOCK SUBJECT TO THE PLAN. The stock subject to the options shall be
shares of the Company's authorized but unissued Common Stock or shares of Common
Stock reacquired by the Company, including shares purchased in the open market.
The aggregate number of shares which may be issued pursuant to the Plan is
increased from 200,000 to 700,000 effective as of when approved by the
stockholders of the Company, subject to increase or decrease by reason of stock
split-ups, reclassifications, stock dividends, changes in par value and the
like.
7. CHANGES IN CAPITAL STRUCTURE.
7.1 In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation, by reason of any reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, combination of shares, or
dividend payable in shares, appropriate adjustment shall be made by the Board in
the number or kind of shares as to which an option granted under this Plan shall
be exercisable, to the end that the participant's proportionate interest shall
be maintained as before the occurrence of such event. Any such adjustment made
by the Board shall be conclusive.
7.2 If the Company is not the surviving or resulting corporation in any
reorganization, merger, consolidation or recapitalization, each outstanding
option shall be assumed by the surviving or resulting corporation and each
option shall continue in full force and effect, and shall apply to the same
number and class of securities of the surviving corporation as a holder of the
number of shares of Common Stock subject to the option would be entitled under
the terms of the reorganization, merger, consolidation or recapitalization.
8. PARTICIPATION. An eligible employee may become a participant by
completing, signing and filing an enrollment agreement ("Enrollment Agreement")
and any other necessary papers with the Company at least ten days prior to the
commencement of the initial offering in which he or she wishes to participate.
Effective beginning with any Enrollment Agreement for the 1997 Plan Year, any
timely filed Enrollment Agreement shall be effective for all subsequent
offerings unless earlier terminated by the employee as provided in Section 14.
Except to the extent provided in the foregoing sentence, participation in one
offering under the Plan shall neither limit, or require, participation in any
other offering.
2
<PAGE>
9. PAYROLL DEDUCTIONS.
9.1 At the time a participant files his or her Enrollment Agreement, he or
she shall elect to have deductions made from his or her pay at such regular
intervals as may be determined by the Committee during the time he or she is a
participant in an offering at not less than $10 or more than 10% of his or her
Base Pay during the offering period.
9.2 All payroll deductions made for a participant shall be credited to his
or her Payroll Deduction Account under the Plan. A participant may not make any
separate cash payment into such Payroll Deduction Account nor may payment for
shares be made other than by payroll deduction.
9.3 A participant may discontinue his or her payroll deductions or
participation in the Plan as provided in Section 14, but no other change can be
made during an offering and, specifically, except as provided in Section 14, a
participant may not alter the rate of his or her payroll deductions for that
offering.
10. GRANTING OF OPTION.
10.1 On the Offering Date, this Plan shall be deemed to have granted to the
participant an option for as many full shares as he or she will be able to
purchase with the payroll deductions credited to his or her Payroll Deduction
Account during his or her participation in that offering; provided that the
maximum number of shares that a participant may purchase under an offering shall
be the participants Base Pay on the Offering Date divided by the Fair Market
Value of the Common Stock on that Offering Date.
10.2 Notwithstanding the foregoing, no employee shall be granted an option
which permits his or her rights to purchase Common Stock under the Plan and any
similar employee stock purchase plans of the Company and, if applicable, a
Subsidiary and, if applicable, a Parent to accrue at a rate which exceeds
$25,000 of Fair Market Value of such stock (determined at the time such option
is granted) for each calendar year which such option is outstanding at any time.
The purposes of the limitation in the preceding sentence is to comply with
Section 423(b)(8) of the Code.
10.3 If the total number of shares for which options are to be granted on
any date in accordance with Paragraph 10.1 exceeds the number of shares then
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Company shall make a PRO RATA
allocation of the shares remaining available in as nearly a uniform manner as
shall be practical and as it shall determine to be equitable.
11. EXERCISE OF OPTION. Each employee who continues to be a participant in
an offering on the last business day of that offering shall be deemed to have
exercised his or her option on such date and shall be deemed to have purchased
from the Company such number of full shares of Common Stock (subject to the
limitations under Section 10) reserved for the purpose of the Plan as his or her
accumulated payroll deductions on such date will pay for at the purchase price.
All such shares purchased shall be credited to the participants Investment
Account. The Agent shall hold in its name or in the name of its nominee all
certificates for shares purchased until shares are withdrawn by the Participant
under Section 13.
12. EMPLOYEE'S RIGHTS AS A STOCKHOLDER.
12.1 No participating employee shall have any right as a stockholder with
respect to any shares under the Plan until the shares have been purchased in
accordance with Section 11 above and the stock certificate has actually been
issued.
12.2 All cash dividends paid with respect to shares of Common Stock in a
participant's Investment Account shall, unless otherwise directed by the
Committee, be used to purchase additional shares of Common Stock on the next
date shares are purchased pursuant to Section 11, subject to the limitations in
Section 10. Such shares shall be added to the participant's Investment Account.
3
<PAGE>
12.3 Each participant shall be entitled to direct the Agent as to the voting
of any shares of Common Stock held in the participant's Investment Account.
13. WITHDRAWAL FROM INVESTMENT ACCOUNT.
13.1 A participant shall have the right to withdraw a certificate for all or
a portion of the Common Stock credited to his or her Investment Account by
giving notice to the Company; provided such requests may not be made more
frequently than once per calendar quarter.
13.2 Each certificate withdrawn by a participant may be registered only in
the name of the participant, or if the participant so directs, in the names of
the participant and one other person, as joint tenants with right of
survivorship, tenants in common, or as community property, to the extent and in
the manner permitted by applicable law.
14. WITHDRAWAL FROM PAYROLL DEDUCTION ACCOUNT.
14.1 An employee may withdraw from the Plan, in whole but not in part, at
any time prior to the last business day of each offering by delivering a
withdrawal notice ("Withdrawal Notice") to the Company, in which event the
Company will refund the entire balance of his or her Payroll Deduction Account
as soon as practicable thereafter.
14.2 To re-enter the Plan, an employee who has previously withdrawn must
file a new Enrollment Agreement in accordance with Section 8. His or her
re-entry into the Plan cannot, however, become effective before the beginning of
the next offering following his or her withdrawal.
14.3 An employee may elect to discontinue his or her payroll deductions
during the course of a particular offering, at any time prior to the last
business day preceding the final pay day during such offering by delivering an
election to discontinue deductions to the Company, and such election shall not
constitute a withdrawal for the purposes of this Section 14. In the event that
an employee elects to discontinue his or her payroll deductions pursuant to this
Paragraph 14.3, the employee shall remain a participant in such offering and
shall be entitled to purchase from the Company such number of full shares of
Common Stock as set forth in and in accordance with Section 11 of the Plan.
15. CARRYOVER OF PAYROLL DEDUCTION ACCOUNT. The Company shall carryover the
balance of a participant's Payroll Deduction Account to the next offering unless
the participant does not participate in the next offering, in which event the
balance of the participant's Payroll Deduction Account shall be refunded to the
participant. Upon termination of the Plan, the balance of each participant's
Payroll Deduction Account shall be returned to the participant.
16. INTEREST. No interest will be paid or allowed on any money in the
Payroll Deduction Accounts of participating employees.
17. RIGHTS NOT TRANSFERABLE. No participant shall be permitted to sell,
assign, transfer, pledge, or otherwise dispose of or encumber either the payroll
deductions credited to his or her Payroll Deduction Account, Common Stock
credited to his or her Investment Account, or any rights with regard to the
exercise of an option or to receive shares under the Plan other than by will or
the laws of descent and distribution, and such right and interest shall not be
liable for, or subject to, the debts, contracts, or liabilities of the employee.
If any such action is taken by the participant, or any claim is asserted by any
other party in respect of such right and interest whether by garnishment, levy,
attachment or otherwise, such action or claim will be treated as an election to
withdraw in accordance with Sections 13 or 14, whichever is applicable.
18. TERMINATION OF EMPLOYEE'S RIGHTS. An employee's rights under the Plan
will terminate when he or she ceases to be an employee because of resignation,
layoff, or discharge. A Withdrawal Notice will be considered as having been
received from the employee on the day his or her employment ceases, and all
payroll deductions not used will be refunded.
4
<PAGE>
If an employee's employment shall be terminated by reason of retirement,
death, or disability prior to the end of the current offering, he or she (or his
or her designated beneficiary, in the event of his or her death, or if none, his
or her legal representative) shall have the right, within 90 days thereafter, to
elect to have the balance of his or her Payroll Deduction Account either paid to
him or her in cash or applied at the end of the current offering toward the
purchase of Common Stock.
19. ADMINISTRATION OF THE PLAN. The Plan Administrator shall be a committee
consisting of not less than two directors who shall be appointed from time to
time by, and shall serve at the discretion of the Board (the "Committee"). To
the extent required to comply with Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, each member of the Committee shall qualify as a
"non-employee director" as defined in Rule 16b-3 or any successor definition
adopted by the Securities and Exchange Commission.
Subject to the provisions of this Plan, and with a view to effecting its
purpose, the Plan Administrator shall have sole authority, in its absolute
discretion, to (a) designate from time to time the Subsidiaries whose employees
will be eligible to participate in the Plan; (b) construe and interpret this
Plan; (c) define the terms used in this Plan; (d) prescribe, amend and rescind
rules and regulations relating to this Plan; (e) correct any defect, supply any
omission or reconcile any inconsistency in this Plan; (f) determine all other
terms and conditions of options; and (g) make all other determinations necessary
or advisable for the administration of this Plan. All decisions, determinations
and interpretations made by the Plan Administrator shall be binding and
conclusive on all participants in this Plan and on their legal representatives,
heirs and beneficiaries. The Committee may, in its sole discretion, delegate to
an officer or officers of the Company the administration of the Plan under this
Section; provided, however, that no such delegation by the Committee shall be
made with respect to the administration of the Plan as it affects officers of
the Company or its Subsidiaries and provided further that the Committee may not
delegate its authority to correct errors, omissions or inconsistencies in the
Plan.
20. TERMINATION AND AMENDMENTS TO PLAN. The Plan may be terminated at any
time by the Board. The Plan will terminate in any case on the date on which all
or substantially all of the unissued shares of Common Stock reserved for the
purpose of the Plan have been purchased. Upon termination of the Plan, all
payroll deductions not used to purchase Common Stock will be refunded.
The Board also reserves the right to amend the Plan from time to time in any
respects, provided, however, that no amendment shall be effective without prior
approval of the stockholders (a) which would, except as provided in Section 6
and 7, increase the aggregate number of shares of Common Stock to be issued
under the Plan, (b) which would, except as provided in Section 3, change the
class of employees eligible to receive options under the Plan or (c) if such
amendment requires stockholder approval for any other reason in order for the
Plan to be eligible or continue to qualify for the benefits conferred by
Securities and Exchange Commission Rule 16b-3, as amended from time to time, or
any successor rule or regulatory requirements.
21. EFFECTIVE DATE. The original effective date of the Plan was January 1,
1995. The effective date of this amendment and restatement is January 1, 1997.
5
<PAGE>
ANNEX 2
JACOR COMMUNICATIONS, INC.
1997 LONG-TERM INCENTIVE STOCK PLAN
EFFECTIVE APRIL 28, 1997
<PAGE>
JACOR COMMUNICATIONS, INC.
1997 LONG-TERM INCENTIVE STOCK PLAN
EFFECTIVE JUNE 1, 1997
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. On April 28, 1997, the Board of Directors
of Jacor Communications, Inc. (the "Company") adopted, subject to the approval
of stockholders, an incentive stock compensation plan known as the "1997
Long-Term Incentive Stock Plan" (hereinafter referred to as the "Plan"), which
permits the grant of Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Units, Performance Shares and
Stock Units. The Plan is designed to comply with the performance-based
compensation exemption under the proposed regulations to Internal Revenue Code
Section 162(m) issued by the Department of Treasury.
1.2. PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
success of the Company and its Subsidiaries by providing incentives to Key
Employees that will link their personal interests to the long-term financial
success of the Company and its Subsidiaries and to growth in stockholder value.
The Plan is designed to provide flexibility to the Company and its Subsidiaries
in their ability to motivate, attract, and retain the services of Key Employees
upon whose judgment, interest, and special effort the successful conduct of
their operations is largely dependent.
1.3. DURATION OF THE PLAN. The Plan commences on April 28, 1997, and shall
remain in effect, subject to the right of the Board of Directors to terminate
the Plan at any time pursuant to Article 13 herein, until all Shares subject to
it shall have been purchased or acquired according to the provisions herein.
However, in no event may an Award be granted under the Plan on or after April
28, 2002, which is the fifth (5th) anniversary of the effective date of the
Plan.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under this Plan of
Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Units, Performance Shares or Stock
Units.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Exchange Act.
(c) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(d) "Cause" shall mean the occurrence of any one of the following:
(i) The willful and continued failure by a Participant to substantially
perform his/her duties (other than any such failure resulting from
the Participant's disability), after a written demand for substantial
performance is delivered to the Participant that specifically
identifies the manner in which the Company or any of its
Subsidiaries, as the case may be, believes that the Participant has
not substantially performed his/her duties, and the Participant has
failed to remedy the situation within ten (10) business days of
receiving such notice; or
(ii) the Participant's conviction for committing a felony in connection
with the employment relationship; or
(iii) the willful engaging by the Participant in gross misconduct
materially and demonstrably injurious to the Company or any of its
Subsidiaries. However, no act, or failure to act, on the
Participant's part shall be considered "willful" unless done, or
omitted to be done, by the Participant not in good faith and without
reasonable belief that his/her action or omission was in the best
interest of the Company or any of its Subsidiaries.
<PAGE>
(e) "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) any Person (other than Zell/Chilmark Fund L.P., a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any of its Subsidiaries, or a corporation owned directly
or indirectly by the common stockholders of the Company in
substantially the same proportions as their ownership of Stock of the
Company), is or becomes the Beneficial Owner, directly or indirectly,
of securities of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning
of such period constitute the Board and any new director, whose
election by the Board or nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the stockholders of the Company approve (A) a plan of complete
liquidation of the Company; or (B) an agreement for the sale or
disposition of all or substantially all the Company's assets; or (C)
a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), at least
50% of the combined voting power of the voting securities of the
Company (or such surviving entity) outstanding immediately after such
merger or consolidation.
However, in no event shall a Change in Control be deemed to have
occurred, with respect to a Participant, if the Participant is part
of a purchasing group which consummates the Change in Control
transaction. The Participant shall be deemed "part of a purchasing
group..." for purposes of the preceding sentence if the Participant
is an equity participant or has agreed to become an equity
participant in the purchasing company or group (except for (i)
passive ownership of less than 5% of the voting securities of the
purchasing company or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not deemed to be
significant, as determined prior to the Change in Control by a
majority of the nonemployee continuing members of the Board).
(f) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(g) "Committee" means the committee appointed by the Board to administer the
Plan pursuant to Article 3 herein.
(h) "Company" means Jacor Communications, Inc., a Delaware corporation, or
any successor thereto as provided in Article 15 herein.
(i) "Covered Employee" means any Participant designated prior to the grant
of Restricted Stock, Performance Units or Performance Shares by the
Committee who is or may be a "covered employee" within the meaning of
Section 162(m)(3) of the Code in the year in which such Restricted Stock,
Performance Units or Performance Shares are taxable to such Participant.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(k) "Fair Market Value" means the average of the highest price and lowest
price at which the Stock was traded on the relevant date, or on the most
recent date on which the Stock was traded prior to such date, as reported
on Nasdaq National Market.
2
<PAGE>
(l) "Incentive Stock Option" or "ISO" means an option to purchase Stock,
granted under Article 6 herein, which is designated as an incentive stock
option and is intended to meet the requirements of Section 422 of the
Code.
(m) "Key Employee" means an employee of the Company or any of its
Subsidiaries, including an employee who is an officer or a director of
the Company or any of its Subsidiaries, who, in the opinion of the
Committee, can contribute significantly to the growth and profitability
of the Company and its Subsidiaries.
"Key Employee" also may include any other employee, identified by the
Committee, in special situations involving extraordinary performance,
promotion, retention, or recruitment. The granting of an Award under this
Plan shall be deemed a determination by the Committee that such employee
is a Key Employee, but shall not create a right to remain a Key Employee.
(n) "Nonqualified Stock Option" or "NQSO" means an option to purchase Stock,
granted under Article 6 herein, which is not intended to be an Incentive
Stock Option.
(o) "Option" means an Incentive Stock Option or a Nonqualified Stock Option.
(p) "Outside Director" means any director who qualifies as an "outside
director" as that term is defined in Code Section 162(m) and the
regulations issued thereunder.
(q) "Participant" means a Key Employee who has been granted an Award under
the Plan.
(r) "Performance Share" means an Award, designated as a performance share,
granted to a Participant pursuant to Article 9 herein.
(s) "Performance Unit" means an Award, designated as a performance unit,
granted to a Participant pursuant to Article 9 herein.
(t) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, during which the Participant is
subject to a substantial risk of forfeiture, pursuant to Article 8
herein.
(u) "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
(v) "Plan" means this Long-Term Incentive Stock Plan of Jacor
Communications, Inc., as herein described and as hereafter from time to
time amended.
(w) "Restricted Stock" means an Award of Stock granted to a Participant
pursuant to Article 8 herein.
(x) "Subsidiary" shall mean any corporation of which more than 50% (by
number of votes) of the Voting Stock at the time outstanding is owned,
directly or indirectly, by the Company.
(y) "Stock" or "Shares" means the common stock without par value of the
Company.
(z) "Stock Unit" means a derivative interest in Common Stock of the Company
which may be converted on the date of grant into cash, or which may be
credited to a bookkeeping account and then paid out on a one-for-one
basis into Common Stock of the Company upon the occurrence of certain
Trigger Events (as defined herein).
(aa) "Stock Appreciation Right" or "SAR" means an Award, designated as a
Stock appreciation right, granted to a Participant pursuant to Article 7
herein.
(bb) "Voting Stock" shall mean securities of any class or classes of stock
of a corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors.
3
<PAGE>
2.2. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
2.3. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1. THE COMMITTEE. The Plan shall be administered by a committee (the
"Committee") consisting of not less than two directors who shall be appointed
from time to time by, and shall serve at the discretion of, the Board of
Directors. To the extent required to comply with Rule 16b-3 under the Exchange
Act, each member of the Committee shall qualify as a "non-employee director" as
defined in Rule 16b-3 or any successor definition adopted by the Securities and
Exchange Commission. To the extent required to comply with Code Section 162(m),
each member of the Committee also shall be an Outside Director.
3.2. AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
the Committee shall have full power to construe and interpret the Plan; to
establish, amend or waive rules and regulations for its administration; to
accelerate the exercisability of any Award or the end of a performance period or
the termination of any Period of Restriction or any award agreement, or any
other instrument relating to an Award under the Plan; and (subject to the
provisions of Article 13 herein) to amend the terms and conditions of any
outstanding Option, Stock Appreciation Right or other Award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the Plan. Notwithstanding the foregoing, the Committee shall have no authority
to adjust upwards the amount payable to a Covered Employee with respect to a
particular Award, to take any of the foregoing actions or to take any other
action to the extent that such action or the Committee's ability to take such
action would cause any Award under the Plan to any Covered Employee to fail to
qualify as "performance-based compensation" within the meaning of Code Section
162(m)(4) and the regulations issued thereunder. Also notwithstanding the
foregoing, no action of the Committee (other than pursuant to Section 4.3 hereof
or Section 9.4 hereof) may, without the consent of the person or persons
entitled to exercise any outstanding Option or Stock Appreciation Right or to
receive payment of any other outstanding Award, adversely affect the rights of
such person or persons.
3.3. SELECTION OF PARTICIPANTS. The Committee shall have the authority to
grant Awards under the Plan, from time to time, to such Key Employees (including
officers and directors who are employees) as may be selected by it. The
Committee shall select Participants from among those who they have identified as
being Key Employees.
3.4. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board of Directors shall be final, conclusive and binding on
all persons, including the Company and its Subsidiaries, its stockholders,
employees, and Participants and their estates and beneficiaries, and such
determinations and decisions shall not be reviewable.
3.5. DELEGATION OF CERTAIN RESPONSIBILITIES. The Committee may, in its
sole discretion, delegate to an officer or officers of the Company the
administration of the Plan under this Article 3; provided, however, that no such
delegation by the Committee shall be made with respect to the administration of
the Plan as it affects officers of the Company or its Subsidiaries and provided
further that the Committee may not delegate its authority to correct errors,
omissions or inconsistencies in the Plan. The Committee may delegate to the
Chief Executive Officer of the Company its authority under this Article 3 to
grant Awards to Key Employees who are not Covered Employees or who are not
officers of the Company or its Subsidiaries subject to the reporting
requirements of Section 16(a) of the Exchange Act. All authority delegated by
the Committee under this Section 3.5 shall be exercised in accordance with the
provisions of
4
<PAGE>
the Plan and any guidelines for the exercise of such authority that may from
time to time be established by the Committee.
3.6. PROCEDURES OF THE COMMITTEE. All determinations of the Committee
shall be made by not less than a majority of its members present at the meeting
(in person or otherwise) at which a quorum is present. A majority of the entire
Committee shall constitute a quorum for the transaction of business. Any action
required or permitted to be taken at a meeting of the Committee may be taken
without a meeting if a unanimous written consent, which sets forth the action,
is signed by each member of the Committee and filed with the minutes for
proceedings of the Committee. Service on the Committee shall constitute service
as a director of the Company so that members of the Committee shall be entitled
to indemnification, limitation of liability and reimbursement of expenses with
respect to their services as members of the Committee to the same extent that
they are entitled under the Company's Certificate of Incorporation and Delaware
law for their services as directors of the Company.
3.7. AWARD AGREEMENTS. Each Award under the Plan shall be evidenced by an
award agreement which shall be signed by an authorized officer of the Company
and by the Participant, and shall contain such terms and conditions as may be
approved by the Committee. Such terms and conditions need not be the same in all
cases.
3.8. RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Board or the Committee may impose such conditions on any Award
(including, without limitation, the right of the Board or the Committee to limit
the time of exercise to specified periods) as may be required to satisfy the
requirements of Rule 16b-3 (or any successor rule), under the Exchange Act
("Rule 16b-3").
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the aggregate number of Shares that may be delivered under the Plan at
any time shall not exceed one million eight hundred thousand (1,800,000) Shares
of common stock of the Company. No more than one-half of such aggregate number
of such Shares shall be issued as Restricted Stock under Article 8 of the Plan
and no more than five hundred thousand (500,000) shares shall be issued upon
exercise of Incentive Stock Options under Article 6 of the Plan. Stock delivered
under the Plan may consist, in whole or in part, of authorized and unissued
Shares or Shares reacquired by the Company in the open market. The exercise of a
Stock Appreciation Right, whether paid in cash or Stock, shall be deemed to be
an issuance of Stock under the Plan. The payment of Performance Shares,
Performance Units or Stock Units shall not be deemed to constitute an issuance
of Stock under the Plan unless payment is made in Stock, in which case only the
number of Shares issued in payment of the Performance Share, Performance Unit or
Stock Unit Award shall constitute an issuance of Stock under the Plan.
4.2. LAPSED AWARDS. If any Award (other than Restricted Stock) granted
under this Plan terminates, expires, or lapses for any reason, any Stock subject
to such Award again shall be available for the grant of an Award under the Plan,
subject to Section 7.2 herein.
4.3. ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, Stock
dividend, split-up, share combination, or other change in the corporate
structure of the Company affecting the Stock, such adjustment shall be made in
the number and class of shares which may be delivered under the Plan, and in the
number and class of and/or price of shares subject to outstanding Options, Stock
Appreciation Rights, Restricted Stock Awards, Performance Shares, Performance
Units and Stock Units granted under the Plan, as may be determined to be
appropriate and equitable by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights; and provided that the number of shares
subject to any Award shall always be a whole number. Any adjustment of an
Incentive Stock Option under this paragraph shall be made in such a manner so as
not to constitute a modification within the meaning of Section 425(h)(3) of the
Code.
5
<PAGE>
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1. ELIGIBILITY. Persons eligible to participate in this Plan include all
employees of the Company and its Subsidiaries who, in the opinion of the
Committee, are Key Employees. "Key Employees" may include employees who are
members of the Board, but may not include directors who are not employees.
5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may from time to time select those Key Employees to whom Awards shall
be granted and determine the nature and amount of each Award. No employee shall
have any right to be granted an Award under this Plan even if previously granted
an Award.
ARTICLE 6. STOCK OPTIONS
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Key Employees at any time and from time to time as
shall be determined by the Committee. The maximum number of Shares subject to
Options granted to any individual Participant in any calendar year shall be one
hundred thousand (100,000) Shares. The Committee shall have the sole discretion,
subject to the requirements of the Plan, to determine the actual number of
Shares subject to Options granted to any Participant. The Committee may grant
any type of Option to purchase Stock that is permitted by law at the time of
grant including, but not limited to, ISOs and NQSOs. Unless otherwise expressly
provided at the time of grant, Options granted under the Plan will be NQSOs.
6.2. LIMITATION ON EXERCISABILITY. The aggregate Fair Market Value
(determined as of the date of grant) of the Shares issuable pursuant to an ISO
under this Plan and under any other plan of the Company, any parent corporation
or any Subsidiary of the Company, which are exercisable for the first time by
any employee during any calendar year, shall not exceed $100,000. Options for
Shares which are exercisable for the first time by any employee during any
calendar year in excess of $100,000 shall be treated as NQSOs, in accordance
with Section 422(d)(i) of the Code.
6.3. OPTION AGREEMENT. Each Option grant shall be evidenced by an Option
agreement that shall specify the type of Option granted, the Option price, the
duration of the Option, the number of Shares to which the Option pertains, and
such other provisions as the Committee shall determine. The Option agreement
shall specify whether the Option is intended to be an Incentive Stock Option
within the meaning of Section 422 of the Code, or a Nonqualified Stock Option
whose grant is not intended to be subject to the provisions of Code Section 422.
6.4. OPTION PRICE. The purchase price per share of Stock covered by an
Option shall be determined by the Committee but, in the case of grants to
executive officers, shall not be less than 100% of the Fair Market Value of such
Stock on the date the option is granted. Notwithstanding the above, all ISOs
must be granted at Fair Market Value, whether granted to executive officers or
otherwise.
An Incentive Stock Option granted to an Employee who, at the time of grant,
owns (within the meaning of Section 425(d) of the Code) Stock possessing more
than 10% of the total combined voting power of all classes of Stock of the
Company, shall have an exercise price which is at least 110% of the Fair Market
Value of the Stock subject to the Option.
6.5. DURATION OF OPTIONS. Each Option shall expire at such time as the
Committee shall determine at the time of grant provided, however, that no ISO
shall be exercisable later than the tenth (10th) anniversary date of its grant,
and no ISO granted to any individual who owns more than 10% of the total
combined voting power of all classes of Stock of the Company shall be
exercisable later than the fifth (5th) anniversary date of its grant.
6.6. EXERCISE OF OPTIONS. Subject to Section 3.8 herein, Options granted
under the Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Committee shall in each instance approve,
which need not be the same for all Participants.
6
<PAGE>
6.7. PAYMENT. Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the Shares. The
Option price upon exercise of any Option shall be payable to the Company in full
either (a) in cash or its equivalent, (b) by tendering shares of previously
acquired Stock having a Fair Market Value at the time of exercise equal to the
total Option price, (c) by foregoing compensation under rules established by the
Committee, or (d) by a combination of (a), (b), or (c). The proceeds from such a
payment shall be added to the general funds of the Company and shall be used for
general corporate purposes. As soon as practicable, after receipt of written
notification and payment, the Company shall deliver to the Participant Stock
certificates in an appropriate amount based upon the number of Options
exercised, issued in the Participant's name.
6.8. RESTRICTIONS ON STOCK TRANSFERABILITY. The Committee shall impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities law, under the requirements of
any stock exchange upon which such Shares are then listed and under any blue sky
or state securities laws applicable to such Shares.
6.9. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. In
the event the employment of a Participant is terminated by reason of death, any
of such Participant's outstanding Options shall become immediately exercisable
at any time prior to the expiration date of the Options or within one year after
such date of termination of employment, whichever period is shorter, by such
person or persons as shall have acquired the Participant's rights under the
Option pursuant to Article 10 hereof or by will or by the laws of descent and
distribution. In the event the employment of a Participant is terminated by
reason of disability (as defined under the then established rules of the Company
or any of its Subsidiaries, as the case may be), any of such Participant's
outstanding Options shall become immediately exercisable, at any time prior to
the expiration date of the Options or within one year after such date of
termination of employment, whichever period is shorter. In the event the
employment of a Participant is terminated by reason of retirement, any of such
Participant's outstanding Options shall become immediately exercisable (subject
to Section 3.8 herein) at any time prior to the expiration date of the Options.
In the case of Incentive Stock Options, the favorable tax treatment prescribed
under Section 422 of the Internal Revenue Code of l986, as amended, may not be
available if the Options are not exercised within the Code Section 422
prescribed time period after termination of employment for death, disability, or
retirement.
6.10. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. If the employment of a
Participant shall terminate for any reason other than death, disability,
retirement or for Cause, the Participant shall have the right to exercise such
Participant's outstanding Options within the 90 days after the date of his
termination, but in no event beyond the expiration of the term of the Options
and only to the extent that the Participant was entitled to exercise the Options
at the date of his termination of employment. In its sole discretion, the
Committee may extend the 90 days to up to one year but, however, in no event
beyond the expiration date of the Option.
If the employment of the Participant shall terminate for Cause, all of the
Participant's outstanding Options shall be immediately forfeited back to the
Company.
6.11. NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
7
<PAGE>
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the terms and
conditions of the Plan, Stock Appreciation Rights may be granted to
Participants, at the discretion of the Committee, in any of the following forms:
(a) In lieu of Options;
(b) In addition to Options;
(c) Independent of Options; or
(d) In any combination of (a), (b), or (c).
The maximum number of Shares subject to SARs granted to any individual
Participant in any calendar year shall be one hundred thousand (100,000) Shares.
Subject to the immediately preceding sentence, the Committee shall have the sole
discretion, subject to the requirements of the Plan, to determine the actual
number of Shares subject to SARs granted to any Participant.
7.2. EXERCISE OF SARS IN LIEU OF OPTIONS. SARs granted in lieu of Options
may be exercised for all or part of the Shares subject to the related Option
upon the surrender of the related Options representing the right to purchase an
equivalent number of Shares. The SAR may be exercised only with respect to the
Shares of Stock for which its related Option is then exercisable. Option Stock
with respect to which the SAR shall have been exercised may not be subject again
to an Award under the Plan.
Notwithstanding any other provision of the Plan to the contrary, with
respect to an SAR granted in lieu of an Incentive Stock Option, (i) the SAR will
expire no later than the expiration of the underlying Incentive Stock Option;
(ii) the SAR amount may be for no more than one hundred percent (100%) of the
difference between the exercise price of the underlying Incentive Stock Option
and the Fair Market Value of the Stock subject to the underlying Incentive Stock
Option at the time the SAR is exercised; and (iii) the SAR may be exercised only
when the Fair Market Value of the Stock subject to the Incentive Stock Option
exceeds the exercise price of the Incentive Stock Option.
7.3. EXERCISE OF SARS IN ADDITION TO OPTIONS. SARs granted in addition to
Options shall be deemed to be exercised upon the exercise of the related
Options. The deemed exercise of SARs granted in addition to Options shall not
necessitate a reduction in the number of related Options.
7.4. EXERCISE OF SARS INDEPENDENT OF OPTIONS. Subject to Section 3.8
herein and Section 7.5 herein, SARs granted independently of Options may be
exercised upon whatever terms and conditions the Committee, in its sole
discretion, imposes upon the SARs, including, but not limited to, a
corresponding proportional reduction in previously granted Options.
7.5. PAYMENT OF SAR AMOUNT. Upon exercise of the SAR, the holder shall be
entitled to receive payment of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on the date of
exercise over the price fixed by the Committee at the date of grant
(which price shall not be less than 100% of the market price of a Share
on the date of grant) (the Exercise Price); by
(b) The number of Shares with respect to which the SAR is exercised.
7.6. FORM AND TIMING OF PAYMENT. Payment to a Participant, upon SAR
exercise, will be made in cash or Stock, at the discretion of the Committee,
within ten calendar days of the exercise.
7.7. TERM OF SAR. The term of an SAR granted under the Plan shall not
exceed ten years.
7.8. TERMINATION OF EMPLOYMENT. In the event the employment of a
Participant is terminated by reason of death, disability, retirement, or any
other reason, the exercisability of any outstanding SAR granted in lieu of or in
addition to an Option shall terminate in the same manner as its related Option
as
8
<PAGE>
specified under Sections 6.8 and 6.9 herein. The exercisability of any
outstanding SARs granted independent of Options also shall terminate in the
manner provided under Sections 6.8 and 6.9 hereof.
7.9. NONTRANSFERABILITY OF SARS. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
ARTICLE 8. RESTRICTED STOCK
8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine. In the case of Covered Employees, the Committee may condition
the vesting or lapse of the Period of Restriction established pursuant to
Section 8.3 upon the attainment of one or more of the performance goals utilized
for purposes of Performance Units and Performance Shares pursuant to Article 9
hereof.
8.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or periods, the number of Shares of Restricted Stock granted, and
such other provisions as the Committee shall determine.
8.3. TRANSFERABILITY. Except as provided in this Article 8 or in Section
3.8 herein, the Shares of Restricted Stock granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
termination of the applicable Period of Restriction or for such period of time
as shall be established by the Committee and as shall be specified in the
Restricted Stock Agreement, or upon earlier satisfaction of other conditions
(including any performance goals) as specified by the Committee in its sole
discretion and set forth in the Restricted Stock Agreement. All rights with
respect to the Restricted Stock granted to a Participant under the Plan shall be
exercisable during his lifetime only by such Participant.
8.4. OTHER RESTRICTIONS. The Committee shall impose such other
restrictions on any Shares of Restricted Stock granted pursuant to the Plan as
it may deem advisable including, without limitation, restrictions under
applicable Federal or state securities laws, and the Committee may legend
certificates representing Restricted Stock to give appropriate notice of such
restrictions.
8.5. CERTIFICATE LEGEND. In addition to any legends placed on certificates
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the Long-Term
Incentive Stock Plan of Jacor Communications, Inc., in the rules and
administrative procedures adopted pursuant to such Plan, and in a Restricted
Stock Agreement dated . A copy of the Plan, such rules and procedures,
and such Restricted Stock Agreement may be obtained from the Secretary of
Jacor Communications, Inc."
8.6. REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Article, Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 8.5 removed from his Stock certificate.
8.7. VOTING RIGHTS. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
9
<PAGE>
8.8. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions on
transferability as the Shares of Restricted Stock with respect to which they
were paid.
8.9. TERMINATION OF EMPLOYMENT DUE TO RETIREMENT. In the event that a
Participant terminates his employment with the Company or any of its
Subsidiaries because of normal retirement (as defined under the then established
rules of the Company or any of its Subsidiaries, as the case may be), any
remaining Period of Restriction applicable to the Restricted Stock pursuant to
Section 8.3 hereof shall automatically terminate and, except as otherwise
provided in Section 8.4 or Section 3.8 hereof, the Shares of Restricted Stock
shall thereby be free of restrictions and be freely transferable. In the event
that a Participant terminates his employment with the Company or any of its
Subsidiaries because of early retirement (as defined under the then established
rules of the Company or any of its Subsidiaries, as the case may be), the
Committee in its sole discretion (subject to Section 3.8 herein) may waive the
restrictions remaining on any or all Shares of Restricted Stock pursuant to
Section 8.3 herein and add such new restrictions to those Shares of Restricted
Stock as it deems appropriate.
8.10. TERMINATION OF EMPLOYMENT DUE TO DEATH OR DISABILITY. In the event a
Participant's employment is terminated because of death or disability (as
defined under the then established rules of the Company or any of its
Subsidiaries, as the case may be) during the Period of Restriction, any
remaining Period of Restriction applicable to the Restricted Stock pursuant to
Section 8.3 herein shall automatically terminate and, except as otherwise
provided in Section 8.4. herein, the shares of Restricted Stock shall thereby be
free of restrictions and be fully transferable.
8.11. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant terminates his employment with the Company or any of its
Subsidiaries for any reason other than for death, disability, or retirement, as
set forth in Sections 8.9 and 8.10 herein, during the Period of Restriction,
then any shares of Restricted Stock still subject to restrictions as of the date
of such termination shall automatically be forfeited and returned to the
Company; provided, however, that in the event of an involuntary termination of
the employment of a Participant by the Company or any of its Subsidiaries other
than for Cause, the Committee, in its sole discretion (subject to Section 3.8
herein), may waive the automatic forfeiture of any or all such Shares and may
add such new restrictions to such Shares of Restricted Stock as it deems
appropriate.
ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND STOCK UNITS
9.1. GRANT OF PERFORMANCE UNITS, PERFORMANCE SHARES OR STOCK
UNITS. Subject to the terms and provisions of the Plan, Performance Units,
Performance Shares or Stock Units may be granted to Participants at any time and
from time to time as shall be determined by the Committee. The Committee shall
have complete discretion in determining the number of Performance Units,
Performance Shares or Stock Units granted to each Participant.
9.2. VALUE OF PERFORMANCE UNITS AND PERFORMANCE SHARES. The Committee
shall set performance goals over certain periods to be determined in advance by
the Committee ("Performance Periods"). Prior to each grant of Performance Units
or Performance Shares, the Committee shall establish an initial value for each
Performance Unit and an initial number of Shares for each Performance Share
granted to each Participant for that Performance Period. Prior to each grant of
Performance Units or Performance Shares, the Committee also shall set the
performance goals that will be used to determine the extent to which the
Participant receives a payment of the value of the Performance Units or number
of Shares for the Performance Shares awarded for such Performance Period. These
goals will be based on the attainment, by the Company or its Subsidiaries, of
certain objective performance measures, which shall include one or more of the
following: broadcast cash flow, total stockholder return, return on equity,
return on capital,
10
<PAGE>
earnings per share, market share, stock price, revenues, costs, net income, cash
flow and retained earnings. Such performance goals also may be based upon the
attainment of specified levels of performance of the Company or one or more
Subsidiaries under one or more of the measures described above relative to the
performance of other corporations. With respect to each such performance measure
utilized during a Performance Period, the Committee shall assign percentages to
various levels of performance which shall be applied to determine the extent to
which the Participant shall receive a payout of the values of Performance Units
and number of Performance Shares awarded. With respect to Covered Employees, all
performance goals shall be objective performance goals satisfying the
requirements for "performance-based compensation" within the meaning of Section
162(m)(4) of the Code, and shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations.
9.3. PAYMENT OF PERFORMANCE UNITS AND PERFORMANCE SHARES. After a
Performance Period has ended, the holder of a Performance Unit or Performance
Share shall be entitled to receive the value thereof as determined by the
Committee. The Committee shall make this determination by first determining the
extent to which the performance goals set pursuant to Section 9.2 have been met.
It will then determine the applicable percentage (which may exceed 100%) to be
applied to, and will apply such percentage to, the value of Performance Units or
number of Performance Shares to determine the payout to be received by the
Participant. In addition, with respect to Performance Units and Performance
Shares granted to any Covered Employee, no payout shall be made hereunder except
upon written certification by the Committee that the applicable performance goal
or goals have been satisfied to a particular extent. The maximum amount payable
in cash to any Covered Employee with respect to any Performance Period pursuant
to any Performance Unit or Performance Share award shall be $1,000,000, and the
maximum number of Shares that may be issued to any Covered Employee with respect
to any Performance Period pursuant to any Performance Unit or Performance Share
award is fifty thousand (50,000) (subject to adjustment as provided in Section
4.3).
9.4 VALUE OF STOCK UNITS. Subject to the terms and provisions of the Plan,
Stock Units may be granted to Participants at any time and from time to time on
such terms as shall be determined by the Committee. The Committee shall have
complete discretion in determining the number of Stock Units granted to each
Participant. Each Participant must elect, by completing and signing an Election
Form, to either (i) convert all or part of his or her Stock Unit award into
cash, equivalent to the cash value of the Stock Units established by the
Committee on the date of grant, receive a cash award for the corresponding
number of Stock Units converted to cash, and receive the remaining Stock Units
in shares of Common Stock payable upon the occurrence of certain trigger events
set forth on the Participant's election form in his or her complete discretion
("Trigger Events"); or (ii) receive his or her entire Stock Unit award in shares
of Common Stock, payable upon the occurrence of certain Trigger Events. The
terms and conditions of the Trigger Events may vary by Stock Unit award, by
Participant, or both. The Election Form shall be filed with the Secretary of the
Company prior to the date on which any Stock Unit award is made. Such election
will be irrevocable as to any Stock Unit award made after delivery of the
Election Form to the Company, and it shall continue in effect until revoked,
increased or decreased prospectively by Participant prior to the grant of any
future Stock Unit award for which the change is effective.
9.5 ACCOUNTING FOR STOCK UNITS. Any portion of a Participant's Stock Unit
award which is not converted to cash as set forth in Section 9.4(i) above shall
be credited by the Company to a bookkeeping account to reflect the Company's
liability to that Participant (the "Stock Unit Account"). Each Stock Unit is
credited as a Common Stock equivalent on the date so credited. Additional stock
equivalents may be added to the Stock Unit Account equal to the amount of Common
Stock that could be purchased with dividends equal to that paid on one share of
Common Stock, multiplied by the number of stock equivalents then existing in the
Stock Unit Account, based on the Fair Market Value of the Common Stock on the
date a dividend is paid on the Common Stock. Because the Trigger Events of each
Stock Unit award may differ, the Company shall establish a separate Stock Unit
Account for each separate Stock Unit award. Upon the occurrence of particular
Trigger Events, the holder of a Stock Unit award shall be entitled to receive a
11
<PAGE>
number of shares of Common Stock which corresponds to the number of Stock Units
granted as part of the initial Stock Unit award. Because the payout of Stock
Unit awards is not based on objective performance goals, such awards will not
constitute "performance-based" compensation within the meaning of Section
162(m)(4)(C) of the Code and, as such, will count toward the annual $1,000,000
deduction limit.
9.6. COMMITTEE DISCRETION TO ADJUST AWARDS. Subject to Section 3.2
regarding Awards to Covered Employees, the Committee shall have the authority to
modify, amend or adjust the terms and conditions of any Performance Unit award,
Performance Share award or Stock Unit award, at any time or from time to time,
including but not limited to the performance goals.
9.7. FORM AND TIMING OF PAYMENT. The payments described above shall be
made in cash, Stock, or a combination thereof as determined by the Committee, or
in the case of Stock Units, as elected by the Participant. Payment may be made
in a lump sum or installments as prescribed by the Committee. If any payment is
to be made on a deferred basis, the Committee may provide for the payment of
dividend equivalents or interest during the deferral period.
9.8. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. In
the case of death, disability, or retirement (each of disability and retirement
as defined under the established rules of the Company or any of its
Subsidiaries, as the case may be), the holder of a Performance Unit or
Performance Share shall receive a prorated payment based on the Participant's
number of full months of service during the Performance Period, further adjusted
based on the achievement of the performance goals during the entire Performance
Period, as computed by the Committee. Payment shall be made at the time payments
are made to Participants who did not terminate service during the Performance
Period. In the case of Stock Units, all such Stock Units held will immediately
vest and be paid as set forth in the Participant's Election Form.
9.9. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event that a
Participant terminates employment with the Company or any of its Subsidiaries
for any reason other than death, disability, or retirement, all Performance
Units and Performance Shares shall be forfeited; provided, however, that in the
event of an involuntary termination of the employment of the Participant by the
Company or any of its Subsidiaries other than for Cause, the Committee in its
sole discretion may waive the automatic forfeiture provisions and pay out on a
prorata basis. In the case of termination other than for Cause, all Stock Units
held will immediately vest and be paid as set forth in the Participant's
Election Form. However, in the event of termination for Cause, all Stock Units
held will be forfeited.
9.10. NONTRANSFERABILITY. No Performance Units, Performance Shares or
Stock Units granted under the Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Performance
Period or, in the case of Stock Units, vesting and payment. All rights with
respect to Performance Units, Performance Shares and Stock Units granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively and who may
include a trustee under a will or living trust) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation or if all designated
beneficiaries predecease the Participant, benefits remaining unpaid at the
Participant's death shall be paid to the Participant's estate.
12
<PAGE>
ARTICLE 11. RIGHTS OF EMPLOYEES
11.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of the Company or any of its Subsidiaries to terminate any
Participant's employment at any time, nor confer upon any Participant any right
to continue in the employ of the Company or any of its Subsidiaries.
11.2. PARTICIPATION. No employee shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
11.3. NO IMPLIED RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving
any Participant, beneficiary, or any other person any legal or equitable right
unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Committee in accordance with the terms and provisions of
the Plan. Except as expressly provided in this Plan, neither the Company nor any
of its Subsidiaries shall be required or be liable to make any payment under the
Plan.
11.4. NO RIGHT TO COMPANY ASSETS. Neither the Participant nor any other
person shall acquire, by reason of the Plan, any right in or title to any
assets, funds or property of the Company or any of its Subsidiaries whatsoever
including, without limiting the generality of the foregoing, any specific funds,
assets, or other property which the Company or any of its Subsidiaries, in its
sole discretion, may set aside in anticipation of a liability hereunder. Any
benefits which become payable hereunder shall be paid from the general assets of
the Company or the applicable subsidiary. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company or any of its Subsidiaries. Nothing contained in the Plan
constitutes a guarantee by the Company or any of its Subsidiaries that the
assets of the Company or the applicable subsidiary shall be sufficient to pay
any benefit to any person.
ARTICLE 12. CHANGE IN CONTROL
12.1. STOCK BASED AWARDS. Notwithstanding any other provisions of the
Plan, in the event of a Change in Control, all Stock based awards granted under
this Plan shall immediately vest 100% in each Participant (subject to Section
3.8 herein), including Incentive Stock Options, Nonqualified Stock Options,
Stock Appreciation Rights, Restricted Stock and Stock Units.
12.2. PERFORMANCE BASED AWARDS. Notwithstanding any other provisions of
the Plan, in the event of a Change in Control, all performance based awards
granted under this Plan shall be immediately paid out in cash, including
Performance Units and Performance Shares. The amount of the payout shall be
based on the higher of: (i) the extent, as determined by the Committee, to which
performance goals, established for the Performance Period then in progress have
been met up through and including the effective date of the Change in Control or
(ii) 100% of the value on the date of grant of the Performance Units or number
of Performance Shares.
ARTICLE 13. AMENDMENT, MODIFICATION, AND TERMINATION
13.1. AMENDMENT, MODIFICATION, AND TERMINATION. At any time and from time
to time, the Board may terminate, amend, or modify the Plan, subject to the
approval of the stockholders of the Company if required by the Code, by the
insider trading rules of Section 16 of the Exchange Act, by any national
securities exchange or system on which the Stock is then listed or reported, or
by any regulatory body having jurisdiction with respect hereto.
13.2. AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification
of the Plan other than pursuant to Section 4.3 hereof shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
written consent of the Participant.
13
<PAGE>
ARTICLE 14. WITHHOLDING
14.1. TAX WITHHOLDING. The Company and any of its Subsidiaries shall have
the power and the right to deduct or withhold, or require a Participant to remit
to the Company or any of its Subsidiaries, an amount sufficient to satisfy
Federal, state and local taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any grant, exercise, or payment
made under or as a result of this Plan.
14.2. STOCK DELIVERY OR WITHHOLDING. With respect to withholding required
upon the exercise of Nonqualified Stock Options, or upon the lapse of
restrictions on Restricted Stock, participants may elect, subject to the
approval of the Committee, to satisfy the withholding requirement, in whole or
in part, by tendering to the Company shares of previously acquired Stock or by
having the Company withhold Shares of Stock, in each such case in an amount
having a Fair Market Value equal to the amount required to be withheld to
satisfy the tax withholding obligations described in Section 14.1. The value of
the Shares to be tendered or withheld is to be based on the Fair Market Value of
the Stock on the date that the amount of tax to be withheld is to be determined.
All Stock withholding elections shall be irrevocable and made in writing, signed
by the Participant on forms approved by the Committee in advance of the day that
the transaction becomes taxable.
Stock withholding elections made by Participants who are subject to the
short-swing profit restrictions of Section 16 of the Exchange Act must comply
with the additional restrictions of Section 16 and Rule 16b-3 in making their
elections.
ARTICLE 15. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 16. REQUIREMENTS OF LAW
16.1. REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares of Stock under this Plan shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
16.2. GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
14
<PAGE>
ANNEX 3
JACOR COMMUNICATIONS, INC.
1997 SHORT-TERM INCENTIVE PLAN
EFFECTIVE JUNE 1, 1997
<PAGE>
JACOR COMMUNICATIONS, INC.
1997 SHORT TERM INCENTIVE PLAN
EFFECTIVE JUNE 1, 1997
ARTICLE 1. ESTABLISHMENT AND PURPOSE
1.1. ESTABLISHMENT OF THE PLAN. Jacor Communications, Inc. (hereinafter
referred to as the "Company"), a Delaware corporation, hereby establishes an
annual incentive compensation plan to be known as the "1997 Short Term Incentive
Plan" (hereinafter referred to as the "Plan") as set forth in this document. The
Plan permits the awarding of annual cash bonuses to Key Employees of the Company
and its Subsidiaries, based on the achievement of preestablished performance
goals.
With approval by the Board of Directors of the Company, the Plan shall
become effective as of June 1, 1997, upon the approval of the Plan by the
stockholders of the Company by the affirmative vote of a majority of the shares
of common stock of the Company present or represented and entitled to vote at a
meeting of the Company's stockholders. The Plan shall remain in effect until
terminated by the Board of Directors.
1.2. PURPOSE. The purpose of the Plan is to provide Key Employees of the
Company and its Subsidiaries with a meaningful annual incentive opportunity
geared toward the achievement of specific corporate, business unit, line of
business, and/or individual goals. Payments pursuant to Article 6 of the Plan
are intended to qualify under the performance-based compensation exemption of
Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended.
ARTICLE 2. DEFINITIONS
2.1. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the defined meaning is intended, the
term is capitalized:
(a) "Beneficial Owner" shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Exchange Act.
(b) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(c) "Cause" shall mean the occurrence of any one of the following:
(i) The willful and continued failure by a Participant to substantially
perform his/her duties (other than any such failure resulting from
the Participant's disability), after a written demand for substantial
performance is delivered to the Participant that specifically
identifies the manner in which the Company or any of its
Subsidiaries, as the case may be, believes that the Participant has
not substantially performed his/her duties, and the Participant has
failed to remedy the situation within ten (10) business days of
receiving such notice; or
(ii) the Participant's conviction for committing a felony in connection
with the employment relationship; or
(iii) the willful engaging by the Participant in gross misconduct
materially and demonstrably injurious to the Company or any of its
Subsidiaries. However, no act, or failure to act, on the
Participant's part shall be considered "willful" unless done, or
omitted to be done, by the Participant not in good faith and without
reasonable belief that his/her action or omission was in the best
interest of the Company or any of its Subsidiaries.
(d) "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) Any Person (other than Zell/Chilmark Fund L.P., a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or any of its Subsidiaries, or a corporation owned directly
or indirectly by the common stockholders of the Company in
substantially the same proportions as their ownership of common stock
of the Company), is
<PAGE>
or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company representing 50% or more of the combined
voting power of the Company's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not including any
period prior to the effective date of the Plan), individuals who at
the beginning of such period constitute the Board and any new
director, whose election by the Board or nomination for election by
the Company's stockholders was approved by a vote of at least
two-thirds ( 2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or
(iii) the stockholders of the Company approve (A) a plan of complete
liquidation of the Company; or (B) an agreement for the sale or
disposition of all or substantially all the Company's assets; or (C)
a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity), at least
50% of the combined voting power of the voting securities of the
Company (or such surviving entity) outstanding immediately after such
merger or consolidation.
However, in no event shall a Change in Control be deemed to have
occurred, with respect to a Participant, if the Participant is part
of a purchasing group which consummates the Change in Control
transaction. The Participant shall be deemed "part of a purchasing
group..." for purposes of the preceding sentence if the Participant
is an equity participant or has agreed to become an equity
participant in the purchasing company or group (except for (i)
passive ownership of less than 5% of the voting securities of the
purchasing company or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not deemed to be
significant, as determined prior to the Change in Control by a
majority of the nonemployee continuing members of the Board).
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means the committee of three or more persons appointed by
the Board to administer the Plan, pursuant to Article 3 herein.
(g) "Company" means Jacor Communications, Inc., a Delaware corporation, and
any successor thereto.
(h) "Company Performance Goals" shall have the meaning ascribed to it by
Section 6.1 hereof.
(i) "Company Performance Award" means an award established pursuant to
Article 6 hereof. Such Company Performance Awards shall be expressed as a
percentage of the Participant's base salary.
(j) "Earned Award" means the Earned Individual Award, if any, and the Earned
Company Award, if any, for a Participant for the applicable Incentive
Period.
(k) "Earned Company Award" means the actual award earned under a
Participant's Company Performance Award during an Incentive Period as
determined by the Committee at the end of the Incentive Period (pursuant
to Section 6.3 hereof).
(l) "Earned Individual Award" means the actual award earned under a
Participant's Individual Performance Award during an Incentive Period as
determined by the Committee at the end of the Incentive Period (pursuant
to Section 5.4 hereof).
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
2
<PAGE>
(n) "Incentive Period" shall mean the period with respect to which a
Participant is eligible to earn an Earned Award. Subject to the
discretion of the Committee to select shorter or longer Incentive
Periods, the Incentive Period shall be the Plan Year; provided that the
Incentive Period for the 1997 Plan Year shall begin on June 1 and end on
December 31.
(o) "Individual Performance Award" means an award established pursuant to
Article 5 hereof. Such Individual Performance Award shall be expressed as
a percentage of the Participant's actual base salary.
(p) "Key Employee" means the Chief Executive Officer of the Company and each
employee of the Company or any of its Subsidiaries who, in the opinion of
the Chief Executive Officer of the Company, is in a position to
significantly contribute to the growth and profitability of the Company
or any of its Subsidiaries (see Article 4 herein).
(q) "Outside Director" means any director who qualifies as an "outside
director" as that term is defined in Code Section 162(m) and the
regulations issued thereunder.
(r) "Participant" means a Key Employee who is nominated for participation by
the Chief Executive Officer and then is selected by the Committee to
participate in the Plan (see Article 4 herein).
(s) "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Section 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d).
(t) "Plan Year" means the Company's fiscal year commencing January 1 and
ending December 31.
(u) "Subsidiary" shall mean any corporation of which more than 50% (by
number of votes) of the Voting Stock at the time outstanding is owned,
directly or indirectly, by the Company.
(v) "Target Performance Award" means the Individual Performance Award, if
any, and the Company Performance Award, if any, for a Participant for the
applicable Incentive Period.
(w) "Voting Stock" shall mean securities of any class or classes of stock of
a corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors.
2.2. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
2.3. SEVERABILITY. In the event any provision of the Plan shall be held
legally invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1. THE COMMITTEE. This Plan shall be administered by the Committee in
accordance with rules that it may establish from time to time, that are not
inconsistent with the provisions of this Plan. To the extent required to comply
with Code Section 162(m) and the related regulations, each member of the
Committee shall be an Outside Director.
3.2. AUTHORITY OF THE COMMITTEE. Subject to the provisions of the Plan,
the Committee shall have full power to construe and interpret the Plan and to
establish, amend or waive rules and regulations for its administration. The
determination of the Committee as to any disputed question arising under this
Plan, including questions of construction and interpretation shall be final,
binding, and conclusive upon all persons and shall not be reviewable.
3.3. DELEGATION OF CERTAIN RESPONSIBILITIES. The Committee may, in its
sole discretion, delegate to an officer or officers of the Company the
administration of the Plan under this Article 3; provided, however,
3
<PAGE>
that no such delegation by the Committee shall be made with respect to the
administration of the Plan as it affects officers of the Company or its
Subsidiaries, and provided further that the Committee may not delegate its
authority to correct errors, omissions or inconsistencies in the Plan. All
authority delegated by the Committee under this Section 3.3 shall be exercised
in accordance with the provisions of the Plan and any guidelines for the
exercise of such authority that may from time to time be established by the
Committee.
3.4. PROCEDURES OF THE COMMITTEE. All determinations of the Committee
shall be made by not less than a majority of its members present at the meeting
(in person or otherwise) at which a quorum is present. A majority of the entire
Committee shall constitute a quorum for the transaction of business. Any action
required or permitted to be taken at a meeting of the Committee may be taken
without a meeting if a unanimous written consent, which sets forth the action,
is signed by each member of the Committee and filed with the minutes for
proceedings of the Committee.
3.5. INDEMNIFICATION. Service on the Committee shall constitute service as
a director of the Company so that members of the Committee shall be entitled to
indemnification, limitation of liability and reimbursement of expenses with
respect to their services as members of the Committee to the same extent that
they are entitled under the Company's Certificate of Incorporation and Delaware
law for their services as directors of the Company.
ARTICLE 4. ELIGIBILITY AND PARTICIPATION
4.1. ELIGIBILITY. Eligibility for participation in the Plan shall be
limited to those Key Employees who are nominated for participation by the Chief
Executive Officer of the Company and then selected by the Committee to
participate in the Plan.
4.2. PARTICIPATION. Participation in the Plan shall be determined annually
based upon nomination by the Chief Executive Officer and selection by the
Committee. Specific criteria for participation shall be determined by the
Committee prior to the beginning of each Incentive Period. Key Employees
selected for participation shall be notified in writing of their selection, and
of their performance goals and related Target Performance Awards, as soon after
approval as is practicable.
4.3. PARTIAL INCENTIVE PERIOD PARTICIPATION. Subject to Article 6 herein,
the Committee may, upon recommendation of the Chief Executive Officer, allow an
individual who becomes eligible after the beginning of an Incentive Period to
participate in the Plan for that period. In such case, the Participant's Earned
Award normally shall be prorated based on the number of full months of
participation during such Incentive Period. However, subject to Article 6
herein, the Chief Executive Officer, subject to Committee approval, may
authorize an unreduced Earned Award.
4.4. TERMINATION OF APPROVAL. In its sole discretion, the Committee may
withdraw its approval for participation in the Plan with respect to an Incentive
Period for a Participant at any time during such Incentive Period; provided,
however that, such withdrawal must occur before the end of such Incentive Period
and provided further that, in the event a Change in Control occurs during an
Incentive Period, the Committee may not thereafter withdraw its approval for a
Participant during such Incentive Period. In the event of such withdrawal, the
employee concerned shall cease to be a Participant as of the date designated by
the Committee, and the employee shall not be entitled to any part of an Earned
Award for the Incentive Period in which such withdrawal occurs. Such employee
shall be notified of such withdrawal in writing as soon as practicable following
such action.
ARTICLE 5. INDIVIDUAL PERFORMANCE AWARDS
5.1. AWARD OPPORTUNITIES. At the beginning of each Incentive Period, the
Committee shall establish Individual Performance Award levels for each
Participant who is to be granted an Individual Performance Award. The
established levels may vary in relation to the responsibility level of the
Participant. In the event
4
<PAGE>
a Participant changes job levels during the Incentive Period, the Individual
Performance Award may be adjusted at the discretion of the Committee to reflect
the amount of time at each job level. Notwithstanding any provision in this Plan
to the contrary, Individual Performance Awards shall not be dependent in any
manner on, and shall be established independently of and in addition to, the
establishment of any Company Performance Awards or the payout of any Earned
Company Awards pursuant to Article 6 herein.
5.2. INDIVIDUAL PERFORMANCE GOALS. At the beginning of each Incentive
Period, the Chief Executive Officer shall establish individual performance goals
for each Participant who is granted an Individual Performance Award; provided,
however, that the Committee shall establish the individual performance goals for
the Chief Executive Officer. The level of achievement of the individual
performance goals by a Participant at the end of the Incentive Period, as
determined pursuant to Section 5.4 below, will determine such Participant's
Earned Individual Award, which may range from 0% to 150% of such Participant's
Individual Performance Award.
5.3. ADJUSTMENT OF INDIVIDUAL PERFORMANCE GOALS. The Chief Executive
Officer shall have the right to adjust the individual performance goals (either
up or down) during the Incentive Period if he determines that external changes
or other unanticipated conditions have materially affected the fairness of the
goals and unduly influenced a Participant's ability to meet them; provided,
however, that no such adjustment to the Chief Executive Officer's individual
performance goals shall be made unless approved by the Committee; and provided
further that no adjustment of such individual performance goals for any
Participant shall be made based upon the failure, or the expected failure, to
attain or exceed the Company Performance Goals for any Company Performance Award
granted to such Participant under Article 6 herein. Further, in the event of an
Incentive Period of less than twelve (12) months, the Chief Executive Officer
shall have the right to adjust the individual performance goals, at his
discretion, to protect the purpose and intent of the Plan.
5.4. EARNED INDIVIDUAL AWARD DETERMINATION. At the end of each Incentive
Period, the Chief Executive Officer shall review the performance of each
Participant who received an Individual Performance Award. Based on the Chief
Executive Officer's determination as to a Participant's level of achievement of
his or her individual performance goals, the Chief Executive Officer shall make
a recommendation to the Committee as to the Earned Individual Award to be
received by such Participant. Notwithstanding the foregoing, however, all
reviews and determinations with respect to the performance of the Chief
Executive Officer, and the payment of any Earned Individual Award to the Chief
Executive Officer, shall be made by the Committee. The payment of all Earned
Individual Awards is subject to approval by the Committee. The payment of an
Earned Individual Award to a Participant shall not be contingent in any manner
upon the attainment of, or failure to attain, the Company Performance Goals for
the Company Performance Awards granted to such Participant under Article 6.
5.5. MAXIMUM PAYABLE/AGGREGATE AWARD CAP. The maximum amount payable to a
Participant pursuant to this Article 5 for performance by the Participant during
any fiscal year of the Company shall be $500,000. The Committee also may
establish guidelines governing the maximum Earned Individual Awards that may be
earned by all Participants in the aggregate, in each Incentive Period. These
guidelines may be expressed as a percentage of a financial measure, or such
other measure as the Committee shall from time to time determine.
ARTICLE 6. COMPANY PERFORMANCE AWARDS
In addition to any Individual Performance Awards granted under Article 5,
Company Performance Awards based solely on Company performance may be
established under this Article 6 for Participants. Company Performance Awards
are intended to satisfy the performance-based compensation exemption under Code
Section 162(m)(4)(C) and the related regulations and shall thus be subject to
the requirements set forth in this Article 6.
5
<PAGE>
6.1. AWARD OPPORTUNITIES. On or before the 90th day of each Incentive
Period and in any event before 25% or more of the Incentive Period has elapsed,
the Committee shall establish in writing for each Participant for whom a Company
Performance Award is to be granted under this Article 6, the Company Performance
Award and specific objective performance goals for the Incentive Period, which
goals shall meet the requirements of Section 6.2 herein (such goals are
hereinafter referred to as "Company Performance Goals"). The extent, if any, to
which an Earned Company Award will be payable to a Participant will be based
solely upon the degree of achievement of such preestablished Company Performance
Goals over the specified Incentive Period; provided, however, that the Committee
may, in its sole discretion, reduce the amount which would otherwise be payable
with respect to an Incentive Period. Payment of an Earned Company Award to a
Participant shall consist of a cash award from the Company to be based upon a
percentage (which may exceed 100%) of the Participant's Company Performance
Award.
6.2. COMPANY PERFORMANCE GOALS. The Company Performance Goals established
by the Committee pursuant to Section 6.1 will be based on one or more of the
following: broadcast cash flow, total stockholder return, return on equity,
return on capital, earnings per share, market share, stock price, revenues,
costs, net income, cash flow and retained earnings. At the time of establishing
a Company Performance Goal, the Committee shall specify the manner in which the
Company Performance Goal shall be calculated. In so doing, the Committee may
exclude the impact of certain specified events from the calculation of the
Company Performance Goal. For example, if the Company Performance Goal were
earnings per share, the Committee could, at the time this Company Performance
Goal was established, specify that earnings per share are to be calculated
without regard to any subsequent change in accounting standards required by the
Financial Accounting Standards Board. Company Performance Goals also may be
based on the attainment of specified levels of performance of the Company and/or
any of its Subsidiaries under one or more of the measures described above
relative to the performance of other corporations. As part of the establishment
of Company Performance Goals for an Incentive Period, the Company shall also
establish a minimum level of achievement of the Company Performance Goals that
must be met for a Participant to receive any portion of his Company Performance
Award. All of the provisions of this Section 6.2 are subject to the requirement
that all Company Performance Goals shall be objective performance goals
satisfying the requirement for "performance-based compensation" within the
meaning of Section 162(m)(4) of the Code and the related regulations.
6.3. PAYMENT OF AN EARNED COMPANY AWARD. At the time the Company
Performance Award for a Participant is established, the Committee shall
prescribe a formula to determine the percentage (which may exceed 100%) of the
Company Performance Award which may be payable to the Participant based upon the
degree of attainment of the Company Performance Goals during the Incentive
Period. If the minimum level of achievement of Company Performance Goals
established by the Committee for a Participant for an Incentive Period is not
met, no payment of an Earned Company Award will be made to the Participant for
that Incentive Period. To the extent that the minimum level of achievement of
Company Performance Goals is satisfied or surpassed for a Participant for an
Incentive Period, and upon written certification by the Committee that the
Company Performance Goals have been satisfied to a particular extent and that
any other material terms and conditions of the Company Performance Awards have
been satisfied, payment of an Earned Company Award shall be made to the
Participant for that Incentive Period in accordance with the prescribed formula
unless the Committee determines, in its sole discretion, to reduce the payment
to be made.
6.4. MAXIMUM PAYABLE. The maximum amount payable to a Participant pursuant
to this Article 6 for performance by the Participant during any fiscal year of
the Company shall be $1,000,000.
6.5. COMMITTEE DISCRETION. Notwithstanding Article 5 herein, the Committee
shall not have discretion to modify the terms of Company Performance Awards,
except as specifically set forth in this Article 6.
6
<PAGE>
ARTICLE 7. FORM AND TIMING OF PAYMENT OF AWARDS
Subject to Article 6 herein, as soon as practicable following the release of
the Company's audited financial statements pertaining to the Plan Year ending
coincident with or immediately after the applicable Incentive Period, Earned
Award payments, if any, for such Incentive Period shall be paid in cash. Subject
to Article 6 herein, deferral of payments may be provided for under rules to be
determined by the Committee.
ARTICLE 8. TERMINATION OF EMPLOYMENT
8.1. TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY, OR RETIREMENT. In
the event a Participant's employment is terminated by reason of death, total and
permanent disability (as determined by the Committee), or retirement (as
determined by the Committee), the Earned Award, determined in accordance with
Section 5.4 and Section 6.3 herein, shall be reduced to reflect participation
prior to termination. This reduction shall be determined by multiplying said
Earned Award by a fraction; the numerator of which is the months of
participation through the date of termination rounded up to whole months and the
denominator of which is the number of whole months in the applicable Incentive
Period. The Earned Award thus determined shall be paid as soon as practicable
following the release of the Company's audited financial statements pertaining
to the Plan Year ending coincident with or immediately after the applicable
Incentive Period.
8.2. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. In the event a
Participant's employment is terminated for any reason other than death, total
and permanent disability, or retirement (of which the Committee shall be the
sole judge), all of the Participant's rights to an Earned Award for the
Incentive Period then in progress shall be forfeited. However, except in the
event of a termination of employment for Cause, the Committee, in its sole
discretion, may pay a prorated award for the portion of that Incentive Period
that the Participant was employed by the Company or any of its Subsidiaries,
computed as determined by the Committee.
ARTICLE 9. RIGHTS OF PARTICIPANTS
9.1. EMPLOYMENT. Nothing in this Plan shall interfere with or limit in any
way the right of the Company or any of its Subsidiaries to terminate any
Participant's employment at any time, nor confer upon any Participant any right
to continue in the employ of the Company or any of its Subsidiaries.
9.2. PARTICIPATION. No Participant or other employee shall at any time
have a right to be selected for participation in the Plan for any Incentive
Period, despite having been selected for participation in a previous Incentive
Period. Except as otherwise provided in Article 8 or Article 11 herein and
subject to Section 4.4 herein, a Participant shall not have any right to an
Earned Award for an Incentive Period, unless the Participant is an employee of
the Company at the end of such Incentive Period.
9.3. NONTRANSFERABILITY. No right or interest of any Participant in this
Plan shall be assignable or transferable, or subject to any lien, directly, by
operation of law, or otherwise, including execution, levy, garnishment,
attachment, pledge, and bankruptcy.
9.4. NO IMPLIED RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving
any Participant, beneficiary, or any other person any legal or equitable right
unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Committee in accordance with the terms and provisions of
the Plan. Except as expressly provided in this Plan, neither the Company nor any
of its Subsidiaries shall be required or be liable to make any payment under the
Plan.
9.5. NO RIGHT TO COMPANY ASSETS. Neither the Participant nor any other
person shall acquire, by reason of the Plan, any right in or title to any
assets, funds or property of the Company or any of its Subsidiaries whatsoever
including, without limiting the generality of the foregoing, any specific funds,
7
<PAGE>
assets, or other property which the Company or any of its Subsidiaries, in its
sole discretion, may set aside in anticipation of a liability hereunder. Any
benefits which become payable hereunder shall be paid from the general assets of
the Company or the applicable Subsidiary. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company or any of its Subsidiaries. Nothing contained in the Plan
constitutes a guarantee by the Company or any of its Subsidiaries that the
assets of the Company or the applicable Subsidiary shall be sufficient to pay
any benefit to any person.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively and who may
include a trustee under a will or living trust) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, or if all
designated beneficiaries predecease the Participant, benefits remaining unpaid
at the Participant's death shall be paid to the Participant's estate.
ARTICLE 11. CHANGE IN CONTROL
Notwithstanding any other provisions of the Plan, in the event a
Participant's employment with the Company or any of its Subsidiaries is
terminated for any reason other than for Cause, within twenty-four (24) months
after a Change in Control of the Company or any of its Subsidiaries, all awards
previously deferred (with earnings) shall be paid to the Participant within ten
(10) business days of the termination; along with the Target Performance Award
established for the Participant for the Incentive Period in progress at the time
of the employment termination, prorated for the number of days in the Incentive
Period in which the Participant was employed by the Company or any of its
Subsidiaries, up to and including the date of termination.
In the event a Participant's employment with the Company or any of its
Subsidiaries is terminated for Cause, no Earned Award will be paid for the
Incentive Period in progress at the time of the employment termination.
ARTICLE 12. AMENDMENTS
The Board of Directors, in its absolute discretion, without notice, at any
time and from time to time, may modify or amend in whole or in part, any or all
of the provisions of this Plan, or suspend or terminate it entirely; provided,
that no such modification, amendment, suspension, or termination after an
Incentive Period, may without the consent of a Participant (or his beneficiary
in the case of the death of the Participant) reduce the right of a Participant
(or his beneficiary, as the case may be) to a payment or distribution hereunder
to which he is entitled for that Incentive Period.
ARTICLE 13. REQUIREMENTS OF LAW
13.1. GOVERNING LAW. The Plan, and all agreements hereunder shall be
construed in accordance with and governed by the laws of the State of Delaware.
13.2. WITHHOLDING TAXES. The Company shall have the right to deduct from
all payments under this Plan any Federal, state, or local taxes required by the
law to be withheld with respect to such payments.
8
<PAGE>
ANNEX 4
JACOR COMMUNICATIONS, INC.
1997 NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN
(EFFECTIVE DATE: JUNE 1, 1997)
<PAGE>
JACOR COMMUNICATIONS, INC.
1997 NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN
1. PURPOSE
The purpose of this Plan is to promote the success of the Company by
providing incentives to directors that link their director compensation to the
long-term financial success of the Company and to growth in stockholder value.
The plan is designed to enable the Company to attract and retain highly
qualified directors upon whose judgment, interest and special effort the
successful conduct of the Company's operations is largely dependent.
2. DEFINITIONS
2.1 The term "Account" shall mean the separate bookkeeping account
established and maintained by the Plan Administrator for each Participant for
each Purchase Period to record the contributions made on his or her behalf to
purchase Shares under this Plan.
2.2 The term "Beneficiary" shall mean the person designated as such in
accordance with Section 7.
2.3 The term "Board" shall mean the Board of Directors of Jacor.
2.4 The term "Closing Price" means the closing price for a Share on a
national stock exchange, or if the Shares are not traded on an exchange, the
last sale price for a Share as reported on the NASDAQ National Market.
2.5 The term "Committee" shall mean the Compensation Committee of the Board.
2.6 The term "Election Form" shall mean the form which an Eligible Director
shall be required to properly complete in writing and timely file at least 15
days prior to the commencement of any Purchase Period in order to make any of
the elections available to an Eligible Director under this Plan.
2.7 The term "Eligible Director" shall mean a non-employee who is a member
of the Board.
2.8 The term "Jacor" shall mean Jacor Communications, Inc.
2.9 The term "Participant" shall mean (a) for each Purchase Period an
Eligible Director who has elected to purchase Shares in accordance with Section
3 in such Purchase Period and (b) any person for whom a Share is held pending
delivery under Section 6.
2.10 The term "Plan" shall mean this Jacor Communications, Inc. 1997
Director Share Purchase Plan, effective as of the first day of the first
Purchase Period following the date the Plan has been adopted by the Board and
approved and adopted by a majority of the outstanding Shares entitled to vote
thereon, and as thereafter amended from time to time.
2.11 The term "Plan Administrator" shall mean Jacor or Jacor's delegate.
2.12 The term "Purchase Period" shall mean a period set by the Committee.
Unless changed by the Committee, each Purchase Period shall begin on the first
day of a calendar quarter and end on the last day of such calendar quarter.
2.13 The term "Purchase Price" for each Purchase Period shall mean 85% of
the lesser of (a) the Closing Price for a Share on the last day of such Purchase
Period; and (b) the greater of (i) the Closing Price for a Share on the first
day of such Purchase Period; and (ii) the average Closing Price for a Share for
all of the business days in the Purchase Period.
2.14 The term "Rule 16b-3" shall mean Rule 16b-3 promulgated under Section
16(b) of the Securities Exchange Act of 1934, as amended, or any successor to
such rule.
2.15 The term "Share" shall mean a $.01 par value common share of Jacor.
<PAGE>
3. PARTICIPATION
Each person who is an Eligible Director shall be a Participant in this Plan
for the related Purchase Period if he or she properly completes and timely files
an Election Form with the Plan Administrator to elect to participate in this
Plan. An Election form may require an Eligible Director to provide such
information and to agree to take such action (in addition to the action required
under Section 4) as the Plan Administrator deems necessary or appropriate in
light of the purpose of this Plan or for the orderly administration of this
Plan.
4. CONTRIBUTIONS
(a) INITIAL CONTRIBUTION. Each Participant's Election Form under Section 3
shall specify the contributions that he or she proposes to make for the related
Purchase Period. Such contributions shall be expressed as a specific dollar
amount that Participant proposes to contribute in cash provided, however, the
maximum contribution which a Participant may make under this Plan for any
calendar year shall be $100,000. All such contributions shall be made by the
Participant no later than 5 days prior to the last day of the Purchase Period
for which the contribution is being made.
(b) CHANGES IN CONTRIBUTIONS AND WITHDRAWALS. A Participant shall have the
right to amend his or her Election Form at any time to reduce or to stop his or
her contributions, and such election shall be effective immediately for cash
contributions and as soon as practicable after the Plan Administrator actually
receives such amended Election Form for payroll deductions. A Participant also
shall have the right at any time on or before 5 days prior to the last day of a
Purchase Period: (i) to withdraw (without interest) all or any part of the
contributions credited to his or her Account for such purchase; or (ii) to
increase his or her cash contributions for such purchase, by delivering an
amended Election Form (and for purposes of clause (ii), a check for such
contributions) to the Plan Administrator at least 5 days prior to the last day
of such Purchase Period. A withdrawal shall be deducted from the participant's
Account as of the date the Plan Administrator receives such amended Election
Form, and the actual withdrawal shall be effected by the Plan Administrator as
soon as practicable after such date.
(c) ACCOUNT CREDITS, GENERAL ASSETS AND TAXES. All contributions made by a
Participant under this Plan shall be held by Jacor. All such contributions shall
be held as part of the general assets of Jacor and shall not be held in trust or
otherwise segregated from Jacor's general assets. No interest shall be paid or
accrued on any such contributions. Each Participant's right to the contributions
credited to his or her Account shall be that of a general and unsecured creditor
of Jacor.
(d) AUTOMATIC REFUNDS. The balance credited to the Account of an Eligible
Director automatically shall be refunded in full (without interest) if his or
her status as a member of the Board terminates for any reason whatsoever during
a Purchase Period. Such refunds shall be made as soon as practicable after the
Plan Administrator has actual notice of any such termination.
5. PURCHASE OF SHARES
If a Participant is an Eligible Director through the end of a Purchase
Period, the balance which remains credited to his or her Account at the end of
such Purchase Period automatically shall be applied to purchase Shares at the
Purchase Price for such Shares. Such Shares shall be purchased on behalf of the
Participant by operation of this Plan in whole shares and any cash remaining in
the Account shall be carried over to the following Purchase Period. If the total
Shares to be purchased on any date in accordance with this Section exceeds the
Shares then available under the Plan (after deduction of all Shares that have
previously been purchased), the Plan Administrator shall made a PRO RATA
allocation of the Shares remaining available in as nearly a uniform manner as
shall be practical and as it shall determine to be equitable.
2
<PAGE>
6. DELIVERY
A book-entry record of the Shares purchased by each Participant shall be
maintained by Jacor's Share transfer agent and no certificates shall be issued
for such Shares except to the extent that a Participant specifically so
requests. Notwithstanding the foregoing, when a refund is made to a Participant
pursuant to Section 4(d), certificates shall be delivered to him or her for all
Shares then held for the Participant under the Plan. A Share certificate
delivered to a Participant shall be registered in his or her name or, if the
Participant so elects and if permissible under applicable law, in the names of
the Participant and one such other person as may be designated by the
Participant, as joint tenants with rights of survivorship. However, (a) no Share
certificate representing a fractional share shall be delivered to a Participant
or to a Participant and any other person, (b) cash which the Plan Administrator
deems representative of the value of a Participant's fractional share shall be
distributed (when a Participant requests a distribution of certificates for all
of the Shares held for him or her) in lieu of such fractional share unless a
Participant in light of Rule 16b-3 waives his or her right to such cash payment,
and (c) the Plan Administrator shall have the right to charge a Participant for
registering Shares in the name of the Participant any other person. No
Participant (or any person who makes a claim for, on behalf of, or in place of a
Participant) shall have any interest in any Shares under this Plan until they
have been reflected in the book-entry record maintained by the Share transfer
agent or the certificate for such Shares has been delivered to such person.
7. DESIGNATION OF BENEFICIARY
A Participant may designate on his or her Election Form a Beneficiary (a)
who shall receive the balance credited to his or her Account if the Participant
dies before the end of a Purchase Period and (b) who shall receive the Shares,
if any, purchased for the Participant under this Plan if the Participant dies
after the end of a Purchase Period but before either the certificate
representing such Shares has been delivered to the Participant or before such
Shares have been credited to a brokerage account maintained for the Participant.
Such designation may be revised in writing at any time by the Participant by
filing an amended Election Form, and his or her revised designation shall be
effective at such time as the Plan Administrator receives such amended Election
Form. If a deceased Participant fails to designate a Beneficiary or, if no
person so designated survives a Participant or, if after checking his or her
last known mailing address, the whereabouts of the person so designated are
unknown, then the Participant's estate shall be treated as his or her designated
Beneficiary under this Section 7.
8. TRANSFERABILITY AND DISPOSITIONS
(a) RESTRICTION. Neither the balance credited to a Participant's Account
nor any rights to receive Shares under this Plan may be assigned, encumbered,
alienated, transferred, pledged, or otherwise disposed of in any way by a
Participant during his or her lifetime or by his or her Beneficiary or by any
other person during his or lifetime, and any attempt to do so shall be without
effect. Notwithstanding the foregoing, a Participant may assign his or her
rights to purchase Shares hereunder to any deferred compensation plan previously
or hereafter adopted by Jacor, subject to an in accordance with such procedures
as are established by the Plan Administrator.
(b) DISPOSITIONS. Except as provided in the last sentence of this
Subsection or in Section 6, no sale, transfer or other disposition may be made
of any Shares purchased under the Plan until the first anniversary of such
purchase. If a Participant violates the foregoing restriction, he or she shall
remit to Jacor an amount of cash equal to the difference between the amount he
or she paid for such Shares and the Closing Price of such shares on the date
they were purchased. The amount to be remitted for purposes of the foregoing
shall be computed by the Plan Administrator, in its discretion, using a Last-In
First-Out basis of accounting in the event that Shares from more than one
Purchase Period are involved. Notwithstanding the foregoing, if a Participant
who owns Shares subject to the foregoing restriction is determined by the Plan
Administrator in its discretion to have a serious financial need for the
proceeds of the sale of such Shares, then upon application made by the
Participant, the Plan Administrator shall consent to a sale
3
<PAGE>
of such Shares to the extent necessary to satisfy the serious financial need,
and the Participant will not be required to make the remittance to Jacor
described in this Subsection (b).
9. SHARES SUBJECT TO THE PLAN
The Shares available for purchase under this Plan shall be authorized but
unissued Shares or Shares reacquired by Jacor, including shares purchased in the
open market. The aggregate number of Shares which may be issued pursuant to the
Plan is 150,000, subject to increase or decrease by reason of stock split-ups,
reclassifications, stock dividends, changes in par value and the like.
10. CHANGES IN CAPITAL STRUCTURE
In the event that Shares are hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares of stock or other
securities of Jacor or of another corporation, by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up,
combination of shares of stock, or dividend payable in shares of stock,
appropriate adjustment shall be made by the Board in the number or kind of
shares of stock which may be purchased under this Plan, to the end that the
participant's proportionate interest shall be maintained as before the
occurrence of such event. Any such adjustment made by the Board shall be
conclusive.
11. ADMINISTRATION
Except for the exercise of those powers expressly granted to the Committee
to determine the Closing Price, and to set the Purchase Period, the Plan
Administrator shall be responsible for the administration of this Plan and shall
have the power in connection with such administration as the Plan Administrator
deems necessary or equitable under the circumstances. The Plan Administrator
also shall have the power to delegate the duty to perform such administrative
functions as the Plan Administrator deems appropriate under the circumstances.
Any person to whom the duty to perform an administrative function is delegated
shall act on behalf of and shall be responsible to the Plan Administrator for
such function. Any action or inaction by or on behalf of the Plan Administrator
under this Plan shall be final and binding on each Participant and on each other
person who makes a claim under this Plan based on the rights, if any, of any
such Eligible Director or Participant under this Plan.
12. SECURITIES REGISTRATION
If Jacor shall deem it necessary to register under the Securities Act of
1933, as amended, or any other applicable statutes any Shares purchased under
this Plan or to qualify any such Shares for an exemption from any such statutes,
Jacor shall take such action at its own expense. If Shares are listed on any
national securities exchange at the time any Shares are purchased hereunder,
Jacor shall make prompt application for the listing on such national Share
exchange of such Shares, at its own expense. Purchases of Shares hereunder shall
be postponed as necessary pending any such action.
13. COMPLIANCE WITH RULE 16B-3
All elections and transactions under this Plan by persons subject to Rule
16b-3 are intended to comply with at least one of the exemptive conditions under
Rule 16b-3. The Plan Administrator shall establish such administrative
guidelines to facilitate compliance with at least one such exemptive condition
under Rule 16b-3 as the Plan Administrator may deem necessary or appropriate. If
any provision of this Plan or such administrative guidelines or any act or
omission with respect to this Plan (including any act or omission by an Eligible
Director) fails to satisfy such exemptive condition under Rule 16b-3 or
otherwise is inconsistent with such condition, such provision, guidelines or act
or omission shall be deemed null and void.
4
<PAGE>
14. AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate, and any such amendment shall be
subject to the approval of Jacor's stockholders to the extent such approval is
required under applicable laws or the rules of an exchange on which Jacor is
listed; provided, however, no amendment shall be retroactive unless the Board in
its discretion determines that such amendment is in the best interest of Jacor
or such amendment is required by applicable law to be retroactive. The Board
also may terminate this Plan and any Purchase Period at any time (together with
any related contribution election) or may terminate any Purchase Period
(together with any related contribution elections) at any time; provided,
however, no such termination shall be retroactive unless the Board determines
that applicable law requires a retroactive termination.
15. NOTICES
All Election Forms and other communications from a Participant to the Plan
Administrator under, or in connection with, this Plan shall be deemed to have
been filed with the Plan Administrator when actually received in the form
specified by the Plan Administrator at the location, or by the person,
designated by the Plan Administrator for the receipt of any such Election Form
and communications.
16. EMPLOYMENT
The right to elect to participate in this Plan shall not constitute an offer
of employment or membership on the Board, and no election to participate in this
Plan shall constitute an agreement with respect to Board membership for an
Eligible Director. Any such right or election shall have no bearing whatsoever
on an Eligible Director's status as a member of the Board.
17. HEADINGS, REFERENCES AND CONSTRUCTION
The headings to sections in this Plan have been included for convenience of
reference only. This Plan shall be interpreted and construed in accordance with
the laws of the State of Delaware.
5
<PAGE>
ANNEX 5
JACOR COMMUNICATIONS, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
EFFECTIVE APRIL 28, 1997
<PAGE>
JACOR COMMUNICATIONS, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK PLAN
EFFECTIVE APRIL 28, 1997
ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION
1.1. ESTABLISHMENT OF THE PLAN. On April 28, 1997, the Board of Directors
of Jacor Communications, Inc. (the "Company") adopted, subject to the approval
of stockholders, an incentive stock plan for members of the Board of Directors
known as the "1997 Non-Employee Directors Stock Plan" (hereinafter referred to
as the "Plan"), which permits the grant of Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Units, Performance Shares and
Stock Units.
1.2. PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
success of the Company by providing incentives to Directors that will link their
personal interests to the long-term financial success of the Company and to
growth in stockholder value. The Plan is designed to provide flexibility to the
Company in its ability to motivate, attract, and retain the services of
Directors upon whose judgment, interest and special effort the successful
conduct of the Company's operations is largely dependent.
1.3. DURATION OF THE PLAN. The Plan commences on April 28, 1997, and shall
remain in effect, subject to the right of the Board of Directors to terminate
the Plan at any time pursuant to Article 13 herein, until all Shares subject to
it shall have been purchased or acquired according to the provisions herein.
However, in no event may an Award be granted under the Plan on or after April
28, 2002, which is the fifth (5th) anniversary of the effective date of the
Plan.
ARTICLE 2. DEFINITIONS AND CONSTRUCTION
2.1. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meanings set forth below and, when the meaning is intended, the initial
letter of the word is capitalized:
(a) "Award" means, individually or collectively, a grant under this Plan of
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock,
Performance Units, Performance Shares, or Stock Units.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in Rule
13d-3 of the General Rules and Regulations under the Exchange Act.
(c) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(d) "Change in Control" shall be deemed to have occurred if the conditions
set forth in any one of the following paragraphs shall have been
satisfied:
(i) any Person (other than Zell/Chilmark Fund L.P., a trustee or other
fiduciary holding securities under an employee benefit plan of the
Company, or a corporation owned directly or indirectly by the common
stockholders of the Company in substantially the same proportions as
their ownership of Stock of the Company), is or becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the
Company's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning
of such period constitute the Board and any new director, whose
election by the Board or nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority thereof; or
(iii) the stockholders of the Company approve (A) a plan of complete
liquidation of the Company; or (B) an agreement for the sale or
disposition of all or substantially all the
<PAGE>
Company's assets; or (C) a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities
of the surviving entity), at least 50% of the combined voting power
of the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger or consolidation.
However, in no event shall a Change in Control be deemed to have occurred,
with respect to a Participant, if the Participant is part of a purchasing
group which consummates the Change in Control transaction. The Participant
shall be deemed "part of a purchasing group. . . " for purposes of the
preceding sentence if the Participant is an equity participant or has agreed
to become an equity participant in the purchasing company or group (except
for (i) passive ownership of less than 5% of the voting securities of the
purchasing company or (ii) ownership of equity participation in the
purchasing company or group which is otherwise not deemed to be significant,
as determined prior to the Change in Control by a majority of the
nonemployee continuing members of the Board).
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Company" means Jacor Communications, Inc., a Delaware corporation, or
any successor thereto as provided in Article 15 herein.
(g) "Director" means a member of the Board who is not, and has not been at
any time within the preceding three years, an officer or employee of the
Company or any of its subsidiaries or affiliates.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
(i) "Fair Market Value" means the average of the highest price and lowest
price at which the Stock was traded on the relevant date, or on the most
recent date on which the Stock was traded prior to such date, as reported
on Nasdaq National Market.
(j) "Nonqualified Stock Option" or "NQSO" means an option to purchase Stock,
which is not intended to satisfy the requirements of Section 422 of the
Code, granted under Article 6 herein.
(k) "Option" means a Nonqualified Stock Option.
(l) "Participant" means a Director who has been granted an Award under the
Plan.
(m) "Performance Share" means an Award, designated as a performance share,
granted to a Participant pursuant to Article 9 herein.
(n) "Performance Unit" means an Award, designated as a performance unit,
granted to a Participant pursuant to Article 9 herein.
(o) "Period of Restriction" means the period during which the transfer of
Shares of Restricted Stock is restricted, during which the Participant is
subject to a substantial risk of forfeiture, pursuant to Article 8
herein.
(p) "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
of the Exchange Act and used in Sections 13(d) and 14(d) thereof,
including a "group" as defined in Section 13(d) thereof.
(q) "Plan" means this Non-Employee Directors Stock Plan of Jacor
Communications, Inc., as herein described and as hereafter from time to
time amended.
(r) "Restricted Stock" means an Award of Stock granted to a Participant
pursuant to Article 8 herein.
(s) "Stock" or "Shares" means the common stock without par value of the
Company.
2
<PAGE>
(t) "Stock Unit" means a derivative interest in Common Stock of the Company
which may be converted on the date of grant into cash, or which may be
credited to a bookkeeping account and then paid out on a one-for-one
basis into Common Stock of the Company upon the occurrence of certain
Trigger Events (as defined herein).
(u) "Stock Appreciation Right" or "SAR" means an Award, designated as a
Stock appreciation right, granted to a Participant pursuant to Article 7
herein.
(v) "Voting Stock" shall mean securities of any class or classes of stock of
a corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the directors.
2.2. GENDER AND NUMBER. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
2.3. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3. ADMINISTRATION
3.1 AUTHORITY OF BOARD. The Plan shall be administered by the full Board
of Directors of the Company. Subject to the provisions of the Plan, the Board
shall have full power to construe and interpret the Plan; to establish, amend or
waive rules and regulations for its administration; to accelerate the
exercisability of any Award or the end of a performance period or the
termination of any Period of Restriction or any award agreement, or any other
instrument relating to an Award under the Plan; and (subject to the provisions
of Article 13 herein) to amend the terms and conditions of any outstanding
Option, Stock Appreciation Right or other Award to the extent such terms and
conditions are within the discretion of the Board as provided in the Plan. Also
notwithstanding the foregoing, no action of the Board (other than pursuant to
Section 4.3 hereof or Section 9.4 hereof) may, without the consent of the person
or persons entitled to exercise any outstanding Option or Stock Appreciation
Right or to receive payment of any other outstanding Award, adversely affect the
rights of such person or persons.
3.2. SELECTION OF PARTICIPANTS. The Board shall have the authority to
grant Awards under the Plan, from time to time, to such Directors as may be
selected by it.
3.3. DECISIONS BINDING. All determinations and decisions made by the Board
pursuant to the provisions of the Plan and all related orders or resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its stockholders and Participants and their estates and beneficiaries,
and such determinations and decisions shall not be reviewable.
3.4. DELEGATION OF CERTAIN RESPONSIBILITIES. The Board may, in its sole
discretion, delegate to the Board Chair of the Company the administration of the
Plan under this Article 3; provided, however, that no such delegation by the
Board to correct errors, omissions or inconsistencies in the Plan, and the Board
may not delegate its authority under this Article 3 to grant Awards to
Directors. All authority delegated by the Board under this Section 3.4 shall be
exercised in accordance with the provisions of the Plan and any guidelines for
the exercise of such authority that may from time to time be established by the
Board.
3.5. PROCEDURES OF THE BOARD. All Awards and other determinations of the
Board shall be made by not less than a majority of its members present at the
meeting (in person or otherwise) at which a quorum is present. A majority of the
entire Board shall constitute a quorum for the transaction of business. Any
action required or permitted to be taken at a meeting of the Board may be taken
without a meeting if a unanimous written consent, which sets forth the action,
is signed by each member of the Board and filed with the minutes for proceedings
of the Board.
3
<PAGE>
3.6. AWARD AGREEMENTS. Each Award under the Plan shall be evidenced by an
award agreement which shall be signed by the Chairman of the Board on behalf of
the Board and by the Participant, and shall contain such terms and conditions as
may be approved by the Board. Such terms and conditions need not be the same in
all cases.
3.7. RULE 16B-3 REQUIREMENTS. Notwithstanding any other provision of the
Plan, the Board may impose such conditions on any Award (including, without
limitation, the right of the Board to limit the time of exercise to specified
periods) as may be required to satisfy the requirements of Rule 16b-3 (or any
successor rule), under the Exchange Act ("Rule 16b-3").
ARTICLE 4. STOCK SUBJECT TO THE PLAN
4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the aggregate number of Shares that may be delivered under the Plan at
any time shall not exceed 350,000 Shares of common stock of the Company. Stock
delivered under the Plan may consist, in whole or in part, of authorized and
unissued Shares or Shares reacquired by the Company in the open market. The
exercise of a Stock Appreciation Right, whether paid in cash or Stock, shall be
deemed to be an issuance of Stock under the Plan. The payment of Performance
Shares, Performance Units or Stock Units shall not be deemed to constitute an
issuance of Stock under the Plan unless payment is made in Stock, in which case
only the number of Shares issued in payment of the Performance Share,
Performance Unit or Stock Unit Award shall constitute an issuance of Stock under
the Plan.
4.2. LAPSED AWARDS. If any Award (other than Restricted Stock) granted
under this Plan terminates, expires, or lapses for any reason, any Stock subject
to such Award again shall be available for the grant of an Award under the Plan,
subject to Section 7.2 herein.
4.3. ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, Stock
dividend, split-up, share combination, or other change in the corporate
structure of the Company affecting the Stock, such adjustment shall be made in
the number and class of shares which may be delivered under the Plan, and in the
number and class of and/or price of shares subject to outstanding Options, Stock
Appreciation Rights, Restricted Stock Awards, Performance Shares, Performance
Units and Stock Units granted under the Plan, as may be determined to be
appropriate and equitable by the Board, in its sole discretion, to prevent
dilution or enlargement of rights; and provided that the number of shares
subject to any Award shall always be a whole number.
ARTICLE 5. ELIGIBILITY AND PARTICIPATION
5.1. ELIGIBILITY. Persons eligible to participate in this Plan include all
Directors who are not also employees of the Company.
5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Board may from time to time select those Directors to whom Awards shall be
granted and determine the nature and amount of each Award. No Director shall
have any right to be granted an Award under this Plan even if previously granted
an Award.
ARTICLE 6. STOCK OPTIONS
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Directors at any time and from time to time as shall
be determined by the Board. The Board shall have the sole discretion, subject to
the requirements of the Plan, to determine the actual number of Shares subject
to Options granted to any Participant. Options granted under the Plan will be
NQSOs.
6.2. OPTION AGREEMENT. Each Option grant shall be evidenced by an Option
agreement that shall specify the Option price, the duration of the Option, the
number of Shares to which the Option pertains, and such other provisions as the
Board shall determine.
4
<PAGE>
6.3. OPTION PRICE. The purchase price per share of Stock covered by an
Option shall be determined by the Board.
6.4. DURATION OF OPTIONS. Each Option shall expire at such time as the
Board shall determine at the time of grant
6.5. EXERCISE OF OPTIONS. Subject to Section 3.7 herein, Options granted
under the Plan shall be exercisable at such times and be subject to such
restrictions and conditions as the Board shall in each instance approve, which
need not be the same for all Participants.
6.6. PAYMENT. Options shall be exercised by the delivery of a written
notice to the Company setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment for the Shares. The
Option price upon exercise of any Option shall be payable to the Company in full
either (a) in cash or its equivalent, (b) by tendering shares of previously
acquired Stock having a Fair Market Value at the time of exercise equal to the
total Option price, (c) by foregoing compensation under rules established by the
Board, or (d) by a combination of (a), (b), or (c). The proceeds from such a
payment shall be added to the general funds of the Company and shall be used for
general corporate purposes. As soon as practicable, after receipt of written
notification and payment, the Company shall deliver to the Participant Stock
certificates in an appropriate amount based upon the number of Options
exercised, issued in the Participant's name.
6.7. RESTRICTIONS ON STOCK TRANSFERABILITY. The Board shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities law, under the requirements of any stock
exchange upon which such Shares are then listed and under any blue sky or state
securities laws applicable to such Shares.
6.8. TERMINATION OF SERVICE DUE TO DEATH, DISABILITY, OR RETIREMENT. In
the event a Participant dies while serving as a Director, any of such
Participant's outstanding Options shall become immediately exercisable at any
time prior to the expiration date of the Options or within one year after such
date of termination of employment, whichever period is shorter, by such person
or persons as shall have acquired the Participant's rights under the Option
pursuant to Article 10 hereof or by will or by the laws of descent and
distribution. In the event a Participant is unable to serve as a Director by
reason of disability (as defined under the then established rules of the
Company), any of such Participant's outstanding Options shall become immediately
exercisable, at any time prior to the expiration date of the Options or within
one year after such date of termination of service, whichever period is shorter.
In the event a Participant retires from the Board, any of such Participant's
outstanding Options shall become immediately exercisable (subject to Section 3.7
herein) at any time prior to the expiration date of the Options.
6.9. TERMINATION OF SERVICE FOR OTHER REASONS. If a Participant ceases
service as a Director for any reason other than death, disability, retirement or
removal, the Participant shall have the right to exercise such Participant's
outstanding Options within the 90 days after the date of his termination, but in
no event beyond the expiration of the term of the Options and only to the extent
that the Participant was entitled to exercise the Options at the date of his
termination of employment. In its sole discretion, the Board may extend the 90
days to up to one year but, however, in no event beyond the expiration date of
the Option.
Notwithstanding anything contained herein, if a Director is removed from
service, all of the Participant's outstanding Options shall be immediately
forfeited back to the Company.
6.10. NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
Options granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
5
<PAGE>
ARTICLE 7. STOCK APPRECIATION RIGHTS
7.1. GRANT OF STOCK APPRECIATION RIGHTS. Subject to the terms and
conditions of the Plan, Stock Appreciation Rights may be granted to
Participants, at the discretion of the Board, in any of the following forms:
(a) In lieu of Options;
(b) In addition to Options;
(c) Independent of Options; or
(d) In any combination of (a), (b), or (c).
The Board shall have the sole discretion, subject to the requirements of the
Plan, to determine the actual number of Shares subject to SARs granted to any
Participant.
7.2. EXERCISE OF SARS IN LIEU OF OPTIONS. SARs granted in lieu of Options
may be exercised for all or part of the Shares subject to the related Option
upon the surrender of the related Options representing the right to purchase an
equivalent number of Shares. The SAR may be exercised only with respect to the
Shares of Stock for which its related Option is then exercisable. Option Stock
with respect to which the SAR shall have been exercised may not be subject again
to an Award under the Plan.
7.3. EXERCISE OF SARS IN ADDITION TO OPTIONS. SARs granted in addition to
Options shall be deemed to be exercised upon the exercise of the related
Options. The deemed exercise of SARs granted in addition to Options shall not
necessitate a reduction in the number of related Options.
7.4. EXERCISE OF SARS INDEPENDENT OF OPTIONS. Subject to Section 3.7
herein and Section 7.5 herein, SARs granted independently of Options may be
exercised upon whatever terms and conditions the Board, in its sole discretion,
imposes upon the SARs, including, but not limited to, a corresponding
proportional reduction in previously granted Options.
7.5. PAYMENT OF SAR AMOUNT. Upon exercise of the SAR, the holder shall be
entitled to receive payment of an amount determined by multiplying:
(a) The difference between the Fair Market Value of a Share on the date of
exercise over the price fixed by the Board at the date of grant (which
price shall not be less than 100% of the market price of a Share on the
date of grant) (the Exercise Price); by
(b) The number of Shares with respect to which the SAR is exercised.
7.6. FORM AND TIMING OF PAYMENT. Payment to a Participant, upon SAR
exercise, will be made in cash or stock, at the discretion of the Board, within
ten calendar days of the exercise.
7.7. TERM OF SAR. The term of an SAR granted under the Plan shall not
exceed ten years.
7.8. TERMINATION OF SERVICE. In the event a Participant ceases service as
a Director by reason of death, disability, retirement, or any other reason, the
exercisability of any outstanding SAR granted in lieu of or in addition to an
Option shall terminate in the same manner as its related Option as specified
under Sections 6.8 and 6.9 herein. The exercisability of any outstanding SARs
granted independent of Options also shall terminate in the manner provided under
Sections 6.8 and 6.9 hereof.
7.9. NONTRANSFERABILITY OF SARS. No SAR granted under the Plan may be
sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
otherwise than by will or by the laws of descent and distribution. Further, all
SARs granted to a Participant under the Plan shall be exercisable during his
lifetime only by such Participant.
ARTICLE 8. RESTRICTED STOCK
8.1. GRANT OF RESTRICTED STOCK. Subject to the terms and provisions of the
Plan, the Board, at any time and from time to time, may grant Shares of
Restricted Stock under the Plan to such Participants and in such amounts as it
shall determine.
6
<PAGE>
8.2. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock Agreement that shall specify the Period of
Restriction, or periods, the number of Shares of Restricted Stock granted, and
such other provisions as the Board shall determine.
8.3. TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock granted hereunder may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the termination of the
applicable Period of Restriction or for such period of time as shall be
established by the Board and as shall be specified in the Restricted Stock
Agreement, or upon earlier satisfaction of other conditions (including any
performance goals) as specified by the Board in its sole discretion and set
forth in the Restricted Stock Agreement. All rights with respect to the
Restricted Stock granted to a Participant under the Plan shall be exercisable
during his lifetime only by such Participant.
8.4. OTHER RESTRICTIONS. The Board shall impose such other restrictions on
any Shares of Restricted Stock granted pursuant to the Plan as it may deem
advisable including, without limitation, restrictions under applicable Federal
or state securities laws, and the Board may legend certificates representing
Restricted Stock to give appropriate notice of such restrictions.
8.5. CERTIFICATE LEGEND. In addition to any legends placed on certificates
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan shall bear the following legend:
"The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is
subject to certain restrictions on transfer set forth in the Non-Employee
Directors Incentive Stock Plan of Jacor Communications, Inc., in the rules
and administrative procedures adopted pursuant to such Plan, and in a
Restricted Stock Agreement dated . A copy of the Plan, such
rules and procedures, and such Restricted Stock Agreement may be obtained
from the Secretary of Jacor Communications, Inc."
8.6. REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Article, Shares of Restricted Stock covered by each Restricted Stock grant made
under the Plan shall become freely transferable by the Participant after the
last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 8.5 removed from his Stock certificate.
8.7. VOTING RIGHTS. During the Period of Restriction, Participants holding
Shares of Restricted Stock granted hereunder may exercise full voting rights
with respect to those Shares.
8.8. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock granted hereunder shall be
entitled to receive all dividends and other distributions paid with respect to
those Shares while they are so held. If any such dividends or distributions are
paid in Shares, the Shares shall be subject to the same restrictions on
transferability as the Shares of Restricted Stock with respect to which they
were paid.
8.9. TERMINATION OF SERVICE DUE TO RETIREMENT. In the event that a
Participant ceases service as a Director of the Company because of normal
retirement (as defined under the then established rules of the Company), any
remaining Period of Restriction applicable to the Restricted Stock pursuant to
Section 8.3 hereof shall automatically terminate and, except as otherwise
provided in Section 8.4 the Shares of Restricted Stock shall thereby be free of
restrictions and be freely transferable. In the event that a Participant ceases
to be a Director of the Company because of early retirement (as defined under
the then established rules of the Company), the Board in its sole discretion may
waive the restrictions remaining on any or all Shares of Restricted Stock
pursuant to Section 8.3 herein and add such new restrictions to those Shares of
Restricted Stock as it deems appropriate.
8.10. TERMINATION OF SERVICE DUE TO DEATH OR DISABILITY. In the event a
Participant ceases service as a Director because of death or disability (as
defined under the then established rules of the Company) during the Period of
Restriction, any remaining Period of Restriction applicable to the Restricted
Stock pursuant to Section 8.3 herein shall automatically terminate and, except
as otherwise provided in
7
<PAGE>
Section 8.4. herein, the shares of Restricted Stock shall thereby be free of
restrictions and be fully transferable.
8.11. TERMINATION OF SERVICE FOR OTHER REASONS. In the event that a
Participant ceases service as a Director of the Company for any reason other
than for death, disability, or retirement, as set forth in Sections 8.9 and 8.10
herein, during the Period of Restriction, then any shares of Restricted Stock
still subject to restrictions as of the date of such termination shall
automatically be forfeited and returned to the Company.
ARTICLE 9. PERFORMANCE UNITS, PERFORMANCE SHARES AND STOCK UNITS
9.1. GRANT OF PERFORMANCE UNITS, PERFORMANCE SHARES OR STOCK
UNITS. Subject to the terms and provisions of the Plan, Performance Units,
Performance Shares or Stock Units may be granted to Participants at any time and
from time to time as shall be determined by the Board. The Board shall have
complete discretion in determining the number of Performance Units, Performance
Shares or Stock Units granted to each Participant.
9.2. VALUE OF PERFORMANCE UNITS AND PERFORMANCE SHARES. The Board shall
set performance goals over certain periods to be determined in advance by the
Board ("Performance Periods"). Prior to each grant of Performance Units or
Performance Shares, the Board shall establish an initial value for each
Performance Unit and an initial number of Shares for each Performance Share
granted to each Participant for that Performance Period. Prior to each grant of
Performance Units or Performance Shares, the Board also shall set the
performance goals that will be used to determine the extent to which the
Participant receives a payment of the value of the Performance Units or number
of Shares for the Performance Shares awarded for such Performance Period. These
goals will be based on the attainment, by the Company of certain objective or
subjective performance measures, which may include one or more of the following:
broadcast cash flow, total stockholder return, return on equity, return on
capital, earnings per share, market share, stock price, revenues, costs, net
income, cash flow and retained earnings. Such performance goals also may be
based upon the attainment of specified levels of performance of the Company
under one or more of the measures described above relative to the performance of
other corporations. With respect to each such performance measure utilized
during a Performance Period, the Board shall assign percentages to various
levels of performance which shall be applied to determine the extent to which
the Participant shall receive a payout of the values of Performance Units and
number of Performance Shares awarded.
9.3. PAYMENT OF PERFORMANCE UNITS AND PERFORMANCE SHARES. After a
Performance Period has ended, the holder of a Performance Unit or Performance
Share shall be entitled to receive the value thereof as determined by the Board.
The Board shall make this determination by first determining the extent to which
the performance goals set pursuant to Section 9.2 have been met. It will then
determine the applicable percentage (which may exceed 100%) to be applied to,
and will apply such percentage to, the value of Performance Units or number of
Performance Shares to determine the payout to be received by the Participant.
9.4. VALUE OF STOCK UNITS. Subject to the terms and provisions of the
Plan, Stock Units may be granted to Participants at any time and from time to
time on such terms as shall be determined by the Board. The Board shall have
complete discretion in determining the number of Stock Units granted to each
Participant. Each Participant must elect, by completing and signing an Election
Form, to either (i) convert all or part of his or her Stock Unit award into
cash, equivalent to the cash value of the Stock Units established by the Board
on the date of grant, receive a cash award for the corresponding number of Stock
Units converted to cash, and receive the remaining Stock Units in shares of
Common Stock payable upon the occurrence of certain trigger events set forth on
the Participant's election form in his or her complete discretion ("Trigger
Events"); or (ii) receive his or her entire Stock Unit award in shares of Common
Stock, payable upon the occurrence of certain Trigger Events. The terms and
conditions of the Trigger Events may vary by Stock Unit award, by Participant,
or both. The Election Form shall be filed with
8
<PAGE>
the Secretary of the Company prior to the date on which any Stock Unit award is
made. Such election will be irrevocable as to any Stock Unit award made after
delivery of the Election Form to the Company, and it shall continue in effect
until revoked, increased or decreased prospectively by Participant prior to the
grant of any future Stock Unit award for which the change is effective.
9.5. ACCOUNTING FOR STOCK UNITS. Any portion of a Participant's Stock Unit
Award which is not converted to cash as set forth in Section 9.4(i) above shall
be credited by the Company to a bookkeeping account to reflect the Company's
liability to that Participant (the "Stock Unit Account"). Each Stock Unit is
credited as a Common Stock equivalent on the date so credited. Additional stock
equivalents may be added to the Stock Unit Account equal to the amount of Common
Stock that could be purchased with dividends equal to that paid on one share of
Common Stock, multiplied by the number of stock equivalents then existing in the
Stock Unit Account, based on the Fair Market Value of the Common Stock on the
date a dividend is paid on the Common Stock. Because the Trigger Events for each
Stock Unit award may differ, the Company shall establish a separate Stock Unit
Account for each separate Stock Unit award. Upon the occurrence of particular
Trigger Events, the holder of a Stock Unit award shall be entitled to receive a
number of shares of Common Stock which corresponds to the number of Stock Units
granted as part of the initial Stock Unit award.
9.6. BOARD DISCRETION TO ADJUST AWARDS. The Board shall have the authority
to modify, amend or adjust the terms and conditions of any Performance Unit
award, Performance Share award or Stock Unit Award, at any time or from time to
time, including but not limited to the performance goals.
9.7. FORM AND TIMING OF PAYMENT. The payment described in Section 9.3
herein shall be made in cash, Stock, or a combination thereof as determined by
the Board, or in the case of Stock Units, as Selected by the Participant.
Payment may be made in a lump sum or installments as prescribed by the Board. If
any payment is to be made on a deferred basis, the Board may provide for the
payment of dividend equivalents or interest during the deferral period.
9.8. TERMINATION OF SERVICE DUE TO DEATH, DISABILITY, OR RETIREMENT. In
the case of death, disability, or retirement (each of disability and retirement
as defined under the established rules of the Company), the holder of a
Performance Unit or Performance Share shall receive a prorated payment based on
the Participant's number of full months of service during the Performance
Period, further adjusted based on the achievement of the performance goals
during the entire Performance Period, as computed by the Board. Payment shall be
made at the time payments are made to Participants who did not terminate service
during the Performance Period. In the case of Stock Units, all such Stock Units
held will immediately vest and be paid as set forth in the Participant's
Election Form.
9.9. TERMINATION OF SERVICE FOR OTHER REASONS. In the event that a
Participant ceases to be a Director of the Company for any reason other than
death, disability, or retirement, all Performance Units and Performance Shares
shall be forfeited. In the case of termination other than due to removal, all
Stock Units held will immediately vest and be paid as set forth in the
Participant's Election Form. However, in the event of termination due to
removal, all Stock Units held will be forfeited.
9.10. NONTRANSFERABILITY. No Performance Units, Performance Shares or
Stock Units granted under the Plan may be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, otherwise than by will or by the laws of
descent and distribution until the termination of the applicable Performance
Period or, in the case of Stock Units, vesting and payment. All rights with
respect to Performance Units, Performance Shares and Stock Units granted to a
Participant under the Plan shall be exercisable during his lifetime only by such
Participant.
ARTICLE 10. BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any beneficiary
or beneficiaries (who may be named contingently or successively and who may
include a trustee under a will or living trust) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form
9
<PAGE>
prescribed by the Board, and will be effective only when filed by the
Participant in writing with the Board during his lifetime. In the absence of any
such designation or if all designated beneficiaries predecease the Participant,
benefits remaining unpaid at the Participant's death shall be paid to the
Participant's estate.
ARTICLE 11. RIGHTS OF DIRECTORS
11.1. DIRECTORSHIP. Nothing in the Plan shall interfere with or limit in
any way the right of the Board of Directors or stockholders under applicable law
to remove any Participant from the Board at any time, nor confer upon any
Participant any right to continue in the service of the Company.
11.2. PARTICIPATION. No Director shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
11.3. NO IMPLIED RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the
establishment of the Plan nor any amendment thereof shall be construed as giving
any Participant, beneficiary, or any other person any legal or equitable right
unless such right shall be specifically provided for in the Plan or conferred by
specific action of the Board in accordance with the terms and provisions of the
Plan. Except as expressly provided in this Plan, the Company nor shall not be
required or be liable to make any payment under the Plan.
11.4. NO RIGHT TO COMPANY ASSETS. Neither the Participant nor any other
person shall acquire, by reason of the Plan, any right in or title to any
assets, funds or property of the Company whatsoever including, without limiting
the generality of the foregoing, any specific funds, assets, or other property
which the Company, in its sole discretion, may set aside in anticipation of a
liability hereunder. Any benefits which become payable hereunder shall be paid
from the general assets of the Company. The Participant shall have only a
contractual right to the amounts, if any, payable hereunder unsecured by any
asset of the Company. Nothing contained in the Plan constitutes a guarantee by
the Company that the assets of the Company shall be sufficient to pay any
benefit to any person.
ARTICLE 12. CHANGE IN CONTROL
12.1. STOCK BASED AWARDS. Notwithstanding any other provisions of the
Plan, in the event of a Change in Control, all Stock based awards granted under
this Plan shall immediately vest 100% in each Participant, including
Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock and
Stock Units.
12.2. PERFORMANCE BASED AWARDS. Notwithstanding any other provisions of
the Plan, in the event of a Change in Control, all performance based awards
granted under this Plan shall be immediately paid out in cash, including
Performance Units and Performance Shares. The amount of the payout shall be
based on the higher of: (i) the extent, as determined by the Board, to which
performance goals, established for the Performance Period then in progress have
been met up through and including the effective date of the Change in Control or
(ii) 100% of the value on the date of grant of the Performance Units or number
of Performance Shares.
ARTICLE 13. AMENDMENT, MODIFICATION, AND TERMINATION
13.1. AMENDMENT, MODIFICATION, AND TERMINATION. At any time and from time
to time, the Board may terminate, amend, or modify the Plan, subject to the
approval of the stockholders of the Company if required by the Code, by the
insider trading rules of Section 16 of the Exchange Act, by any national
securities exchange or system on which the Stock is then listed or reported, or
by any regulatory body having jurisdiction with respect hereto.
13.2. AWARDS PREVIOUSLY GRANTED. No termination, amendment or modification
of the Plan other than pursuant to Section 4.3 hereof shall in any manner
adversely affect any Award theretofore granted under the Plan, without the
written consent of the Participant.
10
<PAGE>
ARTICLE 14. WITHHOLDING
14.1. TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes (including the
Participant's FICA obligation) required by law to be withheld with respect to
any grant, exercise, or payment made under or as a result of this Plan.
14.2. STOCK DELIVERY OR WITHHOLDING. With respect to withholding required
upon the exercise of Nonqualified Stock Options, or upon the lapse of
restrictions on Restricted Stock, participants may elect, subject to the
approval of the Board, to satisfy the withholding requirement, in whole or in
part, by tendering to the Company shares of previously acquired Stock or by
having the Company withhold Shares of Stock, in each such case in an amount
having a Fair Market Value equal to the amount required to be withheld to
satisfy the tax withholding obligations described in Section 14.1. The value of
the Shares to be tendered or withheld is to be based on the Fair Market Value of
the Stock on the date that the amount of tax to be withheld is to be determined.
All Stock withholding elections shall be irrevocable and made in writing, signed
by the Participant on forms approved by the Board in advance of the day that the
transaction becomes taxable.
Stock withholding elections made by Participants who are subject to the
short-swing profit restrictions of Section 16 of the Exchange Act must comply
with the additional restrictions of Section 16 and Rule 16b-3 in making their
elections.
ARTICLE 15. SUCCESSORS
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation or otherwise, of all or substantially all of the business
and/or assets of the Company.
ARTICLE 16. REQUIREMENTS OF LAW
16.1. REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares of Stock under this Plan shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
16.2. GOVERNING LAW. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Delaware.
11
<PAGE>
- --------------------------------------------------------------------------------
PROXY
JACOR COMMUNICATIONS, INC.
BUCKEYE AB ROOM, HYATT REGENCY HOTEL
151 W. FIFTH STREET
CINCINNATI, OHIO
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 28, 1997
The undersigned hereby appoints Randy Michaels, R. Christopher Weber and
Jon M. Berry, and each of them, as Proxy Holders for the undersigned, with
full power of substitution, to appear and vote all of the shares of Jacor
Communications, Inc. which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held at the Buckeye AB Room, Hyatt Regency
Hotel, 151 W. Fifth Street, Cincinnati, Ohio on May 28, 1997, at 10:30 a.m.,
local time, and at any adjournment thereof, and in their discretion to act
upon any other matters that may properly come before the meeting or any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED AS YOU SPECIFY. IF NOT SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL OF
THE PROPOSALS.
Please mark sign and date this proxy on the reverse side and return the
completed proxy promptly in the enclosed envelope.
- --------------------------------------------------------------------------------
Triangle FOLD AND DETACH HERE Triangle
<PAGE>
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH PROPOSAL
Please mark
your votes as /X/
indicated in
this example
1. ELECTION OF DIRECTORS
FOR all WITHHOLD John W. Alexander Robert L. Lawrence
nominees AUTHORITY Peter C.B. Bynos Randy Michaels
listed to vote for all Rod F. Dammeyer Sheli Z. Rosenberg,
(except as nominees F. Philip Handy Maggie Wilderotter
marked to listed Marc Lasry Samuel Zell
the contrary) (INSTRUCTION: To withhold authority to
vote for any individual nominee, strike a
/ / / / line through the nominee's name)
2. Proposal to approve the Amended and Restated
Employee Stock Purchase Plan, including the
issuance of up to 500,000 shares of Common
Stock thereunder
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal to approve the 1997 Long-Term Incentive
Stock Plan, including the issuance of up to
1,800,000 shares of Common Stock thereunder
FOR AGAINST ABSTAIN
/ / / / / /
4. Proposal to approve the 1997
Short-Term Incentive Plan
FOR AGAINST ABSTAIN
/ / / / / /
5. Proposal to approve the 1997 Non-Employee
Directors Stock Purchase Plan, including the issuance
of up to 150,000 shares of Common Stock thereunder
FOR AGAINST ABSTAIN
/ / / / / /
6. Proposal to approve the 1997 Non-Employee Directors
Incentive Stock Plan, including the issuance of up to Change of / /
350,000 shares of Common Stock thereunder Address
FOR AGAINST ABSTAIN Attend / /
/ / / / / / Meeting
SHARES IN YOUR NAME(S)
Each proposal is fully explained in the enclosed Notice of
Annual Meeting of Stockholders and Proxy Statement. To vote
your proxy, please MARK by placing an "X" in the appropriate
box, SIGN and DATE the proxy. Then please DETACH and
RETURN the completed proxy promptly in the enclosed
envelope, postage prepaid.
SIGNATURE(S)_________________ SIGNATURE(S)__________________ DATE _______, 1997
NOTE Please sign exactly as the name appears above. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title.
- --------------------------------------------------------------------------------
Triangle FOLD AND DETACH HERE Triangle
