<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Sinclair Broadcast Group, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(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: *1
______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________________
*1 Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
______________________________________________________________________
(3) Filing Party:
______________________________________________________________________
(4) Date Filed:
----------------------------------------------------------------------
<PAGE>
[LETTERHEAD OF SINCLAIR BROADCAST GROUP, INC.]
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Sinclair Broadcast Group, Inc. ("Sinclair") to be held on June 28, 1996 at
[LOCATION] at 10:00 a.m., local time. As described in the enclosed Proxy
Statement, at the Annual Meeting, the stockholders of Sinclair will be asked to
(i) elect seven members of the Board of Directors of Sinclair; (ii) approve an
amendment to Sinclair's Amended and Restated Charter (the "Charter") for the
purpose of increasing the number of shares of Class A Common Stock authorized to
be issued by Sinclair from 35,000,000 shares to 100,000,000 shares and
increasing the number of shares of preferred stock authorized to be issued by
Sinclair from 5,000,000 shares to 10,000,000 shares (the "Charter Amendment");
(iii) approve, ratify and confirm the adoption of the 1996 Long-Term Incentive
Plan of Sinclair (the "LTIP Approval"); (iv) approve, ratify and confirm the
adoption of certain amendments to the Sinclair Incentive Stock Option Plan
increasing from 400,000 to 500,000 the number of options that may be granted
under the Plan, delegating to an officer of the Company the authority to make
certain option awards, revising the exercise and expiration periods for options
and making certain other changes (the "1995 Plan Amendment"); (v) approve,
ratify and confirm the selection of Arthur Andersen LLP as Sinclair's
independent auditors for the fiscal year ended December 31, 1996; and (vi)
transact such other business as properly comes before the meeting.
THE BOARD OF DIRECTORS OF SINCLAIR RECOMMENDS THAT STOCKHOLDERS VOTE
FOR ELECTION OF THE BOARD'S NOMINEES FOR DIRECTOR AND FOR APPROVAL OF EACH OF
THE OTHER PROPOSALS.
All members of the Sinclair Board of Directors and certain other
stockholders, holding in the aggregate approximately 97% of the voting power of
the outstanding shares of Sinclair Common Stock on May 21, 1996 (the record date
for the Annual Meeting), have agreed in writing (subject, in the case of the
directors, only to their fiduciary duties) to vote all of their shares in favor
of the Charter Amendment, the LTIP Approval and the 1995 Plan Amendments.
Accordingly, approval of the Charter Amendment, the LTIP Approval and the 1995
Plan Amendments by the Sinclair stockholders is assured. Nevertheless, your vote
on these matters is very important. We urge you to review carefully the enclosed
materials and to return your proxy promptly.
Whether or not you plan to attend the Annual Meeting, please sign and
promptly return your proxy card in the enclosed postage paid envelope. If you
attend the meeting, you may vote in person if you wish, even though you have
previously returned your proxy.
Sincerely,
David D. Smith
Chairman of the Board
and Chief Executive Officer
<PAGE>
YOUR VOTE IS IMPORTANT -- Please execute and return the enclosed proxy
promptly, whether or not you plan to attend the
Sinclair Broadcast Group, Inc. Annual Meeting.
SINCLAIR BROADCAST GROUP, INC.
2000 W. 41st Street
Baltimore, Maryland 21211
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on June 28, 1996
To the Stockholders of Sinclair Broadcast Group, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Sinclair Broadcast Group, Inc. ("Sinclair") will be held at
[LOCATION] on June 28, 1996, commencing at 10:00 a.m., for the following
purposes:
1. To elect seven directors, each for a one-year term.
2. To consider and act upon an amendment to Sinclair's Amended
and Restated Charter for the purpose of increasing the number
of shares of Class A Common Stock authorized to be issued by
Sinclair from 35,000,000 shares to 100,000,000 shares and
increasing the number of shares of preferred stock authorized
to be issued by Sinclair from 5,000,000 shares to 10,000,000
shares.
3. To consider and act upon the 1996 Long-Term Incentive Plan of
Sinclair.
4. To consider and act upon certain amendments to the Sinclair
Incentive Stock Option Plan increasing from 400,000 to 500,000
the number of options that may be granted under the Plan,
delegating to an officer of the Company the authority to make
certain option awards, revising the exercise and expiration
periods for options and making certain other changes.
5. To ratify the appointment by the Board of Directors of the
firm of Arthur Andersen LLP as independent public accountants
of Sinclair for the fiscal year ending December 31, 1996.
6. To transact such other business as may properly come before
the Annual Meeting.
Accompanying this notice is a Proxy Statement and a Proxy Card. Whether or not
you expect to be present at the Annual Meeting, please sign and date the Proxy
Card and return it in the enclosed envelope provided for that purpose prior to
the date of the Annual Meeting. A Proxy may be revoked at any time prior to the
time that it is voted at the Annual Meeting. May 21, 1996 was fixed by the Board
of Directors as the record date for determination of stockholders entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof. Only
stockholders of record at the close of business on May 21, 1996 will be entitled
to vote at the Annual Meeting.
<PAGE>
You are cordially invited to attend the Annual Meeting, and you may
vote in person even though you have returned your card.
BY ORDER OF THE BOARD OF DIRECTORS
-----------------------------------------------
J. Duncan Smith
Secretary
Baltimore, Maryland
June __, 1996
<PAGE>
TABLE OF CONTENTS
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 2: AUTHORIZATION OF THE CHARTER AMENDMENT
PROPOSAL 3: 1996 LONG-TERM INCENTIVE PLAN
PROPOSAL 4: 1995 INCENTIVE STOCK OPTION PLAN AMENDMENT
PROPOSAL 5: RATIFICATION OF INDEPENDENT AUDITORS
BENEFICIAL OWNERSHIP OF COMMON STOCK
EXECUTIVE COMPENSATION AND RELATED MATTERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OTHER MATTERS
STOCKHOLDER PROPOSALS
INCORPORATION OF INFORMATION BY REFERENCE
INDEX TO FINANCIAL STATEMENTS
EXHIBIT A-- CHARTER AMENDMENTS
EXHIBIT B -- LONG TERM INCENTIVE PLAN
EXHIBIT C -- AMENDMENTS TO THE STOCK OPTION PLAN
- i -
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
2000 W. 41st Street
Baltimore, Maryland 21211
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To be held on June 28, 1996
-----------------
This Proxy Statement is being furnished to the stockholders of Sinclair
Broadcast Group, Inc. ("Sinclair" or the "Company") for use in connection with
the Annual Meeting of Stockholders (the "Annual Meeting") of Sinclair to be held
on June 28, 1996 at [LOCATION], and any adjournments or postponements thereof.
This Proxy Statement is being used for the solicitation of proxies by the Board
of Directors of Sinclair (the "Sinclair Board"). It is first being mailed to the
stockholders of Sinclair on or about June __, 1996.
At the Annual Meeting, the stockholders of Sinclair (the "Record
Stockholders") at the close of business on May 21, 1996 (the "Record Date") will
be asked to (i) elect seven members of the Board of Directors of Sinclair; (ii)
approve an amendment to Sinclair's Amended and Restated Charter (the "Charter")
for the purpose of increasing the number of shares of Class A Common Stock
("Class A Common Stock") authorized to be issued by Sinclair from 35,000,000
shares to 100,000,000 shares and increasing the number of shares of preferred
stock authorized to be issued by Sinclair from 5,000,000 to 10,000,000 (the
"Charter Amendment"); (iii) approve, ratify and confirm the adoption of the 1996
Long-Term Incentive Plan of Sinclair (the "LTIP Approval"); (iv) approve, ratify
and confirm the adoption of certain amendments to the Sinclair Incentive Stock
Option Plan (the "Stock Option Plan") increasing from 400,000 to 500,000 the
number of options that may be granted under the Stock Option Plan, delegating to
an officer of the Company the authority to make certain option awards, revising
the exercise and expiration periods for options and making certain other changes
(the "1995 Plan Amendments"); (v) approve, ratify and confirm the selection of
Arthur Andersen LLP as Sinclair's independent auditors for the fiscal year ended
December 31, 1996; and (vi) transact such other business as properly comes
before the Annual Meeting. The items on which the stockholders are being asked
to vote are referred to in this Proxy Statement as the "Proposals."
THE BOARD OF DIRECTORS OF SINCLAIR RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR ELECTION OF THE BOARD'S NOMINEES FOR DIRECTOR AND FOR APPROVAL OF EACH
OF THE OTHER PROPOSALS.
Information regarding the persons nominated as directors and regarding
each of the other Proposals and the reasons for the Proposals is set forth in
this Proxy Statement, as well as certain other information regarding Sinclair.
Stockholders are encouraged to read this Proxy Statement in its entirety before
determining how to vote on the Proposals.
All members of the Sinclair Board and certain other stockholders,
holding in the aggregate approximately 97% of the voting power of outstanding
shares of Sinclair Common Stock on the Record Date, have agreed in writing
(subject, in the case of the directors, only to their fiduciary duty) to vote
all of their shares in favor of the Charter Amendment, the LTIP Approval and the
1995 Plan Amendments. Accordingly, approval of these matters by the Sinclair
stockholders is assured.
<PAGE>
The principal executive offices of Sinclair are located at 2000 W. 41st
Street, Baltimore, Maryland 21211 and its telephone number is (410) 467-5005.
Stockholders with questions regarding the matters described herein may contact
David B. Amy, Chief Financial Officer of Sinclair at (410) 467-5005.
<PAGE>
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The close of business on May 21, 1996 has been fixed by the Sinclair
Board as the Record Date for determination of stockholders entitled to vote at
the Annual Meeting. On the Record Date, ____ shares of Sinclair Class A Common
Stock and ____ shares of Sinclair Class B Common Stock were outstanding. The
presence, in person or by proxy, of stockholders entitled to cast a majority of
all the votes entitled to be cast at the Annual Meeting (___ votes) is necessary
to constitute a quorum at the Annual Meeting. Directors will be elected by a
plurality of the votes cast at the Annual Meeting. The affirmative vote of
two-thirds of all the votes entitled to be cast at the Annual Meeting (_________
votes) will constitute shareholder approval of the Common Stock Authorization
and the Preferred Stock Authorization. The affirmative vote of a majority of the
votes cast at the Annual Meeting will constitute shareholder approval of each of
the other Proposals. With respect to the election of directors and with respect
to each of the Proposals, each share of Sinclair Class A Common Stock is
entitled to one vote, and each share of Sinclair Class B Common Stock is
entitled to ten votes.
All proxies submitted on the enclosed form of proxy that are properly
executed and returned to Sinclair prior to commencement of voting at the Annual
Meeting will be voted at the Annual Meeting or any adjournment or postponement
thereof in accordance with the instructions thereon. Sinclair has named David D.
Smith and Frederick G. Smith, or either of them, as attorneys-in-fact on the
proxy cards. All executed but unmarked proxies will be voted FOR the Board's
nominees for Director and FOR approval of the other Proposals. Any proxy may be
revoked by any stockholder who attends the Annual Meeting and gives notice of
his or her intention to vote in person without compliance with any other
formalities. In addition, any Sinclair stockholder may revoke a proxy at any
time before it is voted by executing and delivering a subsequent proxy or by
delivering a written notice stating that the proxy is revoked to Sinclair at
2000 W. 41st Street, Baltimore, MD 21211, Attention: J. Duncan Smith, Secretary.
At the Annual Meeting, stockholder votes will be tabulated by persons appointed
by the Chairman of the Board to act as inspectors of election. Abstentions and
broker nonvotes will be treated as shares that are present and entitled to vote
for purposes of determining the presence of a quorum at the Annual Meeting, but
will not be counted as a vote cast; only votes cast in favor of the Proposals
and executed and unmarked proxies shall be counted toward the number needed to
reach approval.
Management of Sinclair does not know of any matters other than those
set forth herein that may come before the Annual Meeting. If any other matters
are properly presented to the Annual Meeting for action, it is intended that the
persons named in the proxy will vote in accordance with their best judgment on
such matters.
The expense of preparing and printing this Proxy Statement and the
proxies solicited hereby, and any filing fees incurred in connection with this
Proxy Statement, will be borne by Sinclair. In addition to the use of the mails,
proxies may be solicited by officers and directors and regular employees of
Sinclair, without additional remuneration, by personal interviews, telephone,
telegraph, letter or otherwise. Sinclair may also request brokerage firms,
nominees, custodians and fiduciaries to forward proxy materials to beneficial
owners of shares of Sinclair and will provide reimbursement for the cost of
forwarding the material in accordance with customary charges.
THE BOARD OF DIRECTORS OF SINCLAIR RECOMMENDS THAT STOCKHOLDERS VOTE
FOR ELECTION OF THE BOARD'S NOMINEES FOR DIRECTOR AND FOR APPROVAL OF EACH OF
THE OTHER PROPOSALS.
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<PAGE>
PROPOSAL 1: ELECTION OF DIRECTORS
It is proposed to elect seven directors of the Company to hold office
for terms of one year and until their successors shall be elected and shall
qualify. At the Annual Meeting, the persons named in the enclosed form of proxy
will vote the shares covered by the proxy for the election of the nominees named
below to the Board of Directors of the Company unless instructed to the
contrary. Each nominee is currently a director of the Company. Each nominee has
indicated his willingness to serve, if elected; however, if any nominee should
be unwilling to serve, the proxies may be voted for a substitute nominee
designated by the Board of Directors.
Set forth below for each nominee is the director's name, age, length of
service as a director, his principal occupation and business experience of the
past five years, and the names of any other publicly held companies for which he
serves as a director.
<TABLE>
<CAPTION>
Director Principal occupation and business experience
Nominee Age Since during the past five years
------- --- ----- --------------------------
<S> <C> <C> <C>
David D. Smith 43 1986 President, Chief Executive Officer, Director and Chairman
of the Board of the Company since 1990.
Frederick G. Smith 46 1986 Vice President of the Company since 1990.
J. Duncan Smith 42 1986 Vice President and Secretary of the Company since 1988.
Robert E. Smith 32 1986 Vice President and Treasurer of the Company since 1988.
Basil A. Thomas 80 1993 Of counsel to the Baltimore law firm of Thomas &
Libowitz, P.A. since 1983.
William E. Brock 63 1995 Consultant from 1995 to present; Chairman of the Brock
Group from 1989 to 1994.
Lawrence E. McCanna 52 1995 Managing partner of the accounting firm of Gross,
Mendelsohn & Associates, P.A. since 1982.
</TABLE>
Messrs. David, Frederick, Duncan and Robert Smith (the "Controlling
Stockholders") have entered into a stockholders agreement pursuant to which they
have agreed, for a period of 10 years commencing June 12, 1995, to vote for each
other as candidates for election to the Board of Directors of the Company.
In connection with the acquisition (the "River City Acquisition") of
assets of River City Broadcasting, L.P. (as described under "Proposal 2:
Authorization of the Charter Amendment -- The River City Acquisition") the
Company has agreed to increase the size of the Board of Directors from seven to
nine directors, and agreed to cause each of Barry Baker and Roy F. Coppedge to
be appointed as members of the Board of Directors as soon as permissible under
the rules of the FCC and applicable laws. As of the date of mailing of this
Proxy Statement, this condition had not been satisfied. If it is satisfied prior
to the date of the Annual Meeting, Mr. Baker and/or Mr. Coppedge will be
appointed to the Board of Directors and will be nominated for an annual term as
director at the Annual Meeting. If the condition is not satisfied prior to the
Annual Meeting, in accordance with the Company's bylaws, the Board of Directors
will appoint Mr. Baker and Mr. Coppedge to serve as directors until the next
Annual Meeting of Stockholders as soon as the condition is satisfied. The
Controlling Stockholders have agreed to vote for the election of Mr. Baker to
the Board of Directors for so long as he is an employee of the Company pursuant
to the terms of his employment agreement and to vote for Mr. Coppedge (or
another designee of Boston Ventures Limited
- 3 -
<PAGE>
Partnership IV and Boston Ventures Limited Partnership IVA "Boston Ventures") to
the Board of Directors for a period ending on the earlier of (a) five years
after the later of the closing of the River City Acquisition and the beginning
of Mr. Baker's employment with Sinclair under the Employment Agreement with Mr.
Baker described below under "Executive Compensation and Related Matters --
Employment Agreements" and (b) such time as Boston Ventures no longer owns
721,115 shares of Common Stock (or preferred stock convertible into that number
of shares of Common Stock).
Meetings of the Board of Directors and Standing Committees
The Board of Directors had a total of 22 meetings during 1995
(including 16 consents in lieu of meetings). Each director attended at least 75%
of the aggregate number of meetings of the Board of Directors and all committees
of the Board on which he served.
The Board of Directors of the Company currently consists of seven
members. The committees of the Board of Directors include an Audit Committee and
a Compensation Committee. The members of the Audit Committee are Messrs. Thomas,
Brock and McCanna. This committee is charged with the responsibility of
reviewing the Company's internal auditing procedures and accounting controls and
will consider the selection and independence of the company's outside auditors.
The Audit Committee met once during the year ended December 31, 1995. The
members of the Compensation Committee are Messrs. Thomas, Brock and McCanna.
This committee is charged with the responsibility for setting executive
compensation, reviewing certain of the Company's compensation programs and
making recommendations to the Board of Directors in the interval between
meetings. The Compensation Committee met twice during the year ended December
31, 1995.
Compensation of Directors
Directors of the Company who also are employees of the Company serve
without additional compensation. Independent directors receive $15,000 annually.
These independent directors also receive $1,000 for each meeting of the Board of
Directors attended and $500 for each committee meeting attended. In addition,
the independent directors are reimbursed for any expenses incurred in connection
with their attendance at such meetings.
Compliance with the Reporting Requirements of Section 16 of the Securities
Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's officers (as defined in regulations
promulgated by the U.S. Securities & Exchange Commission (the "SEC") and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on a review of copies of such reports of ownership
furnished to the Company, or written representations that no forms were
necessary, the Company believes that during the past fiscal year all filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were complied with except for one transaction by J. Duncan
Smith which was inadvertently not timely reported on a Form 4. The transaction
was subsequently reported on a Form 4.
PROPOSAL 2: AUTHORIZATION OF THE CHARTER AMENDMENT
The Board of Directors has approved amendments to the Charter (i)
increasing the number of authorized shares of all classes of stock from
75,000,000 shares to 145,000,000 shares, (ii) increasing the number of
authorized shares of Class A Common Stock from 35,000,000 shares to 100,000,000
shares, (iii) increasing the number of
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<PAGE>
authorized shares of Preferred Stock from 5,000,000 shares to 10,000,000 shares,
and (iv) clarifying that the Board may designate preferred shares that are
convertible into previously authorized shares of Common Stock. The Board of
Directors recommends that the stockholders approve the Charter Amendment. The
amendments are set out in Exhibit A.
Reasons for the Common Stock Authorization
The Board of Directors recommends that the number of authorized shares
of Class A Common Stock be increased in order to permit the issuance of
additional shares (i) upon conversion of the preferred stock issued in
connection with the River City Acquisition, (ii) upon the exercise of options
issued pursuant to existing or future stock option plans of Sinclair, (iii) as
consideration in connection with future acquisitions, (iv) in order to raise
capital, or (v) for other valid purposes. As of May 1, 1996, Sinclair had issued
and outstanding 6,273,000 shares of Class A Common Stock, and has reserved
28,476,981 shares for conversion of issued and outstanding shares of Class B
Common Stock. Sinclair has also reserved 468,000 shares for issuance upon
exercise of options issued or currently issuable under existing stock option
plans. In the River City Acquisition (described below), Sinclair issued
1,150,000 shares of Series A Preferred Stock that are automatically exchanged
for Series B Preferred Stock upon approval of the Charter Amendment and are then
convertible into up to 4,181,818 shares of Class A Common Stock, in certain
circumstances. If the Long Term Incentive Plan is approved (see "Proposal 3:
Long Term Incentive Plan") and the amendments to the 1995 Stock Option Plan are
approved (see "Proposal 4: 1995 Incentive Stock Option Plan Amendment"), the
Company will need to reserve an additional 2,173,673 shares for issuance upon
exercise of additional options that may be granted under the Long Term Incentive
Plan and the 1995 Stock Option Plan as amended. In order to reserve sufficient
shares for conversion of Class B Common Stock and Series B Preferred Stock and
exercise of options that may be granted under existing and proposed stock option
plans, the Company needs to have approximately 41,600,000 shares of Class A
Common Stock authorized. Authorization of 100,000,000 shares will allow the
Company to reserve sufficient shares and have additional shares available for
issuance in connection with future acquisitions, future stock option plans,
raising capital or other purposes.
Reasons for the Preferred Stock Authorization and Amendments
The Board of Directors recommends that the number of authorized shares
of preferred stock be increased in order to permit the issuance of additional
shares of preferred stock to raise capital, for acquisitions or for other
purposes. Sinclair has designated 1,500,000 shares of Series A Preferred Stock
(of which 1,150,000 are issued and outstanding) and has reserved 1,500,000
shares of Series B Preferred Stock for issuance upon exchange of the Series A
Preferred Stock. Sinclair is also actively considering the issuance over the
next year of up to 400,000 shares of preferred stock to raise up to $400 million
in cash. After issuance of the additional proposed preferred shares, only
1,600,000 preferred shares will remain authorized that have not been issued or
reserved. Authorization of 10,000,000 shares would give the Board the
flexibility to issue additional shares of preferred stock in connection with
future acquisitions, in order to raise additional capital or for other reasons.
In addition, Sinclair has the option to issue additional shares of Series A or
Series B Preferred Stock in payment of dividends on such shares (if and when
dividends become payable) and will have increased flexibility to do so if the
additional shares are authorized. The Board of Directors has no current plans to
issue preferred stock other than as stated above.
The Board of Directors also recommends that the Charter be amended to
clarify that the Company may issue shares of preferred stock that are
convertible into shares of Common Stock. The Charter currently provides that the
Board may not classify or reclassify any shares of preferred stock into Common
Stock. This language was intended to prevent preferred shares from being
redesignated as common when there were no available authorized but unissued
shares of Common Stock, but it might also be read to prevent the conversion of
shares of preferred stock into previously authorized shares of Common Stock. The
proposed amendment will make it clear that preferred shares can be converted
into Common Stock as long as the shares into which they are converted are
authorized and available for issuance. The amendment is being proposed to
eliminate any
- 5 -
<PAGE>
uncertainty as to the validity of the Series B Preferred Stock reserved for
issuance in connection with the River City Acquisition, which is convertible
into Common Stock in certain circumstances.
The terms of the Series A Preferred Stock and the Series B Preferred
Stock are set forth below. The terms of any other preferred stock, including
dividend rates, conversion rights and prices, voting rights, redemption prices
and similar matters will be determined by the Board of Directors.
The River City Acquisition
The Company entered into agreements to acquire (or to obtain options to
acquire) substantially all of the assets of River City Broadcasting, L.P.
("River City"), on April 10, 1996. The River City Acquisition was not
conditioned on shareholder approval of the Charter Amendments and is expected to
close prior to the Annual Meeting.
Pursuant to an Asset Purchase Agreement (the "APA") with River City,
the Company will acquire (i) all of River City's long-term assets (the
"Non-License Assets") other than FCC licenses and certain related assets
("License Assets") and the assets relating to WSYX-TV in Columbus, Ohio, and
(ii) $10,000,000 in accounts receivable. Simultaneously with the closing on the
APA, the Company will enter into 10-year Time Brokerage Agreements ("TBAs") with
River City with respect to all of River City's License Assets (with the
exception of the License Assets relating to WSYX) and will be granted: (i) a
10-year option (the "Option") to acquire River City's License Assets for a
purchase price of $20,000,000, in the aggregate, and (ii) a 3-year option to
acquire the assets relating to WSYX-TV (both the License and Non-License Assets,
collectively the "Columbus Option") for $235,000,000. The Option and the
Columbus Option are sometimes referred to herein collectively as the "Options".
The total purchase price for all of the assets of River City (including assets
relating to WSYX) is approximately $1,200,000,000 in aggregate. Of this amount,
approximately $832,000,000 will be paid in cash upon the APA closing and Option
grants. Further, as part of this transaction, Barry Baker, certain officers of
River City, and Boston Ventures and other River City investors, will receive
shares of Series A Preferred Stock with an aggregate liquidation preference of
$115,000,000. See "Description of the Series A Preferred Stock" and "Description
of the Series B Preferred Stock." In connection with the River City Acquisition,
the Company agreed to award certain employees of River City and Sinclair stock
options including certain options to Mr. Baker as described under "Executive
Compensation and Related Matters," below.
Under the terms of the APA, closing must occur on or before June 10,
1996. The Company made a $60,000,000 down payment upon the execution of the APA.
This $60,000,000 is at risk unless the Company closes on or before June 10, 1996
or is granted an extension to closing pursuant to the terms and conditions of
the APA. Under certain circumstances, the closing may be extended past June 10,
1996, but will occasion an increase in the purchase price of approximately
$10,000,000 for each and every month the closing is extended past June 10, 1996.
Under no circumstance can the Company extend the closing past December 31, 1996.
Time Brokerage Agreements. Upon the closing of the APA, the Company
will enter into 10-year TBAs with River City with respect to all of River City's
broadcasting stations except WSYX (the "Stations"). The term of these TBAs (the
"TBA Term") will coincide with the "Option Term" as defined below. Under the
TBAs, the Company will pay to River City a fee (the "TBA Fee") in return for
which the Company will acquire all of the inventory of broadcastings on the
Stations and the right to sell 100% of each Station's inventory of advertising
time. The TBA Fees to be paid by the Company to River City shall be equal to the
marginal operational expenses and capital costs at each Station.
Options. Upon the closing on the APA, the Company will enter into the
Options. The exercise price under these Options (the "Exercise Price") is
$255,000,000, in the aggregate; $20,000,000 of which has been
- 6 -
<PAGE>
allocated to all of the Stations with the exception of WSYX-TV, to which
$235,000,000 has been allocated. The Exercise Price will increase during each
year of the 10-year Option term (the "Option Term") as follows:
(1) 8% of the Option Price for the first year following the closing
under the APA;
(2) 15% for the second year following the closing under the APA; and
(3) 25% from the third year through the tenth following the closing
under the APA.
These increases in the Exercise Price must be paid on a current basis quarterly
during each and every year of the Option Term; otherwise, the Option shall
terminate.
Properties Owned Following the Acquisition. After the completion of the
River City Acquisition, the Company will own and operate or have local marketing
agreements ("LMAs"), TBAs or other arrangements with each of the following
television and radio stations. With respect to the stations acquired from River
City, the Company will not own the License Assets until it exercises the Option
with respect to each Station, which the Company intends to do as soon as
required FCC approvals are obtained.
- 7 -
<PAGE>
<TABLE>
<CAPTION>
Television Properties Radio Properties+
- - --------------------- -----------------
Market Station Affiliation Market Stations
- - ------ ------- ----------- ------ --------
<S> <C> <C> <C> <C>
Pittsburgh, Pennsylvania WPGH Fox New Orleans, Louisiana WLMG-FM
WPTT* UPN KMEZ-FM
WWL-AM
WSMB-AM
Baltimore, Maryland WBFF Fox Wilkes-Barre/Scranton, Pennsylvania WKRZ-FM
WNUV* UPN WGGY-FM
WILK-AM
WGBI-AM
Milwaukee, Wisconsin WCGV UPN Memphis, Tennessee WRVR-FM
WJCE-AM
WOGY-FM
Raleigh-Durham, WLFL Fox/UPN Buffalo, New York WMJQ-FM
North Carolina WRDC* NBC/UPN WKSE-FM
WBEN-AM
Columbus, Ohio WTTE Fox/UPN WWKB-AM
Norfolk, Virginia WTVZ Fox Nashville, Tennessee WLAC-FM
WJCE-FM
Oklahoma City, Oklahoma KOCB Fox WLAC-AM
Birmingham, Alabama WTTO Fox St. Louis, Missouri KPNT-FM
WABM** UPN WVRV-FM
Flint-Saginaw, Michigan WSMH Fox Los Angeles, California KBLA-AM
Lexington, Kentucky WDKY Fox Greenville/Spartanburg, SC WSPA-FMX
WSPA-AMX
Tuscaloosa, Alabama WDBB* Fox WFBC-FMX
WFBC-AMX
St. Louis, Missouri KDNL+ ABC WORD-AMX
Indianapolis, Indiana WTTV+ UPN ________________________________
- 8 -
<PAGE>
San Antonio, Texas KABB+ Fox * Stations to which the Company provides or will
provide programming services pursuant to LMAs.
Des Moines, Iowa KDSM+ Fox
+Non-License Assets to be acquired from River City
Sacramento, California KOVR+ CBS and subject to time brokerage agreements until Options
are exercised. All radio properties will be acquired
Columbus, Ohio WSYXX ABC from River City.
Asheville, North Carolina WLOS+ ABC XAll assets are subject to option to acquire.
Greenville-Spartanburg, WAXA+ IND
South Carolina
San Antonio, Texas KRRT*+ UPN
Anderson, South Carolina WFBC*+
</TABLE>
Upon the completion of the River City Acquisition, television stations
owned and operated by the Company or to which the Company will provide
programming will reach approximately 14.8% of U.S. television households and the
Company will be the 7th largest television group in the U.S. The Company's radio
broadcasting assets will constitute one of the top 10 radio groups in the
country when measured by the total number of owned or managed stations. The
financial statements incorporated by reference to this Proxy Statement provide
information regarding River City and provide pro forma financial information for
the Company showing the pro forma effects of the acquisition as described in the
financial statements.
- 9 -
<PAGE>
Description of the Series A Preferred Stock
As partial consideration for the acquisition of assets from River City,
the Company issued 1,150,000 shares of Series A Preferred Stock to River City.
The shares have a liquidation preference of $100 and, after payment of this
preference, are entitled to share in distributions made to holders of shares of
Common Stock. Each holder of a share of Series A Preferred Stock is entitled to
receive the amount of liquidating distributions received with respect to
approximately 3.64 shares of Common Stock (subject to adjustment) less the
amount of the liquidation preference. The liquidation preference of Series A
Preferred Stock is payable in preference to any other class of capital stock of
the Company, except that the Company may issue up to $400 million of stock
("Senior Securities") that ranks senior to the Series A Preferred Stock until a
Trigger Event (as defined below), after which Senior Securities will have the
same rank as Series A Preferred Stock.
The holders of Series A Preferred Stock do not initially receive
dividends, except to the extent that dividends are paid to the holders of Common
Stock. A holder of shares of Series A Preferred Stock is entitled to share in
any dividends paid to holders of Common Stock, with each share of Series A
Preferred Stock allocated the amount of dividends allocated to approximately
3.64 shares of Common Stock (subject to adjustment). In addition, after the
occurrence of a "Trigger Event" (as defined below), holders of shares of Series
A Preferred Stock are entitled to quarterly dividends in the amount of $3.75 per
quarter for the first year, and in the amount of $5.00 per quarter after the
first year. A Trigger Event means the termination of Barry Baker's employment
with the Company prior to the expiration of the initial five-year term of his
employment agreement (1) by the Company for any reason other than for cause (as
defined in the employment agreement) or (2) by Barry Baker upon the occurrence
of certain events described in the employment agreement. See "Executive
Compensation and Related Matters -- Employment Agreements." Dividends are
payable either in cash or in additional shares of Series A Preferred Stock at
the rate of $100 per share. Dividends on Series A Preferred Stock are payable in
preference to the holders of any other class of capital stock of the Company,
except for Senior Securities, which will rank senior to the Series A Preferred
Stock as to dividends until a Trigger Event, after which Senior Securities will
have the same rank as Series A Preferred Stock as to dividends. The Company may
not pay any dividends on capital stock other than Senior Securities until all
Series A Preferred Stock has been exchanged for Series B Preferred Stock.
The Company may redeem shares of Series A Preferred Stock for an amount
equal to $100 per share plus any accrued and unpaid dividends at any time
beginning 180 days after a Trigger Event, but holders have the right to retain
their shares in which case the liquidation preference will be lost, dividends
will only accrue to the extent dividends are paid on Common Stock (as described
above), and the shares would be exchanged for shares of Series B Preferred Stock
and immediately and automatically converted into shares of Common Stock upon
approval of the Charter Amendment.
Each share of Series A Preferred Stock is entitled to one vote on all
matters with respect to which Class A Common Stock has a vote, and the Series A
Preferred Stock votes together with the Class A Common Stock as a single class,
except that the Series A Preferred Stock is entitled to vote as a separate class
(and approval of a majority of such votes is required) on certain matters,
including changes in the authorized amount of Series A Preferred Stock and
actions affecting the rights of holders of Series A Preferred Stock.
The Series A Preferred Stock will automatically be exchanged for and
converted into Series B Preferred Stock upon approval of the Charter Amendment.
- 10 -
<PAGE>
Description of the Series B Preferred Stock
Except as follows, the terms of the Series B Preferred Stock are
substantially the same as the terms of the Series A Preferred Stock.
Shares of Series B Preferred Stock are convertible at any time into
shares of Class A Common Stock, with each share of Series B Preferred Stock
convertible into approximately 3.64 shares of Class A Common Stock. The
conversion rate is subject to adjustment if the Company undertakes a stock
split, combination or stock dividend or distribution or if the Company issues
Common Stock or securities convertible into Common Stock at a price less than
$27.50 per share. Shares of Series B Preferred Stock issued as payment of
dividends (or shares of Series B Preferred Stock issued upon exchange of shares
of Series A Preferred Stock issued as dividends) are not convertible into Common
Stock and become void at the time of conversion of a shareholder's other shares
of Series B Preferred Stock. If the Company seeks to redeem shares of Series B
Preferred Stock (which is permitted only under the circumstances described above
for redemption of Series A Preferred Stock) and a shareholder elects to retain
shares, the shares will automatically be converted into Common Stock on the
proposed redemption date. All shares of Series B Preferred Stock remaining
outstanding five years after the closing of the River City Acquisition (other
than shares issued as a dividend) automatically convert into Class A Common
Stock on that date.
Series B Preferred Stock has approximately 3.64 votes per share
(subject to adjustment) rather than the one vote per share held by the Series A
Preferred Stock.
Prior to a Trigger Event, the Series B Preferred Stock ranks senior to
Common Stock of the Company as to liquidation preference, but may rank equal to
or below other classes of capital stock of the Company. After a Trigger Event,
the Series B Preferred Stock ranks senior to all classes of capital stock of the
Company as to liquidation preference, other than Senior Securities, as to which
the Series B Preferred Stock will have the same rank. The preference as to
dividends for Series B Preferred Stock is the same as for Series A Preferred
Stock.
PROPOSAL 3: 1996 LONG-TERM INCENTIVE PLAN
Background
The Board of Directors has adopted, subject to stockholder approval,
the 1996 Long-Term Incentive Plan of the Company (the "LTIP"). The Compensation
Committee of the Board (the "Compensation Committee") has approved the LTIP. The
purpose of the LTIP is to reward key individuals for making major contributions
to the success of Sinclair and its subsidiaries and to attract and retain the
services of qualified and capable employees. The LTIP is intended to provide
meaningful long-term incentive opportunities for employees who are and are
expected to be responsible for the success of the Company and who are in a
position to make significant contributions toward its objectives. If approved by
the Stockholders, the LTIP will continue until terminated.
The following summarizes the principal features of the LTIP, the full
text of which is attached as Exhibit B to this Proxy Statement.
Principal Features of the Plan
The LTIP will be administered by the Compensation Committee, consisting
of two or more directors, each of whom must not be employees of the Company and
must not be eligible to receive awards under the LTIP. The Compensation
Committee is authorized to designate participants from among the eligible
officers
- 11 -
<PAGE>
and other employees, determine the type and number of awards to be granted, set
terms and conditions of awards, and make all determinations that may be
necessary or advisable for the administration of the LTIP. The Compensation
Committee may extend the exercisability of awards, accelerate the vesting or
exercisability of awards, and eliminate or make less restrictive any
restrictions in an award. No such amendment or termination may impair the rights
of a participant under any outstanding award without his or her consent. The
Compensation Committee may delegate its duties except that it may not delegate
the granting of awards to officers and directors subject to liability under
Section 16(b) of the Securities Exchange Act or to persons who are not employees
of the Company or any subsidiaries.
The LTIP provides for the discretionary grant by the Compensation
Committee of nonqualified stock options ("NQSOs"), incentive stock options
("ISOs"), stock appreciation rights ("SARs"), stock awards ("Stock Awards"),
cash awards ("Cash Awards"), and performance awards ("Performance Awards"), each
of which is more fully described below. The individuals eligible to participate
in the LTIP are the employees of, and other service providers to, the Company
and its subsidiaries whose performance can have an effect on the success of the
Company and its subsidiaries (approximately 2400 people), but it is expected
that Awards will be limited to executive officers and key employees. Awards may
be granted alone, in addition to, in tandem with, or in substitution for any
other award under the LTIP, other awards under other plans of the Company, or
other rights to payment from the Company. Awards granted in addition to or in
tandem with other awards may be granted either at the same time or at different
times.
A total of 2,073,673 shares of Class A Common Stock will be reserved
and available for awards under the LTIP, although the LTIP provides certain
further limits on awards under the plan. During or with respect to any calendar
year, no participant may receive (i) awards of NQSOs or SARs that are
exercisable for more than the difference between 1.5 million shares and the
number of shares relating to outstanding NQSOs and SARs, (ii) awards consisting
of shares or denominated in shares (other than NQSOs or SARs) relating to more
than 20,000 shares, or (iii) cash or other awards not described in (i) and (ii)
with a value in excess of $300,000, determined as of the date of grant.
To the extent permitted by Rule 16b-3 under the Securities Exchange
Act, shares forfeited or related to an award that terminates without issuance of
shares will be available again for issuance under the LTIP, but in no event
shall the number of shares subject to outstanding awards exceed the total shares
reserved.
The LTIP provides that Compensation Committee members and its agents
shall not be personally liable, and shall be fully indemnified, in connection
with any action, determination, or interpretation taken or made in good faith
under the LTIP.
Description of Possible Awards
Stock Options and SARS. NQSOs and ISOs entitle the participant to
purchase shares of Class A Common Stock at prescribed prices pursuant to a
vesting schedule established by the Compensation Committee. SARs entitle the
participant to receive the excess of the fair market value of a share of Class A
Common Stock or other specified valuation on the date of exercise over the
strike price of the SAR, as determined by the Compensation Committee. The
exercise price of an ISO may not be less than the fair market value per share of
the Common Stock on the date of grant (or 110% of the fair market value for any
optionee who is a "Ten Percent Shareholder" as defined in Section 422(c)(5) of
the Internal Revenue Code of 1986, as amended (the "Code")). The exercise price
of an NQSO may not be less than 50% of the fair market value per share of the
Common Stock on the date of grant. Stock options and SARs may be exercisable at
such times (including certain periods following the termination of employment)
and may be subject to such terms and conditions as the Compensation Committee
may specify, except that no option or SAR may have a term exceeding 10 years (or
5 years for ISOs granted to Ten Percent Shareholders). Options may be exercised
by payment of the exercise price in cash, Common Stock, outstanding awards, or
other property as the Compensation Committee may determine from time to time.
- 12 -
<PAGE>
Stock Awards and Cash Awards. Stock Awards consist of grants of Common
Stock to participants, subject to the terms and conditions established by the
Compensation Committee. The Stock Awards may be restricted or subject to
forfeiture ("Restricted Stock"), which stock may be issued at the beginning of
the period or at the end. Cash Awards may also be made at the discretion of the
Compensation Committee and under terms it establishes.
Performance Awards. Performance Awards confer upon a participant rights
payable or exercisable based upon the attainment of certain performance
objectives ("Performance Goals") during specified award periods. The Performance
Goals will be objective measures determined by the Compensation Committee while
the outcome of the goal is substantially uncertain and before the earlier of (i)
90 days after the commencement of the period of service to which the Performance
Goals relates and (ii) the elapse of 25% of the service period. The Performance
Goals to be achieved as a condition of payment or settlement of a Performance
Award or annual incentive award will consist of (i) one or more business
criteria and (ii) a targeted level or levels of performance with respect to each
such business criteria. In the case of performance awards intended to meet the
requirements of Section 162(m) of the Code, the business criteria used must be
one of those specified in the LTIP, although for other participants the
Compensation Committee may specify any other criteria. The business criteria
specified in the LTIP are revenue, cash flow, net income, stock price, market
share, earnings per share, return on equity, return on assets, and decrease in
costs. Performance Goals can include maintaining the status quo or avoiding
objective economic losses. The Compensation Committee must certify satisfaction
of the relevant Performance Goals before any payments will be made thereunder.
Performance Awards may be payable in cash, stock, other awards, or other
property and may be subject to such forfeiture combinations, restrictions, and
other terms as the Compensation Committee may specify. The Company intends that
Performance Awards conform to the standards of Section 162(m) of the Code
discussed below.
Other Terms of Awards
Awards may be settled in cash, Class A Common Stock, other awards or
other property. The Compensation Committee may require or permit participants to
defer the distribution of all or part of an award in accordance with such terms
and conditions as the Compensation Committee may specify, including payment of
interest or dividend equivalents on any deferred amounts or stock, respectively.
The Committee may permit optionees to exercise their options using
successive exercises (so that shares deemed received in the exercise of the
first portion of the option become the consideration paid for the exercise of
the next portion of the option). The Committee may also direct the Company to
lend a participant the funds to exercise or purchase Awards and may authorize
the use of proceeds to be received by participants from the sale of Common Stock
under Awards as a source of funds to exercise or purchase Awards.
Awards may not be pledged or otherwise encumbered and are not
transferable except by will or by the laws of descent and distribution. A
participant may designate a beneficiary to exercise such person's rights and
receive distributions under the LTIP upon such person's death.
Amendment, Termination, and Adjustments
The Board may amend, suspend, or terminate the LTIP without the consent
of stockholders or participants, except that stockholder approval will be sought
within one year after such Board action if any such amendment would have the
effect of increasing the total number of shares that may be awarded under the
LTIP, or materially increasing the benefits accruing to participants, or if
stockholder approval otherwise is required by any applicable law or regulation
or rule of a stock exchange, or if the Board in its discretion determines that
obtaining such approval is advisable.
- 13 -
<PAGE>
In the event of certain changes affecting the shares of Class A Common
Stock (such as a stock dividend or distribution, recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, spin-off,
combination, repurchase or share exchange, or other similar corporate
transaction or event), the Board may adjust the aggregate number or kind of
shares that may be issued under the LTIP and the terms of outstanding awards as
it deems to be appropriate in order to prevent dilution or enlargement of
participants' rights under the LTIP.
Federal Income Tax Implications
The Company believes that, under present law, the following federal
income tax consequences generally arise with respect to awards granted under the
LTIP. The grant of an option or SAR (including a stock-based award in the nature
of a purchase right) will create no tax consequences for the participant or the
Company. A participant will not have taxable income upon exercising an ISO
(except that the alternative minimum tax may apply), and the Company will
receive no deduction at that time. Upon exercising an option other than an ISO
(including a stock-based award in the nature of a purchase right), the
participant generally must recognize ordinary income equal to the difference
between the exercise price and the fair market value of the freely transferable
and nonforfeitable stock acquired on the date of exercise. Upon exercising a
SAR, the participant generally must recognize ordinary income equal to the cash
or the fair market value of the freely transferable and nonforfeitable stock
received. In each case, the Company will be entitled to a deduction equal to the
amount recognized as ordinary income by the participant.
A participant's disposition of shares acquired upon the exercise of an
option, SAR, or other stock-based award in the nature of a purchase right
generally will result in a short-term or long-term capital gain or loss (except
in the event that shares issued pursuant to the exercise of an ISO are disposed
of within two years after the date of grant of the ISO or within one year after
the transfer of the shares to the participant) measured by the difference
between the sale price and the participant's tax basis in such shares (or the
exercise price of the option in the case of shares acquired by the exercise of
an ISO and held for the applicable ISO holding period). Generally, there will be
no tax consequences to the Company in connection with a disposition of shares
acquired under an option or other award, except that the Company will be
entitled to a deduction (and the participant will recognize ordinary taxable
income) if shares acquired upon the exercise of an ISO are disposed of before
the applicable ISO holding period has been satisfied.
With respect to awards granted under the LTIP that may be settled
either in cash, Class A Common Stock or other property that is either not
restricted as to transferability or not subject to a substantial risk of
forfeiture, the participant generally must recognize compensation income equal
to the cash or the fair market value of stock or other property received. The
Company will be entitled to a deduction for the same amount. With respect to
awards involving Common Stock or other property, that is restricted as to
transferability and subject to a substantial risk of forfeiture, the Company
will be entitled to a deduction for the same amount at the same time the
participant recognizes ordinary income. A participant may elect to be taxed at
the time of receipt of shares or other property rather than upon the lapse of
restrictions on transferability or the substantial risk of forfeiture, in which
case the Company will be entitled to a deduction at the same time. Dividends
paid to the employee during a restricted period will be taxable as compensation
income (with the Company's being entitled to a deduction in an equal amount),
unless the election referred to in the immediately preceding sentence has been
made.
Special rules apply to a director or officer subject to liability under
Section 16(b) of the Exchange Act.
Under Section 162(m) of the Code, certain compensation payments in
excess of $1 million are subject to a limitation on deductibility for the
Company. The limitation on deductibility applies with respect to that portion of
a compensation payment for a taxable year in excess of $1 million to either the
Company's Chief Executive Officer or any one of the other four most highly
compensated executive officers. Certain
- 14 -
<PAGE>
performance-based compensation is not subject to the limitation on
deductibility. Options and stock appreciation rights can qualify for this
performance-based exception, but only if they are granted at fair market value,
the total number of shares that can be granted to an executive for any period is
stated, and stockholder and Board of Directors' approval is obtained. Stock
Awards, Cash Awards, and Performance Awards may satisfy the performance-based
criteria, and the Performance Awards provisions have been drafted to allow
compliance with those performance-based criteria.
The foregoing discussion, which is general in nature, is intended for
the information of stockholders considering how to vote at the Annual Meeting
and not as tax guidance to participants in the LTIP. Different tax rules may
apply, including in the case of variations in transactions that are permitted
under the LTIP (such as payment of the exercise price of an option by surrender
of previously acquired shares), and with respect to a participant who is subject
to Section 16 of the Securities Exchange Act when he or she acquires shares in a
transaction that would otherwise result in taxation within six months after the
grant of the Award. This discussion does not address the effects of other
federal taxes (including possible 'golden parachute' excise taxes) or taxes
imposed under state, local, or foreign tax laws. Participants in the LTIP should
consult a tax advisor as to the tax consequences of participation.
New Plan Benefits
The following benefits have been awarded under the LTIP and Stock
Option Plan (as discussed under Proposal 4), subject to shareholder approval,
and the closing of the River City Acquisition and may require the entering of
employment agreements:
<TABLE>
<CAPTION>
Name and position LTIP ISO Total Options Awarded
----------------- ---- --- ---------------------
<S> <C> <C> <C>
David D. Smith, President and -0- -0- - 0 -
Chief Executive Officer
Frederick G. Smith, Vice President -0- -0- - 0 -
J. Duncan Smith, Secretary -0- -0- - 0 -
Robert E. Smith, Treasurer -0- -0- - 0 -
David B. Amy, Chief Financial Officer 15,000 10,000 25,000
Executive Group 15,000 10,000 25,000
Non-Executive Director Group -0- -0- -0-
Non-Executive Officer Employee Group 177,500 324,950 502,450
</TABLE>
Additional benefits to be awarded under the LTIP have not been determined at
this time.
The Board of Directors recommends a vote FOR approval of the
LTIP.
PROPOSAL 4: 1995 INCENTIVE STOCK OPTION PLAN AMENDMENT
Background
The Board of Directors has adopted, subject to Stockholder approval,
certain amendments (the "1995 Plan Amendments") to the Sinclair Broadcast Group,
Inc. Incentive Stock Option Plan (the "Stock Option Plan"). The Compensation
Committee and the Incentive Stock Option Committee of the Board (the "Option
Committee") have approved the amendments to the Stock Option Plan. The purpose
of the amendments is (i) to increase the number of shares of Class A Common
Stock reserved for issuance under the Stock Option Plan from 400,000 to 500,000,
(ii) to delegate authority for determining grants for persons not subject to
Section 16 of the Exchange Act to Barry Baker if and when the River City
Acquisition closes and Mr. Baker becomes an officer of Sinclair Communications,
Inc., (iii) to lengthen from two years to three the period after date of grant
before the options first become exercisable, (iv) to provide for immediate
termination of options for employees who (a) leave voluntarily before the three
years have elapsed or (b) are terminated for cause, (v) to provide
- 15 -
<PAGE>
three-year ratable vesting for persons who leave employment as a result of
death, disability, or termination by the Company without cause, and (vi) to make
other minor administrative changes.
The following paragraphs summarize the principal features of the Stock
Option Plan as revised by the First and Second Amendments thereto. The full text
of the First and Second Amendments to the Stock Option Plan are attached as
Exhibit C to this Proxy Statement.
Principal Features of the Plan
The Stock Option Plan will be administered by the Option Committee,
which will consist of at least two individuals, each of whom must not be
employees of the Company and must not be eligible to receive options under the
Stock Option Plan. The Option Committee is authorized to designate employees to
receive options ("Optionees") from among the eligible officers subject to
Section 16 of the Exchange Act, determine the number of shares of Common Stock
to be subject to a particular option grant, set terms and conditions of options,
and make all determinations that may be necessary or advisable for the
administration of the Stock Option Plan. No amendment to or termination of the
Stock Option Plan may alter or impair an outstanding option grant without the
consent of the Optionee. Subject to the foregoing, the 1995 Plan Amendments
would delegate to Mr. Baker the authority to determine the recipients of option
grants from among the employees not subject to Section 16 of the Exchange Act.
The Stock Option Plan provides for the discretionary grant of ISOs by
the Option Committee or Mr. Baker. The individuals eligible to participate in
the Stock Option Plan are the officers, regional directors, directors of sales,
directors of engineering, general managers, and other key employees of the
Company (approximately 175 people).
A total of up to 500,000 shares of Class A Common Stock have been
reserved for issuance under the Stock Option Plan (as increased from 400,000
before the adoption of the Second Amendment). The aggregate fair market value of
the shares (determined as of the date of grant of an option) with respect to
which any Optionee in the Stock Option Plan may first exercise ISOs in any
calendar year (under the Stock Option Plan and all other plans of the Company or
its subsidiaries) may not exceed $100,000. In the event of certain changes
affecting the shares of Class A Common Stock (such as stock splits, reverse
stock splits, stock dividends, recapitalizations, or other similar
transactions), the Option Committee shall appropriately adjust the number of
shares available for and subject to option grants. In the event of a
reorganization, merger, or sale of substantially all of the Company's assets,
the Company shall take the necessary steps to ensure that Optionees receive
shares or other consideration in reflection of the transaction.
If any option granted under the Stock Option Plan terminates or expires
unexercised the shares released may be the subject of additional grants under
the Stock Option Plan, but in no event shall the number of shares subject to
outstanding options exceed the total shares reserved. Options granted under the
Stock Option Plan may not be transferred, assigned, pledged, or hypothecated in
any way. The mean price per share of the high bid and low asked, as reported on
the Nasdaq Stock Market, of a share of Class A Common Stock on ______________,
1996 was $_________.
Description of Options
ISOs entitle the Optionee to purchase shares of Class A Common Stock at
prescribed prices after completion of a three year period of service after the
date of grant. The exercise price of an ISO may not be less than the fair market
value of a share of Class A Common Stock (determined using the mean price per
share of the high bid and low asked) on the date of grant (or 110% of the fair
market value for an Optionee who is a Ten Percent Shareholder. Options granted
after the First Amendment will be exercisable beginning three years from the
date of grant, subject to the Optionee's continued
- 16 -
<PAGE>
employment with the Company. The options may not be exercised after ten years
from the date of grant (five years in the case of a Ten Percent Shareholder).
Whether and when an Optionee whose employment terminates may exercise
unexercised options will depend upon the reason for the employment termination,
and the First Amendment changes both the conditions for option expiration and
the exercise schedule. Options granted under the Stock Option Plan, as amended,
will terminate automatically upon an employee's termination for cause. Options
granted to an Optionee who voluntarily terminates employment before three years
have passed since the date of grant will also immediately terminate; if the
optionee has completed three years of service, the options will only terminate
if not exercised within three months after termination of employment. Options
granted to an Optionee who dies while employed or within three months after
termination of employment may be exercised for up to six months after death to
the extent either previously exercisable or newly exercisable as a result of a
new provision described in the following sentence. Options granted to an
Optionee who is terminated by the Company without cause, or whose employment is
terminated by death or disability, may exercise one-third of the options for
each year elapsed since the date of grant, provided that any options not
exercised within three months after termination of employment (or the previously
described later date for death) shall terminate.
Federal Income Tax Implications
See the discussion of ISOs and Code Section 162(m) under Proposal
Three, including the paragraph noting the general nature of the tax discussion
and the importance of participants' consulting their own tax advisers. In
general, Section 162(m) will only apply in the event of a disqualifying
disposition. Grants made by Mr. Baker to persons who later become subject to
162(m) may not qualify as "performance-based" compensation exempt from 162(m)'s
limits, while grants made by the Option Committee would more likely qualify for
such exemption.
The Board of Directors recommends a vote FOR approval of the 1995 Plan
Amendments to the Stock Option Plan.
PROPOSAL 5: RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors, with the concurrence of the Audit Committee,
has selected Arthur Andersen LLP as its independent auditors for 1996. If the
stockholders do not ratify the appointment of Arthur Andersen LLP, the
engagement of independent auditors will be reevaluated by the Board of
Directors. Even if the appointment is ratified, the Board of Directors in its
discretion may nevertheless appoint another firm of independent auditors at any
time during the year if the Board determines that such a change would be in the
best interests of the shareholders and the Company.
A representative of Arthur Andersen LLP is expected to attend the
Annual Meeting, and will have the opportunity to make a statement if he desires
to do so and will be able to respond to appropriate questions from shareholders.
The Board of Directors recommends a vote FOR ratification of the
appointment of Arthur Andersen LLP.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of May 1, 1996,
regarding the beneficial ownership of Common Stock by (i) each person who is
known to Sinclair to own more than 5% of the Common Stock, (ii) each director
and executive officer of Sinclair and (iii) all directors and executive officers
as a group. The information on beneficial ownership in the table and the
footnotes thereto is based on Sinclair's records and
- 17 -
<PAGE>
the most recent Schedule 13D or 13G filed by each such person or entity. Unless
otherwise indicated, each person has sole voting power and sole investment power
with respect to the shares shown. Except as noted below, the business address of
each person identified is 2000 W. 41st Street, Baltimore, MD 21211.
<TABLE>
<CAPTION>
Shares of Class B Common Stock Shares of Class A Common Stock
Beneficially Owned Beneficially Owned
----------------------------------------------- --------------------------------------------
Percent Total Voting Percent Total Voting
Name Number of Class Power (a) Number of Class Power (a)
---- ------ -------- --------- ------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
David D. Smith 7,249,999 25.96% 24.91% * *
Frederick G. Smith (b) 7,118,994 25.00 24.46 3,000 * *
J. Duncan Smith(c) 7,069,994 24.83 24.29 2,400 * *
Robert E. Smith (d) 7,037,994 24.71 24.18 2,000 * *
David B. Amy (e) 9,700 * *
Basil A. Thomas 2,000 * *
100 Light Street, Suite 1100
Baltimore, MD 21202
Lawrence E. McCanna 300 * *
Gross, Mendelsohn & Associates
1818 Charles Center South
36 South Charles Street
Baltimore, MD 21201-3172
William E. Brock 2,500 * *
Senator
2029 Homewood Road
Annapolis, MD 21402
Directors and executive
officers as a group
(8 persons)(f) 28,476,981 100% 97.84% 40,900 * *
<FN>
* Less than 1%
(a) Holders of Class A Common Stock are entitled to one vote per
share and holders of Class B Common Stock are entitled to ten
votes per share except for votes relating to "going private"
and certain other transactions. Holders of both classes of
Common Stock will vote together as a single class on all
matters presented for a vote, except as otherwise may be
required by Maryland law.
(b) Includes 531,695 shares held in irrevocable trusts established
by Frederick G. Smith for the benefit of his children and as
to which Mr. Smith has the power to acquire by substitution of
trust property. Absent such substitution, Mr. Smith would have
no power to vote or dispose of the shares.
(c) Includes 531,695 shares held in irrevocable trusts established
by J. Duncan Smith for the benefit of his children and as to
which Mr. Smith has the power to acquire by substitution of
trust property. Absent such substitution, Mr. Smith would have
no power to vote or dispose of the shares.
<PAGE>
(d) Includes 531,695 shares held in irrevocable trusts established
by Robert E. Smith for the benefit of his children and as to
which Mr. Smith has the power to acquire by substitution of
trust property. Absent such substitution, Mr. Smith would have
no power to vote or dispose of the shares.
(e) Includes 7,500 shares of Class A Common Stock that may be
acquired upon exercise of an option granted in June 1995
pursuant to the Designated Participants Stock Option Plan.
(f) Includes all shares identified above.
</FN>
</TABLE>
In addition to the shares reported in the table, Barry Baker, who will
become an executive officer and director of the Company upon the satisfaction of
certain conditions, has been granted an option to acquire shares of Class A
Common Stock, which is exercisable within 60 days of the date of this Proxy
Statement as to 691,218 shares (or 11.0% of the Class A Common Stock,
representing 2.0% of the total voting power).
- 19 -
<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Committee")
consists entirely of non-employee directors. The Committee determines all
compensation paid or awarded to the Company's key executive officers.
The Committee's goal is to attract, motivate, and retain an executive
management team that can take full advantage of the Company's opportunities and
achieve long-term success in an increasingly competitive business environment,
thereby increasing stockholder value. In deciding on initial compensation for an
individual, the Committee considers determinants of the individual's market
value, including experience, education, accomplishments, and reputation, as well
as the level of responsibility to be assumed. Retention and compensation
decisions are sometimes made in the context of an acquisition, and the Committee
considers the overall terms of the acquisition and the individual's relationship
to the acquired business in those cases. In deciding whether to increase the
compensation of an individual or whether to award bonuses or stock options
initially or upon subsequent performance reviews, the Committee considers the
contributions of the individual to the Company's progress on its business plan
and against its competitors, to growth of the Company and its opportunities and
to achievement of other aims the Committee deems valuable to shareholders.
Applying these factors to each individual's case is a judgment process,
exercised by the Committee with the advice of management. No specific
relationship exists between the Company's performance and the compensation of an
individual executive officer. There is no intent to relate compensation to the
Company's stock price performance, either absolute or relative to peer groups,
except as that relationship is implicit in the stock-based compensation plans.
The Committee's annual performance evaluation of each executive officer
is subjective, will not typically be based upon an exact formula for determining
the relative importance of each of the factors considered, nor will there be a
precise measure of how each of the individual factors relates to the Committee's
recommendation with respect to each executive officer's ultimate annual
compensation.
Executive officers' compensation consists primarily of three
components: (i) base salary, (ii) cash bonus, and (iii) stock options.
Base Salary. The Committee establishes base salaries and may offer
employment agreements after considering a variety of factors that make up value
and usefulness to the Company, including the individual's knowledge, experience,
and accomplishments, his level of responsibility, his role in an acquired
business, and the typical compensation levels for individuals with similar
credentials. The Committee may increase the salary of an individual on the basis
of its judgment for any reason, including the performance of the individual or
the Company and changes in the market for an executive with similar credentials.
Cash Bonus. The Committee determined each individual's cash bonus under
the Sinclair Broadcast Group, Inc. Executive Bonus Plan for the fiscal year
ended December 31, 1995. Bonuses were paid based upon the attainment of
performance targets established by the Compensation Committee. Performance
targets were based on percentage increases in "equalized broadcast cash flow."
Stock Options. The Committee believes achievement of the Company's
goals may be fostered by a stock option program that is tailored to employees
who significantly enhance the value of the Company. In that regard, during the
fiscal year ended December 31, 1995, the Committee granted employees options to
purchase 69,250 shares of Class A common stock of which none went to employees
hired during the year. Named executive officers (as defined below) received
options with respect to 7,500 shares of Class A common stock.
- 20 -
<PAGE>
Chief Executive Officer's Compensation. As one of the Company's largest
stockholders, David D. Smith's financial well-being is directly tied to the
overall performance of the Company as reflected in the price per share of common
stock. For his services as the Company's president and chief executive officer,
David D. Smith's compensation has been determined in accordance with the
compensation policies outlined herein. The Committee awarded Mr. Smith a bonus
of $343,213 for the fiscal year ended December 31, 1995. In addition, effective
June 1, 1995, Mr. Smith's base salary was increased from $317,913 to $450,000
per year. The bonus and increase in salary are based on the Committee's
assessment of Mr. Smith's role in the Company's performance in 1995 and on the
continuing growth in his responsibilities.
Compensation Deduction Limit. The Committee has considered the $1
million limit on deductible executive compensation that is not
performance-based. The Committee believes all executive compensation expenses
established in 1995 will be deductible by the Company. The Committee believes,
however, that compensation exceeding this limit should not be ruled out where
such compensation is justified on the basis of the executive's value to the
Company and its shareholders. In any event, there are few indications that tax
deductibility is having much impact on the market for managerial talent, in
which the Company must remain competitive.
Compensation Committee
Basil A. Thomas
William E Brock
Lawrence E. McCanna
- 21 -
<PAGE>
Summary Compensation Table
The following table sets forth certain information with
respect to the annual and long-term compensation of the Chief Executive Officer
of the Company and each of the four other most highly compensated executive
officers of the Company (the "Named Executive Officers") for the periods shown.
<TABLE>
<CAPTION>
Name and Other Annual All Other
Principal Position Year Salary Bonus (a) Compensation (b) Compensation (c)
- - ------------------ ---- ------ --------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
David D. Smith 1995 $450,000 $ 343,213 $ -- $4,592
President and Chief 1994 317,913 1,300,000 -- 3,841
Executive Officer
Frederick G. Smith 1995 260,000 258,354 15,769 4,592
Vice President 1994 233,054 900,000 13,818 5,142
J. Duncan Smith 1995 270,000 268,354 16,875 4,592
Secretary 1994 243,485 900,000 14,971 1,447
Robert E. Smith 1995 250,000 258,354 -- 4,592
Treasurer 1994 233,054 900,000 8,456 4,782
David B. Amy 1995 132,310 31,000 3,276 4,592
Chief Financial Officer 1994 122,400 20,000 1,267 3,744
<FN>
(a) All bonuses for 1995 were paid in 1996 and all bonuses for 1994 were
paid in 1995.
(b) Other annual compensation consists of income deemed received for
personal use of Company-leased automobiles.
(c) All other compensation consists of the Company's 401(k) contribution,
life insurance and long-term disability coverage. The Company's 401(k)
contributions for 1995 for all executive officers and significant
employees was $3,000 each and additional life insurance premiums paid
by the Company for all executive officers and significant employees was
$1,592 each. The Company's 401(k) contributions for 1994 for David D.
Smith, Frederick G. Smith, J. Duncan Smith, Robert E. Smith and David
B. Amy were $3,535, $4,620, $1,141, $4,620 and $3,472, respectively,
and additional life insurance premiums paid by the Company were $306,
$522, $306, $162 and $272, respectively.
</FN>
</TABLE>
Option Grants in 1995
Except as set forth below, there were no options granted to the Named
Executive Officers during 1995:
- 22 -
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Number of Percent of Total Option Term
Securities Options Granted Exercise or -----------------
Underlying Options to Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
---- ----------- ----------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
David B. Amy (1) 7,500 11.0% $21.00 6/6/05 $99,051 $251,014
<FN>
(1) As of December 31, 1995, Mr. Amy held options to acquire 7,500 shares,
none of which was exercisable, and none of which was in the money. No
other Named Executive Officer held any options on December 31, 1995.
</FN>
</TABLE>
Employment Agreements
In June 1995, the Company entered into an employment agreement with
David D. Smith, President and Chief Executive Officer of the Company. David
Smith's employment agreement has an initial term of three years and is renewable
for additional one-year terms, unless either party gives notice of termination
not less than 60 days prior to the expiration of the then current term. Under
the agreement, Mr. Smith will receive a base salary of $450,000 and will also be
entitled to participate in the Company's annual bonus program based upon the
performance of the Company and Mr. Smith during the year. The employment
agreement provides that the Company may terminate Mr. Smith's employment prior
to expiration of the agreement's term as a result of (i) a breach by Mr. Smith
of any material covenant, promise or agreement contained in the employment
agreement; (ii) a dissolution or winding up of the Company; (iii) the disability
of Mr. Smith for more than 210 days in any twelve month period (as determined
under the employment agreement); or (iv) for cause, which includes conviction of
certain crimes, breach of a fiduciary duty to the Company or the stockholders,
or repeated failure to exercise or undertake his duties as an officer of the
Company (each, a "Termination Event").
In June 1995, the Company entered into an employment agreement with
Frederick G. Smith, Vice President of the Company. Frederick Smith's employment
agreement has an initial term of three years and is renewable for additional
one-year terms, unless either party gives notice of termination not less than 60
days prior to the expiration of the then current term. Under the agreement, Mr.
Smith will receive a base salary of $260,000 and will also be entitled to
participate in the Company's annual bonus program based upon the performance of
the Company and Mr. Smith during the year. The employment agreement provides
that the Company may terminate Mr. Smith's employment prior to expiration of the
agreement's term as a result of a Termination Event.
In June 1995, the Company entered into an employment agreement with J.
Duncan Smith, Vice President and Secretary of the Company. J. Duncan Smith's
employment agreement has an initial term of three years and is renewable for
additional one-year terms, unless either party gives notice of termination not
less than 60 days prior to the expiration of the then current term. Under the
agreement, Mr. Smith will receive a base salary of $270,000 and will also be
entitled to participate in the Company's annual bonus program based
- 23 -
<PAGE>
upon the performance of the Company and Mr. Smith during the year. The
employment agreement provides that the Company may terminate Mr. Smith's
employment prior to expiration of the agreement's term as a result of a
Termination Event.
In June 1995, the Company entered into an employment agreement with
Robert E. Smith, Vice President and Treasurer of the Company. Robert E. Smith's
employment agreement has an initial term of three years and is renewable for
additional one-year terms, unless either party gives notice of termination not
less than 60 days prior to the expiration of the then current term. Under the
agreement, Mr. Smith will receive a base salary of $250,000 and will also be
entitled to participate in the Company's annual bonus program based upon the
performance of the Company and Mr. Smith during the year. The employment
agreement provides that the Company may terminate Mr. Smith's employment prior
to expiration of the agreement's term as a result of a Termination Event.
In connection with the Sinclair Acquisition, the Company entered into
an employment agreement (the "Baker Employment Agreement") with Barry Baker
pursuant to which Mr. Baker will become President and Chief Executive Officer of
Sinclair Communications, Inc. ("SCI," a wholly owned subsidiary of the Company
that will hold all of the broadcast operations of the Company) and Executive
Vice President of the Company. Pursuant to the Baker Employment Agreement, Mr.
Baker will receive a base salary of approximately $1,056,000 per year, subject
to annual increases of 7 1/2% each year beginning January 1, 1997. Mr. Baker
will also be entitled to receive a bonus equal to 2% of the amount by which the
Broadcast Cash Flow (as defined) of SCI for a year exceeds the Broadcast Cash
Flow for the immediately preceding year. Pursuant to the Baker Employment
Agreement, Mr. Baker has received options to acquire 1,382,435 shares of the
Class A Common Stock of Sinclair (or 3.33% of the common equity of Sinclair
determined on a fully diluted basis). The option becomes exercisable with
respect to 50% of the shares upon closing of the River City Acquisition, 25% on
the first anniversary of the closing of the River City Acquisition, and 25% on
the second anniversary of the River City Acquisition. The exercise price of the
option is approximately $30.11 per share. The term of the Baker Employment
Agreement extends for five years from the date Mr. Baker becomes an employee,
and is automatically extended to the third anniversary of any Change of Control
(as defined). If the Baker Employment Agreement is terminated by the Company
other than for Cause (as defined) or by Mr. Baker as a result of certain events,
then Mr. Baker shall be entitled to a termination payment equal to the amount
that would have been paid in base salary for the remainder of the term of the
agreement plus bonuses that would be paid for such period based on the average
bonus paid to Mr. Baker for the previous three years, and all options shall vest
immediately upon such termination. In addition, Mr. Baker shall have the option
to purchase from the Company for the fair market value thereof either (i) all
broadcast operations of Sinclair in the St. Louis, Missouri or (at the option of
Mr. Baker) the Greenville-Spartanburg, South Carolina Designated Market Areas or
(ii) all of the radio broadcast operations of Sinclair. Mr. Baker shall also
have the right to receive quarterly payments (which may be paid either in cash
or, at the Company's option, in additional shares of Class A Common Stock) equal
to 5.00% of the fair market value of all stock options and common stock issued
pursuant to exercise of such stock options or pursuant to payments of this
obligation in shares and held by him at the time of such payment (except that
the first such payment shall be 3.75% of such value). The Company shall have the
option to purchase the options and shares from Mr. Baker at their fair market
value.
Comparative Stock Performance
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Class A Common Stock with
the cumulative total return of the Nasdaq Stock Market Index and the cumulative
total return of the Nasdaq Telecommunications Stock Market Index (an index
containing performance data of radio, telephone, telegraph, television, and
cable television companies) from June 7, 1995, the effective date of the
Company's initial public offering, through December 31, 1995. The performance
graph assumes that an investment of $100 was made in the Class A Stock and in
each Index on June 7, 1995, and that all dividends were reinvested. Total
stockholder return is measured by dividing total
- 24 -
<PAGE>
dividends (assuming dividend reinvestment) plus share price change for a period
by the share price at the beginning of the measurement period.
[graph omitted]
7 Jun 95 31 Dec 95
Nasdaq Stock Market Index 100 120.21
Nasdaq Telecommunications Index 100 116.17
Sinclair 100 71.5
Compensation Committee Interlocks and Insider Participation
Other than as follows, no Named Executive Officer is a director of a
corporation that has a director or executive officer who is also a director of
the Company. Each of the Controlling Stockholders (all of whom are directors of
the Company and Named Executive Officers) is a director and/or executive officer
of each of various other corporations controlled by the Controlling
Stockholders.
During 1995, none of the Named Executive Officers participated in any
deliberations of the Company's Board of Directors or the Compensation Committee
relating to compensation of the Named Executive Officers.
The members of the Compensation Committee are Messrs. Thomas, Brock and
McCanna. As described more fully below, Mr. Thomas is of counsel to the law firm
of Thomas & Libowitz, which has provided legal services to the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Settlement of Certain Claims
In September 1991, Four Jacks Broadcasting, Inc. ("Four Jacks"), a company
wholly owned by the Controlling Stockholders, filed an application with the FCC
to construct a new television station on very-high frequency ("VHF") Channel 2
in Baltimore, Maryland. This application was mutually exclusive with an
application filed by Scripps Howard Broadcasting Company ("Scripps Howard") for
renewal of the license Scripps Howard held for Channel 2 in Baltimore. Scripps
Howard subsequently filed a petition, Application for Review and request for
remand concerning the Company's pending applications to assign licenses for two
station's the Company sought to acquire (WTTO and WCGV). In addition, Scripps
Howard filed an objection to an application by Glencairn Ltd. ("Glencairn")
(with whom the Company has certain agreements described below) for assignment of
licenses to two additional stations Glencairn sought to acquire (WVTV and WNUV).
On July 8, 1995, FCC approval of a settlement between Four Jacks and Scripps
Howard as to each of the various contests between Scripps Howard on the one hand
and Four Jacks, the Company and Glencairn on the other bacame final. As part of
the settlement, Scripps Howard filed requests for dismissal, contingent upon the
dismissal of Four Jacks' Channel 2 application, of each of the petitions it had
made to the FCC relating to the applications of the Company and Glencairn.
Options to Acquire Stations KSMO and WSTR
In June 1995, the Company purchased from the Controlling Stockholders
an option (the "KSMO Option") to acquire from an unrelated party the assets
comprising television station KSMO in Kansas City and an option (the "WSTR
Option") to acquire the assets comprising television station WSTR in Cincinnati.
The aggregate purchase price paid by the Company for the KSMO Option and the
WSTR Option was $9.0 million. The KSMO Option and the WSTR Option were
exercisable by payment of an amount sufficient to pay, or the assumption of,
certain specified indebtedness of the owner of KSMO and the owner of WSTR,
respectively. At the same time that the Company acquired the KSMO Option and the
WSTR Option, the Company acquired from the Controlling Stockholders their rights
and obligations under an agreement (the "Chase Debt Option") among the
Controlling Stockholders and the Chase Manhattan Bank, N.A. (the "Chase Bank").
The Chase
- 25 -
<PAGE>
Debt Option gives the Company, as assignee of the Controlling Stockholders, the
option to require Chase Bank to sell to the Company, and gives Chase Bank the
option any time after June 1996 to require the Company to purchase, certain
secured debt of the owners of KSMO and WSTR owned by Chase Bank. In either case,
the purchase price required to be paid by the Company for the KSMO secured debt
and the WSTR secured debt would generally equal Chase Bank's purchase price for
such debt (approximately $20.5 million in the aggregate), plus any additional
amounts advanced to the owners of KSMO and WSTR pursuant to the terms of the
KSMO debt or the WSTR debt, plus any accrued interest and other amounts payable
by the obligor with respect to such debt to the extent remaining unpaid, plus
certain fees, expenses and other amounts payable to Chase Bank, minus the amount
of any principal payments received by Chase Bank in respect of such debt. As of
December 31, 1995, this secured debt owned by Chase Bank consisted of
approximately $9.6 million in outstanding amount of KSMO secured debt and
approximately $14.8 million in outstanding amount of WSTR secured debt.
In December 1995, the Company exercised the WSTR Option and the KSMO
Option. The Company will, upon the grant of the FCC licenses, assume the
outstanding indebtedness of both television stations. The Company intends to
exercise the Chase Debt Option, effectively retiring the obligations to Chase
for an amount equal to approximately $12.9 million, as of December 31, 1995. In
addition, the Company will assume and retire approximately $4.7 million of
subordinated debt of WSTR.
Sale of WPTT Convertible Debenture
In connection with the sale of WPTT in Pittsburgh by the Company to
WPTT, Inc., WPTT, Inc., issued to the Company (i) a 15-year senior secured term
note of $6.0 million (the "WPTT Note") and (ii) a 20-year 8.5% redeemable
subordinated convertible debenture (the "Convertible Debenture") in the
principal amount of $1.0 million. The Company subsequently sold the WPTT Note to
the late Julian S. Smith and Carolyn C. Smith, the parents of the Controlling
Stockholders and both former stockholders of the Company, in exchange for the
payment of $50,000 and the issuance of a $6.6 million note, which bears interest
at 7.21% per annum and requires payments of interest only through September
2001. Monthly principal payments of $109,317 plus interest are payable with
respect to this note commencing in November 2001 and ending in September 2006,
at which time the remaining principal balance plus accrued interest, if any, is
due. During the year ended December 31, 1995, the Company received $51,553 in
interest payments on this note.
During 1992, the Company assigned the Convertible Debenture to the
Controlling Stockholders in exchange for the payment of $100,000 and the
issuance of a $900,000 note that bore interest at 7.9% per annum. In June 1995,
the Controlling Stockholders assigned the Convertible Debenture back to the
Company in exchange for payment of $1.0 million, $723,700 of which was used to
retire the outstanding balance on the note issued by the Controlling
Stockholders in 1992.
KCI Transactions
In January 1992, KCI, a corporation then wholly owned by the
Controlling Stockholders, entered into a management agreement and other
arrangements with WPGH, Inc., a wholly-owned subsidiary of the Company, whereby
WPGH, Inc. agreed to provide excess programming to KCI, which KCI in turn
provided to WPTT, pursuant to a local marketing agreement ("LMA"). As
consideration for the programming provided by WPGH, Inc., WPGH, Inc. was granted
the right to sell the advertising time allotted to KCI under its LMA with WPTT.
Pursuant to these arrangements, WPGH, Inc. received a 10% commission on the
advertising time sold.
On May 5, 1995, KCI was merged into the Company in a stock merger.
Because there was an identity of shareholders at the time of the merger, no
additional shares of stock were issued as consideration.
WIIB Note
- 26 -
<PAGE>
In September 1990, the Company sold all the stock of Channel 63, Inc.,
the owner of WIIB in Bloomington, Indiana, to the Controlling Stockholders for
$1.5 million. The purchase price was delivered in the form of a note issued to
the Company which was refinanced in June 1992 (the "WIIB Note"). The WIIB Note
bears interest at 6.88% per annum, is payable in monthly principal and interest
payments of $16,000 until September 30, 2000, at which time a final payment of
approximately $431,000 is due. The WIIB Note, and all renewals, extensions,
substitutions, refinancings and restatements thereof, is pledged as security
under the Company's credit agreement with the Chase Bank as agent and certain
lenders. Principal and interest paid in 1995 on the WIIB Note was $208,000. At
December 31, 1995, $1.2 million in principal amount of the WIIB Note remained
outstanding.
Bay Television, Inc. Note
In April 1990, Chesapeake Television, Inc. ("CTI"), a wholly-owned
subsidiary of the Company, sold certain station equipment to Bay Television,
Inc. in exchange for the issuance of a note in the principal amount of $512,000
payable over five years with an interest rate of 11% per annum (the "Bay
Transmitter Note"). Bay Television, Inc. is owned 75% by the Controlling
Stockholders and 25% by Robert L. Simmons, a former stockholder of the Company,
and is the owner and operator of WTTA in St. Petersburg. Principal and interest
paid in 1995 on the Bay Transmitter Note was $111,000. As of December 31, 1995,
$50,000 in principal amount remained outstanding under the Bay Transmitter Note.
Bay Credit Facility
In connection with the capitalization of Bay Television, Inc., the
Company agreed on May 17, 1990 to loan the Controlling Stockholders up to $3.0
million (the "Bay Credit Facility"). Each of the loans to the Controlling
Stockholders pursuant to the Bay Credit Facility is evidenced by an amended and
restated secured note totaling $2.6 million due December 31, 1999 accruing
interest at a fixed rate equal to 6.88%. Principal and interest are payable over
six years commencing on March 31, 1994, and are required to be repaid quarterly
so that $312,000 was payable in 1994, $440,000 was payable in 1995, $480,000 is
payable in 1996, $600,000 is payable in 1997, $660,000 is payable in 1998 and
$718,000 is payable in 1999. $440,000 was paid on this note in 1995. As of
December 31, 1995, $2,047,500 in principal amount was outstanding under this
note.
Affiliated Leases
From 1987 to 1992, the Company entered into five lease transactions
with CCI, a corporation wholly owned by the Controlling Stockholders, to lease
certain facilities from CCI. Four of these leases are 10-year leases for rental
space on broadcast towers, two of which are capital leases having renewable
terms of 10 years. The other lease is a month-to-month lease for a portion of
studio and office space at which certain satellite dishes are located. Aggregate
annual rental payments related to these leases were $477,000 in 1995.
In January 1991, CTI entered into a 10-year capital lease with KIG, a
corporation wholly owned by the Controlling Stockholders, pursuant to which CTI
leases both an administrative facility and studios for station WBFF and the
Company's present corporate offices. Additionally, in June 1991, CTI entered
into a one-year renewable lease with KIG pursuant to which CTI leases parking
facilities at the administrative facility. Payments under these leases with KIG
were $419,015 in 1995.
- 27 -
<PAGE>
Transactions with Gerstell
Gerstell LP, an entity wholly owned by the Controlling Stockholders,
was formed in April 1993 to acquire certain personal and real property interests
of the Company in Pennsylvania. In a transaction that was completed in September
1993, Gerstell LP acquired the WPGH office/studio, transmitter and tower site
for an aggregate purchase price of $2.2 million. The purchase price was financed
in part by a $2.1 million note from Gerstell LP bearing interest at 6.18% with
principal payments beginning on November 1, 1994 and a final maturity date of
October 1, 2013. Principal and interest paid in 1995 on the note was $188,087.
At December 31, 1995, $2,029,782 in principal amount of the note remained
outstanding. Following the acquisition, Gerstell LP leased the office/studio,
transmitter and tower site to WPGH, Inc. (a subsidiary of the Company) for
$14,875 per month and $25,000 per month, respectively. The leases have terms of
seven years, with four seven-year renewal periods. Aggregate annual rental
payment related to these leases was $508,705 in 1995. Gerstell LP has arranged
for a $2.0 million loan (the "Gerstell Loan") from a bank lender to provide for
construction at the studio/transmitter site of an expansion to the existing
office building/television studio located there and for construction of a new
tower having an aggregate estimated cost of $1.5 million. The Company has
guaranteed the Gerstell Loan. As of June 30, 1995, there are no amounts
outstanding under the Gerstell Loan. The completed office building/television
studio and the new tower will be leased from Gerstell LP by WPGH, Inc. The
Company believes that the leases with Gerstell LP are or will be on terms and
conditions customary in similar leases with independent third parties.
Stock Redemptions
On September 30, 1990, the Company issued certain notes (the "Founders'
Notes") maturing on May 31, 2005, payable to the late Julian S. Smith and
Carolyn C. Smith, former majority owners of the Company and the parents of the
Controlling Stockholders. The Founders' Notes, which were issued in
consideration for stock redemptions equal to 72.65% of the then outstanding
stock of the Company, have principal amounts of $7.5 million and $6.7 million,
respectively. The Founders' Notes are secured by security interests in
substantially all of the assets of the Company and its Subsidiaries, and are
personally guaranteed by the Controlling Stockholders.
Principal and interest payments on the Founders' Note issued to the
estate of Julian S. Smith are payable, in various amounts, each April and
October, beginning October 1991 until October 2004, with a balloon payment due
at maturity in the amount of $5.0 million. Additionally, monthly interest
payments commenced on April 1993 and will continue until December 1996.
Principal and interest paid in 1995 on this Founders' Note was $889,699 At
December 31, 1995, $6,281,186 in principal amount of the Founders' Note remained
outstanding.
Principal payments on the Founders' Note issued to Carolyn C. Smith are
payable, in various amounts, each April and October, beginning October 1991
until October 2002. The Founders' Notes include stated interest rates of 8.75%,
payable annually from October 1990 until October 1992, then payable monthly
commencing April 1993 to December 1996, and then semiannually thereafter until
maturity. The effective interest rate approximates 9.4%. Principal and interest
paid in 1995 on this Founders' Note was $1,135,508. At December 31, 1995,
$5,160,627 in principal amount of the Founders' Note remained outstanding.
Relationship with Glencairn
Glencairn is a corporation owned by (i) Edwin L. Edwards, Sr. (3%),
(ii) Carolyn C. Smith, the mother of the Controlling Stockholders (7%), and
(iii) certain trusts established by Carolyn C. Smith for the benefit of her
grandchildren (the "Glencairn Trusts") (90%). The 90% equity interest in
Glencairn owned by the Glencairn Trusts is held through the ownership of
non-voting common stock. The 7% equity interest in Glencairn owned by Carolyn C.
Smith is held through the ownership of common stock that is generally
non-
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voting, except with respect to certain specified extraordinary corporate matters
as to which this 7% equity interest has the controlling vote. Edwin L. Edwards,
Sr. owns a 3% equity interest in Glencairn through ownership of all of the
issued and outstanding voting stock of Glencairn and is Chairman of the Board,
President and Chief Executive Officer of Glencairn.
There have been, and the Company expects that in the future there will be,
transactions between the Company and Glencairn. Glencairn is the owner-operator
and FCC licensee of WNUV in Baltimore, WVTV in Milwaukee, WRDC in Raleigh/Durham
and WABM in Birmingham. In July 1995, Glencairn acquired the license assets of
WVTV and WNUV pursuant to options (the "WVTV Option" and the "WNUV Option")
obtained by the Company from their respective former owners in May 1994 for $7.7
million and $9.9 million, respectively. The Company assigned the WVTV Option to
Glencairn in July 1994 in return for Glencairn's cash payment to the Company of
$2.0 million (plus accrued interest) in March 1995 and for Glencairn's agreement
to enter into an LMA with the Company. The Company assigned the WNUV Option to
Glencairn in December 1994 in return for Glencairn's cash payment to the Company
of $2.2 million (plus accrued interest) in March 1995 and for Glencairn's
agreement to enter into an LMA with the Company. In December 1994, the Company
assigned to Glencairn the Company's rights to acquire the license assets of
WTVZ. In 1995, this option was assigned back to the Company by Glencairn and has
been exercised by the Company. No consideration was paid for the transfer to or
from Glencairn.
The Company has entered into LMAs with Glencairn relating to WNUV,
WVTV, WRDC and WABM pursuant to which the Company provides programming to
Glencairn for airing on WNUV, WVTV and WRDC, respectively, during the hours of
6:00 a.m. to 2:00 a.m. each day and has the right to sell advertising during
this period, all in exchange for the payment by the Company to Glencairn of a
monthly fee of $116,667, $95,833, $133,333 and $100,000, respectively.
In June 1995, the Company acquired options from certain stockholders of
Glencairn (the "Glencairn Options") which grant to the Company the right to
acquire, subject to applicable FCC rules and regulations, stock comprising up to
a 97% equity interest in Glencairn. Of the stock subject to the Glencairn
Options, a 90% equity interest is non-voting and the remaining 7% equity
interest is non-voting, except with respect to certain extraordinary matters as
to which this 7% equity interest has the controlling vote. Each Glencairn Option
was purchased by the Company for $1,000 ($5,000 in the aggregate) and is
exercisable only upon the Company's payment of an option exercise price
generally equal to the optionor's proportionate share of the aggregate
acquisition cost of all stations owned by Glencairn on the date of exercise
(plus interest at a rate of 10% from the respective acquisition date). The
Company estimates that the aggregate option exercise price for the Glencairn
Options, if currently exercised, would be approximately $8.8 million.
In connection with the River City Acquisition, the Company has agreed
to assign to Glencairn its option to purchase certain assets relating to WFBC,
Anderson, South Carolina, one of the River City stations. In addition, the
Company has agreed (subject to FCC approval) to sell to Glencairn for $2,000,000
the License Assets of WTTE, Columbus, Ohio, which the Company currently owns.
WFBC is in a market in which the Company currently owns a station, and the
Company is expected to acquire from River City a station in the same market as
WTTE. The Company intends to enter into LMAs with Glencairn relating to WFBC and
WTTE pursuant to which the Company will supply programming to Glencairn, obtain
the right to sell advertising during the periods covered by the supplied
programming and make payments to Glencairn in amounts not less than the
operating costs of the stations allocable to the period covered by the supplied
programming.
Also in connection with the River City Acquisition, Glencairn has been
granted an option to acquire from the current owner the license assets of KRRT,
Kerrville, Texas, which is in the same market as a station the Company will
acquire from River City. The Company will acquire the non-license assets of
KRRT, and is expected to enter into an LMA with Glencairn with respect to KRRT
pursuant to which the Company will
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supply programming to Glencairn, obtain the right to sell advertising during the
periods covered by the supplied programming and make payments to Glencairn in
amounts not less than the operating costs of the stations allocable to the
period covered by the supplied programming.
The River City Acquisition
Roy F. Coppedge, who will become a director of the Company upon
satisfaction of certain conditions, and Barry Baker, who will become a director
and executive officer of the Company upon satisfaction of certain conditions,
each have a direct or indirect equity interest in River City Partners, L.P.
Therefore, Messrs. Coppedge and Baker have an interest in the River City
Acquisition, which is described under "Proposal 2: Authorization of the Charter
Amendment -- The River City Acquisition."
Certain Business Relationships
During 1995, Thomas & Libowitz, P.A., counsel to the Company, billed
the Company approximately $718,000 in fees and expenses for legal services.
Basil A. Thomas, a director of the Company, is of counsel to Thomas & Libowitz,
P.A., and is the father of Steven A. Thomas, a senior attorney and founder of
Thomas & Libowitz, P.A.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
Sinclair does not know of any other matters to be presented for action by the
stockholders at the Annual Meeting. However, if any other matters not now known
are properly brought before the Annual Meeting, the proxy holders will vote upon
the same according to their discretion and best judgment.
STOCKHOLDER PROPOSALS
Any proposal intended to be presented by any stockholder for action at
the 1997 Annual Meeting of Stockholders of Sinclair must be received by the
Secretary of Sinclair at 2000 West 41st Street, Baltimore, Maryland 21211 not
later than [DATE THAT IS ONE YEAR AFTER DATE 120 DAYS BEFORE MAILING THIS PROXY
STATEMENT, OR FEBRUARY 2, 1997 ASSUMING MAILING ON JUNE 1] order for the
proposal to be considered for inclusion in Sinclair's proxy statement and proxy
relating to the 1997 Annual Meeting.
INCORPORATION OF INFORMATION BY REFERENCE
The audited financial statements of Sinclair for the years ended
December 31, 1993, 1994 and 1995, and the unaudited financial statements of
Sinclair for the quarter ended March 30, 1996, are incorporated by reference to
the report of Sinclair on Forms 10-K and 10-Q, respectively. In addition,
Management's Discussion and Analysis of Financial Condition and Results of
Operations, as included in the Forms 10-K and 10-Q, are also incorporated by
reference. Certain pro forma financial statements and audited financial
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statements of companies acquired by Sinclair, or the acquisition of which
Sinclair considers probable, are included in Sinclair's Report on Form 8-K filed
on May 17, 1996, which is incorporated by reference. The Company will provide,
without charge to each person to whom this Proxy Statement is delivered, upon
written or oral request, within one business day of receipt of such request, a
copy of the information incorporated by reference.
BY ORDER OF THE BOARD OF DIRECTORS
J. Duncan Smith, Secretary
Baltimore, Maryland
June __, 1996
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<PAGE>
EXHIBIT A
PROPOSED AMENDMENTS TO THE CHARTER
OF
SINCLAIR BROADCAST GROUP, INC.
1. The charter of the Corporation is hereby amended by striking out the
Third Article thereof and inserting in lieu thereof the following:
THIRD: Capital Structure. The total number of shares of all classes of
stock which the Corporation has authority to issue is one hundred
forty-five million (145,000,000) shares, having an aggregate par value
of one million four hundred fifty thousand dollars ($1,450,000),
consisting of one hundred million (100,000,000) shares of Class A
Common Stock with a par value of one cent ($.01) per share (the "Class
A Common Stock"), thirty-five million (35,000,000) shares of Class B
Common Stock with a par value of one cent ($.01) per share (the "Class
B Common Stock"), and ten million (10,000,000) shares of Preferred
Stock with a par value of one cent ($.01) per share (the "Preferred
Stock"). Class A Common Stock and Class B Common Stock are hereinafter
collectively referred to as "Common Shares."
2. The charter of the Corporation is hereby further amended by adding
the following at the end of the first sentence of the Sixth Article thereof:
; provided further, that nothing herein shall prevent the Board of
Directors from classifying or reclassifying any such shares as
Preferred Stock convertible into Common Shares that have already been
authorized pursuant to Article Third hereof.
A - 1
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EXHIBIT B
LONG TERM INCENTIVE PLAN
OF
SINCLAIR BROADCAST GROUP
B - 1
<PAGE>
1996 LONG-TERM INCENTIVE PLAN
of
SINCLAIR BROADCAST GROUP, INC.
1. Objectives. This 1996 Long-Term Incentive Plan of Sinclair
Broadcast Group, Inc. (the "Plan") is adopted by Sinclair Broadcast Group, Inc.,
a Maryland corporation (the "Company"), to reward key individuals for making
major contributions to the success of the Company and its Subsidiaries (as
hereinafter defined). These objectives are to be accomplished by making Awards
(as hereinafter defined) under the Plan and thereby providing Participants (as
hereinafter defined) with a proprietary interest in the growth and performance
of the Company and its Subsidiaries.
2. Definitions. As used herein, the terms set forth below
shall have the following respective meanings:
"Authorized Officer" means the Chairman of the Board or the
Chief Executive Officer of the Company or a Subsidiary (or any other senior
officer of the Company or a Subsidiary to whom either of them shall delegate the
authority to execute any Award Agreement).
"Award" means the grant of any Option, SAR, Stock Award, Cash
Award or Performance Award, whether granted singly, in combination or in tandem,
to a Participant pursuant to such applicable terms, conditions and limitations
as the Committee may establish in order to fulfill the objectives of the Plan.
"Award Agreement" means a written agreement between the
Company and a Participant setting forth the terms, conditions and limitations
applicable to an Award.
"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
"Company" has the meaning specified in paragraph 1 hereof.
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<PAGE>
"Committee" means the Compensation Committee of the Board or
such other committee of the Board as is designated by the Board to administer
the Plan.
"Common Stock" means the Class A Common Stock, par value $.01
per share, of the Company.
"Dividend Equivalents" means, with respect to shares of
Restricted Stock that are to be issued at the end of the Restriction Period, an
amount equal to all dividends and other distributions (or the economic
equivalent thereof) which are payable to stockholders of record during the
Restriction Period on a like number of shares of Common Stock.
"Effective Date" means the date upon which this Plan shall be
adopted and made effective in accordance with Section 17 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported, (ii)
if shares of Common Stock are not so listed but are quoted on the NASDAQ
National Market, the mean between the highest and lowest sales price per share
of Common Stock reported by the NASDAQ National Market on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported or (iii) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price on
that date, or, if there are no quotations available for such date, on the last
preceding date on which such quotations shall be available, as reported by the
NASDAQ Stock Market, or, if not reported by the NASDAQ Stock Market, by the
National Quotation Bureau Incorporated.
"Incentive Option" means an Option that is intended to comply
with the requirements set forth in Section 422 of the Code.
"Nonqualified Stock Option" means an Option that is not an
Incentive Option.
"Option" means a right to purchase a specified number of
shares of Common Stock at a specified price.
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<PAGE>
"Participant" means an employee of, or an individual otherwise
performing services for or on behalf of, the Company or any of its Subsidiaries,
and to whom an Award has been made under this Plan.
"Performance Award" means an award made pursuant to this Plan
to a Participant that is subject to the attainment of one or more Performance
Goals.
"Performance Goal" means a standard established by the
Committee, to determine in whole or in part whether a Performance Award shall be
earned.
"Plan" has the meaning specified in Section 1 hereof.
"Restricted Stock" means any Common Stock that is restricted
or subject to forfeiture provisions.
"Restriction Period" means a period of time beginning as of
the date upon which an Award of Restricted Stock is made pursuant to this Plan
and ending as of the date upon which the Common Stock subject to such Award is
no longer restricted or subject to forfeiture provisions.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, or any successor rule.
"SAR" means a right to receive a payment, in cash or Common
Stock, equal to the excess of the Fair Market Value or other specified valuation
of a specified number of shares of Common Stock on the date the right is
exercised over a specified strike price (in each case, as determined by the
Committee).
"Stock Award" means an award in the form of shares of Common
Stock or units denominated in shares of Common Stock.
"Subsidiary" means (a) in the case of a corporation, any
corporation of which the Company directly or indirectly owns shares representing
more than 50% of the combined voting power of the shares of all classes or
series of capital stock of such corporation which have the right to vote
generally on matters submitted to a vote of the stockholders of such corporation
and (b) in the case of a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly or
indirectly owns more than 50% of the voting, capital or profits interests
(whether in the form of partnership interests, membership interests or
otherwise).
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<PAGE>
3. Eligibility. Individuals eligible for an Award under this
Plan are those whose performance, in the judgment of the Committee, can have an
effect on the success of the Company and its Subsidiaries.
4. Common Stock Available for Awards. Subject to the
provisions of Section 13 hereof, there shall be available for Awards under this
Plan granted wholly or partly in Common Stock (including rights or options which
may be exercised for or settled in Common Stock) an aggregate of 2,073,673
shares of Common Stock. The number of shares of Common Stock that are the
subject of Awards under this Plan that are forfeited or terminated, expire
unexercised, are settled in cash in lieu of Common Stock or in a manner such
that all or some of the shares covered by an Award are not issued to a
Participant or are exchanged for Awards that do not involve Common Stock, shall
again immediately become available for Awards hereunder. The Committee may from
time to time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate. The Board and the
appropriate officers of the Company shall from time to time take whatever
actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that
shares of Common Stock are available for issuance pursuant to Awards.
5. Administration.
(a) This Plan shall be administered by the Committee. The
Committee shall consist of at least two members of the Board who meet
the requirements of the definition of "disinterested person" in Rule
16b-3(d)(3) promulgated under the Exchange Act, or any successor rule.
(b) Subject to the provisions hereof, the Committee shall have
full and exclusive power and authority to administer this Plan and to
take all actions which are specifically contemplated hereby or are
necessary or appropriate in connection with the administration hereof.
The Committee shall also have full and exclusive power to interpret
this Plan and to adopt such rules, regulations and guidelines for
carrying out this Plan as it may deem necessary or proper, all of which
powers shall be exercised in the best interests of the Company and in
keeping with the objectives of this Plan. The Committee may, in its
discretion, provide for the extension of the exercisability of an
Award, accelerate the vesting or exercisability of an Award, eliminate
or make less restrictive any restrictions contained in an Award, waive
any restriction or other provision of this Plan or an Award or
otherwise amend or modify an Award in any manner that is either (i) not
adverse to the Participant to whom such Award was granted or (ii)
consented to by such Participant. The Committee may correct any defect
or supply any omission or reconcile any inconsistency in this Plan or
in any Award in the manner and to the extent the
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<PAGE>
Committee deems necessary or desirable to carry it into effect. Any
decision of the Committee in the interpretation and administration of
this Plan shall lie within its sole and absolute discretion and shall
be final, conclusive and binding on all parties concerned.
(c) No member of the Committee or officer of the Company to
whom the Committee has delegated authority in accordance with the
provisions of Section 6 of this Plan shall be liable for anything done
or omitted to be done by him or her, by any member of the Committee or
by any officer of the Company in connection with the performance of any
duties under this Plan, except for his or her own willful misconduct or
as expressly provided by statute.
6. Delegation of Authority. The Committee may delegate its
duties under this Plan pursuant to such conditions or limitations as the
Committee may establish, except that the Committee may not delegate to any
person the authority to grant Awards to, or take other action with respect to,
Participants who are (a) subject to Section 16 of the Exchange Act or (b) not
employees of the Company or any of its Subsidiaries.
7. Awards.
(a) The Committee shall determine the type or types of Awards
to be made under this Plan and shall designate from time to time the
individuals who are to be the recipients of such Awards. Each Award
shall be embodied in an Award Agreement, which shall contain such
terms, conditions and limitations as shall be determined by the
Committee in its sole discretion and shall be signed by the Participant
to whom the Award is made and by an Authorized Officer (other than the
Participant) for and on behalf of the Company. Awards may consist of
those listed in this Section 7(a) and may be granted singly, in
combination or in tandem. Awards may also be made in combination or in
tandem with, in replacement of, or as alternatives to, grants or rights
under this Plan or any other plan of the Company or any of its
Subsidiaries, including the plan of any acquired entity. An Award may
provide for the grant or issuance of additional, replacement or
alternative Awards upon the occurrence of specified events, including
the exercise of the original Award granted to a Participant. All or
part of an Award may be subject to conditions established by the
Committee, which may include, but are not limited to, continuous
service with the Company and its Subsidiaries, achievement of specific
business objectives, increases in specified indices, attainment of
specified growth rates and other comparable measurements of
performance.
(i) Stock Option. An Award may be in the form of an
Option. An Option awarded pursuant to this Plan may consist of
an Incentive Option or a Nonqualified Option. The price at
which shares of Common Stock may be purchased upon the
exercise of an Incentive Option shall be not less than the
Fair Market Value of the Common Stock on the date of grant.
The price at which shares of Common
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<PAGE>
Stock may be purchased upon the exercise of a Nonqualified
Option shall be not less than 50% of the Fair Market Value of
the Common Stock on the date of grant. Subject to the
foregoing provisions, the terms, conditions and limitations
applicable to any Options awarded pursuant to this Plan,
including the term of any Options and the date or dates upon
which they become exercisable, shall be determined by the
Committee.
(ii) Stock Appreciation Right. An Award may be in the
form of an SAR. The terms, conditions and limitations
applicable to any SARs awarded pursuant to this Plan,
including the term of any SARs and the date or dates upon
which they become exercisable, shall be determined by the
Committee.
(iii) Stock Award. An Award may be in the form of a
Stock Award. The terms, conditions and limitations applicable
to any Stock Awards granted pursuant to this Plan shall be
determined by the Committee.
(iv) Cash Award. An Award may be in the form of a
Cash Award. The terms, conditions and limitations applicable
to any Cash Awards granted pursuant to this Plan shall be
determined by the Committee.
(v) Performance Award. Without limiting the type or
number of Awards that may be made under the other provisions
of this Plan, an Award may be in the form of a Performance
Award. A Performance Award shall be paid, vested or otherwise
deliverable solely on account of the attainment of one or more
pre-established, objective Performance Goals established by
the Committee prior to the earlier to occur of (A) 90 days
after the commencement of the period of service to which the
Performance Goal relates and (B) the elapse of 25% of the
period of service (as scheduled in good faith at the time the
goal is established), and in any event while the outcome is
substantially uncertain. A Performance Goal is objective if a
third party having knowledge of the relevant facts could
determine whether the goal is met. Such a Performance Goal may
be based on one or more business criteria that apply to the
individual, one or more business units of the Company, or the
Company as a whole, and may include one or more of the
following: revenue, cash flow, net income, stock price, market
share, earnings per share, return on equity, return on assets
or
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<PAGE>
decrease in costs. Unless otherwise stated, such a Performance
Goal need not be based upon an increase or positive result
under a particular business criterion and could include, for
example, maintaining the status quo or limiting economic
losses (measured, in each case, by reference to specific
business criteria). In interpreting Plan provisions applicable
to Performance Goals and Performance Awards, it is the intent
of the Plan to conform with the standards of Section 162(m) of
the Code and Treasury Regulations ss. 1.162-27(e)(2)(i), and
the Committee in establishing such goals and interpreting the
Plan shall be guided by such provisions. Prior to the payment
of any compensation based on the achievement of Performance
Goals, the Committee must certify in writing to the Board that
applicable Performance Goals and any of the material terms
thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms, conditions and limitations applicable
to any Performance Awards made pursuant to this Plan shall be
determined by the Committee.
(b) Notwithstanding anything to the contrary contained in this
Plan, the following limitations shall apply to any Awards made
hereunder:
(i) no Participant may be granted, during any
calendar year, Awards consisting of Options or SARs that are
exercisable for more than the remainder of 1,500,000 shares of
Common Stock less, if any, the number of shares of Common
Stock underlying existing Options or SARs granted to such
Participant under the Plan;
(ii) no Participant may be granted, during any
calendar year, Awards consisting of shares of Common Stock or
units denominated in such shares (other than any Awards
consisting of Options or SARs) covering or relating to more
than 20,000 shares of Common Stock (the limitation set forth
in this clause (ii), together with the limitation set forth in
clause (i) above, being hereinafter collectively referred to
as the "Stock Based Awards Limitations"); and
(iii) no Participant may be granted Awards consisting
of cash or in any other form permitted under this Plan (other
than Awards consisting of Options or SARs or otherwise
consisting of shares of Common Stock or units denominated in
such shares) in respect of any calendar year having a value
determined on the date of grant in excess of $300,000.
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<PAGE>
8. Payment of Awards.
(a) General. Payment of Awards may be made in the form of cash
or Common Stock, or a combination thereof, and may include such
restrictions as the Committee shall determine, including, in the case
of Common Stock, restrictions on transfer and forfeiture provisions. If
payment of an Award is made in the form of Restricted Stock, the Award
Agreement relating to such shares shall specify whether they are to be
issued at the beginning or end of the Restriction Period. In the event
that shares of Restricted Stock are to be issued at the beginning of
the Restriction Period, the certificates evidencing such shares (to the
extent that such shares are so evidenced) shall contain appropriate
legends and restrictions that describe the terms and conditions of the
restrictions applicable thereto. In the event that shares of Restricted
Stock are to be issued at the end of the Restricted Period, the right
to receive such shares shall be evidenced by book entry registration or
in such other manner as the Committee may determine.
(b) Deferral. With the approval of the Committee, payments in
respect of Awards may be deferred, either in the form of installments
or a future lump sum payment. The Committee may permit selected
Participants to elect to defer payments of some or all types of Awards
in accordance with procedures established by the Committee. Any
deferred payment of an Award, whether elected by the Participant or
specified by the Award Agreement or by the Committee, may be forfeited
if and to the extent that the Award Agreement so provides.
(c) Dividends and Interest. Rights to dividends or Dividend
Equivalents may be extended to and made part of any Award consisting of
shares of Common Stock or units denominated in shares of Common Stock,
subject to such terms, conditions and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for
the crediting of interest on deferred cash payments and Dividend
Equivalents for Awards consisting of shares of Common Stock or units
denominated in shares of Common Stock.
(d) Substitution of Awards. At the discretion of the
Committee, a Participant may be offered an election to substitute an
Award for another Award or Awards of the same or different type.
9. Stock Option Exercise. The price at which shares of Common
Stock may be purchased under an Option shall be paid in full at the time of
exercise in cash or, if elected by the optionee, the optionee may purchase such
shares by means of tendering Common Stock or surrendering another Award,
including Restricted Stock, valued at Fair Market Value on the date of exercise,
or any combination thereof. The Committee shall determine acceptable methods for
Participants to tender Common Stock or other Awards.
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<PAGE>
If permitted by the Committee, payment may be made by successive exercises by a
Participant. The Committee may provide for loans from the Company to a
Participant to permit the exercise or purchase of Awards and may provide for
procedures to permit the exercise or purchase of such Awards by use of the
proceeds to be received from the sale of Common Stock issuable pursuant to an
Award. Unless otherwise provided in the applicable Award Agreement, in the event
shares of Restricted Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the Option, equal to
the number of shares of Restricted Stock used as consideration therefor, shall
be subject to the same restrictions as the Restricted Stock so submitted as well
as any additional restrictions that may be imposed by the Committee.
10. Tax Withholding. The Company shall have the right to
deduct applicable taxes from any Award payment and withhold, at the time of
delivery or vesting of cash or shares of Common Stock under this Plan, an
appropriate amount of cash or number of shares of Common Stock or a combination
thereof for payment of taxes required by law or to take such other action as may
be necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required.
If shares of Common Stock are used to satisfy tax withholding, such shares shall
be valued based on the Fair Market Value when the tax withholding is required to
be made.
11. Amendment, Modification, Suspension or Termination. The
Board may amend, modify, suspend or terminate this Plan for the purpose of
meeting or addressing any changes in legal requirements or for any other purpose
permitted by law, except that (a) no amendment or alteration that would impair
the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (b) no
amendment or alteration shall be effective prior to approval by the stockholders
of the Company to the extent such approval is then required pursuant to Rule
16b-3 in order to preserve the applicability of any exemption provided by such
rule to any Award then outstanding (unless the holder of such Award consents) or
to the extent stockholder approval is otherwise required by applicable legal
requirements.
12. Assignability. Unless otherwise determined by the
Committee and provided in the Award Agreement, no Award or any other benefit
under this Plan constituting a derivative security within the meaning of Rule
16a-1(c) under the Exchange Act shall be assignable or otherwise transferable
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. The Committee
may prescribe and include in applicable Award Agreements other restrictions on
transfer. Any attempted assignment of an Award or any other benefit under this
Plan in violation of this paragraph 12 shall be null and void.
-9-
<PAGE>
13. Adjustments.
(a) The existence of outstanding Awards shall not affect in
any manner the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the capital stock of the Company or
its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock
(whether or not such issue is prior to, on a parity with or junior to
the Common Stock) or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceeding of any kind, whether or not of a
character similar to that of the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of
outstanding shares of Common Stock, declaration of a dividend payable
in shares of Common Stock or other stock split, then (i) the number of
shares of Common Stock reserved under this Plan, (ii) the number of
shares of Common Stock covered by outstanding Awards in the form of
Common Stock or units denominated in Common Stock, (iii) the exercise
or other price in respect of such Awards and (iv) the appropriate Fair
Market Value and other price determinations for such Awards shall each
be proportionately adjusted by the Board to reflect such transaction.
In the event of any other recapitalization or capital reorganization of
the Company, any consolidation or merger of the Company with another
corporation or entity, the adoption by the Company of any plan of
exchange affecting the Common Stock or any distribution to holders of
Common Stock of securities or property (other than normal cash
dividends or dividends payable in Common Stock), the Board shall make
appropriate adjustments to (i) the number of shares of Common Stock
covered by Awards in the form of Common Stock or units denominated in
Common Stock, (ii) the exercise or other price in respect of such
Awards and (iii) the appropriate Fair Market Value and other price
determinations for such Awards to give effect to such transaction;
provided that such adjustments shall only be such as are necessary to
maintain the proportionate interest of the holders of the Awards and
preserve, without exceeding, the value of such Awards. In the event of
a corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the Board shall be
authorized to issue or assume Awards by means of substitution of new
Awards, as appropriate, for previously issued Awards or an assumption
of previously issued Awards as part of such adjustment.
14. Restrictions. Unless otherwise agreed to by the Company,
no Common Stock or other form of payment shall be issued with respect to any
Award unless
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<PAGE>
the Company shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state securities
laws. It is the intent of the Company that this Plan comply with Rule 16b-3 with
respect to persons subject to Section 16 of the Exchange Act unless otherwise
provided herein or in an Award Agreement, that any ambiguities or
inconsistencies in the construction of this Plan be interpreted to give effect
to such intention, and that if any provision of this Plan is found not to be in
compliance with Rule 16b-3, such provision shall be null and void to the extent
required to permit this Plan to comply with Rule 16b-3. Certificates evidencing
shares of Common Stock certificates delivered under this Plan (to the extent
that such shares are so evidenced) may be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any securities exchange or transaction reporting system upon which the Common
Stock is then listed or to which it is admitted for quotation and any applicable
federal and state securities law. The Committee may cause a legend or legends to
be placed upon such certificates (if any) to make appropriate reference to such
restrictions.
15. Unfunded Plan. Insofar as it provides for Awards of cash,
Common Stock or rights thereto, this Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Participants who are
entitled to cash, Common Stock or rights thereto under this Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall
not be required to segregate any assets that may at any time be represented by
cash, Common Stock or rights thereto, nor shall this Plan be construed as
providing for such segregation, nor shall the Company, the Board or the
Committee be deemed to be a trustee of any cash, Common Stock or rights thereto
to be granted under this Plan. Any liability or obligation of the Company to any
Participant with respect to an Award of cash, Common Stock or rights thereto
under this Plan shall be based solely upon any contractual obligations that may
be created by this Plan and any Award Agreement, and no such liability or
obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company nor the Board
nor the Committee shall be required to give any security or bond for the
performance of any obligation that may be created by this Plan.
16. Governing Law. This Plan and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Maryland.
17. Effectiveness. This Plan shall become effective as of the
date set forth in the resolutions of the Board approving and adopting this Plan;
provided, however, that the effectiveness of this Plan is expressly conditioned
upon (a) the approval of this Plan by the Board and the Compensation Committee
of the Company and (b) the approval
-11-
<PAGE>
of this Plan by the holders of common stock of the Company of all classes,
voting together as a single class.
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<PAGE>
EXHIBIT C
AMENDMENTS TO 1995 STOCK OPTION PLAN
C - 1
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
FIRST AMENDMENT
to
INCENTIVE STOCK OPTION PLAN
THIS FIRST AMENDMENT TO INCENTIVE STOCK OPTION PLAN ("Amendment") is
hereby adopted on this 10th day of April, 1996 by the Board of Directors of
Sinclair Broadcast Group, Inc., a Maryland corporation (the "Corporation").
WHEREAS, the stockholders of the Corporation approved an Incentive
Stock Option Plan (the "Plan") on May 11, 1995 providing for the issuance by the
Incentive Stock Option Committee of the Board of Directors of options to
purchase up to 400,000 shares of the Corporation's Class A Common Stock; and
WHEREAS, the Plan provides that the Board of Directors may amend the
Plan; and
WHEREAS, by resolution date April 10th, 1996, the Incentive Stock
Option Committee of the Board of Directors recommended approval of the
Amendment; and
WHEREAS, the Board of Directors, pursuant to the Unanimous Consent of
Directors dated April 10th, 1996 have directed that this Amendment be adopted.
NOW, THEREFORE, pursuant to the foregoing recitals, the Plan is hereby
amended as follows:
1. Section 2 of the Plan is amended by adding the following sentence to
the end of that section:
"If the Company enters into an Asset Purchase Agreement ("Agreement")
with River City Broadcasting, L.P. ("River City") providing for the
purchase by the Company of substantially all of the assets of River
City, then, upon the first closing of the transactions contemplated in
the Agreement, the authority to determine which non-insider eligible
participants (meaning eligible participants who are not subject to the
provisions of either Sections 16(a) or 16(b) of the Securities Exchange
Act of 1934) may be granted options under the Plan will be vested in
Barry Baker."
2. Section 7 of the Plan is deleted in its entirety and replaced with
the following:
"7. Other Provisions.
<PAGE>
(a) The options granted under this plan will vest and become
exercisable on the third anniversary of the grant date ("Vesting
Date").
(b) If the Optionee voluntarily terminates his employment with
the Company prior to the Vesting Date, all options held by the Optionee
will immediately terminate.
(c) If the Optionee is terminated from employment by the
Company for "cause," as defined in such Optionee's then effective
employment agreement, options held by the Optionee will immediately
terminate.
(d) If the Optionee's employment with the Company is
terminated by the Company without cause, or in the event the Optionee's
employment with the Company is terminated due to disability or death,
the vesting of the option will be accelerated as follows: (a) one-third
(1/3) if such termination occurs after the first anniversary (and
before the second anniversary) of the date of grant, and (b) two-thirds
(2/3) if such termination occurs after the second anniversary (and
before the third anniversary) of the date of grant, and the Optionee
may, within three (3) months thereafter, exercise that portion of the
option to the extent of such accelerated vesting; options not so
exercised will terminate upon the expiration of said three (3) month
period.
(e) If the Optionee dies while employed by the Company or
within three (3) months after termination of his employment by the
Company, then within six (6) months after the date of the Optionee's
death, subject to the provisions of Subsections 7(a) and 7(d) above,
the option may be exercised by his estate or by any person who has
acquired the Optionee's right to exercise the option by bequest or
inheritance to the extent the option was exercisable as of the date of
his death. Upon the expiration of said six (6) month period, all
unexercised options will terminate.
(f) Except as otherwise provided in Subsection 7(e) above, the
option and all rights granted hereunder may not be transferred by the
Optionee, and may not be assigned, pledged, or hypothecated in any way
and will not be subject to execution, attachment, or similar process.
Upon any attempt by the Optionee to transfer the option, or to assign,
pledge, hypothecate, or otherwise dispose of such option or of any
rights granted hereunder, contrary to the provisions hereof, or upon
the levy or any attachment or similar process upon such option or such
rights, such option and such rights shall immediately become null and
void. The option will be exercisable, during the lifetime of the
Optionee, only by the Optionee."
2. The language used in any future grant of options under the Plan
shall be conformed to reflect the foregoing amendment.
2
<PAGE>
3. No other provisions of the Plan shall be affected hereby, and the
remainder of the Plan shall remain in full force and effect.
3
<PAGE>
SINCLAIR BROADCAST GROUP, INC.
SECOND AMENDMENT TO INCENTIVE STOCK OPTION PLAN
THIS SECOND AMENDMENT TO INCENTIVE STOCK OPTION PLAN ("Second
Amendment") is hereby adopted as of the ____ day of May, 1996 by the
Compensation Committee and the Incentive Stock Option Committee of the Board of
Directors of Sinclair Broadcast Group, Inc., a Maryland corporation (the
"Corporation").
WHEREAS, the stockholders of the Corporation approved an Incentive
Stock Option Plan (the "Plan") on May 11, 1995 providing for the issuance by the
Incentive Stock Option Committee of Options to purchase up to four hundred
thousand (400,000) shares of the Corporation's Class A Common Stock; and
WHEREAS, the Plan provides that the Board of Directors may amend the
Plan; and
WHEREAS, the Board of Directors did so amend the Plan on April 10, 1996
(the "First Amendment"); and
WHEREAS, by Resolution dated May ___, 1996, the Incentive Stock Option
Committee of the Board of Directors recommended approval of this Second
Amendment; and
WHEREAS, the Board of Directors, pursuant to the Unanimous Consent of
the Directors dated May ___, 1996, have directed that this Second Amendment be
adopted.
NOW, THEREFORE, pursuant to the foregoing Recitals, the Plan is hereby
amended as follows:
<PAGE>
1. The final sentence of Section 2 of the Plan is deleted in its
entirety and replaced with the following:
"If and when Barry Baker becomes an officer of Sinclair
Communications, Inc., as contemplated under the Asset Purchase
Agreement with River City Broadcasting, L.P. providing for the
purchase by the Company of substantially all of the assets of River
City, the authority to determine which non-insider eligible
participants (meaning eligible participants who are not subject to
the provisions of Section 16 of the Securities Exchange Act of 1934)
may be granted options under the Plan will be vested in Mr. Baker."
2. The following language shall be added to the end of Section 7(b) of
the Plan:
"If the Optionee voluntarily terminates his employment with the
Company subsequent to the Vesting Date, the Optionee may, within
three (3) months thereafter, subject to the provisions of Subsection
7(a) above, exercise the Option to the extent that the Option was
exercisable as of the date of termination of his employment; in such
case, all unexercised Options shall terminate, be forfeited, and
shall lapse upon the expiration of said three (3) month period."
3. Section 12 of the Amended Plan shall be deleted in its entirety and
replaced with the following:
"12. Option Agreement. The granting of an Option shall take
place and become effective on such date as the Incentive Stock Option
Committee so determines. The Company shall cause a written Option
Agreement substantially in the form of the Incentive Stock Option
Agreement, which is attached hereto and marked Exhibit 1 to be
presented to the Optionee in a timely manner upon the grant of such
Options by the Incentive Stock Option Committee.
4. No other provisions of the Plan shall be affected hereby, and the
remainder of the Plan shall remain in full force and effect.
2
<PAGE>
Sinclair Broadcast Group
Proxy for Annual Meeting of June 28, 1996
1. Election of seven directors for a term expiring in 1997 as set forth in
the Proxy Statement --
Nominees: David D. Smith, Frederick G. Smith, J. Duncan Smith,
Robert E. Smith, Basil A. Thomas, William E. Brock, Lawrence E.
McCanna
2. Approval of the Charter Amendment as set forth in the Proxy
Statement
3. Approval of LTIP as set forth in the Proxy Statement
4. Approval of the 1995 Plan Amendments as set forth in the Proxy
Statement
5. Ratification of the Appointment of Independent Auditors
For: |_| Withheld: |_| For all except: |_|
Identify nominees excepted:
________________________________________
________________________________________
For: |_| Against: |_| Abstain: |_|
For: |_| Against: |_| Abstain: |_|
For: |_| Against: |_| Abstain: |_|
For: |_| Against: |_| Abstain: |_|
The Board of Directors recommends a vote FOR
Items 1, 2, 3, 4 and 5.
Please mark, sign and date, and return the proxy
card promptly using the enclosed envelope.
Dated: ___________________________________________
Signature(s): ____________________________________
__________________________________________________
Please sign exactly as name appears to the left.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
<PAGE>
PROXY
SINCLAIR BROADCAST GROUP, INC.
This proxy is solicited on behalf of the
Board of Directors.
The undersigned hereby appoints David D. Smith and Frederick G. Smith, or either
of them, as attorneys-in-fact, with full power of substitution, to vote in the
manner indicated on the reverse side, and with discretionary authority as to any
other matters that may properly come before the meeting, all shares of common
stock of Sinclair Broadcast Group, Inc. which the undersigned is entitled to
vote at the annual meeting of stockholders of Sinclair Broadcast Group, Inc. to
be held on June 28, 1996 at [location] at 10:00 a.m. or any adjournment thereof.
NOT VALID UNLESS DATED AND SIGNED ON THE REVERSE SIDE
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
FOR the nominees for directors and FOR each of the other proposals.
<PAGE>
