<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
Hollinger International Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
Hollinger International Inc. Logo
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
MARCH 26, 1999
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of Hollinger
International Inc. (the "Company") to be held on Wednesday, May 5, 1999, at
11:00 a.m., local time, in the Versailles Room, St. Regis Hotel, Two East 55th
Street at Fifth Avenue, New York, New York 10022.
At the meeting you will be asked to elect 16 directors and to adopt the
Hollinger International Inc. 1999 Stock Incentive Plan. The Board of Directors
will also report on the Company's affairs and a discussion period will be
provided for questions and comments.
The Board of Directors recommends that you vote in favor of the proposals.
The proposals are more fully described in the enclosed Notice of Meeting and
Proxy Statement, which you are encouraged to read carefully.
The Board of Directors appreciates and encourages stockholder participation
in the Company's affairs. Whether or not you plan to attend the Annual Meeting,
it is important that your shares be represented. Accordingly, we request that
you sign, date and mail the enclosed proxy in the postage paid envelope provided
at your earliest convenience.
Very truly yours,
/s/ CONRAD M. BLACK
CONRAD M. BLACK
Chairman of the Board of Directors
and Chief Executive Officer
<PAGE> 3
Hollinger International Inc. Logo
401 NORTH WABASH AVENUE
CHICAGO, ILLINOIS 60611
TELEPHONE (312) 321-2299; FACSIMILE (312) 321-0629
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Hollinger International Inc. (the "Company") will be held in the
Versailles Room, St. Regis Hotel, Two East 55th Street at Fifth Avenue, New
York, New York 10022, on Wednesday, May 5, 1999, at 11:00 a.m., local time, for
the following purposes:
1. To elect 16 directors to serve for a one-year term expiring at the
2000 Annual Meeting of Stockholders and until their successors are duly
elected and qualified (the "Director Election Proposal").
2. To approve and adopt the Hollinger International Inc. 1999 Stock
Incentive Plan (the "Incentive Plan Proposal").
3. To transact such further and other business as may properly come
before the meeting or any adjournments or postponements thereof.
The Director Election Proposal and the Incentive Plan Proposal
(collectively, the "Proposals") each will be voted upon separately by the
stockholders of the Company. Approval of the Director Election Proposal requires
the approval of a plurality of the votes cast on the proposal in person or by
proxy by holders of the Company's Class A Common Stock, par value $.01 per share
("Class A Common Stock"), Class B Common Stock, par value $.01 per share ("Class
B Common Stock," and together with Class A Common Stock, "Common Stock"), Series
B Convertible Preferred Stock, par value $.01 per share ("Series B Preferred
Stock"), and Series C Convertible Preferred Stock, par value $.01 per share
("Series C Preferred Stock"), voting together as a single class. Approval of the
Incentive Plan Proposal requires the approval of a majority of the total votes
cast on the proposal in person or by proxy by the holders of the Common Stock,
Series B Preferred Stock and Series C Preferred Stock voting together as a
single class. Class A Common Stock is entitled to one vote per share, Class B
Common Stock is entitled to ten votes per share, Series B Preferred Stock is
entitled to 4/5 of a vote per half share and Series C Preferred Stock is
entitled to ten votes per share.
The Board of Directors has fixed the close of business on March 19, 1999
(the "Record Date") as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof. A list of stockholders as of the Record Date will be
available for inspection by stockholders at the Company's office located at 712
5th Avenue, New York, New York 10019 during ordinary business hours in the
ten-day period prior to and including the Annual Meeting.
As of the Record Date, Hollinger Inc. directly or indirectly owned all of
the Series C Preferred Stock, all of the Class B Common Stock and 29,457,404
shares of Class A Common Stock, which in the aggregate represented 74.08% of the
outstanding combined voting power of the Common Stock, Series B Preferred Stock
and Series C Preferred Stock. Therefore, Hollinger Inc. has sufficient voting
power to approve the Proposals regardless of the vote of any other stockholders.
By Order of the Board of Directors,
LOGO
MARK S. KIPNIS
Vice President-Law and Secretary
March 26, 1999
Whether or not you plan to attend the meeting in person, you are requested
to mark, sign, date and return the enclosed proxy card in the enclosed,
addressed, postage paid envelope provided for that purpose.
<PAGE> 4
Hollinger International Inc. Logo
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Hollinger International Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Annual Meeting") of the Company to be held on May 5, 1999 at 11:00 a.m., local
time, in the Versailles Room, St. Regis Hotel, Two East 55th Street at Fifth
Avenue, New York, New York 10022. This Proxy Statement is being mailed on or
about March 26, 1999. Proxies are being solicited from holders of record as of
the close of business on March 19, 1999 (the "Record Date") of the outstanding
shares of the Company's Class A Common Stock, par value $.01 per share ("Class A
Common Stock"), Class B Common Stock, par value $.01 per share ("Class B Common
Stock," and together with Class A Common Stock, "Common Stock"), Series B
Convertible Preferred Stock, par value $.01 per share ("Series B Preferred
Stock"), and Series C Convertible Preferred Stock, par value $.01 per share
("Series C Preferred Stock") for use at the Annual Meeting and at any
adjournments or postponements thereof.
At the Annual Meeting, stockholders of the Company will be asked to vote
upon the following proposals (the "Proposals"):
1. To elect 16 directors to serve for a one-year term expiring at the
2000 Annual Meeting of Stockholders and until their successors are duly
elected and qualified (the "Director Election Proposal").
2. To approve and adopt the Hollinger International Inc. 1999 Stock
Incentive Plan (the "Incentive Plan Proposal").
3. To transact such further and other business as may properly come
before the meeting or any adjournments or postponements thereof.
It is expected that the solicitation will be primarily by mail or
telephone, but proxies may also be solicited personally by regular employees of
the Company. The cost of such solicitation will be borne by the Company. The
Company will not pay any compensation for the solicitation of proxies, but upon
request will reimburse banks, brokers and other nominees for their reasonable
expenses incurred in sending proxy materials to, and obtaining instructions
from, beneficial owners.
2
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE COMPANY................................................. 4
THE ANNUAL MEETING.......................................... 4
General................................................ 4
Record Date............................................ 4
Required Votes......................................... 5
Proxies................................................ 5
Ownership by Hollinger Inc. ........................... 6
PRINCIPAL STOCKHOLDERS...................................... 7
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 9
Relationship with Hollinger Inc. ...................... 9
Management Services and Business Opportunities......... 10
Other Transactions..................................... 11
THE DIRECTOR ELECTION PROPOSAL.............................. 12
Information Concerning Nominees as Directors........... 12
Meetings and Committees................................ 15
Directors' Compensation................................ 15
Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 16
Executive Compensation................................. 16
THE INCENTIVE PLAN PROPOSAL................................. 21
INDEPENDENT AUDITORS........................................ 25
STOCKHOLDER PROPOSALS....................................... 25
OTHER MATTERS............................................... 25
ANNEX A. Hollinger International Inc. 1999 Stock Incentive
Plan...................................................... A-1
</TABLE>
3
<PAGE> 6
As used in this Proxy Statement, unless the context otherwise requires, (i)
the "Company" refers to Hollinger International Inc. and its consolidated
subsidiaries and affiliated companies; (ii) "Publishing" refers to Hollinger
International Publishing Inc. and its consolidated subsidiaries and affiliated
companies; (iii) "Jerusalem Post" refers to the subsidiaries of the Company
publishing The Jerusalem Post; (iv) "The Telegraph" refers to Telegraph Group
Limited (formerly The Telegraph plc) and its consolidated subsidiaries and
affiliated companies; (v) "Hollinger Inc." refers to Hollinger Inc. and its
consolidated subsidiaries; (vi) "Southam" refers to Southam Inc. and its
consolidated subsidiaries; (vii) "HCPH" refers to Hollinger Canadian Publishing
Holdings Inc. and its consolidated subsidiaries; and (viii) "American
Publishing" refers to American Publishing Company and its consolidated
subsidiaries.
THE COMPANY
The Company is a leading publisher of English-language newspapers in the
United States, the United Kingdom, Canada and Israel. Included among the 113
paid daily newspapers which the Company owns or has an interest in are the
Chicago Sun-Times, The Daily Telegraph, the National Post (Canada) and The
Jerusalem Post. In addition, the Company owns or has an interest in 349
non-daily newspapers as well as magazines and other publications. The Company's
strategy is to achieve growth through acquisitions and improvements in the cash
flow and profitability of its newspapers.
THE ANNUAL MEETING
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors from holders of Common Stock, Series B
Preferred Stock and Series C Preferred Stock for use at the Annual Meeting.
At the Annual Meeting, stockholders will be asked to vote upon the
following Proposals:
1. DIRECTOR ELECTION PROPOSAL: To elect 16 directors to serve for a
one-year term expiring at the 2000 Annual Meeting of Stockholders and
until their successors are duly elected and qualified.
2. INCENTIVE PLAN PROPOSAL: To approve and adopt the Hollinger
International Inc. 1999 Stock Incentive Plan.
3. OTHER BUSINESS: To transact such further and other business as may
properly come before the meeting or any adjournments or postponements
thereof.
Each of the Proposals will be voted upon separately by the stockholders of
the Company.
RECORD DATE
The Board of Directors has fixed the close of business on March 19, 1999 as
the Record Date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting. Only holders of record of shares of Common Stock,
Series B Preferred Stock and Series C Preferred Stock at the close of business
on the Record Date will be entitled to notice of and to vote at the Annual
Meeting. On the Record Date, 94,538,723 of shares of Class A Common Stock were
outstanding and held by approximately 238 holders of record (and approximately
8,000 beneficial owners), 14,990,000 shares of Class B Common Stock were
outstanding and held directly or indirectly by Hollinger Inc., 353,234.5 shares
of Series B Preferred Stock were outstanding and held by one holder of record
(and approximately 100 beneficial owners) and 829,409 shares of Series C
Preferred Stock were outstanding and held directly or indirectly by Hollinger
Inc. Class A Common Stock is entitled to one vote per share, Class B Common
Stock is entitled to ten votes per share, Series B Preferred Stock is entitled
to 4/5 of a vote per half share (each one half share of Series B Preferred Stock
underlies one of the Company's Preferred Redeemable Increased Dividend Equity
Securities ("PRIDES") and is represented by a depositary share) and Series C
Preferred Stock is entitled to ten votes per share.
4
<PAGE> 7
REQUIRED VOTES
The Director Election Proposal and the Incentive Plan Proposal each will be
voted upon separately by the stockholders of the Company. Approval of the
Director Election Proposal requires the approval of a plurality of the votes
cast on the proposal in person or by proxy by the holders of the Common Stock,
Series B Preferred Stock and Series C Preferred Stock voting together as a
single class. Approval of the Incentive Plan Proposal requires the approval of a
majority of the total votes cast on the proposal in person or by proxy by the
holders of the Common Stock, Series B Preferred Stock and Series C Preferred
Stock voting together as a single class. Abstentions from voting will have the
effect of a vote against the Proposals and broker non-votes will have no effect
on the outcome of the Proposals.
As of the Record Date, Hollinger Inc. owns approximately 74.08% of the
combined voting power of the outstanding Common Stock, Series B Preferred Stock
and Series C Preferred Stock. Consequently, Hollinger Inc. has sufficient voting
power to approve the Proposals regardless of the vote of any other stockholders.
Hollinger Inc. has indicated that it will vote in favor of the Proposals.
PROXIES
Stockholders of record on the Record Date are entitled to cast their votes,
in person or by properly executed proxy, at the Annual Meeting. The presence, in
person or by properly executed proxy, of the holders of a majority of the votes
attributable to the outstanding shares of Common Stock, Series B Preferred Stock
and Series C Preferred Stock is necessary to constitute a quorum at the Annual
Meeting.
All shares represented at the Annual Meeting by properly executed proxies
received prior to or at the Annual Meeting and not properly revoked will be
voted in accordance with the instructions indicated in such proxies. If no
instructions are indicated, such proxies will be voted FOR the Proposals. The
Board of Directors does not know of any matters, other than the matters
described in the Notice of Annual Meeting attached to this Proxy Statement, that
will come before the Annual Meeting.
If a quorum is not present at the time the Annual Meeting is convened, or
if for any other reason the Company believes that additional time should be
allowed for the solicitation of proxies, the Company may adjourn or postpone the
Annual Meeting by a vote of the stockholders present. If the Company proposes to
adjourn or postpone the Annual Meeting, the persons named in the enclosed proxy
card will vote all shares for which they have voting authority in favor of such
adjournment or postponement.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the Annual Meeting, a written
notice of revocation bearing a date later than the date of the proxy; (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at or before the Annual Meeting; or (iii) attending
the Annual Meeting and voting in person (although attendance at the Annual
Meeting will not in and of itself constitute revocation of a proxy). Any written
notice revoking a proxy should be sent to: Hollinger International Inc., 401
North Wabash Avenue, Chicago, Illinois 60611, Attention: Secretary.
Proxies are being solicited by and on behalf of the Board of Directors. All
expenses of this solicitation, including the cost of mailing this Proxy
Statement, will be borne by the Company. In addition to solicitation by use of
the mails, proxies may be solicited by directors, officers and employees of the
Company in person or by telephone, telegram or other means of communication.
Such directors, officers and employees will not be additionally compensated but
may be reimbursed for out-of-pocket expenses in connection with such
solicitation. Arrangements will be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation material to beneficial owners
of Common Stock held of record by such persons, and the Company may reimburse
such custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.
5
<PAGE> 8
OWNERSHIP BY HOLLINGER INC.
Hollinger Inc. directly and indirectly owns 40.90% of the combined equity
interest and 74.08% of the combined voting powers of the outstanding Class A
Common Stock, Class B Common Stock, Series B Preferred Stock and Series C
Preferred Stock (without giving effect to the future issuance of Class A Common
Stock in connection with the PRIDES or the Series D Redeemable Convertible
Preferred Stock, par value $.01 per share ("Series D Preferred Stock"), of the
Company or the Special Shares of HCPH, as defined in Certain Relationships and
Related Transactions section). As a result, Hollinger Inc. will continue to be
able to control the outcome of any election of directors and to direct
management policy, strategic direction and financial decisions of the Company
and its subsidiaries. Hollinger Inc. owns all of the outstanding Series C
Preferred Stock, which shall convert automatically on June 1, 2001 pursuant to
the conversion formula set forth in its Certificate of Designations. The
conversion rate is initially 9.8646 shares of Class A Common Stock for each
share of Series C Preferred Stock subject to adjustment as set forth in its
Certificate of Designations. Hollinger Inc. owns all of the outstanding Series D
Preferred Stock, which is convertible at any time into shares of Class A Common
Stock at the initial conversion price of the Canadian dollar equivalent of $14
per share. Based on the initial conversion price, 926,851 shares of Class A
Common Stock would have been issuable as of March 19, 1999.
Hollinger Inc. is effectively controlled by The Hon. Conrad M. Black,
Chairman of the Board and Chief Executive Officer of Hollinger Inc. and the
Company, through his direct and indirect ownership and control of Hollinger
Inc.'s securities. Mr. Black has advised the Company that Hollinger Inc. does
not presently intend to reduce its voting power in the Company's outstanding
Common Stock to less than 50%. Furthermore, Mr. Black has advised the Company
that he does not presently intend to reduce his voting control over Hollinger
Inc. such that a third party would be able to exercise effective control over
it.
6
<PAGE> 9
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 19, 1999, certain information
regarding those persons or entities known to hold more than 5% of the
outstanding shares of Class A Common Stock, Class B Common Stock, Series B
Preferred Stock and Series C Preferred Stock and ownership of Class A Common
Stock, Class B Common Stock, Series B Preferred Stock and Series C Preferred
Stock by the named executive officers, the incumbent directors (whom are all the
nominees for directors) and all directors and executive officers as a group.
<TABLE>
<CAPTION>
CLASS AND
NUMBER OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED (1)(2) OF CLASS (3)
---------------- ------------------------- ------------
<S> <C> <C>
Hollinger Inc. and affiliates.......... 52,426,720 Class A Common (4) 47.35%
10 Toronto Street 14,990,000 Class B Common (4) 100.0%
Toronto, Ontario 829,409 Series C Preferred (4) 100.0%
M5C 2B7 Canada
The Hon. Conrad M. Black, P.C., O.C.... 52,596,370 Class A Common (1), (4), (5) 47.51%
14,990,000 Class B Common (4), (5) 100.0%
829,409 Series C Preferred (6) 100.0%
Dwayne O. Andreas...................... 3,500 Class A Common (1) *
Peter Y. Atkinson...................... 27,500 Class A Common (1) *
Barbara Amiel Black.................... 52,596,370 Class A Common (1), (7) 47.51%
14,990,000 Class B Common (7) 100.0%
829,409 Series C Preferred (7) 100.0%
John A. Boultbee....................... 57,000 Class A Common (1) *
Richard R. Burt........................ 3,500 Class A Common (1) *
Raymond G. Chambers.................... 0 Class A Common (1) *
Daniel W. Colson....................... 22,500 Class A Common (1) *
Fredrick A. Creasey.................... 2,500 Class A Common (1) *
John D. Ferguson....................... 5,000 Class A Common (1) *
Paul B. Healy.......................... 37,000 Class A Common (1) *
Mark S. Kipnis......................... 0 Class A Common (1) *
Dr. Henry A. Kissinger................. 3,500 Class A Common (1) *
Marie-Josee Kravis, O.C................ 3,500 Class A Common (1) *
Frederic Lebolt........................ 0 Class A Common (1) *
Shmuel Meitar.......................... 3,500 Class A Common (1) *
Richard N. Perle....................... 12,700 Class A Common (1), (8) *
F. David Radler........................ 159,600 Class A Common (1), (9) *
Jerry Strader.......................... 52,000 Class A Common (1) *
Robert S. Strauss...................... 13,500 Class A Common (1), (10) *
A. Alfred Taubman...................... 3,500 Class A Common (1) *
James R. Thompson...................... 3,500 Class A Common (1) *
Lord Weidenfeld........................ 3,500 Class A Common (1) *
Leslie H. Wexner....................... 28,500 Class A Common (1) *
All Directors and Executive Officers as
a group (24 persons)................. 53,042,170 Class A Common (11) 47.91%
</TABLE>
- ---------
(1) Includes shares subject to presently exercisable options or options
exercisable within 60 days of March 19, 1999 held by executive officers and
directors under the Company's 1994 Stock Option Plan (as defined) and 1997
Stock Incentive Plan (as defined) as follows: Mr. Black 150,000 shares; Mr.
Andreas 3,500 shares; Mr. Atkinson 27,500 shares; Mrs. Black 10,000 shares;
Mr. Boultbee 57,000 shares; Mr. Burt 3,500 shares; Mr. Chambers 0 shares;
Mr. Colson 22,500 shares; Mr. Creasey 2,500 shares; Mr. Ferguson 5,000
shares; Mr. Healy 37,000 shares; Mr. Kipnis 0 shares; Dr. Kissinger 3,500
7
<PAGE> 10
shares; Mrs. Kravis 3,500 shares; Mr. Lebolt 0 shares; Mr. Meitar 3,500
shares; Mr. Perle 2,000 shares; Mr. Radler 150,000 shares; Mr. Strader
52,000 shares; Mr. Strauss 3,500 shares; Mr. Taubman 3,500 shares; Mr.
Thompson 3,500 shares; Lord Weidenfeld 3,500 shares; and Mr. Wexner 3,500
shares.
(2) The directors and executive officers as a group (24 persons) were the
beneficial owners of 53,042,170 shares of Class A Common Stock (which
includes presently exercisable options to purchase 550,500 shares of Class
A Common Stock, 14,990,000 shares of Class B Common Stock which are
convertible into an equal number of shares of Class A Common Stock, 829,409
shares of Series C Preferred Stock which are convertible into 7,052,465
shares of Class A Common Stock as of March 19, 1999 and 134,126 shares of
Series D Preferred Stock which are convertible into 926,851 shares of Class
A Common Stock as of March 19, 1999) or approximately 47.91% of the
outstanding Class A Common Stock, and were the beneficial owners of
14,990,000 shares of Class B Common Stock or 100% of the outstanding Class
B Common Stock, as of March 19, 1999.
(3) An asterisk (*) indicates less than one percent of a class of stock.
(4) Includes 14,990,000 shares of Class A Common Stock into which an equal
number of shares of Class B Common Stock are convertible, 7,052,465 shares
of Class A Common Stock (based upon on an assumed March 19, 1999 conversion
in which 829,409 shares of Series C Preferred Stock are convertible and
926,851 shares of Class A Common Stock (based upon an assumed March 19,
1999 conversion) into which 134,126 shares of Series D Preferred Stock are
convertible at any time at the Canadian dollar equivalent of $14.00 per
share. The Ravelston Corporation Limited ("Ravelston"), 10 Toronto Street,
Toronto, Ontario, Canada M5C 2B7, effectively controls Hollinger Inc.
through its direct or indirect control or direction (including through its
subsidiary Argus Corporation Limited ("Argus") over 63.5% of the
outstanding Retractable Common Shares of Hollinger Inc. Mr. Black
indirectly controls Ravelston. Certain executive officers of the Company,
including Messrs. Black, Radler, Colson, Atkinson, Boultbee and Creasey are
employees of Ravelston. Mr. Black also beneficially owns 169,750 shares
(which includes options to purchase 150,000 shares of Class A Common Stock
of the Company, as described in notes (1) and (6) and also includes options
to purchase 10,000 shares owned by his spouse, Barbara Amiel Black; Mr.
Black disclaims beneficial ownership of his spouse's shares). As of March
17, 1999, there were 32,891,072 outstanding Retractable Common Shares of
Hollinger Inc. Certain of the executive officers and directors of the
Company, including Messrs. Black, Radler, Colson, Andreas, Atkinson,
Boultbee, Creasey, Taubman and Mrs. Black also own, directly or indirectly,
equity securities of Hollinger Inc. or own or have the right to acquire
equity securities of Hollinger Inc. through Hollinger Inc.'s Executive
Share Option Plan. As of March 17, 1999, all executive officers and
directors of the Company and other entities controlled by Mr. Black
beneficially held an aggregate of 82,700 Retractable Common Shares of
Hollinger Inc., or approximately 2.5% of the outstanding Retractable Common
Shares. Mr. Taubman indirectly owns 30,000 Common shares of Hollinger Inc.
through the A. Alfred Taubman Restated Revocable Trust. Mr. Andreas is the
Chairman Emeritus and a current director of Archer-Daniels-Midland Co.
which owns approximately 3,547,065 Series II Preference Shares of Hollinger
Inc. Mr. Andreas disclaims beneficial ownership of such securities.
(5) Includes 9,600 shares of Class A Common Stock which are held by Conrad
Black Capital Corporation and 50 shares of Class A Common Stock owned by
Mr. Black's son. Also includes 14,990,000 shares of Class B Common Stock
and 7,052,465 shares of Class A Common Stock into which 829,409 shares of
Series C Preferred Stock are convertible, 926,851 shares of Class A Common
Stock into which 134,126 shares of Series D Preferred Stock are
convertible, all of which are held by Hollinger Inc. and as to which Mr.
Black may be deemed to have indirect beneficial ownership.
(6) Mr. Andreas is the Chairman Emeritus and a current director of
Archer-Daniels-Midland Co., which owns 730,000 shares of Class A Common
Stock. Mr. Andreas disclaims beneficial ownership of such securities.
(7) Mrs. Black may be deemed to have beneficial ownership of the shares of
Common Stock, Series C Preferred Stock and Series D Preferred Stock held by
Hollinger Inc., Conrad Black Capital Corporation and Mr. Black. Mrs. Black
disclaims beneficial ownership of such securities. See Notes (5) and (6)
above.
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<PAGE> 11
(8) Includes 5,000 shares of Class A Common Stock held by Mr. Perle's wife and
1,600 shares of Class A Common Stock held by the Perle Defined Pension Plan
and as to which Mr. Perle may be deemed to have indirect beneficial
ownership.
(9) Includes 9,000 shares of Class A Common Stock held by F.D. Radler Ltd., 200
shares of Class A Common Stock held by Mr. Radler's wife, 200 shares of
Class A Common Stock held by one daughter, and 200 shares of Class A Common
Stock held by another daughter, and as to which Mr. Radler may be deemed to
have indirect beneficial ownership. Mr. Radler disclaims beneficial
ownership of the Class A Common Stock held by his wife and daughters.
(10) Includes 10,000 shares of Class A Common Stock held by Robert and Helen
Strauss Family Partnership.
(11) See notes (1) through (10).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH HOLLINGER INC.
GENERAL. Prior to its initial public offering in May 1994, the Company had
been a wholly owned subsidiary of Hollinger Inc. Hollinger Inc. presently has
the exclusive right to vote shares constituting approximately 74.08% of the
total voting power of the Common Stock, Series B Preferred Stock and Series C
Preferred Stock (without giving effect to the future issuance of Class A Common
Stock in connection with the PRIDES, the Series D Preferred Stock of the
Company, or the Special Shares of HCPH) and the ability to elect the entire
Board of Directors. Four of the nominees (Messrs. Black, Colson, Radler and Mrs.
Black) for election to the Board of Directors of the Company are officers or
directors of Hollinger Inc.
SECURITY FOR HOLLINGER INC. CREDIT FACILITIES. All of the shares of the
Company owned by Hollinger Inc. and its wholly-owned subsidiaries are pledged to
a syndicate of Canadian chartered banks as security for Hollinger Inc.'s
Cdn.$150 million term facility and Cdn.$90 million revolving facility and to a
Canadian chartered bank as security for Hollinger Inc.'s Cdn.$10 million
operating facility.
On July 29, 1997, Hollinger Inc. made an issuer bid (the "Debenture Offer")
for all of its outstanding 7% Southam-linked debentures ("Debentures"), with the
consideration offered per Cdn.$1,000 principal amount of Debentures being, at
the option of a tendering holder of Debentures, (i) Cdn.$1,342.86 or (ii)
Cdn.$771.43 and 57.143 non-voting special shares ("HCPH Special Shares") of
HCPH, a subsidiary of the Company. 4,146,007 HCPH Special Shares were issued in
consideration for non-voting special shares ("Newco Special Shares") of 3396754
Canada Limited ("Newco"), a wholly-owned subsidiary of Hollinger Inc. Pursuant
to the terms of an exchange agreement (the "Exchange Agreement") between HCPH,
Newco and the Company, the Newco Special Shares are exchangeable at any time
after December 23, 1997, at the option of the holder, into Class A Common Stock
to be delivered by Newco on the same basis as the 4,146,007 HCPH Special Shares
are exchangeable for Class A Common Stock with the Company.
All or any part of the exchange obligation for the Newco Special Shares can
also be settled, at the option of Newco, by a cash payment of an amount
equivalent to the Current Market Price (as defined in the Exchange Agreement) of
the Class A Common Stock to be delivered upon any exchange of Newco Special
Shares. Hollinger Inc. has unconditionally agreed to provide Newco with
sufficient Class A Common Stock and/or cash for Newco to meet its obligations
upon an exchange of Newco Special Shares. The number of shares of Class A Common
Stock which Hollinger Inc. may be required to provide to Newco for optional
exchange prior to the mandatory exchange date, June 26, 2000, is between
2,114,465 and 2,495,896. If exchanges do not occur prior to such date a
mandatory exchange will occur on such date in respect of which Hollinger Inc.
will be required to provide to Newco that number of shares of Class A Common
Stock (or the cash equivalent thereof) equal to US $36,816,542 divided by 95% of
the Current Market Price at such date.
FORWARD PURCHASE CONTRACTS. On September 30, 1998, Hollinger Inc. sold
10,117,704 shares of Class A Common Stock to various banks. As part of the
transaction, a subsidiary of Hollinger Inc. sold 408,551 shares of Series D
Preferred Stock to such banks and the banks then tendered such shares to the
Company for
9
<PAGE> 12
conversion into 2,795,165 shares of Class A Common Stock. In a separate
transaction, the Company entered into forward purchase contracts with such banks
to purchase 12,642,305 shares of Class A Common Stock for a price of $13.88 per
share. The terms of this transaction were reviewed and approved by a special
committee comprised of independent outside directors of the Company's Board of
Directors. Credit Suisse First Boston acted as financial advisor for the special
committee.
OTHER ARRANGEMENTS. Additional or modified arrangements and transactions
may be entered into in the future by the Company and Hollinger Inc. and their
respective subsidiaries. Any such future arrangements and transactions will be
determined through negotiation between the Company and Hollinger Inc. and it is
possible that conflicts of interest will be involved. In general, the Audit
Committee of the Board of Directors is responsible for recommending to the Board
of Directors policies and procedures for dealing with conflicts of interest and
reviews any such arrangements and transactions.
MANAGEMENT SERVICES AND BUSINESS OPPORTUNITIES
Concurrently with the consummation of the Company's initial public offering
in 1994, the Company and Hollinger Inc. entered into agreements for the purpose
of defining their ongoing relationships, including a Services Agreement, to
which Publishing later became a party, and a Business Opportunities Agreement.
These agreements were developed in the context of a parent-subsidiary
relationship and, therefore, were not the result of arms-length negotiations
between independent parties. The Business Opportunities Agreement was
subsequently amended, with the approval of the Audit Committee, in 1995 and 1996
(as so amended, the "Business Opportunities Agreement"). In 1998, the management
services arrangements were restructured to reflect the transformation of
Hollinger Inc. primarily into a holding company for the Company and the
provision by The Ravelston Corporation Limited ("Ravelston") of management
services. A new management agreement (the "Management Agreement") was entered
into between Ravelston and the Company. The Management Agreement is generally
consistent in its scope and terms with the Services Agreement, as amended, which
it superseded.
MANAGEMENT SERVICES. Historically, Hollinger Inc. provided various
management and administrative services to the Company and continued such
relationship pursuant to the Services Agreement. Those services are now provided
by Ravelston pursuant to the Management Agreement. The services to be provided
pursuant to the Management Agreement include, among other things, strategic
advice, planning and financial services (including advice and assistance with
respect to acquisitions); assistance in operational matters; and participation
in group insurance programs.
Pursuant to the Management Agreement, the Company has paid Ravelston (whose
affiliates include Messrs. Black, Radler, Colson, Atkinson, Boultbee and Creasey
and Mrs. Black, who are officers and/or directors of both Hollinger Inc. and the
Company and who, with the exception of Mrs. Black, do not receive compensation
directly from the Company in their capacities as executive officers of the
Company or Hollinger Inc.) approximately $32 million in 1998 and paid Hollinger
Inc. pursuant to the Services Agreement approximately $26 million in 1997. The
amount of the management fees was approved by the Audit Committee as reasonable
for the services rendered to the Company.
BUSINESS OPPORTUNITIES. The Business Opportunities Agreement provides that
the Company is Hollinger Inc.'s principal vehicle for engaging in and effecting
acquisitions in the newspaper business and in related media business in the
United States, Israel, and, through The Telegraph, the United Kingdom, the rest
of the European Community, Australia and New Zealand (the "Telegraph
Territory"). Hollinger Inc. has reserved to itself the ability to pursue all
media (including newspaper) acquisition opportunities outside the United States,
Israel and the Telegraph Territory and all media acquisition opportunities
unrelated to the newspaper business in the United States, Israel and the
Telegraph Territory. As newspaper acquisition opportunities arise in the United
States, Israel and the Telegraph Territory, the Company has the right to pursue
such opportunities directly or through The Telegraph. If Hollinger Inc. acquires
a newspaper business in the United States or Israel, Hollinger Inc. will be
obligated to offer such business for sale to the Company on terms no less
favorable to the Company than those obtained by Hollinger Inc. Hollinger Inc. is
prohibited from acquiring newspapers or media businesses in the Telegraph
Territory under a co-operation agreement with
10
<PAGE> 13
The Telegraph (the "Co-operation Agreement"). As newspaper or media acquisitions
arise in Canada, Hollinger Inc. has the right to pursue such opportunities.
Likewise, if the Company acquires a newspaper business in Canada, the Company
will be obligated to offer such business for sale to Hollinger Inc. on terms no
less favorable to Hollinger Inc. than those obtained by the Company. Hollinger
Inc. expects to continue to acquire newspapers in Canada. Any decision by the
Company with respect to a particular acquisition shall be subject to the review
and approval of the Audit Committee. In addition, the Business Opportunities
Agreement does not restrict newspaper companies in which Hollinger Inc. has a
minority investment from acquiring newspaper or media businesses in the United
States or Israel, nor does it restrict subsidiaries of Hollinger Inc. from
acquiring up to 20% interests in publicly-held newspaper businesses in the
United States. For the purposes of the Business Opportunities Agreement,
"newspaper business" means the business of publishing and distributing
newspapers, magazines and other paid or free publications having national,
regional, local or targeted markets, including publications having limited or no
news or editorial content such as shoppers or other total market coverage
publications and similar publications. "Media business" means the business of
broadcasting radio, television, cable and satellite programs (including
national, regional or local radio, television, cable and satellite programs).
The Business Opportunities Agreement will remain in effect so long as Hollinger
Inc. holds at least 50% of the voting power of the Company, subject to
termination by either party under certain specified circumstances.
The Company and Hollinger Inc. also have acknowledged that, pursuant to the
Co-operation Agreement, Hollinger Inc. has undertaken to restrict its activities
in respect of the newspaper business and the media business (defined to include
radio, television, cable and satellite programs) in the Telegraph Territory. So
long as Hollinger Inc. has beneficial ownership of 50% or more of the voting
power of the Company's outstanding securities, the Company and Hollinger Inc.
have agreed that neither shall, without the other's prior written consent,
violate the provisions of the Co-operation Agreement. In addition, Hollinger
Inc. has agreed not to amend or modify the Co-operation Agreement and will not
waive any benefit or right hereunder without the prior written consent of the
Company. Hollinger Inc. is prohibited from directly acquiring beneficial
ownership of any voting securities of The Telegraph.
OTHER TRANSACTIONS
In order to facilitate the rendering of management and advisory services by
Messrs. Black and Radler, and to enhance the business interests of the Company
with the financial community, the newspaper industry and otherwise, a subsidiary
of the Company purchased apartments in New York and Chicago in 1994 for the use
of Messrs. Black and Radler, respectively, on a rent-free basis while they are
in the United States. The cost to the Company of building out and maintaining
the apartments for Messrs. Black and Radler was $957,722 and $22,200,
respectively, during 1998. The Company has granted options to Messrs. Black and
Radler, respectively, to acquire at any time the Company's interest in the New
York and Chicago apartments, respectively, at their then fair market values. The
Company's subsidiary has agreed to sell the apartments upon exercise of the
option by Mr. Black or Mr. Radler, respectively, or by a third party in the
event of Mr. Black's or Mr. Radler's respective termination as both an officer
and a director of the Company, their respective deaths or permanent disability
or upon notice by Mr. Black or Mr. Radler, respectively.
11
<PAGE> 14
THE DIRECTOR ELECTION PROPOSAL
Sixteen persons are being nominated for election as directors. The Board of
Directors is elected annually and may consist of such number of directors as the
Board of Directors may by resolution from time to time determine. Any newly
created directorship or vacancy may be filled by a majority of the remaining
members of the Board of Directors then in office. The occurrence of a vacancy
which is not filled within 90 days of the vacancy will constitute a
determination by the Board of Directors that the number of directors is to be
reduced so as to eliminate such vacancy, unless the Board of Directors specifies
otherwise. Unless authority to vote is withheld, shares of Common Stock, Series
B Preferred Stock and Series C Preferred Stock represented by proxies properly
executed will be voted in favor of the persons named below, all of whom are
presently directors of the Company. The Company has no reason to believe that
any of the nominees will be unable to serve as a director but, if that should
occur for any reason prior to the meeting, it is intended that discretionary
authority shall be exercised by the persons designated as proxies to vote the
proxies for the election of any other nominee or nominees of management. Each
director elected at the meeting will hold office until the 2000 Annual Meeting
of Stockholders and until his or her successor is duly elected and qualified.
The stockholders of the Company are not entitled to vote cumulatively in
the election of directors. The holders of Class A Common Stock, Class B Common
Stock, Series B Preferred Stock and Series C Preferred Stock are entitled to
vote in the election of directors and vote together as a single class. Hollinger
Inc., which controls approximately 74.08% of the combined voting power of both
classes of Common Stock, the Series B Preferred Stock and the Series C Preferred
Stock has indicated its intention to vote in favor of all the persons named
below for election as directors.
INFORMATION CONCERNING NOMINEES AS DIRECTORS
The following table and the notes thereto set forth the names and ages (as
of March 1, 1999) of the 16 persons nominated for election as directors and all
positions and offices with the Company held by them:
<TABLE>
<CAPTION>
NAME AND AGE POSITION(S) WITH THE COMPANY
------------ ----------------------------
<S> <C>
Dwayne O. Andreas, 80........................ Director
Barbara Amiel Black, 58...................... Vice President, Editorial and Director
The Hon. Conrad M. Black, P.C., O.C., 54..... Chairman of the Board, Chief Executive
Officer and Director
The Hon. Richard R. Burt, 52................. Director
Raymond G. Chambers, 56...................... Director
Daniel W. Colson, 51......................... Vice Chairman and Director, Vice Chairman,
Chief Executive Officer and Director of The
Telegraph
Dr. Henry A. Kissinger, 75................... Director
Marie-Josee Kravis, O.C., 49................. Director
Shmuel Meitar, 55............................ Director
The Hon. Richard N. Perle, 57................ Chief Executive Officer of Hollinger Digital
Inc. and Director
F. David Radler, 56.......................... Deputy Chairman, President, Chief Operating
Officer and Director
The Hon. Robert S. Strauss, 80............... Director
A. Alfred Taubman, 75........................ Director
The Hon. James R. Thompson, 62............... Director
Lord Weidenfeld, 79.......................... Director
Leslie H. Wexner, 61......................... Director
</TABLE>
The name, principal occupation, business experience and tenure as a
director of the Company is set forth below for each nominee for election as a
director. Unless otherwise indicated, all principal occupations have been held
for more than five years.
12
<PAGE> 15
DWAYNE O. ANDREAS, Director. Mr. Andreas has served as a Director since
February 1996. Mr. Andreas served as the Chairman of Archer-Daniels-Midland Co.,
a publicly traded Fortune 500 company, from 1970 to January, 1999, when Mr.
Andreas became Chairman Emeritus of ADM, and currently serves as a director of
such company and served as its Chief Executive Officer from 1966 to 1997. Mr.
Andreas was Chairman of President Reagan's Task Force on International Private
Enterprise from 1983 to 1985. He served as a Director of Salomon, Inc., an
investment banking firm in New York, from 1982 to 1997. Mr. Andreas also serves
on the Company's International Advisory Board.
BARBARA AMIEL BLACK, Vice President, Editorial and Director. Mrs. Black has
served as Vice President, Editorial since September 1995 and as a Director since
February 1996. Mrs. Black is the wife of Mr. Black. Mrs. Black is currently a
columnist for The Daily Telegraph. After an extensive career in both on and off
air television production, Mrs. Black was the editor of The Toronto Sun from
1982 to 1984, a columnist of The Times and The Sunday Times of London from 1986
to 1994 and a columnist of McLean's magazine since 1976. Mrs. Black also serves
as Vice President, Editorial and as a Director of Hollinger Inc. and as a
Director of Jerusalem Post and of Southam.
THE HON. CONRAD M. BLACK, P.C., O.C., Chairman of the Board of Directors,
Chief Executive Officer and Director. Mr. Black has served as Chairman of the
Board of Directors and Chief Executive Officer since October 25, 1995, and has
served as a Director since 1990. Mr. Black served as Deputy Chairman of the
Board of Directors from 1991 to October 25, 1995. Mr. Black has served for the
past five years as the Chairman of the Board and Chief Executive Officer of
Hollinger Inc. He currently serves as the Chairman and as a Director of The
Telegraph, as Chairman and as a Director of Southam and Jerusalem Post, as
Chairman of the Board, Chief Executive Officer and a Director of Argus, a public
reporting company in Canada, and as a Director of EdperBrascan Limited and the
Canadian Imperial Bank of Commerce, both of which are public reporting companies
in Canada, and as a director of Livent, Inc. and Sotheby's Holding Inc. Mr.
Black served as a director of John Fairfax Holdings Inc. from 1992 to 1997 and
is a Member of the Advisory Board of Gulfstream Aerospace Corporation.
THE HON. RICHARD R. BURT, Director. Mr. Burt has served as a Director since
September 1994. Mr. Burt has served as Chairman of IEP Advisors L.L.P., an
emerging markets investment banking and advisory services firm, since 1994. He
was a partner with McKinsey & Company, Inc. from 1991 to 1994. Mr. Burt has
served as Chief Negotiator in Strategic Arms Reduction Talks from 1989 to 1991
and as the United States Ambassador to the Federal Republic of Germany from 1985
to 1989. Mr. Burt currently serves as a Director of Powerhouse Technologies,
Inc., Weirton Steel Corp., Archer-Daniels-Midland Co. and Homestake Mining Inc.,
all of which are United States public reporting companies.
RAYMOND G. CHAMBERS, Director. Mr. Chambers has served as a Director since
February 1996. Mr. Chambers has served as Chairman of the Amelior Foundation for
"at risk youth" since 1988 and is Chairman of the Executive Committee of
America's Promise -- The Alliance for Youth. He is Founding Chairman of the
Points of Light Foundation and the READY Foundation and is Co-Chairman of the
New Jersey Performing Arts Center and a director of King World Productions, Inc.
DANIEL W. COLSON, Vice Chairman and Director of the Company, and Deputy
Chairman, Chief Executive Officer and Director of The Telegraph. Mr. Colson has
served as a Director of the Company since February 1995 and as Vice Chairman
since May 1998. He has served as Deputy Chairman of The Telegraph since 1995 and
as Chief Executive Officer of The Telegraph since 1994, and was Vice Chairman of
The Telegraph from 1992 to 1995. Mr. Colson currently serves as Vice Chairman
and as a Director of Hollinger Inc., Southam and Hollinger Canadian Publishing
Company, and as a director of Argus and The Molson Companies Limited, both of
which are Canadian public reporting companies. Mr. Colson served as a Director
of John Fairfax Holdings Limited from 1991 until 1997.
DR. HENRY A. KISSINGER, Director. Dr. Kissinger has served as a Director
since February 1996. Dr. Kissinger has served as Chairman of Kissinger
Associates Inc., an international consulting firm, since 1982. Dr. Kissinger
served as the 56th Secretary of State from 1973 to 1977. He also served as
Assistant to the President for National Security Affairs from 1969 to 1975 and
as a member of the President's Foreign Intelligence Advisory Board from 1984 to
1990. Dr. Kissinger served as a director of American Express Company from 1986
to 1996 and currently serves as Advisor to the Board of Directors of American
Express
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<PAGE> 16
Company, Counselor to the Chase Manhattan Bank and as a member of its
International Advisory Committee, as Chairman of the International Advisory
Board of American International Group, Inc., and as a Director of Continental
Grain Company, Revlon Inc., Gulfstream Aerospace Corporation, and Freeport-
McMoRan Copper and Gold Inc., all of which are United States public reporting
companies. Dr. Kissinger also serves as a Senior Advisor on the Company's
International Advisory Board.
MARIE-JOSEE KRAVIS, O.C., Director. Mrs. Kravis has served as a Director
since February 1996. She has served as a Senior Fellow of the Hudson Institute
Inc. since 1994. She has served as a Director of The Seagram Company Ltd. since
1988, a Canadian public reporting company, and as a Director of Hasbro Inc.
since 1995 and Ford Motor Company since 1995, both of which are United States
public reporting companies. Mrs. Kravis also served as an Executive Director of
the Hudson Institute of Canada Inc. from 1979 to 1994 and as a Director of
Hollinger Inc. from June 1994 until 1995.
SHMUEL MEITAR, Director. Mr. Meitar has served as a Director since February
1996. Mr. Meitar also serves as Vice Chairman of Aurec Ltd., a leading provider
of communications, media and information services since 1991. Prior to 1991, Mr.
Meitar served as President of the Aurec Group, which includes Golden Channels,
the largest cable television franchise in Israel, and Golden Pages, the Israeli
Yellow Pages. Mr. Meitar has been a director of Jerusalem Post since 1992 and
also serves as a director of Amdocs Limited, a United States public reporting
company.
THE HON. RICHARD N. PERLE, Director. Mr. Perle has served as a Director
since June 1994. Mr. Perle has served as Resident Fellow of the American
Enterprise Institute for Public Policy Research since 1987. He was the Assistant
Secretary for the United States Department of Defense, International Security
Policy from 1981 to 1988. Mr. Perle is Chief Executive Officer and Chairman of
the Board of Directors of Hollinger Digital Inc. and a Director of Jerusalem
Post, both of which are subsidiaries of the Company. Mr. Perle also serves on
the Company's International Advisory Board.
F. DAVID RADLER, Deputy Chairman, President, Chief Operating Officer and
Director. Mr. Radler has served as President and Chief Operating Officer since
October 25, 1995, as Deputy Chairman since May 1998 and as a Director since
1990. Mr. Radler was Chairman of the Board of Directors from 1990 to October 25,
1995. Mr. Radler has served for the past five years as President and Chief
Operating Officer and a Director of Hollinger Inc. He currently serves as a
Director of The Telegraph and as Deputy Chairman, Associate Chief Executive
Officer and Director of Southam, and as a Director of Argus, Dominion Malting
Limited and West Fraser Timber Co. Ltd., all of which are Canadian public
reporting companies. Mr. Radler also serves as a Director of Jerusalem Post.
THE HON. ROBERT S. STRAUSS, Director. Mr. Strauss has served as a Director
since February 1996. Mr. Strauss was a founder of, and is currently a Partner
of, Akin, Gump, Strauss, Hauer & Feld, a national law firm. Mr. Strauss served
as United States Ambassador to the Soviet Union beginning in 1991, and following
the dissolution of the Soviet Union, as United States Ambassador to the Russian
Federation until 1992 when he resigned and rejoined his former law firm. He has
also served from 1981 to the present as a Director of Archer-Daniels-Midland
Co., a United States public reporting company, and from 1993 to the present as a
director of Gulfstream Aerospace Corporation.
A. ALFRED TAUBMAN, Director. Mr. Taubman has served as a Director since
February 1996. Since 1983, Mr. Taubman has been the largest shareholder,
Chairman and a Director of Sotheby's Holdings Inc., the international art
auction house. Mr. Taubman also serves as Chairman of The Taubman Company and
Taubman Centers, Inc., companies engaged in the regional retail shopping center
business, and as a Director of Livent Inc., a company involved with theatrical
productions, since 1994.
THE HON. JAMES R. THOMPSON, Director. Mr. Thompson has served as a Director
since June 1994. Mr. Thompson has served as the Chairman of Winston & Strawn,
attorneys at law, since 1991. Mr. Thompson served as the Governor of the State
of Illinois from 1977 to 1991. Mr. Thompson currently serves as a director of
FMC Corp., Prime Retail, Inc., Prime Group Realty Trust, Metzler Group,
Jefferson Smurfit Group plc, Union Pacific Resources and American National Can,
all of which are United States public reporting
14
<PAGE> 17
companies with the exception of Jefferson Smurfit Group, which is an Irish
company. Mr. Thompson was a Director of The Sun-Times Company prior to its
acquisition by the Company.
LORD WEIDENFELD, Director. Lord Weidenfeld has served as a Director since
February 1996. Lord Weidenfeld has served as Chairman of Weidenfeld & Nicolson
Ltd., a book publisher, since 1948. Lord Weidenfeld served as a Director of
Hollinger Inc. from September 1993 until 1995. Lord Weidenfeld is a Director of
Jerusalem Post.
LESLIE H. WEXNER, Director. Mr. Wexner has served as a Director since
February 1996. Mr. Wexner has served as Chairman and Chief Executive Officer of
The Limited, Inc., a company whose activities include the retail of apparel and
personal care items, since 1963. He also currently serves as a Chairman of
Intimate Brands Inc. and as Chairman of Abercrombie & Fitch. Mr. Wexner served
as Chairman of the Board of Trustees of The Ohio State University until 1991.
MEETINGS AND COMMITTEES
The Board of Directors met six times in 1998. With the exception of Messrs.
Burt, Chambers, Strauss and Weidenfeld, each incumbent director named above
attended 75% or more of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings of the committees on which
such director served. The Company maintains an Executive Committee, an Audit
Committee, a Compensation Committee and a Stock Option Committee. The Company
does not have a nominating committee.
The Executive Committee acted by unanimous written consent seventeen times
and via teleconference two times in 1998. The Executive Committee consists of
Mr. Black, Chairman, and Messrs. Perle and Radler. The Executive Committee, to
the extent permitted by law, the Company's Amended and Restated By-Laws and
resolutions of the Board of Directors, exercises all the power and authority of
the Board of Directors.
The Audit Committee met twice in 1998. The 1999 Audit Committee consists of
Mr. Thompson, Chairman, Mr. Burt and Mrs. Kravis. The Audit Committee's duties
include reviewing internal financial information, monitoring cash flow, budget
variances and credit arrangements, reviewing the audit program, reviewing with
the Company's accountants the results of all audits upon their completion,
annually selecting and recommending independent public accountants, overseeing
the quarterly unaudited reporting process and taking such other action as may be
necessary to assure the adequacy and integrity of all financial information
distributed by the Company.
In addition, pursuant to the Management Agreement with Ravelston, the Audit
Committee is responsible for reviewing the cost of services charged by
Ravelston, and monitoring the Company's decisions with respect to related party
acquisition opportunities and the exercise of the Company's rights under its
Business Opportunities Agreement with Hollinger Inc. See "Certain Relationships
and Related Transactions." The Audit Committee also has authority to recommend
to the Board policies and procedures for dealing with conflicts of interest and
to review the application of such policies and procedures.
The Compensation Committee met once in 1998. The 1999 Compensation
Committee consists of Mr. Thompson, Chairman, and Mr. Burt. The Compensation
Committee recommends compensation levels of senior management (other than for
those executive officers who receive compensation from Hollinger Inc. pursuant
to the Company's Services Agreement with Hollinger Inc.), works with senior
management on benefit and compensation programs for Company employees and
monitors local and national compensation trends to ensure the Company's
compensation program is competitive within the newspaper industry.
The Stock Option Committee acted by unanimous written consent twice in
1998. The Stock Option Committee, which consists of Mr. Thompson, Chairman, and
Mr. Meitar, administers the Company's 1994 Stock Option Plan and the 1997 Stock
Incentive Plan.
DIRECTORS' COMPENSATION
During 1998 each director, including each director who is an executive
officer, was entitled to receive an annual director's fee of $27,500 per annum
and a fee of $2,000 for each board or committee meeting attended.
15
<PAGE> 18
Non-employee directors were each entitled to receive an option to purchase 3,000
shares of Class A Common Stock pursuant to the 1997 Stock Incentive Plan.
Directors are reimbursed for expenses incurred in attending the meetings.
Members of the Executive Committee do not receive meeting fees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the federal securities laws, the directors and executive officers and
any persons holding more than 10% of any equity security of the Company are
required to report their initial ownership of any equity security and any
subsequent changes in that ownership to the Securities and Exchange Commission
(the "Commission"). Specific due dates for these reports have been established
by the Commission, and the Company is required to disclose in this Proxy
Statement any failure to file such reports by those dates during 1998. To the
Company's knowledge, based upon a review of the copies of the reports furnished
to the Company and written representations that no other reports were required,
all of these filing requirements were satisfied, except that one report on Form
4 for each of Messrs. Atkinson, Boultbee, Colson, Creasey, Healy and Kipnis was
filed late, and two reports on Form 4 for each of Messrs. Black and Radler and
Mrs. Black were filed late.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the three
fiscal years ended December 31, 1998 for the Chief Executive Officer and the
four most highly compensated executive officers whose salary and bonus for the
year ended December 31, 1998 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION(2)
- --------------------------- ---- ------ ----- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
CONRAD M. BLACK............. 1998 $455,785(3) --(3) -- 150,000(4) $126,899(5)
Chairman and 1997 428,768(3) --(3) -- 95,000(6) 112,001(7)
Chief Executive Officer 1996 --(3) --(3) -- 65,000(8) 56,000(9)
F. DAVID RADLER............. 1998 $ --(3) --(3) -- 150,000(4) $152,697(5)
President and 1997 --(3) --(3) -- 95,000(6) 129,939(7)
Chief Operating Officer 1996 --(3) --(3) -- 65,000(8) 65,650(9)
DANIEL W. COLSON............ 1998 $234,121(3) --(3) (1) 120,000(4) $117,075(5)
Chief Executive Officer 1997 238,966(3) --(3) -- 45,000(6) 102,419(7)
of The Telegraph 1996 --(3) --(3) -- -- 32,000(9)
J. A. BOULTBEE.............. 1998 $ --(3) --(3) -- 60,000(4) $ 23,615(5)
Executive Vice President
and 1997 --(3) --(3) -- 35,000(6) 15,155(7)
Chief Financial Officer 1996 --(3) --(3) -- 37,000(8) --
PETER Y. ATKINSON........... 1998 $ --(3) --(3) -- 60,000(4) $ 20,916(5)
Vice President 1997 --(3) --(3) -- 35,000(6) --(7)
1996 --(3) --(3) -- 20,000(8) --(9)
</TABLE>
- -------------------------
(1) Pursuant to the Company's deferred compensation plan, discretionary
contributions are credited to the participants' retirement accounts as
deferred compensation. See "Deferred Compensation Plan."
(2) Certain executive officers of the Company, including Messrs. Black, Radler,
Colson, Atkinson and Boultbee are participants in the Hollinger Inc.
Executive Share Option Plan. As of March 19, 1999, no options had vested.
Mr. Black holds unvested options to acquire 250,000 Hollinger Inc.
Retractable Common Shares; Mr. Radler holds unvested options to acquire
230,000 Hollinger Inc. Retractable Common Shares; Mr. Colson holds unvested
options to acquire 160,000 Hollinger Inc. Retractable Common Shares; Mr.
Boultbee holds unvested options to acquire 95,000 Retractable Common Shares
16
<PAGE> 19
of Hollinger Inc.; and Mr. Atkinson holds unvested options to acquire 80,000
Retractable Common Shares of Hollinger Inc.
(3) With the exception of salaries paid to Messrs. Black and Colson by The
Telegraph (which salaries in 1998 were paid in pounds sterling and Canadian
dollars, respectively, and have been converted into U.S. dollars at the 1998
average rate of 1.6574 and 0.6747, respectively, and the 1997 pounds
sterling average rate of 1.6334 for purposes of this disclosure), Messrs.
Black, Radler, Colson, Atkinson and Boultbee do not receive salaries or
bonuses directly from the Company. Under a Management Agreement with
Ravelston, the Company pays a management fee relating to, among other
matters, management and administrative services provided to the Company by
such executives. See "Certain Relationships and Related Transactions."
(4) Options granted pursuant to the 1997 Stock Incentive Plan to purchase shares
of Class A Common Stock. Options were to be exercised upon the payment of
$15.06 per share exercise price and vested over a four year period beginning
February 23, 1999 in equal increments. Effective as of February 26, 1999,
the Company and said employees agreed to cancel such options, with the
employees foregoing one year of vesting, in return for new options for the
respective same number of shares to be exercised upon the payment of $12.25
per share exercise price which vest over a four year period beginning
February 26, 2000 in equal increments. See "1997 Stock Incentive Plan"
below.
(5) With respect to Messrs. Black, Radler and Colson, reflects quarterly and
meeting attendance fees paid for services as a director during 1998. With
respect to Messrs. Black, Radler, Colson, Boultbee and Atkinson, reflects
quarterly and meeting attendance fees paid for services as a director of
Southam during 1998 (which fees were paid in Canadian Dollars and have been
converted to U.S. Dollars at the 1998 average rate of 0.6747 for purposes of
this disclosure). With respect to Messrs. Black and Radler reflects fees
paid for services as a director of American Publishing and Jerusalem Post
during 1998. With respect to Mr. Radler, reflects fees paid for services as
a Senior Director of APAC-95, Inc., a subsidiary of the Company, during
1998. With respect to Messrs. Black, Colson and Radler, also reflects fees
paid for services as a director of The Telegraph (which fees were paid in
pounds sterling and have been converted into U.S. Dollars at the 1998
average rate of 1.6574 for purposes of this disclosure).
(6) Options granted pursuant to the 1997 Stock Incentive Plan to purchase shares
of Class A Common Stock. Options may be exercised upon the payment of $10.06
per share exercise price and vest over a four year period beginning May 1,
1998 in equal increments. See "1997 Stock Incentive Plan" below.
(7) With respect to Messrs. Black, Radler and Colson, reflects quarterly and
meeting attendance fees paid for services as a director during 1997. With
respect to Messrs. Black, Radler, Colson, Boultbee and Atkinson, reflects
quarterly and meeting attendance fees paid for services as a director of
Southam during 1997 (which fees were paid in Canadian Dollars and have been
converted to U.S. Dollars at the 1997 average rate of .7222 for purposes of
this disclosure). With respect to Messrs. Black and Radler reflects fees
paid for services as a director of American Publishing and Jerusalem Post
during 1997. With respect to Mr. Radler, reflects fees paid for services as
a Senior Director of APAC-95, Inc., a subsidiary of the Company, during
1997. With respect to Messrs. Black, Colson and Radler, also reflects fees
paid for services as a director of The Telegraph (which fees were paid in
pounds sterling and have been converted into U.S. Dollars at the 1997
average rate of 1.6334 for purposes of this disclosure).
(8) Options granted pursuant to the 1994 Stock Option Plan to purchase shares of
Class A Common Stock. Options may be exercised upon the payment of a $9.71
per share exercise price and vest over a four year period beginning August
1, 1997 in equal increments. See "1994 Stock Option Plan" below.
(9) Reflects quarterly and meeting attendance fees paid for services as a
director during 1996. With respect to Messrs. Black and Radler, also
reflects fees paid for services as a director of American Publishing and
Jerusalem Post during 1996, and for Mr. Radler, as a Senior Director of
APAC-95 Inc., a subsidiary of the Company, during 1996.
17
<PAGE> 20
DEFERRED COMPENSATION PLAN
The Company, through a subsidiary, provides a deferred compensation plan to
certain executives under which contributions may be made by the Board of
Directors of such subsidiary during the course of each year. Such contributions
are discretionary in amount, time and form of payment and, when made, are
credited to the retirement accounts established for each participant which vest
10% per year after five years of service. Mr. Strader participates in this
program. Mr. Colson received a pension contribution from The Telegraph in the
amount of $70,121.28, which was originally paid in pounds sterling and which has
been converted into U.S. dollars at the average rate of 1.6574 for purposes of
this disclosure.
1994 STOCK OPTION PLAN
Prior to the Company's initial public offering in May 1994, Hollinger Inc.,
the parent company of the Company, adopted and approved a stock option plan for
the Company which was subsequently amended on September 9, 1996 (as amended, the
"1994 Stock Option Plan"), under which stock option awards have been made to
eligible employees and officers. The purpose of the 1994 Stock Option Plan was
to promote the interests of the Company and its stockholders by establishing a
direct link between the financial interests of eligible employees and officers
and the performance of the Company and by enabling the Company to attract and
retain highly competent employees and officers. On May 1, 1997, the stockholders
adopted a new stock option plan (see "1997 Stock Incentive Plan," described
below) which replaced the 1994 Stock Option Plan. No new grants have or will be
made under the 1994 Stock Option Plan. Awards under the 1994 Stock Option Plan
made prior to May 1, 1997 are not affected by the adoption of the 1997 Stock
Incentive Plan.
1997 STOCK INCENTIVE PLAN
On May 1, 1997, the Company adopted, and the Company's stockholders
approved, a new compensation plan known as the Hollinger International Inc. 1997
Stock Incentive Plan (the "1997 Stock Incentive Plan"). The 1997 Stock Incentive
Plan replaces the Company's 1994 Stock Option Plan. Awards previously made under
the 1994 Stock Option Plan will not, however, be affected. The purpose of the
1997 Stock Incentive Plan is to assist in attracting and retaining highly
competent employees and directors and to act as an incentive in motivating
selected officers and other key employees and directors to achieve long-term
corporate objectives. The 1997 Stock Incentive Plan provides for awards of up to
5,156,915 shares of Class A Common Stock. This total includes 189,640 shares
that remained available under the 1994 Stock Option Plan, which shares were
rolled into the 1997 Stock Incentive Plan, and 4,967,275 additional shares. The
number of shares available for issuance under the 1997 Stock Incentive Plan
shall be subject to anti-dilution adjustments upon the occurrence of significant
corporate events. The shares offered under the 1997 Stock Incentive Plan are
either authorized and unissued shares or issued shares which have been
reacquired by the Company.
18
<PAGE> 21
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the issuance of
options to purchase Class A Common Stock in 1998 to the named executive officers
pursuant to the 1997 Stock Incentive Plan.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE GRANT
UNDERLYING GRANTED TO OF BASE DATE
OPTIONS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE VALUE(2)
---- ---------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Conrad M. Black........................... 150,000 10.8% $15.06 2/23/08 $767,819
F. David Radler........................... 150,000 10.8% $15.06 2/23/08 $767,819
Daniel W. Colson.......................... 120,000 8.7% $15.06 2/23/08 $614,255
Barbara Amiel Black....................... 35,000 2.5% $15.06 2/23/08 $179,158
Peter Y. Atkinson......................... 60,000 4.3% $15.06 2/23/08 $307,127
J. A. Boultbee............................ 60,000 4.3% $15.06 2/23/08 $307,127
Frederick A. Creasey...................... 20,000 1.4% $15.06 2/23/08 $102,376
John D. Ferguson.......................... 30,000 2.2% $15.06 2/23/08 $153,564
Paul B. Healy............................. 45,000 3.3% $15.06 2/23/08 $230,346
Mark S. Kipnis............................ 30,000 2.2% $15.06 2/23/08 $153,564
Frederic Lebolt........................... 10,000 0.7% $15.06 2/23/08 $ 51,188
Jerry J. Strader.......................... 50,000 3.6% $15.06 2/23/08 $255,940
</TABLE>
- ---------
(1) The options vested in 25% annual increments on each of the first, second,
third and fourth anniversaries of their respective grant dates, beginning
February 23, 1999. Effective as of February 26, 1999, the Company and said
employees agreed to cancel such options, with the employees foregoing one
year of vesting, in return for new options for the respective same number of
shares to be exercised upon the payment of $12.25 per share exercise price
which vest over a four year period beginning February 26, 2000 in equal
increments.
(2) These values are determined using the Black-Scholes Option Pricing Model.
The Black-Scholes Option Pricing Model is one of the methods permitted by
the Commission for estimating the present value of options. The actual value
of the stock options that an executive officer may realize, if any, will
depend on the excess of the market price on the date of exercise over the
exercise price. The Black-Scholes Option Pricing Model is based on
assumptions as to certain variables described in the following sentence, so
there is no assurance that an individual will actually realize the option
values presented in this table. The values listed above were based on the
following assumptions: volatility (estimated) -- 43.3%; risk-free rate of
return -- 5.1%; dividend yield -- 3.4%; time of exercise -- 10 years. The
options have no present value as of the Record Date as all of such options
were cancelled, as set forth in (1).
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain of its
executive officers and all of the regional managers of its community newspaper
group, providing generally for year-to-year employment. Subject to certain
limited exceptions, the employment agreements generally prohibit the executives
and regional managers from competing with the Company for a period of three
years after termination of employment (i) in any community in which the Company
at that time publishes, or has commenced negotiations to acquire, a newspaper or
shopper, or (ii) within a 50-mile radius of any such community. The Company has
also entered into an employment agreement with Mr. Healy which calls for, among
other things, a lump sum severance payment.
19
<PAGE> 22
REPORT ON EXECUTIVE COMPENSATION
The following Report on Executive Compensation has been furnished by the
Compensation Committee. The Board of Directors has delegated to the Compensation
Committee authority to review and approve the executive remuneration package for
senior executives compensated directly by the Company. The Report reflects the
Compensation Committee's policies toward executive compensation; however, the
compensation of certain executive officers (including Messrs. Black, Radler,
Colson, Boultbee, Atkinson and Creasey) is determined by Ravelston, the parent
corporation of Hollinger Inc., and is paid pursuant to the Management Agreement
with Ravelston, except to the extent that the Company compensates such persons
directly in the form of stock options and other stock-related programs.
As of March 1, 1999, the Compensation Committee consisted of two directors,
neither of whom are officers or employees of the Company, and neither
participates in any executive compensation plan reviewed by the Compensation
Committee.
The Committee has previously noted that in the past base pay constituted
the most significant portion of executive pay. The Compensation Committee has
recognized that it is important to move to a system that provides a more
balanced executive compensation package, placing greater emphasis on annual and
long term incentives and a reduced role for annual base salary. Such an approach
is consistent with many other public companies.
Consequently, as has been done in prior year executive pay packages, the
Compensation Committee will attempt to follow the following strategy:
(i) Motivate executives to achieve their strategic goals by tying
their compensation to the performance of the Company, their individual
operating units and their individual performance;
(ii) Be competitive with other leading companies so as to attract and
retain the best possible executive talent; and
(iii) Align the interests of the executives with the long-term
interest of the Company's stockholders through the award of stock options
and other stock-related programs.
The first step toward this executive compensation strategy was implemented
in 1994 with the establishment of the 1994 Stock Option Plan. Since 1994, key
members of management have been awarded stock options under the 1994 Stock
Option Plan. In 1997, the Hollinger International Inc. 1997 Stock Incentive Plan
was established to continue to make stock options and other stock-related
programs available as incentives for key members of management, and will provide
for automatic stock option grants to non-employee directors of the Company. The
proposed 1999 Stock Incentive Plan is a continuation of this strategy.
Section 162(m) of the Code provides that public companies are denied a
Federal income tax deduction for compensation in excess of $1 million to any
covered employee except to the extent the compensation is performance based. The
Compensation Committee believes that all compensation paid by the Company in
1998 complied with the Section 162(m) limitation. It is the present intention of
the Compensation Committee to seek to ensure that all compensation payable to
executives that is otherwise tax deductible will continue to be tax deductible.
However, the Compensation Committee reserves the right to take whatever action
with respect to the compensation of executive officers that it deems appropriate
and in the best interests of the Company and its stockholders.
The foregoing report has been furnished by James R. Thompson and Richard R.
Burt.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no compensation committee interlocks or insider participation in
compensation decisions.
20
<PAGE> 23
THE INCENTIVE PLAN PROPOSAL
The Board of Directors of the Company adopted and approved effective as of
May 5, 1999 (the "Effective Date"), subject to the approval of the Company's
stockholders, a new compensation plan to be sponsored and maintained by the
Company, to be known as the Hollinger International Inc. 1999 Stock Incentive
Plan (the "1999 Stock Incentive Plan"). The 1999 Stock Incentive Plan will
replace the Company's 1997 Stock Incentive Plan under which no new grants will
be made on or after the Effective Date. Awards made under the 1997 Stock
Incentive Plan prior to the Effective Date will not, however, be affected. If
the 1999 Stock Incentive Plan is approved and adopted by the stockholders at the
Annual Meeting, the 1999 Stock Incentive Plan will be adopted as of the
Effective Date. If the stockholders do not approve and adopt the 1999 Stock
Incentive Plan at the Annual Meeting, the 1999 Stock Incentive Plan will not go
into effect. The following summary of the 1999 Stock Incentive Plan is qualified
in its entirety by reference to the complete text of the 1999 Stock Incentive
Plan, a copy of which is attached as Annex A.
PURPOSE. The purpose of the 1999 Stock Incentive Plan is to assist in
attracting and retaining highly competent employees and directors and to act as
an incentive in motivating selected officers and other key employees and
directors to achieve long-term corporate objectives.
ADMINISTRATION. The 1999 Stock Incentive Plan will be administered by a
committee of the Board of Directors of the Company (the "Committee") comprised
of at least two persons. The Committee shall have the sole discretion to
interpret the 1999 Stock Incentive Plan, establish and modify administrative
rules, impose conditions and restrictions on awards, and take such other actions
as it deems necessary or advisable. With respect to participants who are not
subject to Section 16 of the Exchange Act, the Committee may delegate its
authority under the 1999 Stock Incentive Plan to one or more officers or
employees of the Company. In addition, the full Board of Directors of the
Company can perform any of the functions of the Committee under the 1999 Stock
Incentive Plan.
AMOUNT OF STOCK. The 1999 Stock Incentive Plan provides for awards of up to
8,500,000 shares of Class A Common Stock. The number of shares available for
issuance under the 1999 Stock Incentive Plan shall be subject to anti-dilution
adjustments upon the occurrence of significant corporate events. The shares to
be offered under the 1999 Stock Incentive Plan will be either authorized and
unissued shares or issued shares which have been reacquired by the Company.
ELIGIBILITY AND PARTICIPATION. All directors, officers and key employees of
the Company or any subsidiary will be eligible to participate, including
officers who are also directors of the Company or its subsidiaries.
Approximately 100 persons meet such eligibility requirements. No participant can
receive awards under the 1999 Stock Incentive Plan in any calendar year in
respect of more than 600,000 shares of Class A Common Stock. Non-employee
directors of the Company will be eligible for non-discretionary stock option
grants as described below as well as other types of awards under the 1999 Stock
Incentive Plan.
AMENDMENT OR TERMINATION. The 1999 Stock Incentive Plan has no fixed
expiration date. The Committee will establish expiration and exercise dates on
an award-by-award basis. However, for the purpose of awarding incentive stock
options under Section 422 of the Code ("incentive stock options"), the 1999
Stock Incentive Plan will expire ten years from its Effective Date and certain
provisions of the 1999 Stock Incentive Plan relating to performance-based awards
under Section 162(m) of the Code will expire on the fifth anniversary of the
Effective Date. The Board of Directors has the complete power and authority to
amend and terminate the 1999 Stock Incentive Plan, except that no amendment or
termination may, without the consent of the participant, adversely affect the
participant's right under an award.
STOCK OPTIONS. The Committee may grant to a participant incentive stock
options, options which do not qualify as incentive stock options ("nonqualified
stock options") or a combination thereof. The terms and conditions of stock
option grants including the quantity, price, waiting periods, and other
conditions on exercise will be determined by the Committee. Incentive stock
option grants shall be made in accordance with Section 422 of the Code.
The exercise price for stock options will be determined by the Committee at
its discretion, provided that the exercise price per share for each stock option
shall be at least equal to 100% of the fair market value of one
21
<PAGE> 24
share of Class A Common Stock on the date when the stock option is granted. On
March 19, 1999, the closing market price for Class A Common Stock was $13.50 per
share.
Upon a participant's termination of employment for any reason, any stock
options which were not exercisable on the participant's termination date will
expire, unless otherwise determined by the Committee.
Upon a participant's termination of employment for reasons other than
death, disability or retirement, the participant's exercisable stock options
will expire thirty days after the date of termination, unless the right to
exercise the options is extended by the Committee at its discretion, but in no
event may the options be exercised after the scheduled expiration date of the
options. In general, upon a participant's termination by reason of death,
disability or retirement, stock options which were exercisable on the
participant's termination date (or which are otherwise determined to be
exercisable by the Committee) may continue to be exercised by the participant
(or the participant's beneficiary) for a period of one year from the date of the
participant's termination of employment, unless extended by the Committee, but
in no event may the options be exercised after the scheduled expiration date of
the options.
Subject to the Committee's discretion, payment for shares of Class A Common
Stock on the exercise of stock options may be made in cash, shares of Class A
Common Stock, a combination of cash and shares of Class A Common Stock or in any
other form of consideration acceptable to the Committee (including one or more
"cashless" exercise forms).
STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be
granted by the Committee to a participant either separate from or in tandem with
nonqualified stock options or incentive stock options. SARs may be granted at
the time of the stock option grant or, with respect to nonqualified stock
options, at any time prior to the exercise of the stock option. A SAR entitles
the participant to receive, upon its exercise, a payment equal to (i) the excess
of the fair market value of a share of Class A Common Stock on the exercise date
over the SAR exercise price, times (ii) the number of shares of Class A Common
Stock with respect to which the SAR is exercised.
The exercise price of a SAR is determined by the Committee, but in the case
of SARs granted in tandem with stock options, may not be less than the exercise
price of the related stock option. Upon exercise of a SAR, payment will be made
in cash or shares of Class A Common Stock, or a combination thereof, as
determined at the discretion of the Committee.
RESTRICTED SHARES. The Committee may award to a participant shares of Class
A Common Stock subject to specified restrictions ("Restricted Shares"). The
Restricted Shares are subject to forfeiture if the participant does not meet
certain conditions such as continued employment over a specified forfeiture
period (the "Forfeiture Period") and/or the attainment of specified performance
targets over the Forfeiture Period. The terms and conditions of Restricted Share
awards are determined by the Committee. The performance targets will also be
determined by the Committee but in the case of awards intended to qualify as
"performance-based" for purposes of Section 162(m) of the Code will include one
or more of specified levels of earnings before interest, taxes, depreciation and
amortization of intangibles and/or earnings per share.
Participants who have been awarded Restricted Shares will have all of the
rights of a holder of outstanding shares of Class A Common Stock, including the
right to vote such shares and to receive dividends. During the Forfeiture
Period, the Restricted Shares are nontransferable and may be held in custody by
the Company or its designated agent, or if the certificate is properly legended,
by the participant.
The Committee, at its sole discretion, may waive all restrictions with
respect to a Restricted Share award under certain circumstances (including the
death, disability, or retirement of a participant, or a material change in
circumstances arising after the date of grant) subject to such terms and
conditions as it deems appropriate.
PERFORMANCE AWARDS. The Committee may grant performance awards to
participants under such terms and conditions as the Committee deems appropriate.
A performance award entitles a participant to receive a payment from the
Company, the amount of which is based upon the attainment of predetermined
22
<PAGE> 25
performance targets over a specified award period. Performance awards may be
paid in cash, shares of Class A Common Stock or a combination thereof, as
determined by the Committee.
Award periods will be established at the discretion of the Committee. The
performance targets will also be determined by the Committee but in the case of
awards intended to qualify as "performance-based" for purposes of Section 162(m)
of the Code will include one or more of specified levels of earnings before
interest, taxes, depreciation and amortization of intangibles and/or earnings
per share. When circumstances occur which cause predetermined performance
targets to be an inappropriate measure of achievement, the Committee, at its
discretion, may adjust the performance targets.
NON-EMPLOYEE DIRECTOR AWARDS. The 1999 Stock Incentive Plan provides for
non-discretionary stock option grants to be made to members of the Board of
Directors who are not employees of the Company. Each non-employee director whose
term as a director continues after the date of each annual meeting of
shareholders of the Company, commencing with the initial annual meeting on the
Effective Date (i.e., the 1999 Annual Meeting) and continuing until the date the
1999 Stock Incentive Plan terminates, shall as of the date of each such annual
meeting of shareholders be granted a nonqualified stock option to purchase 4,000
shares of Class A Common Stock. The exercise price for such stock options shall
be the fair market value on the date of grant of the shares subject to the
option. All such options shall have a ten year term and shall vest and become
exercisable in equal installments on the first and second anniversaries of the
date of grant.
If a non-employee director's service on the Board terminates by reason of
death or disability, any options held by such non-employee director may be
exercised for a period of one year from the date of such termination or until
the expiration of the option, whichever is shorter. If a non-employee director's
service terminates other than by reason of death or disability, under mutually
satisfactory conditions, any options held by such non-employee director shall
expire thirty days after the date of termination.
FEDERAL INCOME TAX CONSEQUENCES. The following is a summary of the
principal Federal income tax consequences of 1999 Stock Incentive Plan benefits
under present tax law. The summary is not intended to be exhaustive and, among
other things, does not describe state, local or foreign tax consequences.
STOCK OPTIONS. No tax is incurred by the participant, and no amount is
deductible by the Company, upon the grant of a nonqualified or incentive stock
option. At the time of exercise of a nonqualified option, the difference between
the exercise price and the fair market value of the Class A Common Stock will
constitute ordinary income to the participant. The Company will generally be
allowed a deduction equal to the amount of ordinary income recognized by the
participant.
In the case of incentive stock options, although no income is recognized
upon exercise and the Company is not entitled to a deduction, the excess of the
fair market value of the Class A Common Stock on the date of exercise over the
exercise price is counted in determining the participant's alternative minimum
taxable income. If the participant does not dispose of the shares acquired on
the exercise of an incentive stock option within one year after the date of
exercise and within two years after the grant of the incentive stock option,
gain or loss recognized on the disposition of the shares will be treated as
long-term capital gain or loss and the Company will not be entitled to a
deduction. In the event of an earlier disposition of shares acquired upon the
exercise of an incentive stock option, the participant may recognize ordinary
income equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price (limited generally to the gain on the sale),
and if so, the Company will generally be entitled to a deduction in a like
amount.
SARS. The participant will not recognize any income at the time of grant of
a SAR. Upon the exercise of a SAR, the cash and the value of any Class A Common
Stock received will constitute ordinary income to the participant. The Company
will generally be entitled to a deduction in the amount of such income at the
time of exercise.
RESTRICTED SHARES. A participant will normally not recognize taxable income
upon an award of Restricted Shares, and the Company will not be entitled to a
deduction until the lapse of the applicable restrictions. Upon the lapse of the
restrictions, the participant will recognize ordinary taxable income in an
amount equal to the fair market value of the Class A Common Stock as to which
the restrictions have lapsed, and the Company will be entitled to a deduction in
the same amount. However, a participant may elect under Section 83(b) of
23
<PAGE> 26
the Code to recognize taxable ordinary income in the year the Restricted Shares
are awarded in an amount equal to the fair market value of the shares at that
time, determined without regard to the restrictions. In such event, the Company
will then be entitled to a deduction in the same amount. Any gain or loss
subsequently recognized by the participant will be a capital gain or loss.
PERFORMANCE AWARDS. Normally, a participant will not recognize taxable
income upon the award of such grants. Subsequently, when the conditions and
requirements for the grants have been satisfied and the payment determined, any
cash received and the fair market value of any Class A Common Stock received
will constitute ordinary income to the participant. The Company will also then
be entitled to a deduction in the same amount. If the shares are subsequently
forfeited, no deduction will be allowed to the participant.
NEW PLAN BENEFITS. The following table shows plan benefits that would
accrue to or be allocated to each of the five named executive officers, all
executives as a group, all non-executive directors as a group and all
non-executive officer employees as a group under the 1999 Stock Incentive Plan
if the Incentive Plan Proposal is approved and adopted.
<TABLE>
<CAPTION>
INCENTIVE PLAN
-----------------------------------
NAME AND POSITION DOLLAR VALUE($) NUMBER OF SHARES
----------------- --------------- ----------------
<S> <C> <C>
Conrad M. Black............................................. * *
Chairman and Chief Executive Officer
F. David Radler............................................. * *
Deputy Chairman, President and Chief Operating Officer
Daniel W. Colson............................................ * *
Vice Chairman of the Company, Chief Executive of The
Telegraph
J. A. Boultbee.............................................. * *
Executive Vice President and Chief Financial Officer
Peter Y. Atkinson........................................... * *
Vice President
Executive Group............................................. * *
(including the five named executives above)
Non-Executive Director Group................................ ** 44,000***
(11 persons)
Non-Executive Officer Employee Group........................ * *
</TABLE>
- ---------
* The amount of benefits to be received under the Incentive Plan by any
particular person or group is not determinable at this time.
** The dollar value of the benefits to be received under the 1999 Stock
Incentive Plan by this group is not determinable at this time.
*** Represents the aggregate number of shares of Class A Common Stock to be
awarded to the group of 11 outside directors as of the effective date of the
1999 Stock Incentive Plan.
24
<PAGE> 27
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP as independent auditors of
the Company for the year ending December 31, 1999. Representatives of KPMG LLP
will be present at the Annual Meeting and will have an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
STOCKHOLDER PROPOSALS
Proposals that stockholders desire to have included in the Company's proxy
materials for the 2000 Annual Meeting of Stockholders of the Company must be
received by the Secretary of the Company at its principal executive office no
later than November 27, 1999.
For a stockholder proposal that is not intended to be included in the
Company's proxy materials but is intended to be raised by the stockholder from
the floor at the 2000 Annual Meeting of Stockholders, the stockholder must
provide timely advance notice. Advance notice must be received by the Secretary
of the Company at its principal executive offices no later than February 11,
2000 in order to be timely. If a proposal is received after that date, the
Company's proxy for the 2000 Annual Meeting will confer discretionary authority
to vote on such matter without any discussion of such matter in the proxy
statement for the 2000 Annual Meeting.
OTHER MATTERS
The Board of Directors does not know of any other business which will come
before the Annual Meeting for action by the stockholders other than the matters
specified in the accompanying Notice of the Annual Meeting. If any other matters
requiring a stockholder vote properly come before the meeting, the persons
appointed in the enclosed proxy will vote in accordance with their discretion
with respect to such matters.
LOGO
Mark S. Kipnis
Vice President-Law and Secretary
Chicago, Illinois
March 26, 1999
25
<PAGE> 28
ANNEX A
HOLLINGER INTERNATIONAL INC.
1999 STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.01 PURPOSE. The purpose of the Hollinger International Inc. 1999 Stock
Incentive Plan is to assist in attracting and retaining highly competent
employees and directors and to act as an incentive in motivating selected
officers and other key employees and directors of the Company and its
Subsidiaries to achieve long-term corporate objectives.
1.02 ADOPTION AND TERM. The Plan has been approved by the Board of
Directors of the Company, effective as of May 5, 1999, but is subject to the
approval of the stockholders of the Company. The Plan shall remain in effect
until terminated by action of the Board; provided, however, that no Incentive
Stock Option may be granted hereunder after the tenth anniversary of the
Effective Date and the provisions of Articles VII and VIII with respect to
performance-based awards to "covered employees" under Section 162(m) of the Code
shall expire as of the fifth anniversary of the Effective Date.
1.03 THE PRIOR PLAN. The Company previously adopted the Hollinger
International Inc. 1994 Stock Option Plan and the 1997 Stock Incentive Plan.
Stock options granted under the Prior Plan prior to the Effective Date shall not
be affected by the adoption of the Plan, and the Prior Plan shall remain in
effect following the Effective Date to the extent necessary to administer the
Prior Options, but no new options shall be granted under the Prior Plan on or
after the Effective Date.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, capitalized terms shall have the following
meanings:
2.01 AWARD means (a) any grant to a Participant of one or a combination of
Non-Qualified Stock Options or Incentive Stock Options described in Article VI,
Stock Appreciation Rights described in Article VI, Restricted Shares described
in Article VII and Performance Awards described in Article VIII and (b) any
grant to a Non-Employee Director of a Non-Employee Director Award described in
Article IX.
2.02 AWARD AGREEMENT means a written agreement between the Company and a
Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.
2.03 AWARD PERIOD means, with respect to an Award, the period of time set
forth in the Award Agreement during which specified target performance goals
must be achieved or other conditions set forth in the Award Agreement must be
satisfied.
2.04 BENEFICIARY means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company or by operation of
law, succeeds to the rights and obligations of the Participant under the Plan
and the Award Agreement upon the Participant's death.
2.05 BOARD means the Board of Directors of the Company.
2.06 CLASS A COMMON STOCK means Class A Common Stock of the Company, par
value $.01 per share.
2.07 CODE means the Internal Revenue Code of 1986, as amended. References
to a section of the Code shall include that section and any comparable section
or sections of any future legislation that amends, supplements or supersedes
said section.
2.08 COMMITTEE means the Committee defined in Section 3.01.
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2.09 COMPANY means Hollinger International Inc., a Delaware corporation,
and its successors.
2.10 DATE OF GRANT means the date designated by the Committee as the date
as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.
2.11 EFFECTIVE DATE means May 5, 1999.
2.12 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.13 EXERCISE PRICE means, with respect to a Stock Appreciation Right, the
amount established by the Committee in the Award Agreement which is to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.02(b).
2.14 FAIR MARKET VALUE means, on any date, the average of the high and low
quoted sales prices of a share of Class A Common Stock, as reported on the
Composite Tape for New York Stock Exchange Listed Companies, on such date or, if
there were no sales on such date, on the last date preceding such date on which
a sale was reported.
2.15 INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.
2.16 LIMITED STOCK APPRECIATION RIGHT means an Award granted in accordance
with Section 6.06.
2.17 MERGER means any merger, reorganization, consolidation, exchange,
significant transfer of assets or other transaction having similar effect
involving the Company.
2.18 NON-EMPLOYEE DIRECTOR means each member of the Board who is not an
employee of the Company.
2.19 NON-EMPLOYEE DIRECTOR AWARDS means Awards granted in accordance with
Article IX.
2.20 NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option.
2.21 OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.
2.22 PARTICIPANT means a person designated to receive an Award under the
Plan in accordance with Section 5.01 and, solely to the extent provided in
Article IX of the Plan, any Non-Employee Directors of the Company.
2.23 PERFORMANCE AWARDS means Awards granted in accordance with Article
VIII.
2.24 PLAN means the Hollinger International Inc. 1999 Stock Incentive Plan
as described herein, as the same may be amended from time to time.
2.25 PRIOR OPTIONS means stock options granted under the Prior Plan before
the Effective Date.
2.26 PRIOR PLAN means both the Hollinger International Inc. 1994 Stock
Option Plan and the 1997 Stock Incentive Plan, as amended.
2.27 PURCHASE PRICE, with respect to Options, shall have the meaning set
forth in Section 6.01(b).
2.28 RESTRICTED SHARES means Class A Common Stock subject to restrictions
imposed in connection with Awards granted under Article VII.
2.29 RETIREMENT means early or normal retirement under a pension plan or
arrangement of the Company or one of its Subsidiaries in which the Participant
participates.
2.30 STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Article VI.
2.31 SUBSIDIARY means a domestic or foreign subsidiary of the Company
within the meaning of Section 424(f) of the Code.
2.32 TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as the
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result of the divestiture of the Participant's employer or any similar
transaction in which the Participant's employer ceases to be the Company or one
of its Subsidiaries. Whether entering military or other government service shall
constitute Termination of Employment, or whether a Termination of Employment
shall occur as a result of disability, shall be determined in each case by the
Committee in its sole discretion.
ARTICLE III
ADMINISTRATION
3.01 COMMITTEE. The Plan shall be administered by a committee of the Board
("Committee") comprised of at least two persons. The Committee shall have
exclusive and final authority in each determination, interpretation or other
action affecting the Plan and its Participants. The Committee shall have the
sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, and to take such steps in connection with
the Plan and Awards granted hereunder as it may deem necessary or advisable. The
Committee may, subject to compliance with applicable legal requirements, with
respect to Participants who are not subject to Section 16(b) of the Exchange
Act, delegate such of its powers and authority under the Plan as it deems
appropriate to designated officers or employees of the Company. In addition, the
Board may exercise any of the authority conferred upon the Committee hereunder.
In the event of such delegation of authority or exercise of authority by the
Board, references in the Plan to the Committee shall be deemed to refer to the
delegate of the Committee or the Board, as the case may be.
ARTICLE IV
SHARES
4.01 NUMBER OF SHARES ISSUABLE. The total number of shares initially
authorized to be issued under the Plan shall be 8,500,000 shares of Class A
Common Stock. The number of shares available for issuance under the Plan shall
be subject to adjustment in accordance with Section 10.07. The shares to be
offered under the Plan shall be authorized and unissued Class A Common Stock, or
issued Class A Common Stock which shall have been reacquired by the Company.
4.02 SHARES SUBJECT TO TERMINATED AWARDS. Class A Common Stock covered by
any unexercised portions of terminated Options or Prior Options (including
canceled Options or Prior Options), Class A Common Stock forfeited as provided
in Section 7.02(a) and Class A Common Stock subject to any Awards which are
otherwise surrendered by the Participant may again be subject to new Awards
under the Plan. Class A Common Stock subject to Options, or portions thereof,
which have been surrendered in connection with the exercise of Stock
Appreciation Rights shall not be available for subsequent Awards under the Plan,
but Class A Common Stock issued in payment of such Stock Appreciation Rights
shall not be charged against the number of shares of Class A Common Stock
available for the grant of Awards hereunder.
ARTICLE V
PARTICIPATION
5.01 ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such
directors, officers and other key employees of the Company and its Subsidiaries
as the Committee, in its sole discretion, may designate from time to time. The
Committee's designation of a Participant in any year shall not require the
Committee to designate such person to receive Awards or grants in any other
year. The designation of a Participant to receive one type of Award or grant
under the Plan does not require the Committee to provide such Participant with
other types of Awards or grants under the Plan. The Committee shall consider
such factors as it deems pertinent in selecting Participants and in determining
the type and amount of their respective Awards. Subject to adjustment in
accordance with Section 10.07, during the term of this Plan, no Participant
shall be granted Awards in respect of more than 600,000 shares of Class A Common
Stock (whether through grants of Options or Stock Appreciation Rights or other
grants of Class A Common Stock or rights with respect thereto) in any
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calendar year. Non-Employee Directors shall receive Non-Employee Director Awards
in accordance with Article IX of the Plan, the provisions of which are automatic
and non-discretionary in operation. Non-Employee Directors shall also be
eligible to receive any other Awards under the Plan.
ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.01 OPTIONS.
(A) OPTION AWARDS. The Committee may grant, to such Participants as the
Committee may select, Options entitling the Participant to purchase shares of
Class A Common Stock from the Company in such number, at such price, and on such
terms and subject to such conditions, not inconsistent with the terms of this
Plan, as may be established by the Committee. The terms of any Option granted
under this Plan shall be set forth in an Award Agreement.
(B) PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of Class A
Common Stock which may be purchased upon exercise of any Option granted under
the Plan shall be determined by the Committee; provided, however, that the
Purchase Price of Options shall in all cases be equal to or greater than the
Fair Market Value on the Date of Grant.
(C) DESIGNATION OF OPTIONS. Except as otherwise expressly provided in the
Plan, the Committee may designate, at the time of the grant of each Option, the
Option as an Incentive Stock Option or a Non-Qualified Stock Option.
(D) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant may be granted
Incentive Stock Options under the Plan (or any other plans of the Company and
its Subsidiaries) which would result in shares with an aggregate Fair Market
Value (measured on the Date of Grant) of more than $100,000 first becoming
exercisable in any one calendar year.
(E) RIGHTS AS A STOCKHOLDER. A Participant or a transferee of an Option
pursuant to Section 10.04 shall have no rights as a stockholder with respect to
Class A Common Stock covered by an Option until the Participant or transferee
shall have become the holder of record of any such shares, and no adjustment
shall be made for dividends in cash or other property or distributions or other
rights with respect to any such Class A Common Stock for which the record date
is prior to the date on which the Participant or a transferee of the Option
shall have become the holder of record of any such shares covered by the Option;
provided, however, that Participants are entitled to share adjustments to
reflect capital changes under Section 10.07.
6.02 STOCK APPRECIATION RIGHTS.
(A) STOCK APPRECIATION RIGHT AWARDS. The Committee is authorized to grant
to any Participant one or more Stock Appreciation Rights. Such Stock
Appreciation Rights may be granted either independent of or in tandem with
Options granted to the same Participant. Stock Appreciation Rights granted in
tandem with Options may be granted simultaneously with, or, in the case of
Non-Qualified Stock Options, subsequent to, the grant to such Participant of the
related Option; provided, however, that: (i) any Option covering any share of
Class A Common Stock shall expire and not be exercisable upon the exercise of
any Stock Appreciation Right with respect to the same share, (ii) any Stock
Appreciation Right covering any share of Class A Common Stock shall expire and
not be exercisable upon the exercise of any related Option with respect to the
same share, and (iii) an Option and Stock Appreciation Right covering the same
share of Class A Common Stock may not be exercised simultaneously. Upon exercise
of a Stock Appreciation Right with respect to a share of Class A Common Stock,
the Participant shall be entitled to receive an amount equal to the excess, if
any, of (A) the Fair Market Value of a share of Class A Common Stock on the date
of exercise over (B) the Exercise Price of such Stock Appreciation Right
established in the Award Agreement, which amount shall be payable as provided in
Section 6.02(c).
(B) EXERCISE PRICE. The Exercise Price established under any Stock
Appreciation Right granted under this Plan shall be determined by the Committee,
but in the case of Stock Appreciation Rights granted in
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tandem with Options shall not be less than the Purchase Price of the related
Option. Upon exercise of Stock Appreciation Rights, the number of shares subject
to exercise under any related Option shall automatically be reduced by the
number of shares of Class A Common Stock represented by the Option or portion
thereof which are surrendered as a result of the exercise of such Stock
Appreciation Rights.
(C) PAYMENT OF INCREMENTAL VALUE. Any payment which may become due from the
Company by reason of a Participant's exercise of a Stock Appreciation Right may
be paid to the Participant as determined by the Committee (i) all in cash, (ii)
all in Class A Common Stock, or (iii) in any combination of cash and Class A
Common Stock. In the event that all or a portion of the payment is made in Class
A Common Stock, the number of shares of Class A Common Stock delivered in
satisfaction of such payment shall be determined by dividing the amount of such
payment or portion thereof by the Fair Market Value on the Exercise Date. No
fractional share of Class A Common Stock shall be issued to make any payment in
respect of Stock Appreciation Rights; if any fractional share would be issuable,
the combination of cash and Class A Common Stock payable to the Participant
shall be adjusted as directed by the Committee to avoid the issuance of any
fractional share.
6.03 TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
(A) CONDITIONS ON EXERCISE. An Award Agreement with respect to Options
and/or Stock Appreciation Rights may contain such waiting periods, exercise
dates and restrictions on exercise (including, but not limited to, periodic
installments) as may be determined by the Committee at the time of grant. The
Committee may also establish exceptions to such waiting periods, exercise dates
and restrictions on exercise, including, without limitation, in the case of a
Change in Control of the Company.
(B) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options and Stock
Appreciation Rights shall terminate after the first to occur of the following
events:
(i) Expiration of the Option or Stock Appreciation Right as provided
in the Award Agreement; or
(ii) Termination of the Award as provided in Section 6.03(e),
following the Participant's Termination of Employment; or
(iii) In the case of an Incentive Stock Option, ten years from the
Date of Grant; or
(iv) Solely in the case of a Stock Appreciation Right granted in
tandem with an Option, upon the expiration of the related Option.
(C) ACCELERATION OF EXERCISE TIME. The Committee, in its sole discretion,
shall have the right (but shall not in any case be obligated), exercisable at
any time after the Date of Grant, to permit the exercise of any Option or Stock
Appreciation Right prior to the time such Option or Stock Appreciation Right
would otherwise become exercisable under the terms of the Award Agreement.
(D) EXTENSION OF EXERCISE TIME. In addition to the extensions permitted
under Section 6.03(e) in the event of Termination of Employment, the Committee,
in its sole discretion, shall have the right (but shall not in any case be
obligated), exercisable on or at any time after the Date of Grant, to permit any
Option or Stock Appreciation Right granted under this Plan to be exercised after
its expiration date described in Section 6.03(e), subject, however, to the
limitations described in Section 6.03(b)(i), (iii), and (iv).
(E) EXERCISE OF OPTIONS OR STOCK APPRECIATION RIGHTS UPON TERMINATION OF
EMPLOYMENT.
(I) TERMINATION OF VESTED OPTIONS AND STOCK APPRECIATION RIGHTS UPON
TERMINATION OF EMPLOYMENT.
(A) TERMINATION. In the event of Termination of Employment of a
Participant other than by reason of death, disability or Retirement, the
right of the Participant to exercise the Option or Stock Appreciation
Right under the Plan shall terminate thirty (30) days after the date of
such Termination of Employment, unless the exercise period is extended
by the Committee in accordance with Section 6.03(d). In no event,
however, may any Option or Stock Appreciation Right be
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exercised later than the date of expiration of the Option determined
pursuant to Section 6.03(b)(i), (iii) or (iv).
(B) DISABILITY OR RETIREMENT. In the event of a Participant's
Termination of Employment by reason of disability or Retirement, the
right of the Participant to exercise the Options or Stock Appreciation
Rights which he or she was entitled to exercise upon Termination of
Employment (or which became exercisable at a later date pursuant to
Section 6.03(e)(ii)) shall terminate one year after the date of such
Termination of Employment, unless the exercise period is extended by the
Committee in accordance with Section 6.03(d). In no event, however, may
any Option or Stock Appreciation Right be exercised later than the date
of expiration of the Option determined pursuant to Section 6.03(b)(i),
(iii) or (iv).
(C) DEATH. In the event of the death of a Participant while
employed by the Company or a Subsidiary or within the additional period
of time from the date of the Participant's Termination of Employment and
prior to the expiration of the Option or Stock Appreciation Right as may
be permitted in Section 6.03(e)(i)(B) or Section 6.03(d) above, to the
extent the right to exercise the Option or Stock Appreciation Right
accrued as of the date of such Termination of Employment and did not
expire during such additional period and prior to the Participant's
death, the right of the Participant's Beneficiary to exercise the Option
or Stock Appreciation Right under the Plan shall terminate upon the
expiration of one year from the date of the Participant's death (but in
no event more than one year from the date of the Participant's
Termination of Employment by reason of disability or retirement), unless
the exercise period is extended by the Committee in accordance with
Section 6.03(d). In no event, however, may any Option or Stock
Appreciation Right be exercised later than the date of expiration of the
Option determined pursuant to Section 6.03(b)(i), (iii) or (iv).
(II) TERMINATION OF UNVESTED OPTIONS OR STOCK APPRECIATION RIGHTS UPON
TERMINATION OF EMPLOYMENT. Subject to Section 6.03(c), to the extent the
right to exercise an Option or a Stock Appreciation Right, or any portion
thereof, has not accrued as of the date of Termination of Employment, such
right shall expire at the date of such Termination of Employment.
Notwithstanding the foregoing, the Committee, within its discretion and
under such terms as it deems appropriate, may permit a Participant who
terminates employment by reason of Retirement and who will continue to
render significant services to the Company or one of its Subsidiaries after
his or her Termination of Employment, to continue vesting in his or her
Options and Stock Appreciation Rights during the period in which the
individual continues to render such services.
6.04 EXERCISE PROCEDURES. Each Option and Stock Appreciation Right granted
under the Plan shall be exercised by written notice to the Company which must be
received by the officer or employee of the Company designated in the Award
Agreement on or before the close of business on the expiration date of the
Award. The Purchase Price of shares purchased upon exercise of an Option granted
under the Plan shall be paid in full in cash by the Participant pursuant to the
Award Agreement; provided, however, that the Committee may (but shall not be
required to) permit payment to be made by delivery to the Company of either (a)
Class A Common Stock (which may include Restricted Shares or shares otherwise
issuable in connection with the exercise of the Option, subject to such rules as
the Committee deems appropriate) or (b) any combination of cash and Class A
Common Stock, or (c) such other consideration as the Committee deems appropriate
and in compliance with applicable law (including payment in accordance with a
cashless exercise program under which, if so instructed by the Participant,
Class A Common Stock may be issued directly to the Participant's broker or
dealer upon receipt of an irrevocable written notice of exercise from the
Participant). In the event that any Class A Common Stock shall be transferred to
the Company to satisfy all or any part of the Purchase Price, the part of the
Purchase Price deemed to have been satisfied by such transfer of Class A Common
Stock shall be equal to the product derived by multiplying the Fair Market Value
as of the date of exercise times the number of shares of Class A Common Stock
transferred to the Company. The Participant may not transfer to the Company in
satisfaction of the Purchase Price any fractional share of Class A Common Stock.
Any part of the Purchase Price paid in cash upon the exercise of any Option
shall be added to the general funds of the Company and may be used for any
proper corporate purpose. Unless the
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Committee shall otherwise determine, any Class A Common Stock transferred to the
Company as payment of all or part of the Purchase Price upon the exercise of any
Option shall be held as treasury shares.
ARTICLE VII
RESTRICTED SHARES
7.01 RESTRICTED SHARE AWARDS. The Committee may grant to any Participant an
Award of Class A Common Stock in such number of shares, and on such terms,
conditions and restrictions, whether based on performance standards, periods of
service, retention by the Participant of ownership of purchased or designated
shares of Class A Common Stock or other criteria, as the Committee shall
establish. With respect to performance-based Awards of Restricted Shares
intended to qualify for deductibility under Section 162(m) of the Code,
performance targets will include specified levels of one or more of earnings
before interest, taxes, depreciation and amortization of intangibles and/or
earnings per share. The terms of any Restricted Share Award granted under this
Plan shall be set forth in an Award Agreement which shall contain provisions
determined by the Committee and not inconsistent with this Plan.
(A) ISSUANCE OF RESTRICTED SHARES. As soon as practicable after the Date of
Grant of a Restricted Share Award by the Committee, the Company shall cause to
be transferred on the books of the Company, or its agent, Class A Common Stock,
registered on behalf of the Participant, evidencing the Restricted shares
covered by the Award, but subject to forfeiture to the Company as of the Date of
Grant if an Award Agreement with respect to the Restricted Shares covered by the
Award is not duly executed by the Participant and timely returned to the
Company. All Class A Common Stock covered by Awards under this Article VII shall
be subject to the restrictions, terms and conditions contained in the Plan and
the Award Agreement entered into by the Participant. Until the lapse or release
of all restrictions applicable to an Award of Restricted Shares the share
certificates representing such Restricted Shares may be held in custody by the
Company, its designee, or, if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with respect to an
Award as described in Section 7.01(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares
as provided in Section 7.01(d), free of any restrictions set forth in the Plan
and the Award Agreement shall be delivered to the Participant.
(B) STOCKHOLDER RIGHTS. Beginning on the Date of Grant of the Restricted
Share Award and subject to execution of the Award Agreement as provided in
Section 7.01(a), the Participant shall become a stockholder of the Company with
respect to all shares subject to the Award Agreement and shall have all of the
rights of a stockholder, including, but not limited to, the right to vote such
shares and the right to receive dividends; provided, however, that any Class A
Common Stock distributed as a dividend or otherwise with respect to any
Restricted Shares as to which the restrictions have not yet lapsed, shall be
subject to the same restrictions as such Restricted Shares and held or
restricted as provided in Section 7.01(a).
(C) RESTRICTION ON TRANSFERABILITY. None of the Restricted Shares may be
assigned, transferred (other than by will or the laws of descent and
distribution, or to an inter vivos trust with respect to which the Participant
is treated as the owner under Sections 671 through 677 of the Code), pledged or
sold prior to lapse of the restrictions applicable thereto.
(D) DELIVERY OF SHARES UPON VESTING. Upon expiration or earlier termination
of the forfeiture period without a forfeiture and the satisfaction of or release
from any other conditions prescribed by the Committee, or at such earlier time
as provided under the provisions of Section 7.02(b), the restrictions applicable
to the Restricted Shares shall lapse. As promptly as administratively feasible
thereafter, subject to the requirements of Section 10.05, the Company shall
deliver to the Participant or, in case of the Participant's death, to the
Participant's Beneficiary, one or more share certificates for the appropriate
number of shares of Class A Common Stock, free of all such restrictions, except
for any restrictions that may be imposed by law.
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7.02 TERMS OF RESTRICTED SHARES.
(A) FORFEITURE OF RESTRICTED SHARES. Subject to Section 7.02(b), all
Restricted Shares shall be forfeited and returned to the Company and all rights
of the Participant with respect to such Restricted Shares shall terminate unless
the Participant continues in the service of the Company or a Subsidiary as an
employee until the expiration of the forfeiture period for such Restricted
Shares and satisfies any and all other conditions set forth in the Award
Agreement. The Committee shall determine the forfeiture period (which may, but
need not, lapse in installments) and any other terms and conditions applicable
with respect to any Restricted Share Award.
(B) WAIVER OF FORFEITURE PERIOD. Notwithstanding anything contained in this
Article VII to the contrary, the Committee may, in its sole discretion, waive
the forfeiture period and any other conditions set forth in any Award Agreement
under appropriate circumstances (including the death, disability or Retirement
of the Participant, a change in control of the Company or a material change in
circumstances arising after the date of an Award) and subject to such terms and
conditions (including forfeiture of a proportionate number of the Restricted
Shares) as the Committee shall deem appropriate.
ARTICLE VIII
PERFORMANCE AWARDS
8.01 PERFORMANCE AWARDS.
(A) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE AMOUNTS. The
Committee may grant Performance Awards to Participants. A Performance Award
shall consist of the right to receive a payment (measured by the Fair Market
Value of a specified number of shares of Class A Common Stock, increases in such
Fair Market Value during the Award Period and/or a fixed cash amount) contingent
upon the extent to which certain predetermined performance targets have been met
during an Award Period. Performance Awards may be made in conjunction with, or
in addition to, Restricted Share Awards made under Article VII. The Award Period
shall be two or more fiscal or calendar years as determined by the Committee.
The Committee, in its discretion and under such terms as it deems appropriate,
may permit newly eligible employees, such as those who are promoted or newly
hired, to receive Performance Awards after an Award Period has commenced.
(B) PERFORMANCE TARGETS. The performance targets may include such goals
related to the performance of the Company and/or the performance of a
Participant as may be established by the Committee in its discretion. In the
case of Performance Awards intended to qualify for deductibility under Section
162(m) of the Code, the targets will include one or more specified levels of
earnings before interest, taxes and amortization of intangibles and/or earnings
per share. The performance targets established by the Committee may vary for
different Award Periods and need not be the same for each Participant receiving
a Performance Award in an Award Period. Except to the extent inconsistent with
the performance-based compensation exception under Section 162(m) of the Code,
in the case of Performance Awards granted to employees to whom such section is
applicable, the Committee, in its discretion, but only under extraordinary
circumstances as determined by the Committee, may change any prior determination
of performance targets for any Award Period at any time prior to the final
determination of the Award when events or transactions occur to cause the
performance targets to be an inappropriate measure of achievement.
(C) EARNING PERFORMANCE AWARDS. The Committee, at or as soon as practicable
after the Date of Grant, shall prescribe a formula to determine the percentage
of the Performance Award to be earned based upon the degree of attainment of
performance targets.
(D) PAYMENT OF EARNED PERFORMANCE AWARDS. Payments of earned Performance
Awards shall be made in cash or Class A Common Stock, or a combination of cash
and Class A Common Stock, in the discretion of the Committee. The Committee, in
its sole discretion, may define such terms and conditions with respect to the
payment of earned Performance Awards as it may deem desirable.
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8.02 TERMS OF PERFORMANCE AWARDS.
(A) TERMINATION OF EMPLOYMENT. Unless otherwise provided below or in
Section 8.03, in the case of a Participant's Termination of Employment prior to
the end of an Award Period, the Participant will not have earned any Performance
Awards.
(B) RETIREMENT. If a Participant's Termination of Employment is because of
Retirement prior to the end of an Award Period, the Participant will not be paid
any Performance Awards, unless the Committee, in its sole and exclusive
discretion, determines that an Award should be paid. In such a case, the
Participant shall be entitled to receive a pro-rata portion of his or her Award
as determined under Subsection (d).
(C) DEATH OR DISABILITY. If a Participant's Termination of Employment is
due to death or disability (as determined in the sole and exclusive discretion
of the Committee) prior to the end of an Award Period, the Participant or the
Participant's personal representative shall be entitled to receive a pro-rata
share of his or her Award as determined under Subsection (d).
(D) PRO-RATA PAYMENT. The amount of any payment made to a Participant whose
employment is terminated by retirement, death or disability (under circumstances
described in Subsections (b) and (c)) will be the amount determined by
multiplying the amount of the Performance Award which would have been earned,
determined at the end of the Award Period, had such employment not been
terminated, by a fraction, the numerator of which is the number of whole months
such Participant was employed during the Award Period, and the denominator of
which is the total number of months of the Award Period. Any such payment made
to a Participant whose employment is terminated prior to the end of an Award
Period under this Section 8.02 shall be made at the end of the respective Award
Period, unless otherwise determined by the Committee in its sole discretion. Any
partial payment previously made or credited to a deferred account for the
benefit of a Participant as provided under Section 8.01(d) of the Plan shall be
subtracted from the amount otherwise determined as payable as provided in this
Section.
(E) OTHER EVENTS. Notwithstanding anything to the contrary in this Article
VIII, the Committee may, in its sole and exclusive discretion, determine to pay
all or any portion of a Performance Award to a Participant who has terminated
employment prior to the end of an Award Period under certain circumstances
(including the death, disability or retirement of the Participant, a change a
control of the Company or a material change in circumstances arising after the
Date of Grant) and subject to such terms and conditions as the Committee shall
deem appropriate.
ARTICLE IX
NON-EMPLOYEE DIRECTOR AWARDS
9.01 GRANT OF NON-EMPLOYEE DIRECTOR AWARDS. Each person whose term as a
Director continues after the date of each annual meeting of stockholders of the
Company, commencing with the initial annual meeting after the Effective Date and
continuing until the date this Plan terminates, shall as of the date of each
such annual meeting of stockholders be granted an Option to purchase 4,000
shares of Class A Common Stock. The exercise price for such Options shall be the
Fair Market Value on the Date of Grant of the shares subject to the Option. All
such Options shall be designated as Non-Qualified Stock Options and shall have a
ten year term. Such Options shall vest and become exercisable in equal
installments on the first and second anniversaries of the Date of Grant.
9.02 TERMINATION OF SERVICE AND OTHER TERMS. If a Non-Employee Director's
service with the Company terminates by reason of death or disability, any Award
held by such Non-Employee Director may be exercised for a period of one year
from the date of such termination or until the expiration of the Award,
whichever is shorter. If a Non-Employee Director's service with the Company
terminates other than by reason of death or disability, under mutually
satisfactory conditions, any Award held by such Non-Employee Director shall
expire thirty (30) days after the date of such termination. All applicable
provisions of the Plan not inconsistent with this Article IX shall apply to
Awards granted to Non-Employee Directors; provided, however, that the
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Committee may not exercise discretion under any provision of the Plan with
respect to Awards granted under this Article IX except to the extent expressly
provided herein.
ARTICLE X
TERMS APPLICABLE TO ALL AWARDS GRANTED UNDER THE PLAN
10.01 PLAN PROVISIONS CONTROL AWARD TERMS. The terms of the Plan shall
govern all Awards granted under the Plan, and in no event shall the Committee
have the power to grant any Award under the Plan which is contrary to any of the
provisions of the Plan. In the event any provision of any Award granted under
the Plan shall conflict with any term in the Plan as constituted on the Date of
Grant of such Award, the term in the Plan as constituted on the Date of Grant of
such Award shall control. Except as provided in Section 10.03 and Section 10.07,
the terms of any Award granted under the Plan may not be changed after the Date
of Grant of such Award so as to materially decrease the value of the Award
without the express written approval of the holder.
10.02 AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.
10.03 MODIFICATION OF AWARD AFTER GRANT. No Award granted under the Plan to
a Participant may be modified (unless such modification does not materially
decrease the value of the Award) after the Date of Grant except by express
written agreement between the Company and the Participant, provided that any
such change (a) shall not be inconsistent with the terms of the Plan, and (b)
shall be approved by the Committee.
10.04 LIMITATION ON TRANSFER. Except as provided in Section 7.01(c) in the
case of Restricted Shares, a Participant's rights and interest under the Plan
may not be assigned or transferred other than by will or the laws of descent and
distribution, and during the lifetime of a Participant, only the Participant
personally (or the Participant's personal representative) may exercise rights
under the Plan. The Participant's Beneficiary may exercise the Participant's
rights to the extent they are exercisable under the Plan following the death of
the Participant. Notwithstanding the foregoing, the Committee may grant
Non-Qualified Stock Options that are transferable, without payment of
consideration, to immediate family members of the Participant or to trusts or
partnerships for such family members, and the Committee may also amend
outstanding Non-Qualified Stock Options to provide for such transferability.
10.05 TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under such Participant's Award, or with respect to any income
recognized upon a disqualifying disposition of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment or
issuance of the cash or shares upon exercise or vesting of an Award unless
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
and shall be payable by the Participant at such time as the Committee determines
in accordance with the following rules:
(a) The Participant shall have the right to elect to meet his or her
withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Class A Common Stock, rounded up
to the next whole share, whose Fair Market Value is equal to the amount of
withholding taxes due, (ii) by direct payment to the Company in cash of the
amount of any taxes required to be withheld with respect to such Award or
(iii) by a combination of shares and cash.
(b) The Committee shall have the discretion as to any Award, to cause
the Company to pay to tax authorities for the benefit of any Participant,
or to reimburse such Participant for the individual taxes which are due on
the grant, exercise or vesting of any share Award, or the lapse of any
restriction on any
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share Award (whether by reason of a Participant's filing of an election
under Section 83(b) of the Code or otherwise), including, but not limited
to, Federal income tax, state income tax, local income tax and excise tax
under Section 4999 of the Code, as well as for any such taxes as may be
imposed upon such tax payment or reimbursement.
(c) In the case of Participants who are subject to Section 16 of the
Exchange Act, the Committee may impose such limitations and restrictions as
it deems necessary or appropriate with respect to the delivery or
withholding of shares of Class A Common Stock to meet tax withholding
obligations.
10.06 SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the holder approve.
10.07 ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(A) RECAPITALIZATION. The number and kind of shares subject to outstanding
Awards, the Purchase Price or Exercise Price for such shares, the number and
kind of shares available for Awards subsequently granted under the Plan and the
maximum number of shares in respect of which Awards can be made to any
Participant in any calendar year shall be appropriately adjusted to reflect any
stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Awards granted under the Plan. The Committee shall
have the power and sole discretion to determine the amount of the adjustment to
be made in each case.
(B) MERGER. After any Merger in which the Company is the surviving
corporation, each Participant shall, at no additional cost, be entitled upon any
exercise of all Option or receipt of other Award to receive (subject to any
required action by stockholders), in lieu of the number of shares of Class A
Common Stock receivable or exercisable pursuant to such Award, the number and
class of shares or other securities to which such Participant would have been
entitled pursuant to the terms of the Merger if, at the time of the Merger, such
Participant had been the holder of record of a number of shares equal to the
number of shares receivable or exercisable pursuant to such Award. Comparable
rights shall accrue to each Participant in the event of successive Mergers of
the character described above. In the event of a Merger in which the Company is
not the surviving corporation, the surviving, continuing, successor, or
purchasing corporation, as the case may be (the "Acquiring Corporation"), shall
either assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's stock
for such outstanding Awards. In the event the Acquiring Corporation elects not
to assume or substitute for such outstanding Awards, the Board shall provide
that any unexercisable and/or unvested portion of the outstanding Awards shall
be immediately exercisable and vested as of a date prior to such merger or
consolidation, as the Board so determines. The exercise and/or vesting of any
Award that was permissible solely by reason of this Section 10.07(b) shall be
conditioned upon the consummation of the merger or consolidation. Any Options
which are neither assumed by the Acquiring Corporation not exercised as of the
date of the Merger shall terminate effective as of the effective date of the
Merger.
(C) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES. After any
merger in which the Company or a Subsidiary shall be a surviving corporation,
the Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the merger whose shares or stock subject to the old options
may no longer be issued following the merger. The foregoing adjustments and
manner of application of the foregoing provisions shall be determined by the
Committee in its sole discretion. Any such adjustments may provide for the
elimination of any fractional shares which might otherwise become subject to any
Options.
10.08 NO RIGHT TO EMPLOYMENT. No employee or other person shall have any
claim of right to be granted an Award under this Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee any right to be
retained in the employ of the Company or any of its Subsidiaries.
10.09 AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any pension, group insurance or other benefit
plan applicable to the Participant which is maintained by the Company or any of
its Subsidiaries, except as may be provided under the terms of such plans or
determined by the Board.
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<PAGE> 39
10.10 GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the State of Delaware and construed in
accordance therewith.
10.11 NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.
10.12 CAPTIONS. The captions (i.e., all Section headings) used in the Plan
are for convenience only, do not constitute a part of the Plan, and shall not be
deemed to limit, characterize or affect in any way any provisions of the Plan,
and all provisions of the Plan shall be construed as if no captions have been
used in the Plan.
10.13 SEVERABILITY. Whenever possible, each provision in the Plan and every
Award at any time granted under the Plan shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of the Plan
or any Award at any time granted under the Plan shall be held to be prohibited
by or invalid under applicable law, then (a) such provision shall be deemed
amended to accomplish the objectives of the provision as originally written to
the fullest extent permitted by law and (b) all other provisions of the Plan and
every other Award at any time granted under the Plan shall remain in full force
and effect.
10.14 AMENDMENT AND TERMINATION.
(A) AMENDMENT. The Board shall have complete power and authority to amend
the Plan at any time. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Award shall theretofore have been granted
under the Plan, adversely affect the right of such individual under such Award.
(B) TERMINATION. The Board shall have the right and the power to terminate
the Plan at any time. No Award shall be granted under the Plan after the
termination of the Plan, but the termination of the Plan shall not have any
other effect and any Award outstanding at the time of the termination of the
Plan may be exercised after termination of the Plan at any time prior to the
expiration date of such Award to the same extent such Award would have been
exercisable had the Plan not terminated.
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P R O X Y
HOLLINGER INTERNATIONAL INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF HOLLINGER INTERNATIONAL INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 5, 1999
The undersigned holder of shares of Class A Common Stock, par value $.01 per
share ("Class A Shares"), and/or Class B Common Stock, par value $.01 per share
("Class B Shares"), and/or Series B Convertible Preferred Stock, par value $.01
per share ("Series B Preferred Shares") and/or Series C Convertible Preferred
Stock par value $.01 ("Series C Preferred Shares") of Hollinger International
Inc. ("Hollinger International"), hereby appoints Mark S. Kipnis and Paul B.
Healy, individually, with full power of substitution in each of them, as proxy
or proxies to represent the undersigned and vote all Class A Shares, and/or
Class B Shares, and/or Series B Preferred Shares and/or Series C Preferred
Shares of Hollinger International which the undersigned would be entitled to
vote if personally present and voting at the Annual Meeting of Stockholders of
Hollinger International to be held on May 5, 1999 at 11:00 a.m. local time, in
the Versailles Room, St. Regis Hotel, Two East 55th Street at Fifth Avenue, New
York, New York 10022, and at any adjournments or postponements thereof, upon all
matters coming before such meeting. Said proxies are directed to vote as set
forth below and, in their discretion, upon such other matters as may properly
come before the meeting.
(1) Nominees to serve for a one-year term expiring at the 2000 Annual Meeting of
Stockholders and until their successors are duly elected and qualified:
(1) Dwayne O. Andreas; (2) Barbara Amiel Black; (3) Hon. Conrad M.
Black; (4) Hon. Richard R. Burt; (5) Raymond G. Chambers; (6) Daniel W.
Colson; (7) Hon. Henry A. Kissinger; (8) Marie-Josee Kravis; (9) Shmuel
Meitar; (10) Hon. Richard N. Perle; (11) F. David Radler; (12) Hon.
Robert S. Strauss; (13) A. Alfred Taubman; (14) Hon. James R. Thompson;
(15) Lord Weidenfeld; and (16) Leslie H. Wexner.
(2) Approval and adoption of the Hollinger International Inc. 1999 Stock
Incentive Plan.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HOLLINGER
INTERNATIONAL. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR ALL NOMINEES. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
* FOLD AND DETACH HERE * ---------------
PLEASE SEE
OTHER SIDE
---------------
<PAGE> 41
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
[X] Please mark your |
votes as in this | 4252
example. |_______
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Approval and adoption of the Hollinger
Directors [ ] [ ] International Inc. 1999 Stock [ ] [ ] [ ]
(see reverse) Incentive Plan.
For, except vote withheld from the following nominee(s) 3. OTHER BUSINESS. The proxies shall be authorized to vote on any
other business properly brought before the meeting and any
adjournments or postponements thereof in accordance with their
- ----------------------------------------------------------- discretion.
Mark this box if you will
attend the Annual Meeting [ ]
Mark this box if you will not
attend the Annual Meeting. [ ]
NOTE: Please sign EXACTLY as your name appears
hereon. When signing as executor, trustee,
etc., or as officer of a corporation, give
full title as such. For joint accounts,
please obtain both signatures.
---------------------------------------------------------
---------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE SIGNATURE(S) DATE
ENCLOSED POSTAGE PAID ENVELOPE.
- ------------------------------------------------------------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
</TABLE>
HOLLINGER INTERNATIONAL INC.
Dear Stockholder:
We encourage you to take advantage of two new and convenient ways by which
you can vote your shares. You can vote your shares electronically by telephone
or via the Internet, which eliminates the need to return the proxy card.
VOTE BY TELEPHONE. To vote your shares by telephone, use a touch-tone
telephone and call the following toll-free number: 1-800-652-8683, 24 hours a
day, 7 days a week. Insert the Control Number printed in the box above, just
below the perforation. Follow the simple recorded instructions.
VOTE BY INTERNET. To vote via the Internet, go to website
www.vote-by-net.com, insert the Control Number printed in the box above, just
below the perforation. Following the simple instructions. Please be aware that
if you vote over the Internet, you may incur costs such as telecommunication
and Internet access charges for which you will be responsible.
The Internet and telephone voting facilities will be available until
midnight on May 4, 1999, the day before the Annual Meeting.
YOUR VOTE IS IMPORTANT!
THANK YOU FOR VOTING
DO NOT RETURN PROXY IF YOU ARE VOTING BY TELEPHONE OR THE INTERNET
