<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
EMMIS BROADCASTING CORPORATION
- -------------------------------------------------------------------------------
(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)(4) 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> 2
[EMMIS BROADCASTING LOGO]
May 27, 1997
Dear Shareholder:
The directors and officers of Emmis Broadcasting Corporation join me in
extending to you a cordial invitation to attend the annual meeting of our
shareholders. This meeting will be held on Tuesday, June 24, 1997, at 10:00
a.m. at The Omni Severin Hotel Downtown, 40 West Jackson Place, Indianapolis,
Indiana.
The formal notice of this annual meeting and the proxy statement appear on
the following pages. After reading the proxy statement, PLEASE MARK, SIGN, AND
RETURN THE ENCLOSED PROXY CARD TO ENSURE THAT YOUR VOTES ON THE BUSINESS
MATTERS OF THE MEETING WILL BE RECORDED.
We hope that you will attend this meeting. Whether or not you attend, we
urge you to return your proxy promptly in the postpaid envelope provided.
After returning the proxy, you may, of course, vote in person on all matters
brought before the meeting.
We look forward to seeing you on June 24.
Sincerely,
/s/ Jeffrey H. Smulyan
Jeffrey H. Smulyan
President and
Chairman of the Board
<PAGE> 3
EMMIS BROADCASTING CORPORATION
INDIANAPOLIS, INDIANA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of the shareholders of Emmis Broadcasting Corporation
(the "Corporation") will be held on Tuesday, June 24, 1997, at 10:00 a.m. at
The Omni Severin Hotel Downtown, 40 West Jackson Place, Indianapolis, Indiana
to consider and to take action on the following matters:
1. The election of six directors of the Corporation for terms of
one year;
2. The approval of the 1997 Equity Incentive Plan;
3. The approval of independent auditors; and
4. The transaction of such other business as may properly come before
the meeting and any adjournments thereof.
Only shareholders of record at the close of business on April 30, 1997 are
entitled to notice of and to vote at this meeting and any adjournments thereof.
By order of the Board of Directors,
/s/ Norman H. Gurwitz
Norman H. Gurwitz
Secretary
Indianapolis, Indiana
May 27, 1997
<PAGE> 4
EMMIS BROADCASTING CORPORATION
950 NORTH MERIDIAN STREET, SUITE 1200
INDIANAPOLIS, INDIANA 46204
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Emmis
Broadcasting Corporation (the "Corporation") for use at the annual meeting of
shareholders to be held June 24, 1997 and any adjournments thereof. When the
proxy is properly executed and returned, the shares it represents will be voted
at the meeting in accordance with any directions noted on the proxy. If no
direction is indicated, the proxy will be voted in favor of the proposals set
forth in the notice attached to this proxy statement. Any shareholder giving a
proxy has the power to revoke it at any time before it is voted. The
approximate date of mailing of this proxy statement is May 27, 1997.
VOTING SECURITIES AND BENEFICIAL OWNERS
Only shareholders of record as of the close of business on April 30, 1997
will be entitled to vote at the annual meeting. As of the close of business on
April 30, 1997, the Corporation had outstanding 8,428,596 shares of Class A
Common Stock, par value $.01 per share ("Class A Common Stock") and 2,574,470
shares of Class B Common Stock, par value $.01 per share ("Class B Common
Stock," and together with the Class A Common Stock, "Common Stock").
Holders of shares of Common Stock vote as a single class on all matters
submitted to a vote of the shareholders, except (i) the election of directors,
(ii) certain "going private" transactions and (iii) as otherwise provided by
law. Each share of Class A Common Stock is entitled to one vote and each share
of Class B Common Stock is entitled to ten votes. All matters to come before
the meeting, other than the election of directors, will be determined by
whether the number of votes cast for the matter exceed the number of votes cast
against the matter. An abstention or broker non-vote on any such matter will
not change the number of votes cast for or against the matter.
In the election of directors, the holders of Class A Common Stock, voting
as a separate class, will be entitled to elect two of the Corporation's
directors who must be independent directors. For this purpose, an "independent
director" means a person who is not an officer or employee of the Corporation
or its subsidiaries, and who does not have a relationship which, in the opinion
of the Board of Directors, would interfere with the exercise of independent
judgement in carrying out the responsibilities of a director. The holders of
Common Stock, voting as a single class with each share of Class A Common Stock
entitled to one vote and each share of Class B Common Stock entitled to ten
votes, are entitled to elect the remaining directors. In each case, the
election of directors is determined by a plurality of the votes represented by
shares entitled to vote that are present in person or represented by proxy. An
abstention or broker non-vote on the election of any director will not change
the number of votes cast for or against such director. Holders of Common Stock
are not entitled to cumulate votes in the election of directors.
The following table shows, as of April 30, 1997, the number and percentage
of shares of Common Stock held by each person known to the Corporation who
owned beneficially more than five percent of the issued and outstanding Common
Stock of the Corporation, by the Corporation's directors and nominees, and by
certain executive officers:
<PAGE> 5
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
----------------------------------- -------------------------------- PERCENT
FIVE PERCENT SHAREHOLDERS, AMOUNT AND PERCENT AMOUNT AND PERCENT OF TOTAL
DIRECTORS AND CERTAIN NATURE OF OF NATURE OF OF VOTING
EXECUTIVE OFFICERS BENEFICIAL OWNERSHIP CLASS BENEFICIAL OWNERSHIP CLASS POWER
- ------------------------- -------------------- ------- -------------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan 234,128 (1) 2.6% 2,949,470(13) 100.0% 77.8%
Susan B. Bayh 10,100 (2) * -- -- *
Richard F. Cummings 73,851 (3) * -- -- *
Norman H. Gurwitz 83,233 (4) * -- -- *
Gary L. Kaseff 16,390 (5) * -- -- *
Richard A. Leventhal 22,100 (6) * -- -- *
Doyle L. Rose 83,829 (7) * -- -- *
Howard L. Schrott 57,409 (8) * -- -- *
Lawrence B. Sorrel 765,001 (9) 9.1 -- -- 2.2
Morgan Stanley Group Inc. 765,001(10) 9.1 -- -- 2.2
Putnam Investments, Inc. 1,254,700(11) 14.9 -- -- 2.5
All Officers and Directors
as a Group (22 persons) 799,577(12) 9.2 2,949,470 100.0 79.3
</TABLE>
- --------------
* Less than 1%.
1 Includes 154,128 shares held by Mr. Smulyan as trustee for the Emmis
Broadcasting Corporation Profit Sharing Trust, (the "Profit Sharing
Trust") as to which Mr. Smulyan disclaims beneficial ownership.
2 Consists of 100 shares owned individually and 10,000 shares represented
by stock options exercisable within 60 days of April 30, 1997.
3 Consists of 22,344 shares owned individually, 2,040 shares held for the
benefit of Mr. Cummings' children, 1,467 shares held in the Profit Sharing
Trust, 36,000 shares of restricted stock, and 12,000 shares represented by
stock options exercisable within 60 days of April 30, 1997.
4 Consists of 5,285 shares owned individually or jointly with his spouse,
275 owned by Mr. Gurwitz's spouse, 1,880 owned for the benefit of Mr.
Gurwitz's children, 63,820 shares represented by stock options exercisable
within 60 days of April 30, 1997, 873 shares held in the Profit Sharing
Trust, and 11,100 shares owned by a corporation of which Mr. Gurwitz's
spouse is a 50% owner.
5 Consists of 2,845 shares owned individually by Mr. Kaseff, 940 shares
owned by Mr. Kaseff's spouse, 105 shares held in the Profit Sharing Trust,
and 12,500 shares represented by stock options exercisable within 60 days
of April 30, 1997.
6 Consists of 4,500 shares owned individually, 1,500 shares owned by Mr.
Leventhal's spouse, 11,100 shares owned by a corporation of which Mr.
Leventhal is a 50% owner and 10,000 shares represented by stock options
exercisable within 60 days of April 30, 1997.
7 Consists of 34,362 shares owned individually, 1,467 shares held in the
Profit Sharing Trust, 36,000 shares of restricted stock, and 12,000 shares
represented by stock options exercisable within 60 days of April 30, 1997.
8 Consists of 500 shares owned individually, 464 shares held in the Profit
Sharing Trust, and 56,445 shares represented by stock options exercisable
within 60 days of April 30, 1997.
9 Consists of shares beneficially owned by The Morgan Stanley Leveraged
Equity Fund, L. P., Morgan Stanley LEF I, Inc., and Morgan Stanley Group
Inc. ("MS Group") (Collectively, the "Morgan Stanley Entities"). Mr.
Sorrel disclaims beneficial ownership of these shares.
10 Information concerning these shares was obtained from a Schedule 13G
provided to the Corporation in February 1997 on behalf of CIGNA
Corporation, CIGNA Funding Limited Partnership, and CIGNA Leveraged
Capital Fund, Inc., (collectively, the "CIGNA Entities"), the Morgan
Stanley Entities, and Jeffrey H. Smulyan. The address of the CIGNA
Entities is 900 Cottage Grove Road, Bloomfield, Connecticut, and the
address of the Morgan Stanley Entities is 1251 Avenue of the Americas, New
York, New York.
11 Information concerning these shares was obtained from an Amendment to
Schedule 13G provided to the Corporation in May, 1996, by Putnam
Investments, Inc. on behalf of itself, Marsh & McLennan Companies, Inc.,
Putnam Investment Management, Inc., The Putnam Advisory Company, Inc., and
Putnam New Opportunities Fund (collectively the "Putnam Group"), each of
whom has an address of One Post Office Square, Boston, Massachusetts 02109
(except Marsh & McLennan Companies, Inc. which has an address of 1166
Avenue of the Americas, New York, New York 10036).
12 Includes 201,923 shares represented by stock options exercisable within
60 days of April 30, 1997 and 135,415 shares held in the Emmis
Broadcasting Corporation Profit Sharing Trust. Excludes shares
beneficially owned by the Morgan Stanley Entities.
13 Consists of 2,574,470 shares owned individually and 375,000 shares
represented by stock options exercisable within 60 days of April 30, 1997.
2
<PAGE> 6
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Six directors are to be elected. Susan B. Bayh and Richard A. Leventhal
have been nominated to serve as the independent directors elected by the
holders of Class A Common Stock, and Jeffrey H. Smulyan, Doyle L. Rose,
Lawrence B. Sorrel, and Gary L. Kaseff have been nominated to fill the
remaining directorships. Each nominee is nominated to serve a term of one year
and until his or her successor is elected and qualified. All nominees are
members of the present Board of Directors. If, at the time of the 1997 annual
meeting, any nominee is unable or declines to serve, the discretionary
authority provided in the proxy may be exercised to vote for a substitute or
substitutes. The Board of Directors has no reason to believe that any
substitute nominee or nominees will be required.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE ELECTION OF THE
FOLLOWING NOMINEES.
NAME, AGE, PRINCIPAL
OCCUPATION(S) AND
BUSINESS EXPERIENCE DIRECTOR
DURING PAST 5 YEARS SINCE
-------------------------- --------
JEFFREY H. SMULYAN, Age 49 1979
Chairman of the Board of Directors and President
of the Corporation; formerly also owner and CEO
of the Seattle Mariners major league baseball
team; Director of the Radio Advertising Bureau
and The Finish Line; Trustee of Ball State University.
DOYLE L. ROSE, Age 47 1984
Radio Division President of the Corporation and
General Manager of KPWR-FM in Los Angeles, previously
Executive Vice President-Operations.
LAWRENCE B. SORREL, Age 38 1993
Principal in the Merchant Banking Division of Morgan
Stanley & Co. Incorporated, previously, Vice President
and Associate; Director of American Italian Pasta
Corporation, MS Distribution, Inc., LifeTrust,
Inc., The Eli Witt Company and The Compucare Company.
GARY L. KASEFF, Age 49 1994
Employed as counsel to the Corporation, also solo
practitioner attorney in Southern California; previously,
President of the Seattle Mariners major league baseball
club and partner with the law firm of Epport & Kaseff.
SUSAN B. BAYH, Age 37* 1994
Commissioner of the International Joint Commission of the
United States and Canada; Also, Distinguished Visiting
Professor at Butler University; previously, Attorney with
Eli Lilly & Company; Director of BankOne, Indiana, and
Athemn (Southeast).
RICHARD A. LEVENTHAL, Age 49 * 1992
Owns and operates a wholesale fabric and textile company
in Carmel, Indiana. Mr. Leventhal is the brother-in-law
of Norman H. Gurwitz, an executive officer of the Corporation.
- -----------
* Nominee to serve as independent director elected by the holders of the
Class A Common Stock voting as a single class.
The Board of Directors of the Corporation held 2 meetings, either in
person, by telephone or by written consent, during the last fiscal year. All
directors attended at least 75% of the aggregate of (1) the total number of
meetings of the Board of Directors of the Corporation and (2) the total number
of meetings held by all committees on which he or she served, except that Mr.
Sorrel attended in excess of 50% of such meetings. Directors of the
Corporation who are not officers or employees are compensated for their
services at the rate of $1,000 per meeting of the Board of Directors attended.
Pursuant to the Non-Employee Director Stock Option Plan, Directors who are not
officers or employees of the Corporation also receive options to purchase 5,000
shares of the Corporation's Class A Common Stock. The options are granted on
the date of the Corporation's annual meeting at the closing price of the
underlying shares on that date. Nominees for election as a director of the
Corporation are selected by the Board of Directors, acting as a nominating
committee.
3
<PAGE> 7
CERTAIN COMMITTEES OF THE BOARDS OF DIRECTORS OF THE CORPORATION
The Board of Directors of the Corporation currently has an audit and a
compensation committee. The audit committee, which informally met in
connection with certain Board meetings, evaluates audit performance, handles
relations with the Corporation's independent auditors and evaluates policies
and procedures relating to internal audit functions and controls. The audit
committee may also examine and consider other matters relating to the financial
affairs of the Corporation as it deems appropriate. The directors who are
members of the audit committee are Richard A. Leventhal and Lawrence B. Sorrel.
The compensation committee, which met three times during the last fiscal year,
provides a general review of the Corporation's compensation and benefit plans
to ensure that they meet corporate objectives. The compensation committee also
has authority to administer and to recommend the grant of options and other
awards under the Corporation's various stock option and incentive plans, and to
administer and recommend contributions under the Corporation's Profit Sharing
Trust. The directors who are members of the compensation committee are Susan
B. Bayh, Richard A. Leventhal and Lawrence B. Sorrel.
CERTAIN TRANSACTIONS
The Corporation has periodically made interest-bearing loans to various
officers and employees. The approximate amount of such indebtedness
outstanding at April 30, 1997, and the largest aggregate amount of indebtedness
outstanding at any month end during the last fiscal year, was $700,000 for
Jeffrey H. Smulyan, Chairman, President and Director, $103,200 for Doyle L.
Rose, Radio Division President and Director, $82,000 for Richard F. Cummings,
Executive Vice President-Programming, and $60,000 for Norman H. Gurwitz,
Executive Vice President, Corporate Counsel and Secretary. These loans bear
interest at the Corporation's cost of senior debt, which at April 30, 1997, was
approximately 8%.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
Policy and Performance Measures. During the last fiscal year,
compensation for the Corporation's officers (other than Jeffrey H. Smulyan, the
Corporation's chief executive officer) was largely determined by consensus
between Mr. Smulyan and the Corporation's Compensation Committee, typically
without formal action. Mr. Smulyan determined for each officer a salary that
he believed to be reasonable based upon such officer's compensation for the
previous year, the Corporation's performance over the previous year and each
officer's contribution to such performance. Because the fiscal year ended
February 29, 1996, resulted in significant improvement in the Corporation's
same-station broadcast cash flow base salary levels of the Corporation's
officers for the fiscal year ended February 28, 1997 were generally increased
from base salary levels in 1996.
The Corporation has historically relied upon cash bonuses, stock options
and stock appreciation rights in order to tie compensation to the Corporation's
performance. For the last fiscal year, bonuses for general managers of the
Corporation's radio stations were based upon the extent to which each station
met specified target levels of broadcast cash flow. Bonuses to other officers
were based upon Mr. Smulyan's personal assessment of their contributions to the
Corporation's overall performance and were then discussed with members of the
Compensation Committee to ensure that none had any objections. Stock options
were also granted to the Corporation's officers during the last fiscal year
under the Corporation's 1994 Equity Incentive Plan. The number of options
granted to an officer primarily depended upon such officer's classification
within the Corporation. Each radio station general manager received options to
purchase 6,000 shares of the Corporation's Class A Common Stock, and each
general manager of more than one radio station received options to purchase an
additional 2,000 shares for each radio station under such person's management.
The other officers received options to purchase between 3,000 and 29,806
shares.
The Corporation has also entered into two and three year employment
agreements with certain of the Corporation's general managers and other key
officers. These agreements, which provide for a base salary, annual
performance bonuses, and restricted stock and stock option awards, prohibit the
officer from directly or indirectly competing with the Corporation. The
Committee believes that the structure of these agreements should enable the
Corporation to retain its key officers for a certain period of time and to
focus the efforts and energies of such officers on further enhancing the value
of the Corporation to its shareholders
The Internal Revenue Code of 1986, as amended (the "Code"), generally
limits to $1 million the amount of compensation that may be deducted by the
Corporation in any year with respect to certain of the Corporation's officers.
Accordingly, the Compensation Committee endeavors to structure executive
compensation so that most of such compensation will be deductible. At the same
time, the Compensation Committee has the authority to award compensation in
excess of the $1 million limit, regardless of whether such additional
compensation will be deductible by the Corporation, where the Committee
determines in good faith that such compensation is appropriate.
4
<PAGE> 8
Chief Executive Officer Compensation. Mr. Smulyan is compensated in
accordance with his employment agreement which provides for (i) an annual
salary of approximately $606,000 in the fiscal year ended February 29, 1997,
with annual increases of 10% plus an inflation adjustment, subject to a maximum
annual increase of 15%; (ii) annual bonuses ranging from a minimum of $50,000
to a maximum of $250,000, as adjusted for inflation; and (iii) the award of
options to purchase 100,000 shares of Common Stock at a price per share of
$15.50 for each year during the term of the agreement that either the
Corporation's annual broadcast cash flow increases from the previous year by a
percentage specified in the agreement or the percentage increase in the average
monthly fair market value of the Corporation's Common Stock during the fiscal
year exceeds that of a specified peer group of broadcasting companies.
The amount of the annual bonuses under Mr. Smulyan's employment agreement
is determined by the Board of Directors, based in part on the recommendation of
the Compensation Committee. During the last fiscal year, the Corporation's pro
forma broadcast cash flow increased from $45.9 million to $50.4 million. In
addition, the Corporation began operating three more radio stations in St.
Louis, Missouri, substantially solidifying the Corporation's presence in that
market. As a result of these achievements, the Board of Directors awarded Mr.
Smulyan $250,000, the maximum bonus under his employment agreement. Further,
the Compensation Committee determined that Mr. Smulyan has earned the options
to purchase 100,000 shares of the Corporation's Common Stock.
Compensation Committee Members
Susan B. Bayh
Richard A. Leventhal
Lawrence B. Sorrel
PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
cumulative total shareholder return on the Common Stock of the Corporation with
the cumulative total return of the Nasdaq Stock Market Index and the cumulative
total return of the Nasdaq Telecommunications Stock Market Index (an index
containing performance data of radio, telephone, telegraph, television and
cable television companies) from February 28, 1994, to the fiscal year ended
February 28, 1997. The performance graph assumes that an investment of $100
was made in the Corporation's Common Stock and in each index on February 28,
1994, the date of the Corporation's initial public offering, and that all
dividends were reinvested.
<TABLE>
<CAPTION>
Feb-94 Feb-95 Feb-96 Feb-97
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- - Emmis Broadcasting $100 $103 $247 $223
- -------------------------------------------------------------------------------
- - Nasdaq Stock Market $100 $100 $139 $165
- -------------------------------------------------------------------------------
- - Nasdaq Telecomm $100 $ 93 $125 $124
- -------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 9
COMPENSATION TABLES
The following table sets forth the compensation awarded to, earned by, or
paid to the chief executive officer and the four most highly compensated
executive officers other than the chief executive officer (collectively, the
"Named Executive Officers") during each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS
---------------------------- ----------------------
OTHER SECURITIES ALL
FISCAL ANNUAL RESTRICTED UNDERLYING OTHER
NAME AND YEAR ENDED COMPEN- STOCK OPTIONS/ COMPEN-
PRINCIPAL POSITION FEBRUARY 28 SALARY BONUS SATION AWARDS SARS(#) SATION
- ------------------ ----------- -------- -------- -------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
JEFFREY H. SMULYAN 1997 $606,223 $250,000 $ -- $ -- 100,000 $--
President and 1996 538,853 250,000 -- -- 100,000 --
Chairman of the Board 1995 476,436 250,000 -- -- 100,000 --
DOYLE L. ROSE 1997 $408,446 $ 80,000 $ 14,400(1) $ -- 25,000(3) $--
Radio Division 1996 385,066 245,000 14,400 981,000(2) 25,000 --
President 1995 324,945 138,626 16,438 -- 12,000 --
RICHARD F. CUMMINGS 1997 $408,446 $ 80,000 $ 14,400(1) $ -- 25,000(3) $--
Executive Vice President 1996 385,047 245,000 14,400 981,000(2) 25,000 $--
- -- Programming 1995 313,742 60,000 198,411 -- 12,000 --
HOWARD L. SCHROTT 1997 $218,195 $ 50,000 $ -- $ -- 29,806 $--
Executive Vice President, 1996 191,920 60,000 -- -- 13,139 --
Treasurer and Chief 1995 139,949 30,204 14,400 -- 12,000 --
Financial Officer
NORMAN H. GURWITZ 1997 $195,257 $ 50,000 $ 14,400(1) $ -- 29,806 $--
Executive Vice President, 1996 165,992 60,000 14,400 -- 13,139 --
Corporate Counsel and 1995 145,576 58,431 15,400 -- 12,000 --
Secretary
</TABLE>
- --------------
1 Represents automobile allowance.
2 Represents the market value on the date of grant of 36,000 shares of
restricted stock granted to each of Messrs. Rose and Cummings pursuant to
the terms of their respective employment agreements. The restricted stock
held by each of Messrs. Rose and Cummings (i) had a market value of
$1,242,000 as of the end of the Corporation's last fiscal year, (ii) will
vest on February 28, 1998, and (iii) earns dividends (if any are declared
and paid by the Corporation) while restricted.
3 Pursuant to the terms of the respective employment agreements of Messrs.
Rose and Cummings, these stock options are not exercisable until March 1,
1998.
6
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/SARS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION
OPTIONS/ EMPLOYEES OR BASE FOR OPTION TERM
SARS IN PRICE EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- ------------ --------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan 100,000 16.95% $15.500 2/28/02 $3,363,684 $4,650,464
Doyle L. Rose 25,000 4.24% 15.500 2/28/00 610,952 760,488
Richard F. Cummings 25,000 4.24% 15.500 2/28/00 610,952 760,488
Howard L. Schrott 29,806 5.05% 38.500 (1) 393,933 903,905
Norman H. Gurwitz 29,806 5.05% 38.500 (1) 393,933 903,905
</TABLE>
- --------------
1 The options expire at a rate of 20% per year beginning February 28, 2000,
with all options expired by February 28, 2004.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
AT FISCAL YEAR END AT FISCAL YEAR END
------------------------ ----------------------------
ACQUIRED ON VALUE EXER- UNEXER- EXER- UNEXER-
NAME EXERCISE REALIZED CISABLE CISABLE CISABLE CISABLE
- ---- ----------- -------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey H. Smulyan -- $ -- 375,000 -- $7,889,063 $ --
Doyle L. Rose -- -- 12,000 50,000 255,000 950,000
Richard F. Cummings -- -- 12,000 50,000 255,000 950,000
Howard L. Schrott 500 16,250 26,639 29,806 520,040 --
Norman H. Gurwitz 2,875 101,031 34,014 29,806 742,915 --
</TABLE>
EMPLOYMENT AGREEMENTS
During the fiscal year ended February 28, 1994, the Corporation entered
into a five-year employment agreement with Jeffrey H. Smulyan pursuant to which
Mr. Smulyan is employed as chief executive officer of the Corporation. Mr.
Smulyan's base compensation during the last fiscal year was approximately
$606,000, with the agreement providing for annual increases of 10% plus an
inflation adjustment, subject to a maximum aggregate annual increase of 15%.
In addition, the agreement provides for annual bonuses to be set by the Board
of Directors ranging from a minimum of $50,000 up to a maximum of $250,000, as
adjusted for inflation. Mr. Smulyan is also entitled to receive options to
purchase 100,000 shares of Common Stock at a price per share of $15.50 (the
price per share in the Corporation's initial public offering) for each year
during the term of the agreement that the Corporation's broadcast cash flow or
Common Stock price targets specified in the agreement are achieved. Under the
agreement, Mr. Smulyan retains the right to participate in all employee benefit
plans of the Corporation for which he is otherwise eligible. The agreement
with Mr. Smulyan is subject to termination by the Board of Directors or by Mr.
Smulyan, either without cause or for cause, at any time upon notice. In the
event the Corporation terminates Mr. Smulyan's employment without cause (as
defined in the agreement) or in the event Mr. Smulyan terminates his employment
for good reason (as defined in the agreement), Mr. Smulyan will be entitled to
receive the present value of the applicable base and incentive compensation
through a date five years after the date of termination. In addition, the
agreement entitles Mr. Smulyan to certain termination benefits upon disability,
death or a change in control
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(as defined in the agreement) of the Corporation. Following a termination of
Mr. Smulyan's employment, other than a termination by the Corporation without
cause (as defined in the agreement) or a termination by Mr. Smulyan with good
reason (as defined in the agreement), Mr. Smulyan would be prohibited from
engaging in a business in competition with the Corporation for a period of two
years after the date of termination.
During the fiscal year ended February 29, 1996, the Corporation entered
into three-year employment agreements with each of Doyle L. Rose and Richard F.
Cummings, pursuant to which Mr. Rose is employed as Radio Division President
and Mr. Cummings is employed as Executive Vice President--Programming. Each
employment agreement provides for a $150,000 signing bonus and an annual base
salary of $383,000, $408,000 and $433,000, respectively, for each of the three
years covered thereby. In addition, each agreement provides (i) upon the
commencement of the agreement, for the award of 36,000 restricted shares of
Class A Common Stock, which shares are subject to forfeiture if the officer is
terminated for cause (as defined in the agreement) or terminates his employment
for a reason other than death or disability (as defined in the agreement), (ii)
at the end of each completed year of service under the agreement, for the award
of options to purchase up to 25,000 shares of Class A Common Stock at a price
per share equal to $15.50 per share, which options shall be first exercisable
at the end of the term of the agreement and shall automatically terminate if
the officer is terminated for cause or terminates his employment for a reason
other than death or disability, and (iii) at the end of each completed year of
service under the agreement, for the award of a bonus in an amount (if any)
determined by the Chief Executive Officer, and based upon such officer's
performance during such year and the Corporation's bonus practices with respect
to its other key executive officers for such year. Under the agreements,
Messrs. Rose and Cummings each retain the right to participate in all employee
benefit plans of the Corporation for which they would otherwise be eligible.
During the last fiscal year, the Corporation entered into a three-year
employment agreement with Howard L. Schrott pursuant to which Mr. Schrott is
employed as Executive Vice President and Chief Financial Officer of the
Corporation. The employment agreement provides for an annual base salary of
$200,000, $220,000 and $242,000, respectively, for each of the three years
covered thereby. In addition, the agreement provides (i) for an annual cash
bonus of not less than $20,000 nor more than $50,000, (ii) the award of 10,000
shares of Class A Common Stock if Mr. Schrott remains employed by the
Corporation upon the expiration of the agreement (or is disabled, as defined in
the agreement) during the term of the agreement, and (iii) for the award of
options to purchase 29,806 shares at their fair market value on March 1, 1996
and options to purchase 12,000 shares on the first day of each of the remaining
contract years at the fair market value of such shares on the date of the
grant. Under the agreement, Mr. Schrott also retains the right to participate
in all employee benefit plans of the Corporation for which he is otherwise
eligible.
PROPOSAL NO. 2: APPROVAL OF THE 1997 EQUITY INCENTIVE PLAN
The Board of Directors of the Corporation has adopted the Emmis
Broadcasting Corporation 1997 Equity Incentive Plan (the "1997 Plan"). The
purpose of the 1997 Plan is to advance the interests of the Corporation by
encouraging and facilitating the acquisition and ownership of the Corporation's
Common Stock by key employees, thereby strengthening the key employees'
commitment to the Corporation's success and the continuance of their
association with the Corporation. It is also anticipated that the opportunity
to obtain such a financial interest will prove attractive to potential new key
employees and will assist the Corporation in attracting, employing and
retaining such individuals. The following summary of the principal provisions
of the 1997 Plan is qualified by reference to the full text of the 1997 Plan
which is attached to this proxy statement as Exhibit A.
The 1997 Plan permits the delivery of a maximum of 1,000,000 shares of the
Corporation's Common Stock on account of the exercise of options, the grant of
shares of restricted stock and the payment of benefits upon the exercise of
stock appreciation rights or performance units. As of April 30, 1997, the
shares subject to the 1997 Plan had an aggregate market value of $35,000,000.
If an award under the 1997 Plan expires or terminates without being exercised
in full or is forfeited, the shares of the Corporation's Common Stock subject
thereto generally become available for new awards. If stock appreciation
rights expire or terminate without being exercised in full, such stock
appreciation rights again become available for new awards. Options, stock
appreciation rights and performance units expire no more than 10 years from
date of grant.
Options. Options granted under the 1997 Plan allow participants to
purchase shares of the Corporation's Common Stock at an exercise price
determined by the Corporation's Compensation Committee (the "Committee") which
cannot be less than the fair market value of the Corporation's Common Stock on
the date of the grant. As determined by the Committee, options will generally
become exercisable in one or more installments beginning on the first
anniversary of the date of the grant. The Committee may accelerate the
exercisability of any option. Options may be granted as incentive stock
options subject to the limitations of Section 422 of the Internal Revenue Code
(the "Code"). For the purpose of complying with Section 162(m) of the Code, the
1997 Plan contains a per-participant limit of 500,000 on the number of shares
which may be subject to options granted during any fiscal year.
Restricted Stock. Shares of the Corporation's Common Stock subject to
such restrictions ("restricted stock") as determined by the Committee may be
granted under the 1997 Plan. Shares of restricted stock may be subject to
forfeiture if conditions established by the Committee are not satisfied and are
nontransferable until they become nonforfeitable. Before the grant, the
Committee determines the purchase
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price, if any, of such shares of restricted stock and the restrictions
applicable to such shares. If a grantee's shares of restricted stock are
forfeited, the grantee is required to sell such shares to the Corporation at the
lesser of the purchase price, if any, paid by the grantee or the fair
market value of the shares on the date of such forfeiture. The Committee may
accelerate the time at which the restrictions lapse or remove or, with the
consent of the grantee, modify the restrictions. For the purpose of complying
with Section 162(m) of the Code, the 1997 Plan contains a per-participant limit
on the number of shares of restricted stock that may be awarded during any
calendar year to that number of shares with a value on the date of grant equal
to the lesser of 500% of the participant's base salary or $2,000,000.
Stock Appreciation Rights. Each stock appreciation right which may be
granted under the 1997 Plan provides the grantee, upon exercise, a benefit
equal to the difference between the fair market value of one share of the
Corporation's Common Stock on the date of the exercise and (i) in the case of a
stock appreciation right identified with a share of the Corporation's Common
Stock subject to an option, the option exercise price of such option or such
higher price specified in the grant or (ii) in the case of any other stock
appreciation right, the fair market value of a share of the Corporation's
Common Stock on the grant date or such higher price specified in the grant.
Stock appreciation rights may be granted alone, or identified with shares of
the Corporation's Common Stock subject to options, performance units or shares
of restricted stock. Stock appreciation rights become exercisable commencing
on the first anniversary of the date of grant. The Committee may accelerate
the exercisability of any stock appreciation right. Benefits upon the exercise
of stock appreciation rights are payable in cash unless the Committee
determines that the benefits will be paid wholly or partly in shares of the
Corporation's Common Stock. For the purpose of complying with Section 162(m)
of the Code, the 1997 Plan contains a per-participant limit on the number of
shares which may be subject to stock appreciation rights granted during any
fiscal year of 500,000.
Performance Units. Performance units may be granted under the 1997 Plan
to provide a benefit if performance goals determined by the Committee are
achieved during the measuring period (which may not be less than one year nor
more than seven years). The Committee, before the grant of a performance unit,
determines the performance goals and measuring period and assigns a performance
percentage (which can exceed 100%) to each level of attainment of the
performance goals during the measuring period. The Committee may modify
performance goals at any time. Performance unit benefits are payable in cash
unless the Committee determines that a benefit will be paid wholly or partly in
shares of the Corporation's Common Stock. Performance units may be granted
alone, or identified with shares of the Corporation's Common Stock subject to
an option, shares of restricted stock or stock appreciation rights.
Performance units become exercisable commencing on the later of the first
anniversary of the date the performance unit was granted or the first day after
the end of the applicable measuring period. The benefit for each performance
unit exercised equals the fair market value of a share of the Corporation's
Common Stock on the date of grant of the performance unit multiplied by the
"performance percentage" attained during the measuring period for the
performance unit. For the purpose of complying with Section 162(m) of the
Code, the 1997 Plan contains a per-participant limit on the number of shares of
stock that may be awarded with respect to a performance unit during any
calendar year to that number of shares with a value on the date of grant equal
to the lesser of 500% of the participant's base salary or $2,000,000. To the
extent that awards of performance units are intended to qualify as "performance
based" under Section 162(m) of the Code, the 1997 Plan contains additional
limits on the Committee's discretion with respect to such awards.
Other Information. Under the 1997 Plan, unexercised options, stock
appreciation rights, performance units and restricted stock may not be
transferred except by will or by the laws of descent and distribution and
except as otherwise permitted by the Committee. Payment of the option exercise
price or the purchase price of restricted stock may be made in cash or through
the exchange of shares of the Corporation's Common Stock owned by the grantee.
The Committee may allow a grantee to defer payment of the option exercise
price, the purchase price of restricted stock or any taxes associated with a
benefit provided under the 1997 Plan which is a non-cash benefit at the time it
is taxable, in accordance with such interest rates and such other terms and
conditions as it may determine, or may cause the Corporation to guarantee a
loan to the grantee in an amount equal to all or part of the option exercise
price, the purchase price of restricted stock and related taxes. A grantee may
elect to have withheld shares of the Corporation's Common Stock to satisfy
withholding tax liability with respect to the exercise of options, stock
appreciation rights or performance units or with respect to shares of
restricted stock becoming nonforfeitable. If the amount to be withheld is more
than the minimum required, such withholding is subject to Committee approval.
Subject to certain limitations, the Committee may provide for automatic grants
of additional options for shares of the Corporation's Common Stock equal to the
number of shares which a grantee has used to pay the exercise price of a
previously granted option and to satisfy a withholding tax liability in
connection with an option exercise. In the event of a Change in Control,
options, stock appreciation rights and performance units become exercisable,
and all shares of restricted stock generally become nonforfeitable, whether or
not the grantee has been employed for one year after the applicable grant date.
The benefit payable with respect to any performance unit for which the
measuring period has not ended is prorated based upon the portion of the
measuring period completed before the Change in Control. The aggregate number
of shares of the Corporation's Common Stock, shares of restricted stock, stock
appreciation rights and stock options available pursuant to the Plan, the
number of shares covered by an award, the exercise price of options, and the
fair market values used to determine stock appreciation right and performance
unit benefits, shall be adjusted by the Committee to reflect any stock dividend,
stock split, share combination, merger, consolidation, asset spin-off,
reorganization, or similar event of or by the Corporation.
Plan Administration. The 1997 Plan is administered by the Committee.
Unless the Board of Directors determines otherwise, the Committee will be
comprised solely of "outside directors" within the meaning of Section 162(m) of
the Code and the regulations thereunder, and constituted in a manner that
satisfies the "non-employee" director standard of Rule 16b-3 under the Exchange
Act. Notwithstanding the
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foregoing, awards under the 1997 Plan to persons who are not "executive
officers" of the Corporation may also be made by a duly constituted committee
that is authorized by the Board of Directors but does not qualify under Section
162(m) or Rule 16b-3. Subject to the 1997 Plan's provisions, the Committee has
broad authority to, among other things, determine when grants may be made (and
the amounts thereof); to interpret, and to adopt rules relating to, the 1997
Plan; to determine the terms of the agreements relating to grants and, with the
consent of the grantee, to modify any such agreement; and to cancel existing
awards and to substitute new ones. Because of the Committee's broad authority,
the type and amount of awards to be received by any specific individual, or
group of individuals, is currently indeterminable. However, not more than
500,000 shares may be awarded to Mr. Smulyan.
Amendment and Termination. The Board of Directors may from time to time
in its discretion amend or modify the Plan without the approval of the
shareholders of the Corporation, except as such shareholder approval may be
required (a) to permit transactions pursuant to the 1997 Plan to be exempt from
liability under Section 16(b) of the Exchange Act, or (b) under the listing or
quotation requirements of any national securities exchange or automated
quotation service on which are listed or quoted any of the Corporation's equity
securities. The 1997 Plan will terminate on March 1, 2007 or such earlier date
as the Board of Directors may determine. No termination of the 1997 Plan will
affect outstanding awards.
Federal Income Tax Consequences. Upon the grant of an award under the
1997 Plan, the grantee does not realize any taxable income and no deduction is
available for the Corporation. Any cash received by a grantee in connection
with the exercise of a stock appreciation right or performance unit, as well as
the fair market value of any shares received in connection with the exercise of
a stock appreciation right or a performance unit, is taxable as ordinary income
to the grantee. Generally, upon exercise of an option (other than an incentive
stock option), the grantee will recognize taxable income and the Corporation is
entitled to a deduction at the time the grantee is taxed in the amount of the
grantee's taxable income. In the case of an incentive stock option, the
grantee incurs no income tax liability upon exercise (other than possible
alternative minimum tax liability), but the Corporation is generally not
entitled to a tax deduction. The fair market value of restricted stock in
excess of the purchase price, if any, is taxable to the grantee when the
restrictions lapse. However, if the grantee is not prohibited by the Committee
from electing to be taxed on such value on the date of grant and the grantee
elects such tax treatment, the grantee is taxed on such amount on the date of
grant. The Corporation is entitled to a deduction at the time the grantee is
taxed in the amount of the grantee's taxable income.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
PROPOSAL NO. 3: APPROVAL OF APPOINTMENT OF AUDITORS
The appointment of the Corporation's independent auditors is being
submitted for approval by vote of the shareholders. The Corporation's
financial statements for the year ended February 28, 1997 were certified by
Arthur Andersen LLP. The Corporation has selected Arthur Andersen as its
independent auditors for the fiscal year ending February 28, 1998.
Representatives of Arthur Andersen are expected to attend the annual meeting
with the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions. If shareholders do not approve
the selection of Arthur Andersen, then the selection of independent auditors
will be reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE IN
FAVOR OF THIS PROPOSAL.
SHAREHOLDER PROPOSALS
Any shareholder of the Corporation wishing to have a proposal considered
for inclusion in the Corporation's 1998 proxy solicitation materials must set
forth such proposal in writing and file it with the Secretary of the
Corporation on or before January 27, 1998. The Board of Directors of the
Corporation will review any shareholder proposals that are filed as required,
and will determine whether such proposals meet applicable criteria for
inclusion in its 1998 proxy solicitation materials or consideration at the 1998
annual meeting.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers and directors, and persons who own more than 10% of
the Corporation's Common Stock, to file with the Securities and Exchange
Commission reports detailing their ownership of the Corporation's Common Stock
and changes in such ownership. Officers, directors and greater than 10%
shareholders (the "Reporting Persons") are required by Securities and Exchange
Commission regulation to furnish the Corporation with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Corporation, the Corporation believes that during the last
fiscal
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year all Reporting Persons complied with the filing requirements of
Section 16(a), except that John Beck, Christine Duncan, Judith Ellis, Norman
Gurwitz, Charles Hillier and Richard Leventhal each failed to timely file one
report in connection with one transaction, Valerie Maki failed to timely file
four reports in connection with four transactions and Thomas Severino failed to
file three reports in connection with three transactions.
ANNUAL REPORT
A copy of the Corporation's Annual Report for the year ended February 28,
1997 has been provided to all shareholders of record as of the record date.
The Annual Report is not to be considered as proxy solicitation material.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before this
annual meeting. However, if other matters should come before the meeting, it
is the intention of each person named in the proxy to vote such proxy in
accordance with his or her judgment on such matters.
EXPENSES OF SOLICITATION
The entire expense of preparing, assembling, printing and mailing the
proxy form and the material used in the solicitation of proxies will be paid by
the Corporation. The Corporation does not expect that the solicitation will be
made by specially engaged employees or paid solicitors. Although the
Corporation might use such employees or solicitors if it deems them necessary,
no arrangements or contracts have been made with any such employees or
solicitors as of the date of this statement. In addition to the use of the
mails, solicitation may be made by telephone, telegraph, cable or personal
interview. The Corporation will request record holders of shares beneficially
owned by others to forward this proxy statement and related materials to the
beneficial owners of such shares, and will reimburse such record holders for
their reasonable expenses incurred in doing so.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. Whether or not you
attend the meeting, you are urged to execute and return the proxy.
For the Board of Directors,
/s/ Jeffrey H. Smulyan
Jeffrey H. Smulyan
Chairman
May 27, 1997
<PAGE> 15
EXHIBIT A
EMMIS BROADCASTING CORPORATION
1997 EQUITY INCENTIVE PLAN
1. PURPOSE. The primary purposes of the Plan are to promote and align the
interests of employees of the Company and its shareholders, to reward
performance that enhances long term shareholder values, to increase employee
stock ownership and to improve the Company's ability to attract and retain a
team of outstanding employees and executives.
2. DEFINITIONS. As used in the Plan, terms defined parenthetically
immediately after their use have the respective meanings provided by such
definitions and the terms set forth below have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means, with respect to a specified person, a person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified.
"Award" means options, shares of restricted stock, stock appreciation
rights or performance units granted under the Plan.
"Award Agreement" has the meaning specified in Section 4(b)(vi).
"Board" means the Board of Directors of the Company.
"Cause" means conviction of the Grantee of any felony or other crime
involving dishonesty, fraud or moral turpitude, or the Grantee's habitual
neglect of his duties.
"Change in Control" means any of the following: (i) any person or group
(other than a Subsidiary or any employee benefit plan (or any related trust) of
the Company or a Subsidiary) becomes after the Effective Date the beneficial
owner of 25% or more of either the then outstanding Stock or the combined
voting power of the then outstanding voting securities of the Company entitled
to vote in the election of directors, except that (A) no such person or group
shall be deemed to own beneficially any securities acquired directly from the
Company pursuant to a written agreement with the Company unless such person or
group subsequently becomes the beneficial owner of additional Stock or voting
securities of the Company other than pursuant to a written agreement with the
Company, and (B) no Change in Control shall be deemed to have occurred solely
by reason of any such acquisition by a corporation with respect to which, after
such acquisition, more than 60% of both the then outstanding common shares of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote in the election of directors
are then beneficially owned, directly or indirectly, by the persons who were
the beneficial owners of the Stock and voting securities of the Company
immediately before such acquisition in substantially the same proportion as
their ownership, immediately before such acquisition, of the outstanding Stock
and the combined voting power of the then outstanding voting securities of the
Company entitled to vote in the election of directors; (ii) individuals who, as
of the Effective Date, constitute the Board (the "Incumbent Directors") cease
for any reason to constitute at least a majority of the Board; provided that
any individual who becomes a director after the Effective Date whose election,
or nomination for election by the Company's stockholders, was approved by a
vote or written consent of at least two-thirds of the directors then comprising
the Incumbent Directors shall be considered as though such individual were an
Incumbent Director, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 under the Exchange Act); or (iii) approval
by the stockholders of the Company of (A) a merger, reorganization or
consolidation with respect to which the individuals and entities who were the
respective beneficial owners of the Stock and voting securities of the Company
immediately before such merger, reorganization or consolidation do not, after
such merger, reorganization or consolidation, beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding common shares
and the combined voting power of the then outstanding voting securities
entitled to vote in the election of directors of the corporation resulting from
such merger, reorganization or consolidation, (B) a liquidation or dissolution
of the Company or (C) the sale or other disposition of all or substantially all
of the assets of the Company. Notwithstanding the foregoing provisions of this
definition, a Change in Control of the Company shall be deemed not to have
occurred with respect to any Grantee, if such Grantee is, by written agreement
executed prior to such Change in Control, a participant on such Grantee's own
behalf in a transaction in which the persons (or their affiliates) with whom
such Grantee has the written agreement Acquire the Company (as defined below)
and, pursuant to the written agreement, the Grantee has an equity interest in
the resulting entity or a right to acquire such an equity interest.
For the purposes of this definition, "Acquire the Company" means the
acquisition of beneficial ownership by purchase, merger, or otherwise, of
either more than 50% of the Stock (such percentage to be computed in accordance
with Rule 13d-3(d)(1)(i) of the SEC under the Exchange Act) or substantially
all of the assets of the Company or its successors; "person" means such term as
used in Rule 13d-5 of the SEC under the Exchange Act; "beneficial owner" means
such term as defined in Rule 13d-3 of the SEC under the Exchange Act; and
"group" means such term as defined in Section 13(d) of the Exchange Act.
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"Change in Control Value" means, with respect to a Change in Control, the
highest Fair Market Value of a share of Stock during the period beginning on
the 180th day before such Change in Control and ending on the day preceding the
exercise of an LSAR or, if greater, the highest price per share of Stock paid
in connection with such Change in Control.
"Class A Common Stock" means the Class A Common Stock of the Company, par
value $.01 per share.
"Class B Common Stock" means the Class B Common Stock of the Company, par
value $.01 per share.
"Code" means the Internal Revenue Code of 1986, as amended, and
regulations and rulings thereunder. References to a particular section of the
Code shall include references to successor provisions.
"Committee" means the Compensation Committee of the Board constituted as
provided in Section 4.
"Company" means Emmis Broadcasting Corporation, an Indiana corporation.
"Disability" means, with respect to the exercise of an incentive stock
option after Termination of Employment, a disability within the meaning of
Section 22(e)(3) of the Code, and for all other purposes, a mental or physical
condition which, in the opinion of the Committee, renders a Grantee unable or
incompetent to carry out the job responsibilities which such Grantee held or
the tasks to which such Grantee was assigned at the time disability was
incurred, and which is expected to be permanent or for an indefinite duration.
"Effective Date" means March 1, 1997.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under, the Exchange Act shall
include references to successor provisions.
"Fair Market Value" of any security of the Company or any other issuer
means, as of any applicable date: (i) if the security is listed for trading
on the New York Stock Exchange, the closing price, regular way, of the security
as reported on the New York Stock Exchange Composite Tape, or if no such
reported sale of the security shall have occurred on such date, on the next
preceding date on which there was such a reported sale, or (ii) if a security
is not so listed, but is listed on another national securities exchange or
authorized for quotation on the National Association of Securities Dealers,
Inc.'s NASDAQ National Market System ("NASDAQ/NMS"), the closing price, regular
way, of the security on such exchange or NASDAQ/NMS, as the case may be, or if
no such reported sale of the security shall have occurred on such date, on the
next preceding date on which there was such a reported sale, or (iii) if a
security is not listed for trading on a national securities exchange or
authorized for quotation on NASDAQ/NMS, the average of the closing bid and
asked prices as reported by the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or, if no such prices shall have been so
reported for such date, on the next preceding date for which such prices were
so reported, or (iv) if the security is not listed for trading on a national
securities exchange or is not authorized for quotation on NASDAQ/NMS or NASDAQ,
the fair market value of the security as determined in good faith by the
Committee.
"Grant Date" means the date of grant of an Award determined in accordance
with Section 6.
"Grantee" means an individual who has been granted an Award.
"Incentive Stock Option" means an Award under Section 7(b).
"including" means "including, without limitation."
"Measuring Period" has the meaning specified in Section 10(a)(i)(B).
"Option" means an Award under Section 7.
"Option Price" means the per share purchase price of (i) Stock subject to
an option or (ii) restricted stock subject to an option.
"Parent" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if at the time of the granting
of an Award under the Plan, each of such corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
"Performance Goals" has the meaning specified in Section 10(a)(i).
"Performance Percentage" has the meaning specified in Section 10(a)(i)(C).
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"Performance Units" means units established by the Committee for purposes
of granting an Award under Section 10.
"Plan" means the Emmis Broadcasting Corporation 1997 Equity Incentive
Plan.
"Prior Plans" means the Emmis Broadcasting Corporation 1986 Stock
Incentive Plan and the Emmis Broadcasting Corporation 1992 Stock Option Plan
and Emmis Broadcasting Corporation 1994 Equity Incentive Plan.
"Reload Option" has the meaning specified in Section 7(c).
"Restricted Stock" means Stock awarded pursuant to Section 8.
"SEC" means the Securities and Exchange Commission.
"Section 16 Person" means a person subject to potential liability under
Section 16(b) of the Exchange Act with respect to transactions involving equity
securities of the Company.
"Stock" means the Class A Common Stock and the Class B Common Stock.
"Stock Appreciation Rights" means Awards under Section 9.
"Subsidiary" means any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the
granting of an Award under the Plan, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
"10% Owner" means a person who owns stock (including stock treated as
owned under Section 424(d) of the Code) possessing more than 10% of the total
combined voting power of all classes of stock of the Company.
"Termination of Employment" occurs the first day an individual is for any
reason entitled to severance payments under the Company's or any Subsidiary's
personnel policies or is no longer employed by the Company or any of its
Subsidiaries, or, with respect to an individual who is an employee of a
corporation constituting a Subsidiary, the first day such corporation is no
longer a Subsidiary.
3. SCOPE OF THE PLAN.
(a) Number of Shares. Subject to Section 3(c), an aggregate of one
million (1,000,000) shares of Stock is hereby made available and is reserved
for delivery on account of the exercise of Awards and payment of benefits in
connection with Awards. Subject to the foregoing limit, shares of Stock held
as treasury shares may be used for or in connection with Awards. No more than
five hundred thousand (500,000) shares of Class B Common Stock shall be
available for grant and issuance under the Plan. Awards of or pertaining to
shares of Class B Common Stock may be granted only to Jeffrey H. Smulyan.
Issuance of either Class A Common Stock or Class B Common Stock as or pursuant
to an Award shall reduce the shares available for grant and issuance under the
Plan.
(b) Limit on Awards. Subject to Section 3(a) as to the maximum number of
shares of Stock available for delivery in connection with Awards and Sections
3(c) and 27, the maximum number of Awards that may be granted to each Grantee
in each calendar year during any part of which the Plan is in effect shall be
as follows:
(i) With respect to Stock subject to Options, 500,000 shares;
(ii) With respect to Stock subject to Stock Appreciation Rights,
500,000 shares;
(iii) With respect to Restricted Stock (not issued in payment of an
Award of Performance Units), that number of shares of Stock whose
value equals the lesser of (A) 500% of such Grantee's base salary
for such year or (B) $2,000,000 (based on the Fair Market Value of
Stock on the date the award is granted, not the date the Award
vests or is paid);
(iv) With respect to Awards of Performance Units, that number of shares
of Stock whose value equals the lesser of (A) 500% of such
Grantee's base salary for such year or (B) $2,000,000 (based
on the Fair Market Value of Stock on the date the Award is
granted, not the date the Award is earned or paid).
(c) Re-Use of Shares. If and to the extent an Award shall expire or
terminate for any reason without having been exercised in full or shall be
forfeited, shares of Stock (including restricted stock) and stock appreciation
rights associated with such Award shall become available for other Awards. If
a Grantee pays all or part of the exercise price associated with an Award by
the transfer of Stock or the surrender (including
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by attestation) of all or part of an Award (including the Award being
exercised), such Stock will also be available for grant under this Plan, without
reducing the number of shares of Stock available in any calendar year for grant
of Awards.
4. ADMINISTRATION.
(a) General. The Plan shall be administered by the Compensation Committee
of the Board, which shall consist of persons who are, unless the Board
determines otherwise, "outside directors" within the meaning of Section 162(m)
of the Code and "non-employee directors" within the meaning of Rule 16b-3 (and
any successor regulation thereto) as promulgated by the SEC under Section 16(b)
of the Exchange Act, as such rule is amended from time to time and as
interpreted by the SEC. Notwithstanding the requirements contained in the
immediately preceding sentence, the Board may, in its discretion, delegate to a
committee or subcommittee of the Board that does not meet the foregoing
requirements any or all of the authority and responsibility of the Committee
with respect to Awards to employees who are not Section 16 Persons or "covered
employees" for purposes of Section 162(m) of the Code at the time any such
delegated authority or responsibility is exercised. Such other committee or
subcommittee may consist of two or more directors who may, but need not, be
officers or employees of the Company or of any of its Subsidiaries. To the
extent that the Board has delegated to such other committee or subcommittee the
authority and responsibility of the Committee pursuant to the foregoing, all
references to the Committee in the Plan shall be to such other committee or
subcommittee.
(b) Authority of the Committee. The Committee shall have full power and
final authority, in its discretion, but subject to the express provisions of
the Plan, as follows: (i) to select Grantees, (ii) to grant Awards, (iii) to
determine (A) when Awards may be granted, (B) whether or not specific Stock
Appreciation Rights shall be identified with a specific Option, specific shares
of Restricted Stock, or specific Performance Units and, if so, whether they
shall be exercisable cumulatively with, or alternatively to, such Option,
shares of Restricted Stock, or Performance Units, and (C) whether or not
specific Performance Units shall be identified with a specific Option, specific
shares of Restricted Stock, or specific Stock Appreciation Rights under the
Plan or any Prior Plan and, if so, whether they shall be exercisable
cumulatively with, or alternatively to, such Option, shares of Restricted
Stock, or Stock Appreciation Rights, (iv) to interpret the Plan and to make all
determinations necessary or advisable for the administration of the Plan, (v)
to prescribe, amend, and rescind rules relating to the Plan, including rules
with respect to the exercisability and nonforfeitability of Awards upon the
Termination of Employment of a Grantee, (vi) to determine the terms and
provisions of the written agreements by which all Awards shall be granted
("Award Agreements") and, with the consent of the Grantee, to modify any such
Award Agreement at any time, (vii) to accelerate the exercisability of, and to
accelerate or waive any or all of the restrictions and conditions applicable
to, any Award, (viii) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are necessary and advisable to
fulfill the purposes of the Plan, and (ix) to impose such additional
conditions, restrictions, and limitations upon the grant, exercise or retention
of Awards as the Committee may, before or concurrently with the grant thereof,
deem appropriate, including requiring simultaneous exercise of related
identified Options, Stock Appreciation Rights, and Performance Units and
limiting the percentage of Options, Stock Appreciation Rights, and Performance
Units which may from time to time be exercised by a Grantee.
(c) Determinations of the Committee; No Liability. The determination of
the Committee on all matters relating to the Plan or any Award Agreement shall
be conclusive and final. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Award.
5. ELIGIBILITY. Awards may be granted to any employee of the Company or
any of its Subsidiaries. In selecting the individuals to whom Awards may be
granted, as well as in determining the number of shares of Stock subject to and
the other terms and conditions applicable to each Award, the Committee shall
take into consideration such factors as it deems relevant in promoting the
purposes of the Plan.
6. GENERAL TERMS AND CONDITIONS OF GRANTS.
(a) Grant Date. The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by the
Committee.
(b) Maximum Term. The term of each Award (subject to Section 7(b) and
7(c) with respect to Incentive Stock Options and Reload Options, respectively)
shall be a period of not more than ten (10) years from the Grant Date, and
shall be subject to earlier termination as herein provided.
(c) Tandem Awards. A Grantee may, if otherwise eligible, be granted
additional Awards in any combination.
7. OPTIONS.
(a) Grant of Options and Option Price. No later than the Grant Date of
any Option, the Committee shall determine the Option Price of such Option. The
Option Price of any Option shall not be less than the Fair Market Value of the
Stock on the Grant Date.
(b) Grant of Incentive Stock Options. At the time of the grant of any
Option, the Committee may designate that such Option shall be made subject to
additional restrictions to permit it to qualify as an "incentive stock option"
under the requirements of Section 422 of the Code. Any
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Option designated as an Incentive Stock Option: (i) shall have an Option Price
of (A) not less than 100% of the Fair Market Value of the Stock on the Grant
Date or (B) in the case of a 10% Owner, not less than 110% of the Fair Market
Value of the Stock on the Grant Date; (ii) shall be for a period of not more
than 10 years (five years, in the case of a 10% Owner) from the Grant Date,
and shall be subject to earlier termination as provided herein or in the
applicable Award Agreement; (iii) shall not have an aggregate Fair Market Value
of Stock (determined for each Incentive Stock Option on its Grant Date) with
respect to which Incentive Stock Options are exercisable for the first time by
such Grantee during any calendar year (under the Plan and any other employee
stock option plan of the Grantee's employer or any parent or subsidiary thereof
("Other Plans")), determined in accordance with the provisions of Section 422 of
the Code, which exceeds $100,000 (the "$100,000 Limit"); (iv) shall, if the
aggregate Fair Market Value of Stock (determined on the Grant Date) with respect
to all Incentive Stock Options previously granted under the Plan and any Other
Plans ("Prior Grants") and any Incentive Stock Options under such grant (the
"Current Grant") which are exercisable for the first time during any calendar
year would exceed the $100,000 Limit, be exercisable as follows: (A) the
portion of the Current Grant exercisable for the first time by the Grantee
during any calendar year which would, when added to any portions of any Prior
Grants, be exercisable for the first time by the Grantee during such calendar
year with respect to stock which would have an aggregate Fair Market Value
(determined as of the respective Grant Date for such Options) in excess of the
$100,000 Limit shall, notwithstanding the terms of the Current Grant, be
exercisable for the first time by the Grantee in the first subsequent calendar
year or years in which it could be exercisable for the first time by the Grantee
when added to all Prior Grants without exceeding the $100,000 Limit; and (B) if,
viewed as of the date of the Current Grant, any portion of a Current Grant could
not be exercised under the provisions of the immediately preceding sentence
during any calendar year commencing with the calendar year in which it is first
exercisable through and including the last calendar year in which it may by its
terms be exercised, such portion of the Current Grant shall not be an Incentive
Stock Option, but shall be exercisable as a separate Option at such date or
dates as are provided in the Current Grant; (v) shall be granted within 10 years
after the earlier of the date the Plan is adopted or the date the Plan is
approved by the stockholders of the Company; and (vi) shall require the Grantee
to notify the Committee of any disposition of any Stock issued pursuant to the
exercise of the Incentive Stock Option under the circumstances described in
Section 421(b) of the Code (relating to certain disqualifying dispositions),
within 10 days of such disposition.
Notwithstanding the foregoing and Section 4(b)(vi), the Committee may,
without the consent of the Grantee, at any time before the exercise of an
Option (whether or not an Incentive Stock Option), take any action necessary to
prevent such option from being treated as an Incentive Stock Option.
(c) Grant of Reload Options. The Committee may from time to time, in its
discretion, adopt a policy, which policy shall not remain in effect for longer
than 12 months at a time, but which may be adopted for successive 12-month
periods, under which each Grantee who exercises while the policy is in effect
an Option for shares of Stock which have a Fair Market Value on the date of
exercise equal to not less than 100% (or such greater percentage set forth in
the policy) of the Option Price for such Options ("Exercised Options") and pays
the Option Price with shares of Stock, shall be granted, subject to Section 3,
additional Options ("Reload Options") in an amount equal to the sum ("Reload
Number") of the number of shares of Stock tendered to exercise the Exercised
Options plus, if so provided by the Committee, the number of shares of Stock,
if any, retained by the Company in connection with the exercise of the
Exercised Options to satisfy any federal, state or local tax withholding
requirements. The Committee may, in its discretion, provide that the Reload
Option policy shall not apply to Options which would expire within such period
as the Committee determines, in its discretion, from the effective date of the
policy.
(d) Terms and Conditions for Reload Options. Reload Options shall be
subject to the following terms and conditions: (i) the Grant Date for each
Reload Option shall be the date of exercise of the Exercised Option to which it
relates; (ii) the Reload Option may be exercised at any time during the
unexpired term of the Exercised Option (subject to earlier termination thereof
as provided in the Plan and in the applicable Award Agreement); (iii) the terms
of the Reload Option shall be the same as the terms of the Exercised Option to
which it relates, except that (A) the Option Price shall be the Fair Market
Value of the Stock on the Grant Date of the Reload Option, and (B) no Reload
Option may be exercised within one year from the Grant Date thereof; and (iv)
each Reload Option shall by its terms be subject to the Company's receipt of
either an opinion of counsel for the Company or a "no-action" letter from the
staff of the SEC to the effect that the grant of such Reload Option would not
cause the Plan to fail to satisfy the requirements of Rule 16b-3 (or any
successor provision) under Section 16(b) of the Exchange Act.
(e) Exercise of Options. Subject to Sections 4(b)(viii), 7(g), 13 and 18
and such terms and conditions as the Committee may impose, each Option shall be
exercisable in one or more installments commencing not earlier than the first
anniversary of the Grant Date of such Option. Each Option shall be exercised
by delivery to the Company of written notice of intent to purchase a specific
number of shares of Stock subject to the Option. The Option Price of any
shares of Stock or shares of restricted stock as to which an Option shall be
exercised shall be paid in full at the time of the exercise. Payment may, at
the election of the Grantee, be made in any one or any combination of the
following: (i) cash; (ii) Stock valued at its Fair Market Value on the
business day preceding the date of exercise (including through an attestation
procedure); (iii) with the approval of the Committee, shares of restricted
stock each valued at the Fair Market Value of a share of Stock on the business
day next preceding the date of exercise; (iv) by waiver of compensation due or
accrued to the Grantee for services rendered; (v) with the consent of the
Committee, by tender of property; (vi) provided that a public market for the
Stock exists: (A) through a "same day sale" commitment from the Grantee and a
broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby the Grantee irrevocably elects to exercise
the Option and to sell a portion of the Stock so purchased in order to pay for
the Option, and whereby the NASD Dealer irrevocably commits upon receipt of
such Stock to forward the Option Price directly to the Company; or (B) through
a "margin"
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commitment from the Grantee and an NASD Dealer whereby the Grantee
irrevocably elects to exercise the Option and to pledge the Stock so purchased
to the NASD Dealer in a margin account as security for a loan from the NASD
Dealer in the amount of the Option Price, and whereby the NASD Dealer
irrevocably commits upon receipt of such Stock to forward the Option Price
directly to the Company; or (C) through any other procedure pursuant to which
the Grantee delivers to the Company a properly executed exercise notice and
instructions to deliver the resulting Stock to a stock broker that are intended
to satisfy the provisions of Section 220. 3(e)(4) of Regulation T issued by the
Board of Governors of the Federal Reserve System as in effect from time to
time; (vii) in the discretion of the Committee and to the extent permitted by
law, in accordance with Section 14; or (viii) by the surrender of all or part
of the Option being exercised.
(f) Use of Restricted Stock to Pay Option Price. If restricted stock
("Tendered Restricted Stock") is used to pay the Option Price for Stock subject
to an Option, then a number of shares of Stock acquired on exercise of the
Option equal to the number of shares of Tendered Restricted Stock shall, unless
the Committee provides otherwise, be subject to the same restrictions as the
Tendered Restricted Stock, determined as of the date of exercise of the Option.
If the Option Price for restricted stock subject to an Option is paid with
Tendered Restricted Stock, and if the Committee determines that the restricted
stock acquired on exercise of the Option is subject to restrictions that cause
it to have a greater risk of forfeiture than the Tendered Restricted Stock,
then notwithstanding the preceding sentence, all the restricted stock acquired
on exercise of the Option shall, unless the Committee provides otherwise, be
subject to such restrictions.
(g) Special Rules for Section 16 Persons. Except as determined by the
Committee in its sole discretion, no Option identified with a Stock
Appreciation Right shall be exercisable by a Section 16 Person for six months
from its Grant Date. This limitation shall not apply if the Grantee dies or
incurs a Disability before the end of the six-month period.
(h) Provision Applicable to Certain Hardship Distributions. No Grantee
shall make any elective contribution or employee contribution (within the
meaning of Treasury Regulation Section 1.401(k)-1(d)(2)(iv)(B)(4)) (i.e.,
exercise an Option with cash or check) to the Plan during the 12-month period
after the Grantee's receipt of a deemed hardship distribution (within the
meaning of Treasury Regulation Section 1.401(k)-1(d)(2)(iv)) from a plan of the
Company (or a related party within the provisions of Code Section 414(b), (c),
(m) or (o)) containing a cash or deferred arrangement under Section 401(k) of
the Code. The preceding sentence shall not apply if and to the extent that the
Committee determines it is not necessary to qualify any such plan as a cash or
deferred arrangement under Section 401(k) of the Code.
8. RESTRICTED STOCK.
(a) Grant of Shares of Restricted Stock. Before the grant of any shares
of Restricted Stock, the Committee shall determine, in its discretion: (i) the
per share purchase price of such shares (which, subject to clauses (A) and (B)
of this sentence, may be zero), and (ii) the restrictions applicable to such
grant; provided, however, that: (A) the per share purchase price of all such
shares (other than treasury shares) shall be greater than or equal to the par
value of the Stock; and (B) if such shares are to be granted to a Section 16
Person, the per share purchase price of any such shares shall also be at least
50% of the Fair Market Value of the Stock on the Grant Date unless such shares
are granted for no monetary consideration or with a purchase price per share
equal to the par value of the Stock, except that this clause (B) shall be
inapplicable if the Company obtains an opinion of counsel for the Company or a
"no action" letter from the staff of the SEC to the effect that such limitation
is not necessary for the Plan to comply with the requirements of Rule 16b-3 (or
any successor exemption) under the Exchange Act.
(b) Exercise. Payment of the purchase price (if greater than zero) for
shares of Restricted Stock shall be made in full by the Grantee before the
delivery of such shares and, in any event, no later than 10 days after the
Grant Date for such shares. Such payment may, at the election of the Grantee
and unless the Committee otherwise provides in the Award Agreement, be made in
any one or any combination of the following: (i) cash, (ii) Stock valued at
its Fair Market Value on the business day next preceding the date of payment,
or (iii) shares of Restricted Stock, each valued at the Fair Market Value of a
share of Stock on the business day next preceding the date of payment; provided
that: (A) the use of Stock or restricted stock in payment of such purchase
price by a Section 16 Person is subject to the prior receipt by the Company of
either a favorable opinion of counsel for the Company or a "no action" letter
from the staff of the SEC with respect to the exemption of such use of stock
from liability under Section 16(b) of the Exchange Act or the inapplicability
of such liability; (B) in the discretion of the Committee and to the extent
permitted by law, payment may also be made in accordance with Section 14; and
(C) if the purchase price for Restricted Stock ("New Restricted Stock") is paid
with shares of restricted stock ("Old Restricted Stock"), the restrictions
applicable to the New Restricted Stock shall be the same as if the Grantee had
paid for the New Restricted Stock in cash unless, in the judgment of the
Committee, the Old Restricted Stock was subject to a greater risk of
forfeiture, in which case a number of shares of New Restricted Stock equal to
the number of shares of Old Restricted Stock tendered in payment for New
Restricted Stock shall, unless the Committee provides otherwise, be subject to
the same restrictions as the Old Restricted Stock, determined immediately
before such payment.
(c) Forfeiture. The Committee may, but need not, provide that all or any
portion of a Grantee's Award of Restricted Stock shall be forfeited: (i) upon
the Grantee's Termination of Employment within a specified time period after
the Grant Date, or (ii) if the Company or the Grantee does not achieve
specified performance goals within a specified time period after the Grant Date
and before the Grantee's Termination of Employment.
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(d) Effect of Forfeiture. If a share of Restricted Stock is forfeited,
then: (i) the Grantee shall be deemed to have resold such share of restricted
stock to the Company at the lesser of (A) the purchase price paid by the
Grantee (such purchase price shall be deemed to be zero dollars ($0) if no
purchase price was paid) or (B) the Fair Market Value of a share of Stock on
the date of such forfeiture; (ii) the Company shall pay to the Grantee the
amount determined under clause (i) of this sentence as soon as is
administratively practical; and (iii) such share of Restricted Stock shall
cease to be outstanding, and shall no longer confer on the Grantee thereof any
rights as a stockholder of the Company, from and after the date of the
Company's tender of the payment specified in clause (ii) of this sentence,
whether or not such tender is accepted by the Grantee.
(e) Certificates. Any share of Restricted Stock shall be held (together
with a stock power executed in blank by the Grantee) in escrow by the Secretary
of the Company until such shares become nonforfeitable or are forfeited and
shall bear an appropriate legend specifying that such share is non-transferable
and subject to the restrictions set forth in the Plan. If any shares of
Restricted Stock become nonforfeitable, the Company shall cause certificates
for such shares to be issued or reissued without such legend.
9. STOCK APPRECIATION RIGHTS.
(a) Grant of Stock Appreciation Rights. When granted, Stock Appreciation
Rights may, but need not, be identified with shares of Stock subject to a
specific Option, specific shares of Restricted Stock, or specific Performance
Units of the Grantee (including any Option, shares of Restricted Stock, or
Performance Units granted on or before the Grant Date of the Stock Appreciation
Rights) in a number equal to or different from the number of Stock Appreciation
Rights so granted. If Stock Appreciation Rights are identified with shares of
Stock subject to an Option, shares of Restricted Stock, or Performance Units,
then, unless otherwise provided in the applicable Award Agreement, the
Grantee's associated Stock Appreciation Rights shall terminate upon (i) the
expiration, termination, forfeiture, or cancellation of such Option, shares of
Restricted Stock, or Performance Units, (ii) the exercise of such Option or
Performance Units, or (iii) the nonforfeitability of such shares of Restricted
Stock.
(b) Exercise of Stock Appreciation Rights. Subject to Section 4(b)(viii),
9(d), 13 and 18 and such terms and conditions as the Committee may impose, each
Stock Appreciation Right shall be exercisable not earlier than the first
anniversary of the Grant Date of such Stock Appreciation Right to the extent
the Option with which it is identified, if any, may be exercised, to the extent
the Restricted Stock with which it is identified, if any, is nonforfeitable, or
to the extent the Performance Unit with which it is identified, if any, may be
exercised, unless otherwise provided by the Committee. Stock Appreciation
Rights shall be exercised by delivery to the Company of written notice of
intent to exercise a specific number of Stock Appreciation Rights. Unless
otherwise provided in the applicable Award Agreement, the exercise of Stock
Appreciation Rights which are identified with shares subject to an Option,
shares of Restricted Stock, or Performance Units shall result in the
cancellation or forfeiture of such Option, shares of Restricted Stock, or
Performance Units, as the case may be, to the extent of such exercise.
(c) Benefit for Stock Appreciation Rights. The benefit for each Stock
Appreciation Right exercised shall be equal to the difference between: (i) the
Fair Market Value of a share of Stock on the date of such exercise and (ii) an
amount equal to: (A) for any Stock Appreciation Right identified with an
Option, the Option Price of such Option, unless the Committee in the grant of
the Stock Appreciation Right specified a higher amount, or (B) for any other
Stock Appreciation Right, the Fair Market Value of a share of Stock on the Grant
Date of such Stock Appreciation Right, unless the Committee in the grant of the
Stock Appreciation Right specified a higher amount; provided that the Committee,
in its discretion, may provide that the benefit for any Stock Appreciation Right
shall not exceed a stated percentage (which may exceed 100%) of the Fair Market
Value of a share of Stock on such Grant Date. The benefit upon the exercise of
a Stock Appreciation Right shall be payable in cash, except that the Committee,
with respect to any particular exercise, may, in its discretion, pay benefits
wholly or partly in Stock.
(d) Special Rules for Section 16 Persons. Except as determined by the
Committee in its sole discretion, no Stock Appreciation Right shall be
exercisable by a Section 16 Person for six months from its Grant Date. This
limitation shall not apply if the Grantee dies or incurs a Disability before
the end of the six-month period.
10. PERFORMANCE UNITS.
(a) Grant of Performance Units.
(i) Before the grant of any Performance Unit, the Committee shall: (A)
determine performance goals ("Performance Goals") applicable to such grant,
(B) designate a period, of not less than one year nor more than seven years,
for the measurement of the extent to which Performance Goals are attained,
which period may begin prior to the Grant Date (the "Measuring Period"), and
(C) assign a "Performance Percentage" to each level of attainment of
Performance Goals during the Measuring Period, with the percentage applicable
to minimum attainment being zero percent (0%) and the percentage applicable
to maximum attainment to be determined by the Committee from time to time.
(ii) In establishing Performance Goals, the Committee may consider such
performance factor or factors as it deems appropriate, including net income,
cash flow, growth in net income or cash flow, earnings per share, growth of
earnings per share, return on equity,
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or return on capital. The Performance Goals may include minimum and optimum
objectives or a single set of objectives. The Committee may, at any time, in
its discretion, modify Performance Goals in order to facilitate their
attainment for any reason, including recognition of unusual or nonrecurring
events affecting the Company or a Subsidiary or changes in applicable laws,
regulations or accounting principles. If a Grantee is promoted, demoted or
transferred to a different business unit of the Company during a performance
period, the Committee may adjust or eliminate the Performance Goals as it
deems appropriate.
(iii) When granted, Performance Units may, but need not, be identified
with shares of Stock subject to a specific option, specific shares of
Restricted Stock, or specific Stock Appreciation Rights of the Grantee
granted under the Plan or any Prior Plan in a number equal to or different
from the number of the Performance Units so granted. If Performance Units
are identified with shares of Stock subject to an option, shares of
Restricted Stock, or Stock Appreciation Rights, then, unless otherwise
provided in the applicable Award Agreement, the Grantee's associated
Performance Units shall terminate upon (A) the expiration, termination,
forfeiture, or cancellation of such Option, shares of Restricted Stock, or
Stock Appreciation Rights, (B) the exercise of such Option or Stock
Appreciation Rights, or (C) the nonforfeitability of such shares of
Restricted Stock.
(iv) With respect to Awards of Performance Units that are intended to
qualify as "performance based" within the meaning of Code Section
162(m)(4)(C), the Committee shall (A) select the Grantees for such Awards,
(B) establish in writing the applicable Performance Goals and all related
terms no later than 90 days after the commencement of the period of service
to which the Performance Goals relate (or such earlier or later date as may
be the applicable deadline for compensation payable hereunder to qualify as
"performance based" within the meaning of Code Section 162(m)(4)(C)), and (C)
designate the Awards that are to qualify as "performance based" within the
meaning of Code Section 162(m)(4)(C).
(b) Exercise of Performance Units. Subject to Sections 13 and 18 and such
terms and conditions as the Committee may impose, if, with respect to any
Performance Unit, the minimum Performance Goals have been achieved during the
applicable Measuring Period, then such Performance Unit shall be exercisable
commencing on the later of (i) the first anniversary of the Grant Date or (ii)
the first day after the end of the applicable Measuring Period. Performance
Units shall be exercised by delivery to the Company of written notice of intent
to exercise a specific number of Performance Units; provided, however, that
Performance Units not identified with an Option, shares of Restricted Stock, or
Stock Appreciation Rights shall be deemed exercised on the date on which they
first become exercisable. After completion of the Measuring Period, the
Committee shall certify in writing the extent to which the Performance Goals
and other material terms applicable to such Award are attained. Unless and
until the Committee so certifies, the Award shall not be paid. Unless
otherwise provided for in the applicable Award Agreement, the exercise of
Performance Units which are identified with an Option, shares of Restricted
Stock, or Stock Appreciation Rights shall result in the cancellation or
forfeiture of such Option, shares of Restricted Stock, or Stock Appreciation
Rights, as the case may be, to the extent of such exercise.
(c) Benefit of Performance Unit. The benefit for each Performance Unit
exercised shall be an amount equal to the product of: (i) the Fair Market
Value of a share of Stock on the Grant Date of the Performance Unit multiplied
by (ii) the Performance Percentage attained during the Measuring Period for
such Performance Unit.
(d) Payment. The benefit upon the exercise of a Performance Unit shall be
payable as soon as is administratively practicable after the later of (i) the
date the Grantee exercises or is deemed to exercise such Performance Unit, or
(ii) the date (or dates in the event of installment payments) as provided in
the applicable Award Agreement. Such benefit shall be payable in cash, except
that the Committee, with respect to any particular exercise, may, in its
discretion, pay benefits wholly or partly in Stock. The number of shares of
Stock payable in lieu of cash shall be determined by valuing the Stock at its
Fair Market Value on the business day next preceding the date such benefit is
to be paid.
(e) No Discretion. With respect to Awards of Performance Units that are
intended to qualify as "performance based" within the meaning of Code Section
162(m)(4)(C), the Committee has no discretion to increase the amount of the
Award due upon attainment of the applicable Performance Goals. No provision of
this Plan shall preclude the Committee from exercising negative discretion with
respect to any Award of Performance Units (i.e., to reduce or eliminate the
Award payable) within the meaning of Treasury Regulation Section
1.162-27(e)(2)(iii)(A).
(f) Forfeiture. In addition to any specific provisions on forfeiture
provided for in any Performance Unit Award Agreement, Performance Units will be
forfeited if the Grantee terminates employment (other than upon death,
disability or retirement) with the Company, a Subsidiary or an affiliate prior
to the completion of the Measuring Period; provided that the Committee shall
have the authority to provide for a partial or full payment of the Award that
would have been payable if the Grantee had continued employment for the entire
Measuring Period, which shall be paid at the same time as it would have been
paid if no such termination of employment occurred, but only if and to the
extent the exercise of such discretion by the Committee does not prevent any
Award from qualifying as "performance based" within the meaning of Code Section
162(m)(4)(C).
11. GRANTEE'S AGREEMENT TO SERVE. Each Grantee who is granted an Award
shall, by executing such Grantee's Award Agreement, agree that such Grantee
will remain in the employ of the Company or any of its Subsidiaries for at
least one year after the Grant Date. No obligation of the Company or any of
its Subsidiaries as to the length of any Grantee's employment shall be implied
by the terms of the Plan, any grant of
A-8
<PAGE> 23
an Award hereunder or any Award Agreement. The Company and its Subsidiaries
reserve the same rights to terminate employment of any Grantee as existed before
the Effective Date.
12. NON-TRANSFERABILITY. Except as permitted by the Committee in writing,
each Award (other than Restricted Stock) granted hereunder shall by its terms
not be assignable or transferable other than by will or the laws of descent and
distribution and may be exercised, during the Grantee's lifetime, only by the
Grantee. Each share of Restricted Stock shall be non-transferable until such
share becomes nonforfeitable.
13. EFFECTS OF A CHANGE IN CONTROL. The terms and provisions of this
Section 13 shall apply upon the occurrence of a Change in Control only if,
prior to the Change in Control, the Committee shall have determined that this
Section 13 shall be applicable. The Committee shall give written notice to the
Grantees of such a determination and the date on which such determination is
made. After the occurrence of a Change in Control following the date on which
such determination is made, then:
(a) General. Subject to Sections 7(g), 9(d) and 18 but notwithstanding
Section 11 or any other provisions of the Plan: (i) all Options, Stock
Appreciation Rights, and Performance Units granted under the Plan shall
immediately be fully exercisable; and (ii) all shares of Restricted Stock shall
immediately be nonforfeitable and freely transferable.
(b) Benefit. The benefit, if any, payable with respect to any Performance
Unit for which the Measuring Period has not ended shall be equal to the product
of: (i) the Fair Market Value of a share of Stock on the Grant Date of the
Performance Unit multiplied successively by each of the following; (ii) a
fraction, the numerator of which is the number of months (including as a whole
month any partial month) that have elapsed since the beginning of such
Measuring Period until the date of such Change in Control, and the denominator
of which is the number of months (including as a whole month any partial month)
in the Measuring Period; and (iii) a percentage equal to the greater of (A) the
target percentage, if any, specified in the applicable Award Agreement, or (B)
the maximum percentage, if any, that would be earned under the terms of the
applicable Award Agreement assuming that such rate at which the performance
goals have been achieved as of the date of the Change in Control would continue
until the end of the Measuring Period.
14. LOANS AND GUARANTEES. The Committee may, in its discretion:
(i) allow a Grantee to defer payment to the Company of all or any
portion of (i) the Option Price of an Option, (ii) the purchase price of a
share of Restricted Stock, or (iii) any taxes associated with a benefit
hereunder which is not a cash benefit at the time such benefit is so
taxable, or
(ii) cause the Company to guarantee a loan from a third party to the
Grantee, in an amount equal to all or any portion of such Option Price,
purchase price, or any related taxes. Any such payment deferral or
guarantee by the Company pursuant to this Section 14 shall be on a secured
or unsecured basis for such periods, at such interest rates, and on such
other terms and conditions as the Committee may determine.
Notwithstanding the foregoing, a Grantee shall not be entitled to defer
the payment of such Option Price, purchase price, or any related taxes
unless the Grantee (i) enters into a binding obligation to pay the
deferred amount and (ii) pays upon exercise of an Option or grant of
shares of Restricted Stock, as the case may be, an amount equal to or
greater than the aggregate par value of all shares of Stock or Restricted
Stock (other than treasury shares) to be then delivered. If the Committee
has permitted a payment deferral or caused the Company to guarantee a loan
pursuant to this Section 14, then the Committee may, in its discretion,
require the immediate payment of such deferred amount or the immediate
release of such guarantee upon the Grantee's Termination of Employment or
upon the Grantee's sale or other transfer of the Grantee's shares of Stock
purchased pursuant to such deferral or guarantee.
15. NOTIFICATION UNDER SECTION 83(B). If the Committee has not, on the
Grant Date or any later date, prohibited such Grantee from making the following
election, and a Grantee shall, in connection with the exercise of any Option,
or the grant of any share of Restricted Stock, make the election permitted
under Section 83(b) of the Code (i.e., an election to include in such Grantee's
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code), such Grantee shall notify the Company of such election within 10
days of filing notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under the authority of Section 83(b) of the Code.
16. MANDATORY WITHHOLDING TAXES.
(a) General. Whenever under the Plan, cash or shares of Stock are to be
delivered upon exercise or payment of an Award or upon a share of Restricted
Stock becoming nonforfeitable, or any other event with respect to rights and
benefits hereunder, the Company shall be entitled to require as a condition of
delivery (i) that the Grantee remit an amount sufficient to satisfy all
federal, state and local withholding tax requirements related thereto, (ii) the
withholding of such sums from compensation otherwise due to the Grantee or from
any shares of Stock due to the Grantee under the Plan, or (iii) any combination
of the foregoing.
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<PAGE> 24
(b) Incentive Stock Options. If any disqualifying disposition described
in Section 7(b)(vi) is made with respect to shares of Stock acquired under an
Incentive Stock Option granted pursuant to the Plan or any election described
in Section 15 is made, then the person making such disqualifying disposition or
election shall remit to the Company an amount sufficient to satisfy all
federal, state, and local withholding taxes thereby incurred; provided that, in
lieu of or in addition to the foregoing, the Company shall have the right to
withhold such sums from compensation otherwise due to the Grantee or from any
shares of Stock due to the Grantee under the Plan.
17. ELECTIVE SHARE WITHHOLDING.
(a) Election by Grantee. Subject to Section 17(b), a Grantee may elect
the withholding ("Share Withholding") by the Company of a portion of the shares
of Stock otherwise deliverable to such Grantee upon the exercise or payment of
an Award or upon a share of Restricted Stock's becoming nonforfeitable (each a
"Taxable Event") having a Fair Market Value equal to: (i) the minimum amount
necessary to satisfy required federal, state, or local withholding tax
liability attributable to the Taxable Event; or (ii) with the Committee's prior
approval, a greater amount, not to exceed the estimated total amount of such
Grantee's tax liability with respect to the Taxable Event.
(b) Restrictions. Each Share Withholding election by a Grantee shall be
made in writing in a form acceptable to the Committee and shall be subject to
the following restrictions: (i) a Grantee's right to make such an election
shall be subject to the Committee's right to revoke such right at any time
before the Grantee's election if the Committee has reserved the right to do so
in the Award Agreement; (ii) if the Grantee is a Section 16 Person, such
Grantee's election shall be subject to the disapproval of the Committee at any
time, whether or not the Committee has reserved the right to do so; (iii) the
Grantee's election must be made before the date (the "Tax Date") on which the
amount of tax to be withheld is determined; (iv) the Grantee's election shall
be irrevocable by the Grantee; (v) unless waived by the Committee, a Section 16
Person may not elect Share Withholding within six months after the grant of the
related Option or Stock Appreciation Rights (except if the Grantee dies or
incurs a Disability before the end of the six-month period); (vi) unless waived
by the Committee, a Section 16 Person must elect Share Withholding six months
before the Tax Date; and (vii) in the event that the Tax Date is deferred until
six months after the delivery of Stock under Section 83(b) of the Code, the
Grantee shall receive the full amount of Stock with respect to which the
exercise occurs, but such Grantee shall be unconditionally obligated to tender
back to the Company the proper number of shares of Stock on the Tax Date.
18. TERMINATION OF EMPLOYMENT.
(a) Restricted Stock. Except as otherwise provided by the Committee on or
after the Grant Date, a Grantee's shares of Restricted Stock that are
forfeitable shall be forfeited upon the Grantee's Termination of Employment.
(b) Other Awards. If the Grantee has a Termination of Employment for
Cause, any unexercised Option, Stock Appreciation Right, or Performance Unit
shall terminate upon the Grantee's Termination of Employment. If the Grantee
has a Termination of Employment for any reason other than Cause, then any
unexercised Option, Stock Appreciation Right, or Performance Unit, to the
extent exercisable on the date of the Grantee's Termination of Employment, may
be exercised in whole or in part, not later than the later of (A) the 90th day
following the Grantee's Termination of Employment or (B) the 30th day following
the last day for which the Grantee is entitled to severance payments under the
Company's or any Subsidiary's personnel policies, except that: (i) if the
Grantee's Termination of Employment is caused by the death of the Grantee, then
any unexercised Option, Stock Appreciation Right, or Performance Unit, to the
extent exercisable on the date of the Grantee's death, may be exercised, in
whole or in part, at any time within one year after the Grantee's death by the
Grantee's personal representative or by the person to whom the Option, Stock
Appreciation Right, or Performance Unit is transferred by will or the
applicable laws of descent and distribution; (ii) if the Grantee's Termination
of Employment is as a result of retirement, then any unexercised Option, Stock
Appreciation Right, or Performance Unit, to the extent exercisable at the date
of such Termination of Employment, may be exercised, in whole or in part, at
any time within 90 days after such Termination of Employment; provided that, if
the Grantee dies after such Termination of Employment and before the end of
such 90-day period, such Option, Stock Appreciation Right, or Performance Unit
may be exercised by the deceased Grantee's personal representative or by the
person to whom the Option, Stock Appreciation Right, or Performance Unit is
transferred by will or the applicable laws of descent and distribution within
one year after the Grantee's Termination of Employment; and (iii) if the
Grantee's Termination of Employment is on account of the Disability of the
Grantee, then any unexercised Option, Stock Appreciation Right, or Performance
Unit, to the extent exercisable at the date of such Termination of Employment,
may be exercised, in whole or in part, at any time within one year after the
date of such Termination of Employment; provided that, if the Grantee dies
after such Termination of Employment and before the end of such one-year
period, such Option, Stock Appreciation Right, or Performance Unit may be
exercised by the deceased Grantee's personal representative or by the person to
whom the Option, Stock Appreciation Right, or Performance Unit is transferred
by will or the applicable laws of descent and distribution within one year
after the Grantee's Termination of Employment, or, if later, within 180 days
after the Grantee's death.
(c) Exceptions at the Discretion of the Committee. If the Grantee has a
Termination of Employment for any reason other than Cause, the Committee may
provide on or after the Grant Date (including after a Grantee's Termination of
Employment, but before the expiration of the term specified in the applicable
Award Agreement) for one or more of the following: (i) that any unexercised
Option, Stock Appreciation Right, or Performance Unit, to the extent
exercisable on the date of such Termination of Employment, may be exercised, in
whole or in part, at any time within a period specified by the Committee after
the date of such Termination of Employment; (ii) that any Option, Stock
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<PAGE> 25
Appreciation Right, or Performance Unit which is not exercisable on or before
the date of such Termination of Employment (A) will continue to become
exercisable, as if such Termination of Employment had not occurred, after such
date for a period specified by the Committee and (B) to the extent such Option,
Stock Appreciation Right, or Performance Unit has become exercisable during
such period, may be exercised, in whole or in part, at or before the end of
such period; (iii) that any share of Restricted Stock that has not become
nonforfeitable on or before the date of such Termination of Employment may
become nonforfeitable as if such Termination of Employment had not occurred
after such date for a period specified by the Committee; or (iv) that if the
Grantee dies after such Termination of Employment and before the expiration of
the period specified under clause (i) or (ii) of this Section 18(c), such
Option, Stock Appreciation Right, or Performance Unit may be exercised by the
deceased Grantee's personal representative or by the person to whom the Option,
Stock Appreciation Right, or Performance Unit is transferred by will or the
applicable laws of descent and distribution within the specified period after
the Grantee's Termination of Employment, or, if later, within 180 days after
the Grantee's death; provided that if such rights are granted, the Committee
may thereafter take actions to limit such rights but only if such limitation is
consented to by the Grantee.
(d) Maximum Extension. Notwithstanding the foregoing, no Award shall be
exercisable beyond the maximum term permitted under the original Award
Agreement unless the Committee explicitly extends such original term, in which
case such term shall not be extended beyond the maximum term permitted by the
Plan.
19. SUBSTITUTED AWARDS. If the Committee cancels any Award (granted under
this Plan, the Prior Plans, or any plan of any entity acquired by the Company
or any of its Subsidiaries), and a new Award is substituted therefor, then the
Committee may, in its discretion, determine the terms and conditions of such
new Award and may, in its discretion, provide that the grant date of the
canceled Award shall be the date used to determine the earliest date or dates
for exercising the new substituted Award so that the Grantee may exercise the
substituted Award at the same time as if the Grantee had held the substituted
Award since the grant date of the canceled Award; provided that no award shall
be canceled without the consent of the Grantee if the terms and conditions of
the new Award to be substituted are not at least as favorable as the terms and
conditions of the award to be canceled; and further provided that no Section 16
Person may exercise a substituted Stock Appreciation Right or a substituted
Option identified with a Stock Appreciation Right within six months after the
grant date (calculated without reference to this Section 19) of such
substituted Stock Appreciation Right or Option, unless the Company shall have
received an opinion of counsel for the Company or "no action" letter from the
staff of the SEC to the effect that such limitation is not necessary in order
to avoid liability under Section 16(b) of the Exchange Act.
20. SECURITIES LAW MATTERS.
(a) Legend and Investment Representation. If the Committee deems
necessary to comply with the Securities Act of 1933, or any rules, regulations
or other requirements of the SEC or any stock exchange or automated quotation
system, the Committee may require a written investment intent representation by
the Grantee and may require that a restrictive legend be affixed to
certificates for shares of Stock, or that the Stock be subject to such stock
transfer orders and other restrictions as the Committee may deem necessary or
advisable.
(b) Postponement by Committee. If based upon the opinion of counsel for
the Company, the Committee determines that the exercise or nonforfeitability
of, or delivery of benefits pursuant to, any Award would violate any applicable
provision of (i) federal or state securities law or (ii) the listing
requirements of any national securities exchange or the requirements of any
automated quotation system on which are listed or quoted any of the Company's
equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as the case may be, but the Company shall use
reasonable and good faith efforts to cause such exercise, nonforfeitability or
delivery to comply with all such provisions at the earliest practicable date.
The Committee's authority under this Section 20(b) shall expire on the date of
the first Change in Control to which Section 13 applies.
(c) No Obligation to Register or List. The Company shall be under no
obligation to register the Stock with the SEC or to effect compliance with the
registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company shall have
no liability for any inability or failure to do so.
(d) Waiver of Section 16 Restrictions. The Committee may waive compliance
with any provision of this Plan which is expressly applicable only to Section
16 Persons if the Committee determines that such compliance is not necessary to
avoid a violation of Section 16(b) of the Exchange Act.
21. FUNDING. Benefits payable under the Plan to any person shall be paid
directly by the Company. The Company shall not be required to fund, or
otherwise segregate assets to be used for payment of, benefits under the Plan.
22. NO EMPLOYMENT RIGHTS. Neither the establishment of the Plan, nor the
granting of any Award shall be construed to (i) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits
not specifically provided by the Plan, or (ii) in any manner modify the right
of the Company or any of its Subsidiaries to modify, amend, or terminate any of
its employee benefit plans.
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<PAGE> 26
23. RIGHTS AS A STOCKHOLDER. A Grantee shall not, by reason of any Award
(other than Restricted Stock) have any right as a stockholder of the Company
with respect to the shares of Stock which may be deliverable upon exercise or
payment of such Award until such shares have been delivered to such Grantee.
Shares of Restricted Stock held by a Grantee or held in escrow by the Company
or by an agent of the Company shall confer on the Grantee all rights of a
stockholder of the Company, except as otherwise provided in the Plan. The
Committee, in its discretion, at the time of grant of Restricted Stock, may
permit or require the payment of cash dividends thereon to be deferred and, if
the Committee so determines, reinvested in additional Restricted Stock to the
extent shares are available under Section 3, or otherwise reinvested. Stock
dividends and deferred cash dividends issued with respect to Restricted Stock
shall be treated as additional shares of Restricted Stock that are subject to
the same restrictions and other terms as apply to the shares with respect to
which such dividends are issued. The Committee may, in its discretion, provide
for crediting to and payment of interest on deferred cash dividends.
24. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Grantee's
Stock, the Committee may require the Grantee to deposit all certificates
representing such Stock, together with stock powers or other instruments of
transfer approved by the Committee, appropriately endorsed in blank, with the
Company or an agent designated by the Company to hold in escrow until such
restrictions have lapsed or terminated, and the Committee may cause a legend or
legends referencing such restrictions to be placed on the certificates. Any
Grantee who is permitted to execute a promissory note as partial or full
consideration for the purchase of Stock under the Plan shall be required to
pledge and deposit with the Company all or part of the Stock so purchased as
collateral to secure the payment of the Grantee's obligation to the Company
under the promissory note; provided, however, that the Committee may require or
accept other or additional forms of collateral to secure the payment of such
obligation and, in any event, the Company shall have full recourse against the
Grantee under the promissory note notwithstanding any pledge of the Grantee's
Stock or other collateral. In connection with any pledge of the Stock, the
Grantee shall be required to execute and deliver a written pledge agreement in
such form as the Committee shall from time to time approve. The Stock
purchased with the promissory note may be released from the pledge on a pro rata
basis as the promissory note is paid.
25. NATURE OF PAYMENTS. Any and all grants, payments of cash, or
deliveries of shares of Stock hereunder shall constitute special incentive
payments to the Grantee and shall not be taken into account in computing the
amount of salary or compensation of the Grantee for the purposes of determining
any pension, retirement, death or other benefits under (i) any pension,
retirement, profit-sharing, bonus, life insurance or other employee benefit
plan of the Company or any of its Subsidiaries, or (ii) any agreement between
the Company or any Subsidiary, on the one hand, and the Grantee, on the other
hand, except as such plan or agreement shall otherwise expressly provide.
26. NON-UNIFORM DETERMINATIONS. The Committee's determinations under the
Plan need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards (whether or not such
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations and to enter into non-uniform and
selective Award Agreements as to (i) the identity of the Grantees, (ii) the
terms and provisions of Awards, and (iii) the treatment, under Section 18, of
Terminations of Employment. Notwithstanding the foregoing, the Committee's
interpretation of Plan provisions shall be uniform as to similarly situated
Grantees.
27. ADJUSTMENTS. The Committee shall make equitable adjustment of: (i)
the aggregate numbers of shares of Stock, shares of Restricted Stock and Stock
Appreciation Rights, available under Sections 3(a) and 3(b), (ii) the number of
shares of Stock or shares of Restricted Stock covered by an Award, (iii) the
Option Price, and (iv) the Fair Market Value of Stock to be used to determine
the amount of the benefit payable upon exercise of Stock Appreciation Rights or
Performance Units, to reflect a stock dividend, stock split, reverse stock
split, share combination, recapitalization, merger, consolidation, asset
spin-off, reorganization, or similar event of or by the Company.
28. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall be approved by the
shareholders of the Company (excluding holders of Stock issued pursuant to this
Plan), consistent with applicable laws, including but not limited to Section
162(m)(4)(C) (ii) of the Code, within 12 months before or after the Effective
Date. Upon the Effective Date, Awards may be granted pursuant to the Plan;
provided, however, that: (i) no Option may be exercised prior to initial
shareholder approval of the Plan; (ii) no Option granted pursuant to an
increase in the number of shares of Stock approved by the Board shall be
exercised prior to the time such increase has been approved by the shareholders
of the Company; and (iii) in the event that shareholder approval is not
obtained within the time period provided herein, all Awards granted hereunder
shall be canceled, any Stock issued pursuant to any Award shall be canceled and
any purchase of Stock hereunder shall be rescinded.
29. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board, the submission of the Plan to the shareholders of the Company for
approval, nor any provision of the Plan shall be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including the granting of stock options
and bonuses otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
30. AMENDMENT AND TERMINATION OF THE PLAN. Subject to any applicable
shareholder approval requirements of applicable law or the rules of any
national securities exchange or automated quotation service on which the Stock
is listed or quoted, the Plan may be amended by the Board at any time and in
any respect, including without limitation to qualify Awards hereunder as
performance-based compensation under Code Section 162(m)(4)(C) and to permit or
facilitate qualification of Options therefore or thereafter granted as
Incentive Stock Options under the Code; provided that, without shareholder
approval, no amendment shall (a) increase the aggregate number of shares which
may be issued
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<PAGE> 27
as Incentive Stock Options under the Plan within the meaning of Proposed
Treasury Regulation Section 1.422A-2(b)(3)(iv) or its successor, or (b) change
the material terms of a Performance Goal that were previously approved by
shareholders within the meaning of Treasury Regulation Section
1.162-27(e)(4)(vi) or a successor provision, unless the Board shall determine
that such approval is not necessary to avoid loss of a deduction under Section
162(m) of the Code, will not avoid such a loss of deduction or is not
advisable. The Plan may also be terminated at any time by the Board and shall
terminate automatically on the tenth anniversary of the Effective Date
unless earlier terminated by the Board. No amendment or termination of this
Plan shall adversely affect any Award granted prior to the date of such
amendment or termination without the written consent of the Grantee.
31. WEEKENDS AND HOLIDAYS. Unless this Section 31 prevents an Option
from qualifying as an Incentive Stock Option under Section 422 of the Code or
prevents an Award from qualifying as performance-based compensation under
Section 162(m) of the Code, if any day on which action under the Plan must be
taken falls on a Saturday, Sunday or legal holiday, such action may be taken on
the next succeeding day not a Saturday, Sunday or legal holiday.
32. FOREIGN GRANTEES. Without amending the Plan, Awards may be granted to
Grantees who are foreign nationals or employed outside the United States or
both, on such terms and conditions different from those specified in the Plan
as may, in the judgment of the Committee, be necessary or desirable to further
the purposes of the Plan.
33. INTERPRETATION UNDER SECTION 162(M). Any provision of the Plan to the
contrary notwithstanding, and except to the extent that the Committee
determines otherwise: (i) transactions with respect to persons whose
remuneration is subject to the provisions of Section 162(m) of the Code shall
conform to the requirements of Section 162(m)(4)(C) of the Code, and (ii) every
position of the Plan shall be administered, interpreted and construed to carry
out (i) hereof. Notwithstanding any provision of the Plan to the contrary, the
Plan is intended to give the Committee the authority to grant Awards hereunder
that qualify as performance-based compensation under Code Section 162(m)(4)(C)
and that do not so qualify. Every provision of the Plan shall be administered,
interpreted and construed to carry out such intention and any provision that
cannot be so administered, interpreted and construed shall to that extent be
disregarded; and any provision of the Plan that would prevent an Award that the
Committee intends to qualify as performance-based pay under Code Section
162(m)(4)(C) from so qualifying shall be administered, interpreted and
construed to carry out such intent and any provision that cannot be so
administered, interpreted and construed shall to that extent be disregarded.
34. APPLICABLE LAW. The validity, construction, interpretation and
administration of the Plan and of any determinations or decisions made
thereunder, and the rights of all persons having or claiming to have any
interest therein or thereunder, shall be governed by, and determined
exclusively in accordance with, the laws of the State of Indiana, but without
giving effect to the principles of conflicts of laws thereof. Without limiting
the generality of the foregoing, the period within which any action arising
under or in connection with the Plan must be commenced shall be governed by the
laws of the State of Indiana, without giving effect to the principles of
conflicts of laws thereof, irrespective of the place where the act or omission
complained of took place and of the residence of any party to such action and
irrespective of the place where the action may be brought.
35. CONSTRUCTION. The use of the masculine gender shall also include
within its meaning the feminine. The use of the singular shall include within
its meaning the plural and vice versa.
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<PAGE> 28
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EMMIS BROADCASTING CORPORATION
950 NORTH MERIDIAN STREET, SUITE 1200
INDIANAPOLIS, INDIANA 46204
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY
The undersigned hereby appoints Jeffrey H. Smulyan, Howard L. Schrott
and Norman H. Gurwitz, and each of them, attorneys-in-fact and
proxies, with full power of substitution, to vote as designated below
all shares of Class A Common Stock of Emmis Broadcasting Corporation
which the undersigned would be entitled to vote if personally present
at the annual meeting of shareholders to be held on June 24, 1997, at
10:00 a.m., and at any adjournment thereof.
<TABLE>
<S> <C>
1. ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR.
[ ]FOR all nominees listed below (except as [ ]WITHHOLD AUTHORITY to vote for all nominees
marked to the contrary below)
</TABLE>
Jeffrey H. Smulyan, Doyle L. Rose, Lawrence B. Sorrel,
Gary L. Kaseff, Susan B. Bayh* and Richard A. Leventhal*
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name on the line below.)
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2. PROPOSAL TO APPROVE THE 1997 EQUITY INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE SELECTION OF ARTHUR ANDERSEN LLP AS
INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
(Continued on other side)
* Class A Director
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(Continued from other side)
This proxy when properly executed will be voted in the manner directed
by the undersigned shareholders. If no direction is made, this proxy
will be voted FOR Proposals 1, 2 and 3.
The undersigned acknowledges having received from Emmis Broadcasting
Corporation, prior to the execution of this proxy, a notice of the
meeting, a proxy statement, and an annual report to shareholders.
Please sign exactly as name appears below. When shares are held as
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
Dated: , 1997
---------------------
---------------------------------
Signature
---------------------------------
(Signature if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
REVOCABLE PROXY
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