AMERICAN RADIO SYSTEMS CORP /MA/, DEF 14A, 1997-04-21

AMERICAN RADIO SYSTEMS CORP /MA/
DEF 14A, 1997-04-21
RADIO BROADCASTING STATIONS

Previous: WESTPOINT STEVENS REC MAS TR FL RT TRAD REC PAR CE SE 1994-1, 8-K, 1997-04-21

Next: AVANT CORP, DEF 14A, 1997-04-21

<PAGE>

SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

[_]Confidential, for Use of the
Check the appropriate box: Commission Only (as Permitted by
Rule 14a-6(e)(2))

[_] Preliminary Proxy Statement

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

AMERICAN RADIO SYSTEMS CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

- -------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- -------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

- -------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- -------------------------------------------------------------------------------

(5) Total fee paid:

- -------------------------------------------------------------------------------

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

- -------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

- -------------------------------------------------------------------------------

(3) Filing Party:

- -------------------------------------------------------------------------------

(4) Date Filed:

- -------------------------------------------------------------------------------
<PAGE>

[AMERICAN RADIO SYSTEMS LOGO APPEARS HERE]

April 21, 1997

Dear Stockholder:

It is a pleasure to invite you to the Company's 1997 Annual Meeting in
Boston, Massachusetts on Thursday, May 29, 1997 at 10:00 a.m., local time, at
The Boston Harbor Hotel, 70 Rowes Wharf, Boston, Massachusetts 02110.
Registration for the Meeting will begin at 9:30 a.m. The official Notice of
Meeting, proxy statement and form of proxy are included with this letter. The
matters listed in the Notice of Meeting are described in detail in the proxy
statement.

The vote of every stockholder is important. Mailing your completed proxy
will not prevent you from voting in person at the meeting if you wish to do
so.

Please sign, date and promptly mail your proxy. Your cooperation will be
greatly appreciated.

Your Board of Directors and management look forward to greeting those
stockholders who are able to attend.

Sincerely,

/s/ Steven B. Dodge

Steven B. Dodge
Chairman of the Board, President
and Chief Executive Officer
<PAGE>

AMERICAN RADIO SYSTEMS CORPORATION
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116

NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1997

To the Stockholders:

The 1997 Annual Meeting of Stockholders of American Radio Systems
Corporation, a Delaware corporation (the "Company"), will be held at The
Boston Harbor Hotel, 70 Rowes Wharf, Boston, Massachusetts 02110, on Thursday,
May 29, 1997 at 10:00 a.m., local time, to consider and act upon the following
matters:

1. To elect ten Directors, including two independent directors to be
elected by the holders of Class A Common Stock, voting separately as a
class, for the ensuing year or until their successors are elected and
qualified;

2. To approve an amendment to the Company's Amended and Restated Stock
Option Plan to increase the aggregate number of shares of Class A and Class
B Common Stock authorized for issuance thereunder from 2,000,000 to
3,000,000;

3. To ratify the selection by the Board of Directors of Deloitte & Touche
LLP as the Company's independent auditors for 1997; and

4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.

Stockholders of record at the close of business on March 31, 1997 are
entitled to notice of, and to vote at, the Annual Meeting. The stock transfer
books of the Company will remain open for the transfer of the Common Stock.
For a period of ten days prior to the Annual Meeting, a complete list of the
stockholders entitled to vote at the Annual Meeting will be available at the
offices of the Company for inspection by any stockholder of record for any
purpose germane to the Annual Meeting.

By order of the Board of Directors

/s/ Michael B. Milsom

Michael B. Milsom
Secretary

Boston, Massachusetts
April 21, 1997

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL THE PROXY CARD IN THE
ENCLOSED ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE
ANNUAL MEETING. NO POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED WITHIN
THE UNITED STATES.
<PAGE>

AMERICAN RADIO SYSTEMS CORPORATION
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116

PROXY STATEMENT
FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 29, 1997

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of American Radio Systems Corporation, a
Delaware corporation ("American" or the "Company"), for use at the 1997 Annual
Meeting of Stockholders to be held on Thursday, May 29, 1997 (the "Annual
Meeting") and at any adjournment or adjournments of that meeting.

The Company's Annual Report to Stockholders for the fiscal year ended
December 31, 1996 is being mailed to stockholders with the mailing of this
Proxy Statement on or about April 21, 1997.

All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the
owners of stock held in their names, and the Company will reimburse them for
their reasonable out-of-pocket expenses incurred in connection with the
distribution of such proxy materials.

REVOCABILITY OF PROXIES

Any stockholder giving a proxy in the enclosed form has the power to revoke
it at any time before it is exercised by delivering to the Secretary of the
Company at its principal executive office located at 116 Huntington Avenue,
Boston, Massachusetts 02116, a written notice of revocation or another duly
executed proxy bearing a later date. A stockholder may also revoke his or her
proxy by attending the Annual Meeting and voting in person.

RECORD DATE, VOTING AND SHARE OWNERSHIP

The Company has three classes of common stock issued and outstanding: Class
A Common Stock, $.01 par value per share (the "Class A Common Stock"), Class B
Common Stock, $.01 par value per share (the "Class B Common Stock"), and Class
C Common Stock, $.01 par value per share (the "Class C Common Stock" and,
collectively with the Class A Common Stock and the Class B Common Stock, the
"Common Stock"). Shares of Class B Common Stock and, subject to certain limits
set forth in the Amended and Restated Certificate of Incorporation, Class C
Common Stock are convertible, at any time at the option of the holder, on a
share for share basis into shares of Class A Common Stock.

With respect to the matters submitted for vote at the Annual Meeting, each
share of Class A Common Stock is entitled to one vote and each share of Class
B Common Stock is entitled to ten votes. The Class C Common Stock is not
entitled to vote on the matters submitted at the Annual Meeting. Except with
respect to the election of two of the directors, the Class A Common Stock and
the Class B Common Stock shall vote as a single class in regards to the
matters submitted at the Annual Meeting. With respect to the election of
directors, the holders of Class A Common Stock are entitled by class vote,
exclusive of all other stockholders, to elect two independent directors (the
"Independent Directors"). On March 31, 1997, the record date for the
determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting, there were outstanding and entitled to vote 15,192,397 shares
of Class A Common Stock and 4,623,311 shares of Class B Common Stock.

The presence at the Annual Meeting, in person or by proxy, of the holders of
a majority of the votes entitled to be cast of the Class A Common Stock and
the Class B Common Stock issued and outstanding on March 31, 1997 will
constitute a quorum for the transaction of business at the Annual Meeting. A
proxy in the enclosed
<PAGE>

form, if received in time for voting and not revoked, will be voted at the
Annual Meeting in accordance with the instructions contained therein. Where a
choice is not so specified, the shares represented by the proxy will be voted
"for" the election of the nominees for Directors listed herein and in favor of
the other matters set forth in the Notice of Annual Meeting accompanying this
Proxy Statement.

Votes cast at the Annual Meeting will be tabulated by a person or persons
duly appointed to act as an inspector or inspectors of election for the Annual
Meeting. The inspector(s) of election will treat shares represented by a
properly signed and returned proxy as present at the Annual Meeting for
purposes of determining a quorum, without regard to whether the proxy is
marked as casting a vote or abstaining. Likewise, the inspector(s) of election
will treat shares represented by "broker non-votes" as present for purposes of
determining a quorum, although such shares may not be voted on any matter for
which the record holder of such shares lacks authority to act. Broker non-
votes are proxies with respect to shares held in record name by brokers or
nominees, as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote, (ii) the broker or nominee does
not have discretionary voting power under applicable national securities
exchange rules or the instrument under which it serves in such capacity, and
(iii) the record holder has indicated on the proxy card or otherwise notified
the Company that it does not have authority to vote such shares on that
matter.

2
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table provides information as of March 31, 1997, with respect
to the shares of American Common Stock beneficially owned by (i) each person
known by American to own more than 5% of the outstanding American Common
Stock, (ii) each director of American, (iii) each executive officer required
to be identified in the Summary Compensation Table of American, and (iv) by
all directors and executive officers of American as a group. The number of
shares beneficially owned by each director or executive officer is determined
according to the rules of the Securities and Exchange Commission (the
"Commission"), and the information is not necessarily indicative of beneficial
ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the individual or entity has sole or shared
voting power or investment power and also any shares which the individual or
entity has the right to acquire within sixty days of March 31, 1997 through
the exercise of an option, conversion feature or similar right. Except as
noted below, each holder has sole voting and investment power with respect to
all shares of American Common Stock listed as owned by such person or entity.

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED(1)
-----------------------------------------------
PERCENT OF
PERCENT PERCENT PERCENT OF TOTAL
OF OF COMMON VOTING
NUMBER CLASS A CLASS B STOCK POWER
--------- ------- ------- ---------- ----------
<S> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFI-
CERS
Steven B. Dodge(2)............. 2,232,496 * 45.50 10.55 34.51
Thomas H. Stoner(3)............ 941,919 20.46 4.47 15.38
Don P. Bouloukos(4)............ -- -- -- -- --
Alan L. Box(5)................. + + + + +
John R. Gehron(6).............. 88,000 * 1.75 * 1.33
David Pearlman(7).............. 122,520 * 2.52 * 1.91
Joseph L. Winn(8).............. 135,048 * 2.81 * 2.13
Charlton H. Buckley(9)......... 1,810,867 11.92 -- 8.59 2.96
Arnold Chavkin/CEA(10)......... 1,295,518 -- -- 6.14 --
James H. Duncan, Jr.(11)....... 16,278 * * * *
Arthur C. Kellar(12)........... + + + + +
Charles D. Peebler, Jr.(13).... 6,600 * * * *
Lance R. Primis(14)............ -- -- -- -- --
All executive officers and
directors as a group, except
Messrs. Box and Kellar (11
persons)(15).................. 6,649,246 12.75 68.23 30.93 55.32
FIVE PERCENT STOCKHOLDERS
Baron Capital, Inc.(16)........ 2,128,500 14.01 -- 10.09 3.48
Wind Point Partners II,
L.P.(17)...................... 601,072 -- 13.05 2.85 9.82
Massachusetts Financial
Services Company(18).......... 1,394,405 9.18 -- 6.61 2.27
FMR Corp.(19).................. 1,056,200 6.95 -- 5.01 1.73
Wellington Management Company
LLP(20)....................... 1,947,366 12.82 -- 9.23 3.18
The Capital Group Companies,
Inc.(21)...................... 1,120,470 7.38 -- 5.31 1.83
</TABLE>
- --------
* Less than 1%.
+ For information regarding the pro forma beneficial ownership of Messrs. Box
and Kellar, see Notes 5 and 12.
(1) Unless otherwise indicated, all ownership is of Class B Common Stock.
(2) Mr. Dodge is Chairman of the American Board, President and Chief Executive
Officer. His address is 116 Huntington Avenue, Boston, Massachusetts
02116. Includes 78,500 shares of Class A Common Stock owned by Mr. Dodge.
Does not include 90,000 shares purchasable under an option granted on
October 1, 1994, and 32,000 shares purchasable under an option granted on
January 18, 1996 and 100,000 shares purchasable under an option granted on
January 2, 1997; includes 60,000 shares as to which the September option
and 8,000 shares as to which the 1996 option are exercisable. Includes an
aggregate of 25,050 shares

3
<PAGE>

of Class A Common Stock and 20,832 shares of Class B Common Stock owned by
three trusts for the benefit of Mr. Dodge's children and 3,000 shares of
Class A Common Stock owned by Mr. Dodge's wife. Mr. Dodge disclaims
beneficial ownership in all shares owned by such trusts and his wife. See
"Executive Compensation".
(3) Mr. Stoner is Chairman of the Executive Committee of the American Board.
His address is 116 Huntington Avenue, Boston, Massachusetts 02116. Does
not include 5,000 shares of Class A Common Stock purchasable under an
option granted on January 2, 1997. Includes 23,811 shares owned by his
wife, an aggregate of 271,998 shares owned by trusts of which he and/or
certain other persons are trustees and 29,158 shares owned by the Stoner
Broadcasting System ESOP for the benefit of Mr. Stoner. Mr. Stoner
disclaims beneficial ownership of 160,540 shares owned by such trusts.
Does not include 89,154 shares owned by Mr. Stoner's adult children.
(4) Mr. Bouloukos is Co-Chief Operating Officer. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Does not include 200,000 shares of
Class A Common Stock purchasable under an option granted on December 31,
1996. See "Executive Compensation".
(5) Mr. Box is a director and Executive Vice President of American. His
address is 116 Huntington Avenue, Boston, Massachusetts 02116. Giving
effect to the Merger of EZ Communications, Inc. into American on April 4,
1997 (the "EZ Merger"), Mr. Box would beneficially own 398,858 shares of
Class A Common Stock representing 1.7%, 1.4% and .57% of the pro forma
Class A Common Stock, American Common Stock and Voting Power,
respectively. Includes 84,010 shares of American Class A Common Stock
purchasable under options. Mr. Box is the son-in-law of Mr. Kellar.
(6) Mr. Gehron is Co-Chief Operating Officer. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Includes 6,000 shares of Class A
Common Stock owned by Mr. Gehron. Does not include 96,000 shares
purchasable under an option granted on May 23, 1994, 24,000 purchasable
under an option granted on February 15, 1995 and 8,000 shares purchasable
under an option granted on January 18, 1996 and 20,000 shares of Class A
Common Stock purchasable under an option granted on January 2, 1997;
includes 64,000 shares as to which the May option, 16,000 shares as to
which the February option and 2,000 shares as to which the January option
are exercisable. See "Executive Compensation".
(7) Mr. Pearlman is Co-Chief Operating Officer. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Includes 3,000 shares of Class A
Common Stock owned individually by Mr. Pearlman and 520 shares of Class A
Common Stock held for the benefit of his children. Does not include 68,000
shares purchasable under an option granted on December 16, 1993, 30,000
shares purchasable under an option granted on February 15, 1995, 4,000
shares purchasable under an option granted on May 18, 1995, 24,000 shares
purchasable under an option granted on June 15, 1995 and 16,000 shares
purchasable under an option granted on January 18, 1996; includes 88,000
shares as to which the December option, 20,000 shares as to which the
February option, 1,000 as to which the May option, 6,000 shares as to the
June option and 4,000 shares as to which the January option are
exercisable. See "Executive Compensation".
(8) Mr. Winn is a director, Treasurer and Chief Financial Officer. His address
is 116 Huntington Avenue, Boston, Massachusetts 02116. Includes 2,000
shares of Class A Common Stock and 7,948 shares of Class B Common Stock
owned individually by Mr. Winn and 100 shares of Class A Common Stock held
for the benefit of his children. Does not include 64,000 shares
purchasable under an option granted on December 16, 1993, 36,000 shares
purchasable under an option granted on February 15, 1995, 4,000 shares
purchasable under an option granted on May 18, 1995 and 16,000 shares
purchasable under an option granted on January 18, 1996 and 26,900 shares
of Class B and 8,100 shares of Class A Common Stock purchasable under
options granted on January 2, 1997; includes 96,000 shares as to which the
December option, 24,000 shares as to which the February option, 1,000 at
to which the May option and 4,000 shares as to which the January option
are exercisable. See "Executive Compensation".
(9) Mr. Buckley is a director of American. Does not include 5,000 shares of
Class A Common Stock purchasable under an option granted on January 2,
1997. His address is 116 Huntington Avenue, Boston, Massachusetts 02116.
Does not include 6,053 shares of Class A Common Stock which are held by an
adult child of Mr. Buckley and which Mr. Buckley disclaims beneficial
ownership.
(10) Mr. Chavkin is a director of American. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Mr. Chavkin, as a general partner of
Chase Capital Partners ("CCP"), which is the general partner

4
<PAGE>

of Chase Equity Associates ("CEA"), may be deemed to own beneficially
shares held by CEA. Mr. Chavkin disclaims such beneficial ownership. CEA is
the sole holder of Class C Common Stock. The address of CCP and CEA is 380
Madison Avenue, 12th Floor, New York, New York 10017. Does not include
5,000 shares of Class A Common Stock purchasable under an option granted on
January 2, 1997.
(11) Mr. Duncan is a director of American. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Does not include 2,000 shares
purchasable under an option granted on December 16, 1993, 800 shares
purchasable under an option granted on February 15, 1995 and 600 shares
purchasable under an option granted on January 18, 1996 and 5,000 shares
of Class A Common Stock purchasable under an option granted on January 2,
1997; includes 2,000 shares as to which the December option, 800 shares
as to which the February option, and 600 shares as to which the January
option are exercisable. Includes (a) 6,300 shares of Class A Common Stock
and 6,578 shares of Class B Common Stock owned directly and (b) 500
shares of Class A Common Stock owned as follows: (i) 200 shares held by
Mr. Duncan's spouse, (ii) 100 shares held by each of his two daughters
and (iii) 100 shares held by his spouse for his stepson. Mr. Duncan has
disclaimed beneficial ownership of these shares. See "Executive
Compensation".
(12) Mr. Kellar is a director of American. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Giving effect to the EZ Merger, Mr.
Kellar would beneficially own 2,218,247 shares of Class A Common Stock
representing 9.4%, 7.5% and 3.2% of the pro forma Class A Common Stock,
American Common Stock and Voting Power, respectively. Does not include
5,000 shares of Class A Common Stock purchasable under an option granted
April 15, 1997. Includes 84,010 shares of American Class A Common Stock
purchasable under options.
(13) Mr. Peebler is a director of American. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Includes 2,000 shares of Class A
Common Stock owned by Mr. Peebler. Does not include 6,000 shares
purchasable under an option granted February 15, 1995 and 2,400 shares
purchasable under an option granted on January 18, 1996 and 5,000 shares
of Class A Common Stock purchasable under an option granted January 2,
1997; includes 4,000 shares as to which the February option and 600
shares as to which the January option are exercisable. See "Executive
Compensation".
(14) Mr. Primis is a director of American. His address is 116 Huntington
Avenue, Boston, Massachusetts 02116. Does not include 5,000 shares of
Class A Common Stock purchasable under an option granted April 15, 1997.
(15) Includes all shares stated to be owned in the preceding notes.
(16) The address of Baron Capital, Inc. ("Baron") is 767 Fifth Avenue, New
York, NY 10153. Mr. Baron disclaims beneficial ownership of 2,106,400
shares. Based on Baron's Schedule 13D (Amendment No. 1) dated December 5,
1996, Mr. Baron has sole voting power over 225,000 shares, shared voting
power over 1,881,800 shares, sole dispositive power over 225,000 shares
and shared dispositive power over 1,881,800.
(17) The address of Wind Point Partners II, L.P. ("Wind Point") is 676 North
Michigan Avenue, Suite 3300, Chicago, IL 60611. Based on its Schedule 13G
dated February 14, 1996, Wind Point has sole voting power over 24,912
shares, shared voting power over 601,072, sole dispositive power over
24,912 shares, and shared dispositive power over 601,072 shares.
(18) The address of Massachusetts Financial Services Company ("MFS") is 500
Boylston Street, Boston, Massachusetts 02116-3741. Based on its Schedule
13G dated February 11, 1997, MFS has sole voting power over 1,339,705
shares and sole dispositive power over 1,394,405 shares.
(19) The address of FMR Corp. ("FMR") is 82 Devonshire Street, Boston,
Massachusetts 02109. Based on its Schedule 13G (Amendment No. 1) dated
February 12, 1997, FMR has sole voting power over 133,700 and sole
dispositive power over 1,056,200.
(20) The address of Wellington Management Company LLP ("Wellington"), is 75
State Street, Boston, Massachusetts 02109. Based on its Schedule 13G
(Amendment No. 1) dated February 14, 1997, Wellington has shared voting
power over 1,038,346 shares and shared dispositive power over 1,947,366
shares.
(21) The address of The Capital Group Companies, Inc. ("Capital") is 333 South
Hope Street, 52nd Floor, Los Angeles, California 90071. Based on its
Schedule 13G dated February 14, 1997, Capital has sole voting power over
484,700 shares and sole dispositive power over 1,120,470.

5
<PAGE>

ITEM 1

ELECTION OF DIRECTORS

The Board of Directors currently consists of ten directors. The Board of
Directors has nominated for election as directors at the Annual Meeting the
ten incumbent directors listed below. Messrs. Duncan and Peebler are the
nominees to serve as Independent Directors. Persons elected at the meeting
will hold office until the 1998 Annual Meeting or until their successors are
elected and qualified, subject to earlier retirement, resignation or removal.
In the event that any of the above nominees become unavailable to serve, the
shares represented by proxies will be voted for the election of such other
person as may be recommended by the Board of Directors or management. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominees listed below. In connection with American's merger with Henry
Broadcasting Company ("HBC") in July of 1996, American entered into an
agreement with Mr. Buckley entitling him to nominate one member of the Board
of Directors under certain circumstances. In connection with the EZ Merger,
American entered into a similar agreement with Messrs. Box and Kellar
entitling them to nominate two members of the Board of Directors. Mr. Box is
the son-in-law of Mr. Kellar.

REQUIRED VOTE

Except for the election of the Independent Directors, the affirmative vote
of the holders of a plurality of the voting power of the shares of the Class A
Common Stock and the Class B Common Stock, present or represented at the
Annual Meeting, voting as a single class, is required for the election of
directors. For the election of the Independent Directors, an affirmative vote
of the holders of a plurality of the shares of the Class A Common Stock,
present or represented at the Annual Meeting, voting as a separate class, is
required.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF EACH OF THE NOMINEES LISTED BELOW TO SERVE AS DIRECTORS OF THE
COMPANY UNTIL THE NEXT ANNUAL MEETING OR UNTIL THEIR SUCCESSORS ARE ELECTED
AND QUALIFIED.

Set forth below are the name and age of each director, his principal
occupation and business experience during the past five years and the names of
other companies of which he serves as a director as of March 31, 1997.

<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
- ------- ------------------------------------------------------------------------
<S> <C>
Steven B. Dodge Mr. Dodge has been Chairman of the Board, President and Chief
Age 51 Executive Officer since the founding of the Company on
November 1, 1993. Mr. Dodge was the founder in 1988 of
Atlantic Radio, L.P. ("Atlantic"), one of the predecessors of
the Company, and served as Chief Executive Officer of the
general partner of Atlantic. Prior to forming Atlantic, Mr.
Dodge served as Chairman and Chief Executive Officer of
American Cablesystems Corporation, a cable television company
he founded in 1978 and which was merged into Continental
Cablevision, Inc. in 1988. Mr. Dodge serves as a director of
American Media, Inc.
Thomas H. Stoner Mr. Stoner has been Chairman of the Executive Committee and
Age 62 the Compensation Committee of the Board since the founding of
the Company. Mr. Stoner founded Stoner Broadcasting Systems,
Inc. ("Stoner") in 1965. Stoner, which was one of the
predecessors of American, operated radio stations for over 25
years in large, medium and small markets. Mr. Stoner is a
director of Gaylord Container Corporation and Poppe Tyson
Corp., a trustee of Chesapeake Bay Foundation, and serves on
the Advisory Board of St. John's College.
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS
- ------- ------------------------------------------------------------------------
<S> <C>
Alan L. Box Mr. Box has served as a director since the consummation of the
Age 45 EZ Merger. In 1974, he was the General Manager of EZ's
Washington, D.C. area radio station. He became Executive Vice
President and General Manager and a director of EZ in 1979,
President of EZ in 1985 and Chief Executive Officer of EZ in
1995. He serves as a director of the George Mason Bankshares
and the George Mason Bank. Previously, Mr. Box served as the
Chairman of the NAB Digital Audio Broadcast Task Force and as
a director of the NAB. Currently, Mr. Box is the Chairman of
the NAB's Futures Committee.
Joseph L. Winn Mr. Winn has been the Treasurer, Chief Financial Officer and a
Age 45 director since the founding of the Company. In addition to
serving as Chief Financial Officer of the Company, Mr. Winn
was Co-Chief Operating Officer responsible for Boston
operations until May 1994 when Mr. Gehron joined American. Mr.
Winn served as Chief Financial Officer and a director of the
general partner of Atlantic since its organization. He also
served as Executive Vice President of the general partner of
Atlantic from its organization until June 1992, and as its
President from June 1992 until the organization of American.
Atlantic was one of the predecessors of the Company. Prior to
joining Atlantic, Mr. Winn served as Senior Vice President and
Corporate Controller of American Cablesystems since joining
that company in 1983.
Charlton H. Buckley Charlton H. Buckley was elected a director in August 1996. Mr.
Age 59 Buckley is the founder, President and Chief Executive Officer
of HBC. Mr. Buckley is also President and 100% owner of Steele
Park Resort, Inc., which owns and operates a resort on Lake
Berryessa in California's Napa Valley, and is a co-founder of
World Asphalt Company, a manufacturer of roofing products
located in Sacramento, CA. Mr. Buckley has been involved in
the radio broadcast industry since 1983 when HBC acquired its
first stations in Portland, Oregon. Prior to that time, Mr.
Buckley was involved in the construction business.
Arnold L. Chavkin Mr. Chavkin has been a director since the founding of the
Age 45 Company. Mr. Chavkin is a general partner of Chase Capital
Partners ("CCP"), previously known as Chemical Venture
Partners ("CVP"), which is a general partner of Chase Equity
Associates ("CEA"), one of American's shareholders, and
previously a principal shareholder of Multi Market
Communications, Inc. ("Multi-Market"), one of the predecessors
of the Company. Mr. Chavkin has been a General Partner of CCP
and CVP since January 1992 and has served as the President of
Chemical Investments, Inc. since March 1991. Mr. Chavkin is
also a director of Reading & Bates Corporation, Bell Sports
Corporation, and Wireless One, Inc. Prior to joining Chemical
Investments, Inc., Mr. Chavkin was a specialist in investment
and merchant banking at Chemical Bank for six years.
James H. Duncan, Jr. Mr. Duncan has been a director since the founding of the
Age 49 Company. Mr. Duncan is the founder, Chief Executive Officer
and a 50% shareholder of Duncan's American Radio, Inc., which
publishes the Duncan Guide and other reports and publications
about the radio broadcasting industry. Mr. Duncan had served
as a director of Stoner from 1983 until the merger with the
Company in 1993. Mr. Duncan had also served as a director of
Price Communications Corporation from 1992 to 1994, and as a
director of Emmis Broadcasting Corporation from 1985 to 1992.
</TABLE>

7
<PAGE>

Messrs. Duncan and Peebler have been nominated as the Independent Directors
and will be elected by the holders of Class A Common Stock only.

BOARD AND COMMITTEE MEETINGS

During the fiscal year ended December 31, 1996, the Board of Directors held
four regularly scheduled, one special meeting and one telephonic meeting. Each
of the current directors who was then in office attended at least 75% of the
aggregate number of meetings of the Board of Directors and all committees
thereof on which such director served. The committees of the Board of
Directors consist of an Audit Committee, a Compensation Committee and an
Executive Committee. During fiscal year ended December 31, 1996, the
Compensation Committee held two meetings, the Executive Committee held one
meeting and the Audit Committee held four meetings. The Company does not have
a nominating committee.

The Audit Committee currently consists of Messrs. Chavkin (Chairman),
Duncan, and Primis. The functions of the Audit Committee are to review and
report to the Board of Directors with respect to the selection and the terms
of the engagement of the Company's independent auditors and to maintain
communications among the Board of Directors, such independent auditors and the
Company's internal accounting staff with respect to accounting and audit
procedures, the implementation of recommendations by such independent
auditors, the adequacy of the Company's internal controls and related matters.

The Compensation Committee currently consists of Messrs. Stoner (Chairman),
Peebler, Buckley and Kellar. The Compensation Committee provides
recommendations to the Board regarding compensation strategy and programs of
the Company and administers the Amended and Restated Stock Option Plan,
including the grant of stock options thereunder. The Compensation Committee is
also responsible for establishing and modifying the compensation, including
incentive compensation, of all corporate officers of the Company, recommending
adoptions of, and amendment to, all stock option and other employee benefit
plans and arrangements, and the engagement of, terms of any employment
agreements and arrangements with, and termination of, all corporate officers
of the Company.

8
<PAGE>

The Executive Committee currently consists of Messrs. Chavkin, Dodge, Stoner
(Chairman), Buckley and Kellar. Between meetings of the Board of Directors,
the Executive Committee exercises all the powers of the Board of Directors in
the management and direction of the business and affairs of the Company,
except as provided otherwise by law, resolutions of the Board of Directors,
the Company's By-laws, or its Amended and Restated Certificate of
Incorporation.

DIRECTOR COMPENSATION

Mr. Stoner is party to an agreement with American pursuant to which he is
entitled to annual compensation at the rate of $50,000 and to a nonaccountable
expense allowance of $50,000 until the earlier of (a) October 31, 1998 or (b)
his death. The following directors receive an annual committee fee as
indicated: Mr. Stoner ($8,000), Mr. Chavkin ($8,000), Mr. Duncan ($4,000), Mr.
Peebler ($4,000), Mr. Primis ($5,000), Mr. Buckley ($4,000) and Mr. Kellar
($4,000). American paid a total of $23,000 in directors fees during 1996.
Directors are also eligible to receive grants of options under American's
Amended and Restated 1993 Stock Option Plan (the "Stock Option Plan") and have
received such grants in the past for their service. See "Principal
Shareholders" for information about grants of options to directors. During the
last fiscal year, Messrs. Duncan and Peebler were each granted options under
the Plan to purchase 3,000 shares of Class B Common Stock at $25.00 per share.
Each of the foregoing options is exercisable in 20% cumulative annual
increments commencing one year from the date of the grant and expires at the
end of ten years.

9
<PAGE>

EXECUTIVE COMPENSATION

The following table summarizes the annual and long-term compensation for the
years ended December 31, 1994, 1995 and 1996 of American's Chief Executive
Officer and each of the other executive officers whose salary and bonus
exceeded $100,000.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------ ------------------------------
NAME AND OTHER ANNUAL SHARES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION OPTIONS(2) COMPENSATION
- ------------------ ---- --------- ------- ------------ ----------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Steven B. Dodge......... 1994 $252,250 -- -- 150,000 --
Chairman of the Board, 1995 $252,625 -- -- -- --
President and Chief 1996 $297,250 50,000 -- 40,000 4,910(3)
Executive Officer
Joseph L. Winn(4)....... 1994 $184,247 -- -- 160,000 --
Treasurer and Chief 1995 $227,859 -- -- 65,000 --
Financial Officer 1996 $257,250 42,500 20,000 11,456(5)
Don P. Bouloukos........ 1996 $ 81,504(6) -- $100,000(6) 200,000(6) 3,420(5)
Co-Chief Operating
Officer
John R. Gehron.......... 1994 $136,509(7) $50,000(8) $ 25,000(9) 160,000 --
Co-Chief Operating
Officer 1995 $227,544 -- -- 40,000 --
1996 $247,250 $20,000 $ 75,000(7) 10,000 13,500(10)
David Pearlman.......... 1994 $217,760 -- -- 156,000 --
Co-Chief Operating
Officer 1995 $222,745 -- -- 85,000 --
1996 $257,250 $42,500 $364,000(11) 20,000 11,520(5)
</TABLE>
- --------
(1) Includes Company's matching 401(k) plan contributions.
(2) For information regarding the Stock Option Plan, see Item 2.
(3) Includes group term life insurance and parking expenses paid by the
Company.
(4) Mr. Winn also served as Co-Chief Operating Officer until Mr. Gehron joined
American in May 1994.
(5) Includes group term life insurance, automobile lease and parking expenses
paid by the Company.
(6) For the period September 3, 1996 through December 31, 1996. Mr. Bouloukos
was granted options in August 1996 to purchase an aggregate of 200,000
shares at $33.33 per share; such options were terminated by agreement and
Mr. Bouloukos was granted new options to purchase 200,000 shares of Class
A Common Stock at $27.25 per share, the closing price of the Class A
Common Stock on Nasdaq on December 31, 1996. In 1996, Mr. Bouloukos also
received a $100,000 demand loan at a variable interest rate (prime).
(7) For period from May 16, 1994 through December 31, 1994. In 1994, Mr.
Gehron also received a $75,000 demand loan at a variable interest rate
(prime) at the time he joined American. In 1996, the loan was forgiven and
included as compensation.
(8) Bonus paid in January 1995 for services rendered in 1994.
(9) One time allowance for relocation expenses.
(10) Includes group term life insurance, personal travel, relocation expenses
paid by the Company.
(11) Includes compensation associated with May 13, 1996 option exercise of
14,000 shares of Class B Common Stock.

10
<PAGE>

The following table sets forth certain information relating to option grants
pursuant to the Stock Option Plan in the year ended December 31, 1996 to the
individuals named in the Summary Compensation Table above.

OPTION GRANTS IN FISCAL YEAR 1996

INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF STOCK PRICE
SHARES OF APPRECIATION
UNDERLYING EXERCISE FOR OPTION TERMS(B)
OPTIONS PRICE EXPIRATION ---------------------
NAME GRANTED(A) PER SHARE DATE 5% 10%
---- ---------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Steven B. Dodge........... 40,000 $25.00 01/17/2006 $ 628,895 $1,593,742
Joseph L. Winn............ 20,000 25.00 01/17/2006 $ 314,417 $ 796,871
Don P. Bouloukos.......... 200,000 27.25 12/30/2006 $3,427,476 $8,685,896
John R. Gehron............ 10,000 25.00 01/17/2006 $ 157,224 $ 398,436
David Pearlman............ 20,000 25.00 01/17/2006 $ 314,447 $ 796,871
</TABLE>
- --------
(a) All options granted to the named executive officers were granted for Class
B Common Stock (other than Mr. Bouloukos whose option was for Class A
Common Stock) pursuant to the Stock Option Plan. The options become
exercisable in 20% cumulative annual increments commencing one year from
the grant dates (options at $25.00 become exercisable commencing on
January 18, 1997; $27.25 on December 31, 1997.
(b) Potential Realizable Value is based on the assumed growth rates for the
ten-year option term, as applicable. A 5% per year appreciation in stock
price from $25.00 per share yields $40.72 per share and from $27.25 yields
per share $44.39 per share. A 10% per year appreciation in stock price
from $25.00 per share yields $64.84 per share and from $27.25 per share
yields $70.68 per share. The actual value, if any, an executive may
realize will depend on the excess of the stock price over the exercise
price on the date the option is exercised, and there is no assurance the
value realized by an executive will be at or near the amounts reflected in
this table.

On May 13, 1996, Mr. Pearlman exercised a stock option to purchase 14,000
shares of Class B Common Stock at $6.375 per share; the closing price of the
Class A Common Stock on Nasdaq on May 13, 1996 was $31.75. On June 11, 1996,
Mr. Duncan exercised a stock option to purchase 800 shares of Class B Common
Stock at $9.875; the closing price of the Class A Common Stock on Nasdaq on
June 11, 1996 was $36.50.

The following table sets forth certain information with respect to the
unexercised options to purchase Class A and B Common Stock granted (Class A
Common Stock in the case of Mr. Bouloukos) under the Stock Option Plan to the
individuals named in the Summary Compensation Table above.

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
OPTIONS AT DECEMBER 31, 1996 OPTIONS AT DECEMBER 31, 1996(A)
-------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- --------------- -------------------------------
<S> <C> <C> <C> <C>
Steven B. Dodge......... 60,000 130,000 $ 1,077,000 $ 1,705,500
Joseph L. Winn.......... 109,000 136,000 $ 2,224,750 $ 2,264,000
Don P. Bouloukos........ 0 200,000 $ 0 $ 0
John R. Gehron.......... 72,000 138,000 $ 1,475,000 $ 2,582,500
David Pearlman.......... 105,000 156,000 $ 2,053,000 $ 2,328,500
</TABLE>
- --------
(a) Based on the last sale price of the Class A Common Stock on Nasdaq on
December 31, 1996 of $27.25.

Additional ten-year options were granted on January 2, 1997 to purchase
shares of Common Stock at $28.25 per share as follows: Dodge--100,000 shares
(Class B); Winn--35,000 shares (26,900 Class B shares and 8,100 Class A
shares); Pearlman--25,000 shares (Class A); Gehron--20,000 shares (Class A);
and each of the other directors--5,000 shares (Class A). Mr. Bouloukos was
granted ten-year options on August 15, 1996 to purchase 122,000 shares of
Class B Common Stock and 78,000 shares of Class A Common Stock at $33.33 per
share. Such options were canceled by agreement of Mr. Bouloukos and American
and new options were granted to purchase an aggregate of 200,000 shares of
Class A Common Stock at $27.25 per share, the closing price of such stock on
Nasdaq on December 31, 1996.

11
<PAGE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

American is a national radio broadcasting company committed to acquiring,
developing and operating clusters of complementary radio stations in major and
growing advertising markets. The Company's objective is to maximize
advertising revenues, broadcast cash flow and return on investment. American
is also committed to an acquisition program, concentrating those efforts in
markets ranked in the top 50 in terms of radio advertising revenues where
management believes it can ultimately achieve its long-term strategic
objectives. In July 1995, American organized American Tower Systems, Inc. for
the purpose of acquiring, developing and operating communications towers
throughout the United States for use by American's radio stations, other radio
operators and other communications related businesses. In order to achieve
those goals and to implement this strategy and program, the Company believes
that it is crucial to recruit, retain and motivate, imaginative and highly
qualified management at the executive level.

The compensation policies adopted and implemented by the Compensation
Committee, combining base salary and incentive compensation principally in the
form of long-term stock options with a five-year vesting schedule, are
designed to achieve the operating and acquisitions strategies and goals of the
Company. By placing a greater emphasis on the long-term incentive aspects of
the overall compensation program, it is hoped that financial incentives will
be provided to motivate those responsible for achieving the Company's goals
and, at the same time, aligning the interests of those persons with the
Company's stockholders. See "Item 2, Amendment of the Company's Stock Option
Plan to Increase the Number of Shares Reserved for Issuance Thereunder--
Summary of the Stock Option Plan". To recruit Don P. Bouloukos to join
American in August 1996 as Co-Chief Operating Officer, American agreed to
grant Mr. Bouloukos an "at the money" option to purchase 200,000 shares. On
August 15, 1996, Mr. Bouloukos was granted an option to purchase 200,000
shares (122,000 shares of Class B and 78,000 shares of Class A Common Stock)
for $33.33 per share, the closing price of the Class A Common Stock on the
Nasdaq National Market on that date. Shortly thereafter, the price of the
Class A Common Stock declined and the option became significantly "out of the
money". Given the foregoing exceptional circumstances, the Compensation
Committee agreed on December 31, 1996 to terminate Mr. Bouloukos's existing
option and replace it with an option to purchase 200,000 shares of Class A
Common Stock for $27.25 per share, the closing price of the Class A Common
Stock on the Nasdaq National Market on that date.

<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SHARES MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT TIME REMAINING AT
OPTIONS/SARS TIME OF OF REPRICING DATE OF
DATE OF REPRICED OR REPRICING OR OR NEW EXERCISE REPRICING OR
NAME REPRICING AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
---- ----------------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Don P. Bouloukos........ December 31, 1996 200,000 $27.25 $33.33 $27.25 Approximately
Co-Chief Operating
Officer 10 years
</TABLE>

American has not entered into employment agreements with any of its
executive officers. Therefore, the decision of the Compensation Committee,
which is advised by the Chief Executive Officer with respect to executive
officers other than himself, is based on the actual performance of the
specific individuals without regard to any predetermined earnings or other
performance measures. The Compensation Committee does, however, consider the
financial performance of the Company, including the implementation of its
acquisition program, measured both against its budget and the performance of
other radio operators (which are not necessarily the same as those included in
the Peer Group indicated in the performance chart appearing below). During
1996 the base salary of the Chief Executive Officer was not changed
significantly, while that of each of Messrs. Winn, Gehron and Pearlman was
raised by approximately 12.9%, 8.7% and 12.9%, respectively. Additional stock
options to purchase 40,000, 20,000, 10,000 and 20,000 shares, respectively,
were awarded to Messrs. Dodge, Winn, Gehron and Pearlman.

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows an income tax deduction to public companies for compensation in
excess of $1,000,000 paid in any year to the chief executive officer or any of
the four most highly compensated other executive officers, to the extent that
this compensation is not "performance based" within the meaning of such
provision. Although the Compensation Committee has not adopted any hard and
fast rule with respect to this issue, it is its general policy, subject to all
then prevailing

12
<PAGE>

relevant circumstances, to attempt to structure the compensation arrangements
of American to maximize deductions for federal income tax purposes.

COMPENSATION COMMITTEE
Thomas H. Stoner, Chairman
Arnold L. Chavkin

OTHER TRANSACTIONS

The Chase Manhattan Bank ("Chase") is a co-syndication agent and a lender
with an approximately 14%, 9% and 9% combined participation under American's
prior credit agreements in 1994, 1995 and 1996, respectively. Chase is an
affiliate of CCP, the general partner of CEA; Mr. Chavkin, a director, is a
general partner of CCP. For the years ended December 31, 1994, 1995 and 1996,
Chase's share of interest and fees paid by American pursuant to the provisions
of such credit facilities were $1,200,000, 1,688,500 and 553,000,
respectively. Chase Securities Inc. is an affiliate of Chase, and was an
underwriter in the public offering of American's 9% Senior Subordinated Notes
in February 1996.

Mr. Gehron, a Co-Chief Operating Officer, and the Company were parties to a
demand loan agreement pursuant to which the Company loaned to Mr. Gehron
$75,000 at a variable interest rate (prime) at the time he joined the Company
in May 1994. Such loan was forgiven by the Company during the first quarter of
1996.

Mr. Bouloukos, a Co-Chief Operating Officer, and the Company are parties to
a demand loan agreement pursuant to which the Company loaned to Mr. Bouloukos
$100,000 at a variable interest rate (prime) at the time he joined the Company
in August 1996. Such loan remains outstanding in the principal amount of
$100,000.

Management believes that the above transactions were on terms, and the
Company intends to continue its policy that all future transactions between it
and its officers, directors principal stockholders and affiliates will be on
terms, not less favorable to the Company than those which could be obtained
from unaffiliated third parties.

13
<PAGE>

PERFORMANCE GRAPH

The following graph compares the percentage change in the Company's Class A
Common Stock to (i) the cumulative total return of the Nasdaq Market Index,
(ii) the S&P 500 Index, and (iii) a group of companies selected as the
Company's peers in the radio broadcast industry (the "Peer Group"), since the
Class A Common Stock has traded on the Nasdaq National Market (June 9, 1995--
February 4, 1997) and the New York Stock Exchange (since February 5, 1997),
assuming an investment of $100. The Peer Group consists of the following
companies that own and operate radio stations: Clear Channel Communications,
Inc., Cox Radio Inc., Evergreen Media Corporation, Emmis Broadcasting
Corporation, SFX Broadcasting, Inc., Jacor Communications, Inc., Chancellor
Broadcasting and Saga Communications, Inc. It consists of the same companies
that were in American's proxy statement for the previous year except that (i)
Cox Radio Inc. has been added to replace EZ, which was merged into American,
(ii) Chancellor Broadcasting has been added to replace Citicasters, Inc. which
was merged into Jacor Communications, Inc. and (iii) Infinity Broadcasting
Corporation has been deleted as a result of its merger with Westinghouse
Electric Corporation. The cumulative return assumes reinvestment of all
dividends during each month. The performance of the Company's Class A Common
Stock reflected below is not necessarily indicative of future performance.

[GRAPH APPEARS HERE]

<TABLE>
<CAPTION>
- -------------------------------FISCAL YEAR ENDING------------------------------
COMPANY BASE 6/30/1995 9/29/1995 12/29/1995 3/29/1996 6/28/1996 9/30/1996 12/31/1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMERICAN RADIO SYSTS 100.00 112.35 122.22 138.27 166.67 212.35 183.95 134.57
PEER GROUP 100.00 110.09 123.12 137.81 169.71 237.22 256.89 200.27
NASDAQ MARKET INDEX 100.00 105.68 117.75 116.80 122.20 131.26 134.87 141.22
S&P 500 100.00 102.32 110.45 117.11 123.39 128.93 132.92 144.00
</TABLE>

14
<PAGE>

ITEM 2

AMENDMENT OF THE COMPANY'S STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES RESERVED FOR ISSUANCE THEREUNDER

The Board of Directors and the stockholders of the Company adopted the Stock
Option Plan and reserved for issuance thereunder up to an aggregate of
2,000,000 shares of Class A and Class B Common Stock. The Board of Directors
has approved and recommended to the stockholders that they approve an
amendment to the Stock Option Plan to increase the aggregate number of shares
of Class A and Class B Common Stock authorized for issuance from 2,000,000 to
3,000,000 shares. It is not proposed to amend the provision of the Stock
Option Plan which limits the number of shares of Class B Common Stock as to
which options may be granted to 1,600,000 shares.

The Board of Directors believes that equity interests are a significant
factor in the Company's ability to attract, retain and motivate key employees,
directors and advisors that are critical to the Company's long term success
and that an increase in the aggregate number of shares available for issuance
under the Stock Option Plan is necessary in order to provide key employees,
directors and advisors of the Company with incentives to serve the Company.

As of March 31, 1997, options for an aggregate of 1,600,000 shares of Class
B Common Stock and 507,100 shares of Class A Common Stock (of which 107,100
were granted contingent on the receipt of stockholder approval of this
amendment) had been granted and were outstanding or have been exercised under
the Stock Option Plan at exercise prices ranging from $6.375 to $28.25 per
share. Accordingly, assuming the amendment is approved, an aggregate of
1,000,000 shares of Class A (or 892,900 shares taking into account the
aforementioned contingent grants) will be available to be granted under the
Stock Option Plan. On March 31, 1997, the closing price per share of the Class
A Common Stock, as reported in a summary of composite transactions in The Wall
Street Journal for stocks listed on The New York Stock Exchange was $30.50.

On April 4, 1997, the EZ Merger was effective. Pursuant to Section 6.10 of
the Agreement and Plan of Merger (the "EZ Merger Agreement") by and among
American, American Merger Corporation and EZ dated August 5, 1996, and as
amended and restated on September 27, 1996, American assumed all options then
outstanding under the EZ 1993 Equity Incentive Plan (the "EZ Stock Option
Plan"). Such options automatically converted into options to buy an aggregate
of 362,239 shares of Class A Common Stock pursuant to the EZ Merger Agreement.
The shares that underlie such options are additional shares that American is
obligated to issue upon the exercise of options under the EZ Stock Option
Plan. They are not included in the Stock Option Plan.

SUMMARY OF THE STOCK OPTION PLAN

The following summary of the material features of the Stock Option Plan is
qualified in its entirety by reference to the full text of the Stock Option
Plan.

Purpose, Participants, Effective Date and Duration. The Company instituted
the Stock Option Plan effective December 13, 1993. The purpose of the Stock
Option Plan is to encourage key employees, directors and advisors of the
Company and its Subsidiaries (a Subsidiary is a corporation the voting power
of which is at least 50% owned by the Company, directly or indirectly), who
render services of special importance to, and who have contributed or may be
expected to contribute materially to the success of, the Company or a
Subsidiary (the "Participants"), to continue their association with the
Company and its Subsidiaries by providing favorable opportunities for them to
participate in the ownership of the Company and in its future growth through
the granting of options ("Options") to acquire shares of the Class A and Class
B Common Stock. As of December 31, 1996, approximately 1,237 employees and 7
non-employee directors were eligible to participate in the Stock Option Plan.
The Stock Option Plan will terminate on December 13, 2003, unless earlier
terminated by the Board of Directors. Termination of the Stock Option Plan
will not affect awards made prior to termination, but awards may not be made
after termination.

15
<PAGE>

Shares Subject to the American Stock Option Plan. The Stock Option Plan
provides that options may be granted to purchase shares of Class A and Class B
Common Stock. However, the plan currently limits the number of Class A and
Class B Common Stock for which options may be granted to an aggregate of
2,000,000 shares, of which no more than 1,600,000 may be Class B Common Stock.
The Board of Directors recently voted to adopt an amendment to the Stock
Option Plan to provide that options may be granted for up to an aggregate of
3,000,000 shares of Class A and Class B Common Stock (including shares
underlying any options already granted and outstanding or options heretofore
exercised); provided, however, that the number of Shares of Class B Common
Stock as to which options may be granted shall not exceed 1,600,000 shares
(the "Reserved Shares"). These shares may be authorized but unissued shares or
treasury shares. In the event of any change in the number or kind of Class A
and Class B Common Stock outstanding pursuant to a reorganization,
recapitalization, exchange of shares, stock dividend or split or combination
of shares, appropriate adjustments will be made (i) to the Reserved Shares and
the number of shares subject to outstanding Options, (ii) in the exercise
price per share of outstanding Options, and (iii) in the kind of shares which
may be issued under the Stock Option Plan. Shares will be deemed issued under
the Stock Option Plan only after full payment of the exercise price has been
made. To the extent that an award under the Stock Option Plan lapses or is
forfeited, any shares subject to such award will again become available for
grant under the terms of the Stock Option Plan.

Administration. The Stock Option Plan is administered by the Compensation
Committee (the "Committee"), which must consist solely of at least two "Non-
Employee" directors. A director is deemed to be "Non-Employee Director" only
if he satisfies the requirements set forth in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").

Subject to the terms of the Stock Option Plan, the Committee has authority
to: (i) select the persons to whom Options shall be granted; (ii) determine
the number or value and the terms and conditions of Options granted to each
such person, including the price per share to be paid upon exercise of any
Option and the period within which each such Option may be exercised; and
(iii) interpret the Stock Option Plan and prescribe rules and regulations for
the administration thereof.

Stock Options. With regard to each Option, the Committee determines the
number of shares subject to the Option, the exercise price of the Option, the
manner and time of exercise of the Option and whether the Option is intended
to qualify as an incentive stock option ("ISO") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Options
that are not intended to qualify as ISOs are referred to as nonqualified stock
options ("NSOs"). ISOs may only be granted to employees of the Company. In the
case of an ISO, the exercise price may not be less than the "fair market
value" of the Reserved Shares on the date the Option is granted; provided,
however, that in the case of an employee who owns (or is considered to own
under Section 424(d) of the Code) stock possessing more than 10% percent of
the total combined voting power of all classes of stock of the Company or any
of its Subsidiaries, the price at which Reserved Shares may be purchased
pursuant to an ISO may not be less than 110% of the fair market value of the
Class A and Class B Common Stock on the date the ISO is granted.

The duration of the ISOs and NSOs granted under the Stock Option Plan shall
be specified pursuant to each respective stock option agreement, but in no
event can any ISO be exercisable after the expiration of ten years after the
date of grant. In the case of any employee who owns (or is considered under
Section 424(d) of the Code as owning) stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any of
its Subsidiaries, no ISO shall be exercisable after the expiration of five
years from its date of grant. The Committee, in its discretion, may provide
that any Option is exercisable during its entire duration or during any lesser
period of time.

The option exercise price may be paid (i) in cash or a cash equivalent, or
(ii) to the extent permitted by the Compensation Committee, in shares of Class
A and Class B Common Stock owned by the optionee; provided, however, that the
optionee may not make payment in shares that he acquired upon the earlier
exercise of any ISO, unless and until he has held the shares until at least
two years after the date the ISO was granted and at

16
<PAGE>

least one year after the date the ISO was exercised, or (iii) to the extent
permitted by the Compensation Committee, by delivery of a recourse promissory
note secured by the stock acquired upon exercise of the Option.

The following description of the federal income tax consequences of Options
does not purport to be complete.

Tax Treatment of Options. An optionee realizes no taxable income when an NSO
is granted. Instead, the difference between the fair market value of the stock
subject to the NSO and the exercise price paid is taxed as ordinary
compensation income when the NSO is exercised. The difference is measured and
taxed as of the date of exercise, if the stock is not subject to a
"substantial risk of forfeiture", or as of the date or dates on which such
risk terminates in other cases. An optionee may elect to be taxed on the
difference between the exercise price and the fair market value of the stock
on the date of exercise, even though some or all of the stock acquired is
subject to a substantial risk of forfeiture. Gain on the subsequent sale of
the stock is taxed as capital gain. The Company receives no tax deduction on
the grant of an NSO, but is entitled to a tax deduction when the optionee
recognizes taxable income on or after exercise of the NSO, in the same amount
as the income recognized by the optionee.

Generally, an optionee incurs no federal income tax liability on either the
grant or the exercise of an ISO, although an optionee will generally have
taxable income for alternative minimum tax purposes at the time of exercise
equal to the excess of the fair market value of the stock acquired over the
exercise price. Provided that the option stock is held for at least one year
after the date of exercise of the option and at least two years after its date
of grant, any gain realized on subsequent sale of the stock will be taxed as
long-term capital gain. If the stock is disposed of within a shorter period of
time, the optionee will recognize ordinary compensation income in an amount
equal to the lesser of his gain on the disposition or the difference between
the fair market value of the stock on the date of exercise of the option and
its fair market value on its date of grant. The Company receives no tax
deduction on the grant or exercise of an ISO, but is entitled to a tax
deduction if the optionee recognizes taxable income on account of a premature
disposition of ISO stock, in the same amount and at the same time as the
optionee's recognition of ordinary income.

Amendments to Stock Option Plan. The Board may modify, revise or terminate
the Stock Option Plan at any time and from time to time, except that approval
of the stockholders of the Company is required with respect to any amendment
to change the aggregate number of Reserved Shares that may be issued under
Options granted pursuant to the Stock Option Plan, change the class of
employees or other persons eligible to receive Options, reduce the exercise
price of any ISO, extend the latest date on which an ISO can be exercised,
increase materially the benefits accruing to any person under the Stock Option
Plan, or make any other change that requires stockholder approval under
applicable law.

REQUIRED VOTE

The affirmative vote of the holders of a majority of the voting power of the
shares of the Class A and Class B Common Stock, present or represented, at the
Annual Meeting, voting as a single class, is required to approve the proposed
amendment to increase the number of shares of Class A and Class B Common Stock
issuable thereunder.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL OF SUCH PROPOSED AMENDMENT OF THE COMPANY'S STOCK OPTION PLAN.

17
<PAGE>

ITEM 3

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

Subject to ratification by the stockholders, the Board of Directors has
selected the firm of Deloitte & Touche LLP as the Company's independent
auditors for the current year. Deloitte & Touche LLP has served as the
Company's independent auditors since its organization.

Representatives of Deloitte & Touche LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.

If the stockholders do not ratify the selection of Deloitte & Touche LLP as
the Company's independent auditors, the selection of such auditors will be
reconsidered by the Board of Directors.

THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP TO SERVE AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR.

ADDITIONAL INFORMATION

OTHER MATTERS

The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly
presented to the meeting, it is the intention of the persons named in the
accompanying proxy or their substitutes acting hereunder, to vote, or
otherwise act, in accordance with their best judgment on such matters.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities, to file reports of ownership on Form
3 and changes in ownership on Form 4 or 5 with the Commission. Such officers,
directors and ten-percent stockholders are also required by SEC rules to
furnish the Company with copies of all Section 16(a) reports they file. Based
solely on its review of the copies of such forms received by it, or written
representation from certain reporting persons that they were not required to
file a Form 5, the Company believes that, during the fiscal year ended
December 31, 1996, its officers, directors and ten-percent stockholders
complied with all Section 16(a) filing requirements applicable to such
individuals, except that Mr. Bouloukos timely filed all his reports, but
inadvertently omitted information with respect to his options on his initial
report of beneficial ownership on Form 3; this omission was corrected by
filing an amended report upon discovery of the oversight.

PROPOSALS OF STOCKHOLDERS

A stockholder who intends to present a proposal at the 1998 Annual Meeting
of Stockholders for inclusion in the Company's 1998 proxy statement and proxy
card relating to that meeting must submit such proposal by December 26, 1997.
In order for the proposal to be included in the proxy statement, the
stockholder submitting the proposal must meet certain eligibility standards
and comply with certain procedures established by the Commission, and the
proposal must comply with the requirements as to form and substance
established by applicable laws and regulations. The proposal must be mailed to
the Company's principal executive office, at the address stated herein, and
should be directed to the attention of the Chief Financial Officer.

18
<PAGE>

FORM 10-K

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996 AS FILED WITH THE COMMISSION, EXCEPT FOR EXHIBITS, WILL BE
FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN REQUEST TO MR. BRUCE
DANZIGER, AMERICAN RADIO SYSTEMS CORPORATION, 116 HUNTINGTON AVENUE, BOSTON,
MASSACHUSETTS 02116.

By Order of the Board of Directors

/s/ Steven B. Dodge

Steven B. Dodge
Chairman of the Board, President and
Chief Executive Officer

April 21, 1997

<PAGE>

Exhibit 99.1

- --------------------------------------------------------------------------------
PROXY PROXY
CLASS A AMERICAN RADIO SYSTEMS CORPORATION CLASS A
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints STEVEN B. DODGE, JOSEPH L. WINN and MICHAEL
B. MILSOM, and each of them, as Proxies of the undersigned, each with the power
to appoint his or her substitute, and hereby authorizes a majority of them, or
any one if only one be present, to represent and to vote, as designated below
and on the reverse hereof, all the Class A Common Stock, $.01 par value per
share, of American Radio Systems Corporation held of record by the undersigned
or with respect to which the undersigned is entitled to vote or act at the 1997
Annual Meeting of Stockholders to be held on May 29, 1997 or any adjournments
thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTIONS ARE MADE, THE
PROXIES WILL VOTE FOR EACH OF THE MATTERS LISTED ON THE REVERSE SIDE OF THIS
CARD AND, AT THEIR DISCRETION, ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE
THE MEETING.

PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------------------------------------------------------------------

AMERICAN RADIO SYSTEMS CORPORATION
PLEASE MARK AND VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY
<S> <C> <C> <C>

1. Election of Directors -- For Withhold For All
Nominees: Steven B. Dodge, Thomas H. Stoner All All (Except Nominee(s) written below)
Alan L. Box, Joseph L. Winn, Charlton H. [ ] [ ] [ ]
Buckley, Arnold L. Chavkin, James H. Duncan, Jr., --------------------------------
Arthur C. Kellar, Charles D. Peebler, Jr. and Lance
R. Primis.

2. Amend the Stock Option Plan to increase the For Against Abstain
aggregate number of authorized shares of [ ] [ ] [ ]
Class A and Class B Common Stock to 3,000,000
shares

3. Ratification of Deloitte & Touche LLP as For Against Abstain
independent auditors for 1997 [ ] [ ] [ ]

Dated:_________________, 1997

Signatures_________________________________________________

Note: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full name as such. If a corporation, please
sign in full company name by an authorized officer
or if a partnership please sign in partnership name
by an authorized person.

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Exhibit 99.2

- --------------------------------------------------------------------------------
PROXY PROXY
CLASS B AMERICAN RADIO SYSTEMS CORPORATION CLASS B
116 HUNTINGTON AVENUE
BOSTON, MASSACHUSETTS 02116

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints STEVEN B. DODGE, JOSEPH L. WINN and MICHAEL
B. MILSOM, and each of them, as Proxies of the undersigned, each with the power
to appoint his or her substitute, and hereby authorizes a majority of them, or
any one if only one be present, to represent and to vote, as designated below
and on the reverse hereof, all the Class B Common Stock, $.01 par value per
share, of American Radio Systems Corporation held of record by the undersigned
or with respect to which the undersigned is entitled to vote or act at the 1997
Annual Meeting of Stockholders to be held on May 29, 1997 or any adjournments
thereof.

PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------------------------------------------------------------------

AMERICAN RADIO SYSTEMS CORPORATION
PLEASE MARK AND VOTE IN BOX IN THE FOLLOWING MANNER USING DARK INK ONLY

<S> <C> <C> <C>
1. Election of Directors -- For Withhold For All
Nominees: Steven B. Dodge, Thomas H. Stoner All All (Except Nominee(s) written below)
Alan L. Box, Joseph L. Winn, Charlton H. [ ] [ ] [ ]________________________________________
Buckley, Arnold L. Chavkin, Arthur C. Kellar
and Lance R. Primis.

2. Amend the Stock Option Plan to increase the For Against Abstain
aggregate number of authorized shares of [ ] [ ] [ ]
Class A and Class B Common Stock to 3,000,000
shares

3. Ratification of Deloitte & Touche LLP as For Against Abstain
independent auditors for 1997 [ ] [ ] [ ]

Dated:_________________, 1997

Signatures_________________________________________________________

Note: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full name as such.
If a corporation, please sign in full company name by an authorized
officer or if a partnership please sign in partnership name by an
authorized person.

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
EXHIBIT 99.3
================================================================================

AMERICAN RADIO SYSTEMS CORPORATION

1993 Stock Option Plan,

As Amended and Restated

================================================================================
<PAGE>

AMERICAN RADIO SYSTEMS CORPORATION

1993 STOCK OPTION PLAN,
AS AMENDED AND RESTATED

TABLE OF CONTENTS

Page
- ------

1. PURPOSE........................................ 1

2. ADMINISTRATION OF THE PLAN..................... 1

3. OPTION SHARES.................................. 2

4. AUTHORITY TO GRANT OPTIONS..................... 2

5. WRITTEN AGREEMENT.............................. 2

6. ELIGIBILITY.................................... 3

7. OPTION PRICE................................... 3

8. DURATION OF OPTIONS............................ 4

9. RESTRICTIONS ON EXERCISE OF OPTIONS............ 4

10. EXERCISE OF OPTIONS............................ 4

11. TRANSFERABILITY OF OPTIONS..................... 6

12. TERMINATION OF EMPLOYMENT OR INVOLVEMENT
OF OPTIONEE WITH THE COMPANY................... 6

13. REQUIREMENTS OF LAW............................ 7

14. NO RIGHTS AS STOCKHOLDER....................... 8

15. EMPLOYMENT OBLIGATION.......................... 8

16. FORFEITURE AS A RESULT OF TERMINATION FOR CAUSE 8

17. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE..... 9

18. AMENDMENT OR TERMINATION OF PLAN............... 11

<PAGE>

AMERICAN RADIO SYSTEMS CORPORATION

1993 STOCK OPTION PLAN,
AS AMENDED AND RESTATED

1. PURPOSE

The purpose of this Amended and Restated 1993 Stock Option Plan (the
"Plan") is to encourage directors, consultants and key employees of American
Radio Systems Corporation (the "Company") and its Subsidiaries (as hereinafter
defined) to continue their association with the Company and its Subsidiaries, by
providing opportunities for such persons to participate in the ownership of the
Company and in its future growth through the granting of stock options (the
"Options") which may be options designed to qualify as incentive stock option
(within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended [the "Code"]) ("an "ISO"), or options not intended to qualify for any
special tax treatment under the Code (a "NQO"). The term "Subsidiary" as used
in the Plan means a corporation or other business organization of which the
Company owns, directly or indirectly through an unbroken chain of ownership,
fifty percent (50%) or more of the total combined voting power of all classes of
stock.

2. ADMINISTRATION OF THE PLAN

(a) The Plan shall be administered by a committee (the "Committee")
consisting of those directors of the Company who shall at any time and from
time to time be serving as members of the Compensation Committee of the
Board of Directors (the "Board"). If required to insure compliance with
Section 16 of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), if applicable to the Company, no member of the Committee
shall be eligible, nor shall have been eligible at any time within the one-
year period prior to his appointment as a member of the Committee, to
receive an option under the Plan or to participate in any other stock
option, stock bonus, stock appreciation or other stock plan of the Company
or its affiliates. The Committee shall select one of its members as
Chairman and shall hold meetings at such times and places as it may
determine. A majority of the Committee shall constitute a quorum and acts
of the Committee at which a quorum is present, or acts consented to or
approved in writing by all of the members of the Committee, shall be the
valid acts of the Committee.

(b) The Committee shall, from time to time, report to the Board the
names of employees or other persons to whom options are granted, the type
of Options granted, the number of shares covered by each Option and the
terms and conditions of each such Option.

(c) The Committee shall have the sole authority, in its absolute
discretion, to adopt, amend and rescind such rules and regulations as, in
its opinion, may be advisable in the administration of the Plan, and to
continue and interpret the Plan, the rules and regulations, and the
instruments evidencing options and loans granted under the Plan and to make
all

<PAGE>

other determinations deemed necessary or advisable for the administration
of the Plan. All decisions, determinations and interpretations of the
Committee shall be final, binding and conclusive on all Optionees.

3. OPTION SHARES

Subject to the effectiveness of the Restated Certificate of Incorporation
of the Company and the proposed recapitalization contemplated thereby (the
"Proposed Recapitalization") pursuant to which the several series of common
stock of the Company will be exchanged for Class A Common Stock, par value $.01
per share (the "Class A Stock"), Class B Common Stock, par value $.01 per share
(the "Class B Stock") or Class C Common Stock, par value $.01 per share (the
Class C Stock"), the stock subject to Options under the Plan shall be shares of
the Class A Stock and, subject to the limitation hereinafter set forth, the
Class B Stock (the Class A Stock and the Class B Stock being hereinafter
referred to collectively as the "Stock"). The total amount of the Stock with
respect to which Options may be granted, including without limitation those
Options granted prior to the effectiveness of the Proposed Recapitalization (the
"Option Pool"), shall not exceed in the aggregate 3,000,000 shares and the total
amount of the Class B Stock with respect to which Options may be granted,
including without limitation those Options granted prior to the effectiveness of
the Proposed Recapitalization, shall not exceed in the aggregate 1,600,000
shares; provided, however, such aggregate number of shares shall be subject to
adjustment in accordance with the provisions of Section 17. In the event that
any outstanding Option shall expire for any reason or shall terminate by reason
of the death or severance of employment of the Optionee, the surrender of any
such Option, or any other cause, the shares of Stock allocable to the
unexercised portion of such Option may again be subject to an option under the
Plan.

4. AUTHORITY TO GRANT OPTIONS

The Committee may determine, from time to time, which key employees of the
Company or any Subsidiary or other persons shall be granted Options under the
Plan, the terms of the Options (including without limitation whether an Option
shall be an ISO or a NQO) and the number of shares which may be purchased under
the Option or Options; provided, however, that the Committe shall limit the
-------- -------
number of shares for which it may grant an Option or Options to 250,000 shares
per individual per year. Without limiting the generality of the foregoing, the
Committee may from time to time grant: (a) to such eligible employees as it
shall determine an Option or Options to buy a stated number of shares of Stock
under the terms and conditions of the Plan which Option or Options will to the
extent so designated at the time of grant constitute an ISO; and (b) to such
eligible directors, employees or other persons as it shall determine an Option
or Options to buy a stated number of shares of Stock under the terms and
conditions of the Plan which Option or Options shall constitute a NQO. Subject
only to any applicable limitations set forth elsewhere in the Plan, the number
of shares of Stock to be covered by any Option shall be as determined by the
Committee.

-2-
<PAGE>

5. WRITTEN AGREEMENT

Each Option granted hereunder shall be embodied in an option agreement (the
"Option Agreement") substantially in the form of Exhibit 1, which shall be
signed by the Optionee and by the Chief Executive Officer or the Chief Financial
Officer of the Company for and in the name and on behalf of the Company. An
Option Agreement pertaining to an ISO shall contain the restriction on
excercisability set forth in Section 9 and any Option Agreement for any Option,
whether ISO or NQO, may contain such other provisions not inconsistent with the
Plan as the Committee in its sole and absolute discretion shall approve.

6. ELIGIBILITY

The individuals who shall be eligible for grant of Options under the Plan
shall be key employees (including officers who may be members of the Board),
directors who are not employees and other individuals, whether or not employees,
who render services of special importance to the management, operation, or
development of the Company or a Subsidiary, and who have contributed or may be
expected to contribute materially to the success of the Company or a Subsidiary.
An employee, director or other person to whom an Option has been granted
pursuant to an Option Agreement is hereinafter referred to as an "Optionee".

7. OPTION PRICE

The price at which shares of Stock may be purchased pursuant to an Option
shall be specified by the Committee at the time the Option is granted, but shall
in no event be less than the par value of such shares and, in the case of an
ISO, except as set forth in the following sentence, one hundred percent (100%)
of the fair market value of the Stock on the date the ISO is granted. In the
case of an employee who owns (or is considered under Section 424(d) of the Code
as owning) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any Subsidiary, the price
which shares of Stock may be so purchased pursuant to an ISO shall be not less
than one hundred and ten percent (110%) of the fair value of the Stock on the
date the ISO is granted.

For purposes of the Plan, the "fair market value" of a share of Stock on
any date specified herein, shall mean (a) the last reported sales price, regular
way, or, in the event that no sale takes place on such day, the average of the
reported closing bid and asked prices, regular way, in either case (i) as
reported on the New York Stock Exchange Composite Tape, or (ii) if the Stock is
not listed or admitted to trading on the New York Stock Exchange, on the
principal national securities exchange on which such security is listed or
admitted to trading, or (iii) if not then listed or admitted to trading on any
national securities exchange, on the NASDAQ National Market System; or (b) if
the Stock is not quoted on such National Market System, (i) the average of the
closing bid and asked prices on each such day in the over-the-counter market as
reported by NASDAQ, or (ii) if bid and asked prices for such security on each
such day shall not have been reported through NASDAQ, the average of the bid and
asked prices for such day as furnished by any New York Stock Exchange member
firm regularly making a market in such security selected for such purpose by the

-3-
<PAGE>

Committee; or (c) if the Stock is not then listed or admitted to trading on any
national exchange or quoted in the over-the-counter market, the fair value
thereof determined in good faith by the Committee as of a date which is within
thirty (30) days of the date as of which the determination is to be made;
provided, however, that any method of determining fair market value employed by
the Committee with respect to an ISO shall be consistent with any applicable
laws or regulations pertaining to "incentive stock options".

8. DURATION OF OPTIONS

The duration of any Option shall be specified by the Committee in the
Option Agreement, but no ISO shall be exercisable after the expiration of ten
(10) years, and no NQO shall be exercisable after the expiration of ten (10)
years and one (1) day, from the date such Option is granted. In the case of any
employee who owns (or is considered under Section 424(d) of the Code as owning)
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Subsidiary, no ISO shall be
exercisable after the expiration of five (5) years from the date such Option is
granted. The Committee, in its sole and absolute discretion, may extend any
Option theretofore granted subject to the aforesaid limits and may provide that
an Option shall be exercisable during its entire duration or during any lesser
period of time.

9. RESTRICTIONS ON EXERCISE OF OPTIONS

Notwithstanding any other provision of the Plan, the aggregate fair market
value (determined as of the time the Option is granted) of the Stock with
respect to which ISOs may be exercisable for the first time by an Optionee
during any calendar year (under the Plan any other incentive stock option
plan(s) of the Company or any Subsidiary) shall not exceed $100,000. Subject to
the foregoing, each Option may be exercised so long as it is valid and
outstanding from time to time, in part or as a whole, in such manner and subject
to such conditions as the Committee, in its sole and absolute discretion, may
provide in the Option Agreement.

10. EXERCISE OF OPTIONS

Options shall be exercised by the delivery of written notice to the Company
setting forth the number of shares of Stock with respect to which the Option is
to be exercised, accompanied by payment of the option price of such shares,
which payment shall be made, subject to the alternative provisions of this
Section, in cash or by such cash equivalents, payable to the order of the
Company in an amount in United States dollars equal to the option price of such
shares, as the Committee in its sole and absolute discretion shall consider
acceptable. Such notice shall be delivered in person to the Secretary of the
Company or shall be sent by registered mail, return receipt requested, to the
Secretary of the Company, in which case delivery shall be deemed made on the
date such notice is deposited in the mail.

Alternatively, payment of the option price may be made, in whole or in
part, in shares of Stock owned by the Optionee; provided, however, that the
Optionee may not make payment in

-4-
<PAGE>

shares of Stock that he acquired upon the earlier exercise of any ISO (or other
"incentive stock option"), unless and until he has held the shares until at
least two (2) years after the date the ISO (or such other incentive stock
option) was granted and at least one (1) year after the date the ISO (or such
other option) was exercised. If payment is made in whole or in part in shares of
Stock, then the Optionee shall deliver to the Company in payment of the option
price of the shares with respect of which such Option is exercised (a)
certificates registered in the name of such Optionee representing a number of
shares of Stock legally and beneficially owned by such Optionee, free of all
liens, claims and encumbrances of every kind, and having a fair market value on
the date of delivery of such notice equal to the option price of the shares of
Stock with respect to which such Option is to be exercised, such certificates to
be accompanied by stock powers duly endorsed in blank by the record holder of
the shares of Stock represented by such certificates; and (b) if the option
price of the shares with respect to which such Option is to be exercised exceeds
such fair market value, cash or such cash equivalents payable to the order to
the Company, in an amount in United States dollars equal to the amount of such
excess, as the Committee in its sole and absolute discretion shall consider
acceptable. Notwithstanding the foregoing provisions of this Section, the
Committee, in its sole and absolute discretion, may refuse to accept shares of
Stock in payment of the option price of the shares of Stock with respect to
which such Option is to be exercised and, in that event, any certificates
representing shares of Stock which were delivered to the Company with such
written notice shall be returned to such Optionee together with notice by the
Company to such Optionee of the refusal of the Committee to accept such shares
of Stock.

Alternatively, if the Option Agreement so specifies, payment of the option
price may be made in part by a promissory note executed by the Optionee and
containing the following terms and conditions (and such others as the Committee
shall, in its sole and absolute discretion determine from time to time): (a) it
shall be collaterally secured by the shares of Stock obtained upon exercise of
the Option; (b) repayment shall be made on demand by the Company and, in any
event, no later than three (3) years from the date of exercise; and (c) the note
shall bear interest at a rate of ten percent (10%) per annum, payable monthly
out of a payroll deduction provision; provided, however, that notwithstanding
the foregoing (i) an amount not less than the par value of the shares of Stock
with respect to which the Option is being exercised must be paid in cash, cash
equivalents, or shares of Stock in accordance with this Section, and (ii) the
payment of such exercise price by promissory note does not violate any
applicable laws or regulations, including, without limitation, Delaware
corporate law or applicable margin lending rules. The decision as to whether to
permit partial payment by a promissory note for shares of Stock to be issued
upon exercise of any Option granted shall rest entirely in the sole and absolute
discretion of the Committee.

As promptly as practicable after the receipt by the Company of (a) written
notice from the Optionee setting forth the number of shares of Stock with
respect to which such Option is to be exercised and (b) payment of the option
price of such shares in the form required by the foregoing provisions of this
Section, the Company shall cause to be delivered to such Optionee certificates
representing the number of shares with respect to which such Option has been so
exercised.

-5-
<PAGE>

11. TRANSFERABILITY OF OPTIONS

Options shall not be transferable by the Optionee otherwise than by will or
under the laws of descent and distribution, and shall be exercisable during his
or her lifetime only by the Optionee.

12. TERMINATION OF EMPLOYMENT OR INVOLVEMENT OF OPTIONEE WITH THE COMPANY

For purposes of this Section, employment by or involvement with (in the
case of an Optionee who is not an employee) a Subsidiary shall be considered
employment by or involvement with the Company. Unless otherwise set forth in
the option agreement, after the Optionee's termination of employment with the
Company, including his retirement in good standing from the employ of the
Company for reasons of age under the then established rules of the Company, the
Option shall terminate on the earlier of the date of its expiration or three (3)
months after the date of such termination or retirement. If the holder of an
Option dies before the date of expiration of such Option and while in the employ
of the Company or during the three (3) month period described in the preceding
sentence, or in the event of the retirement of the Optionee for reasons of
disability (within the meaning of Section 22(e)(3) of the Code), such Option
shall terminate on the earlier of such date of expiration or one (l) year
following the date of such death or disability retirement. After the death of
the Optionee, his or her executors, administrators or any persons to whom his or
her Option may be transferred by will or by the laws of descent and distribution
shall have the right at any time prior to such termination to exercise the
Option to the extent to which the Optionee was entitled to exercise the Option
on the date of his or her death.

Authorized leave of absence or absence on military or government service
shall not constitute severance of the employment relationship between the
Company and the Optionee for purposes of the Plan, provided that either (a) such
absence is for a period of no more than ninety (90) days or (b) the Employee's
right to re-employment after such absence is guaranteed either by statute or by
contract.

For Optionees who are not employees of the Company, options shall be
exercisable for such periods following the termination of the Optionee's
involvement with the Company as may be set forth in the specific written option
agreement with the Optionee.

13. REQUIREMENTS OF LAW

The Company shall not be required to sell or issue any shares of Stock upon
the exercise of any Option if the issuance of such shares shall constitute or
result in a violation by the Optionee or the Company of any provisions of any
law, statute or regulation of any governmental authority. Specifically, in
connection with the Securities Act of 1933, as amended (the "Securities Act"),
and any applicable state securities or "blue sky" law (a "Blue Sky Law"), upon
exercise of any Option the Company shall not be required to issue such shares
unless the Committee has received evidence satisfactory to it to the effect that
the holder of such Option will not transfer such shares except pursuant to a
registration statement in effect under the Securities Act and Blue Sky Laws or
unless an opinion of counsel satisfactory to the Company has been received by
the Company to the effect

-6-
<PAGE>

that such registration and compliance is not required. Any determination in this
connection by the Committee shall be final, binding and conclusive. The Company
shall not be obligated to take any action in order to cause the exercise of an
Option or the issuance of shares of Stock pursuant thereto to comply with any
law or regulations of any governmental authority, including, without limitation,
the Securities Act or applicable Blue Sky Law.

Notwithstanding any other provision of the Plan to the contrary, the
Company may refuse to permit transfer of shares of Stock if in the opinion of
its legal counsel such transfer would violate federal or state securities laws
or subject the Company to liability thereunder. Any sale, assignment, transfer,
pledge or other disposition of shares of Stock received upon exercise of any
Option (or any other shares or securities derived therefrom) which is not in
accordance with the provisions of this Section shall be void and of no effect
and shall not be recognized by the Company.

Legend on Certificates. The Committee may cause any certificate
----------------------
representing shares of Stock acquired upon exercise of an Option (and any other
shares or securities derived therefrom) to bear a legend to the effect that the
securities represented by such certificate have not been registered under the
Federal Securities Act of 1933, as amended, or any applicable state securities
laws, and may not be sold, assigned, transferred, pledged or otherwise disposed
of except in accordance with the Plan and applicable agreements binding the
holder and the Company or any of its stockholders.

14. NO RIGHTS AS STOCKHOLDER

No Optionee shall have any rights as a stockholder with respect to shares
covered by his or her Option until the date of issuance of a stock certificate
for such shares; except as otherwise provided in Section 17, no adjustment for
dividends or otherwise shall be made if the record date therefor is prior to the
date of issuance of such certificate.

15. EMPLOYMENT OBLIGATION

The granting of any Option shall not impose upon the Company or any
Subsidiary any obligation to employ or continue to employ any Optionee, or to
engage or retain the services of any person, and the right of the Company or any
Subsidiary to terminate the employment or services of any person shall not be
diminished or affected by reason of the fact that an Option has been granted to
him or her. The existence of any Option shall not be taken into account in
determining any damages relating to termination of employment or services for
any reason.

16. FORFEITURE AS A RESULT OF TERMINATION FOR CAUSE

Notwithstanding any provision of the Plan to the contrary, if the Committee
determines, after full consideration of the facts presented on behalf of the
Company and an Optionee, that

(a) the Optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or dishonesty in the course of his or her employment
by or involvement with the

-7-
<PAGE>

Company or a Subsidiary, which damaged the Company or a Subsidiary, or has
made unauthorized disclosure of trade secrets or other proprietary
information of the Company or a Subsidiary or of a third party who has
entrusted such information to the Company or a Subsidiary, or

(b) the Optionee's employment or involvement was otherwise terminated
for "cause," as defined in any employment agreement with the Optionee, if
applicable, or if there is no such agreement, as determined by the
Committee, which may determine that "cause" includes among other matters
the failure or inability of the Optionee to perform and carry out his or
her assigned duties and responsibilities diligently and in a manner
satisfactory to the Committee,

then the Optionee's right to exercise an Option shall terminate as of the date
of such act (in the case of (a)) or such termination (in the case of (b)) and
the Optionee shall forfeit all unexercised Options. If an Optionee whose
behavior the Company asserts falls within the provisions of (a) or (b) above has
exercised or attempts to exercise an Option prior to a decision of the
Committee, the Company shall not be required to recognize such exercise until
the Committee has made its decision and, in the event of any exercise shall have
taken place, it shall be of no force and effect (and void ab initio) if the
-- ------
Committee makes an adverse determination; provided, however, if the Committee
finds in favor of the Optionee then the Optionee will be deemed to have
exercised such Option retroactively as of the date he or she originally gave
written notice of his or her attempt to exercise or actual exercise, as the case
may be. The decision of the Committee as to the cause of an Optionee's
discharge and the damage done to the Company or a Subsidiary shall be final,
binding and conclusive. No decision of the Committee, however, shall affect in
any manner the finality of the discharge of such Optionee by the Company or a
Subsidiary.

17. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE

The existence of outstanding Options shall not affect in any way 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
Company's capital structure or its business or any merger or consolidation of
the Company or any issue of bonds, debentures, preferred or preference stock,
whether or not convertible into the Stock or other securities, ranking prior to
the Stock or affecting the rights thereof, or warrants, rights or options to
acquire the same, 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, whether of a similar character or otherwise.

The number of shares of Stock in the Option Pool (less the number of shares
theretofore delivered upon exercise of Options) and the number of shares of
Stock covered by any outstanding Option and the price per share payable upon
exercise thereof (provided that in no event shall the option price be less than
the par value of such shares) shall be proportionately adjusted for any increase
or decrease in the number of issued and outstanding shares of Stock resulting
from any subdivision, split, combination or consolidation of shares of Stock or
the payment of a dividend in

-8-
<PAGE>

shares of Stock or other securities of the Company on the Stock. The decision of
the Board as to the adjustment, if any, required by the provisions of this
Section shall be final, binding and conclusive.

If the Company merges or consolidates with a wholly-owned subsidiary for
the purpose of reincorporating itself under the laws of another jurisdiction,
the Optionees will be entitled to acquire shares of Stock of the reincorporated
Company upon the same terms and conditions as were in effect immediately prior
to such reincorporation (unless such reincorporation involves a change in the
number of shares or the capitalization of the Company, in which case
proportional adjustments shall be made as provided above) and the Plan, unless
otherwise rescinded by the Board, will remain the Plan of the reincorporated
Company.

Except as otherwise provided in the preceding paragraph, if the Company is
merged or consolidated with another corporation, whether or not the Company is
the surviving entity, or if the Company is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another entity while
unexercised Options remain outstanding under the Plan, or in other circumstances
in which the Board in its sole and absolute discretion deems it appropriate for
the provisions of this paragraph to apply, (a) subject to the provisions of
clause (c) below, after the effective date of such merger, consolidation,
liquidation, sale or other event (in each case, an "Applicable Event"), as the
case may be, each holder of an outstanding Option shall be entitled, upon
exercise of such Option, to receive in lieu of shares of Stock, such stock or
other securities or property as he or she would have received had he exercised
such option immediately prior to the Applicable Event; (b) the Board may, in its
sole and absolute discretion, waive, generally or in one or more specific cases,
any limitations imposed pursuant to Section 9 or Section 19 so that some or all
Options from and after a date prior to the effective date of such Applicable
Event, specified by the Board, in its sole and absolute discretion, shall be
exercisable in full; and (c) all outstanding and unexercised Options may, in its
sole and absolute discretion, be cancelled by the Board as of the effective date
of any such Applicable Event; provided, however, notice of any such cancellation
shall be given to each holder of an Option not less than thirty (30) days
preceding the effective date of such Applicable Event; and provided further,
however, that the Board may, in its sole and absolute discretion, waive,
generally or in one or more specific instances, any limitations imposed pursuant
to Section 9 or Section 19 with respect to any Option so that such Option shall
be exercisable in full or in part, as the Board may, in its sole and absolute
discretion, determine, during such thirty (30) day period.

Except as expressly provided herein, the issue by the Company of shares of
Stock or other securities of any class or series or securities convertible into
or exchangeable or exercisable for shares of Stock or other securities of any
class or series for cash or property or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number, class or price of shares of Stock then
subject to outstanding Options.

-9-
<PAGE>

18. AMENDMENT OR TERMINATION OF PLAN

The Board may, in its sole and absolute discretion, modify, revise or
terminate the Plan at any time and from time to time; provided, however, that
without the further approval of the holders of at least a majority of the
outstanding shares of Stock, the Board may not (a) materially increase the
benefits accruing to Optionees under the Plan or make any "modifications" as
that term is defined under Section 424(h)(3) (or its successor) of the Code if
such increase in benefits or modifications would adversely affect (i) the
availability to the Plan of the protections of Section 16(b) of the Exchange
Act, if applicable to the Company, or (ii) the qualification of the Plan or any
Options for "incentive stock option" treatment under Section 422 of the Code;
(b) change the aggregate number of shares of Stock which may be issued under
Options pursuant to the provisions of the Plan; (c) reduce the option price at
which ISOs may be granted to an amount less than the fair market value per share
at the time the Option is granted; or (d) change the class of persons eligible
to receive ISOs. Notwithstanding the preceding sentence, the Board shall in all
events have the power and authority to make such changes in the Plan and in the
regulations and administrative provisions hereunder or in any outstanding Option
as, in the opinion of counsel for the Company, may be necessary or appropriate
from time to time to enable any Option granted pursuant to the Plan to qualify
as an incentive stock option or such other stock option as may be defined under
the Code, as amended from time to time, so as to receive preferential federal
income tax treatment.

19. CERTAIN RIGHTS OF THE COMPANY

Voluntary or Involuntary Transfers of Stock. Shares of Stock acquired by
-------------------------------------------
an Optionee pursuant to the exercise of an Option or Options granted under the
Plan shall not be voluntarily transferred by the Optionee without the prior
written consent of the Committee, which consent may be withheld or conditioned
as the Committee, in its sole and absolute discretion, determine. If such
shares of Stock are subject to an involuntary transfer, including by reason of
death, a divorce settlement or judicial proceeding, the Company shall have the
right to repurchase all or any such shares (including any shares of other
securities of the Company derived therefrom) at a price equal to the Repurchase
Price at the time of the involuntary transfer event. The Company may exercise
its repurchase right no later than one hundred eighty (180) days following the
later of (a) the date of such involuntary transfer of such shares of Stock, and
(b) the Committee's receipt of written notice of the occurrence of such transfer
event. Any such shares of Stock (or other shares or securities) as to which the
Company does not exercise its repurchase rights within such period shall
thereafter be free of the restrictions of this Section.

Termination of Employment or Involvement. If the Optionee's employment by
----------------------------------------
or involvement with the Company (including, for this purpose, any Subsidiary)
shall terminate for any reason other than the Optionee's death or a Justifiable
Termination (as defined below) or Optionee's retirement for reasons of age or
disability in accordance with the then policy of the Company, the Company shall
have the right to repurchase all or any of such shares of Stock (or other shares
or securities derived therefrom) at a price equal to the Repurchase Price at the
time of such repurchase. In addition, if at the time of such termination an
Optionee holds an Option granted under the Plan which is by its terms
exercisable after such termination, the Company shall have the right to

-10-
<PAGE>

repurchase all or any part of the shares of Stock acquired pursuant to the
exercise of such Option, at the Repurchase Price. In the case of a termination
on account of any circumstance listed in Section 16(a) or (b) (a "Justifiable
Termination"), the Company shall have the right to repurchase all or any of such
shares of Stock at the lesser of (i) the exercise price per share or (ii) the
Repurchase Price. If the option price for any repurchased shares has been paid
by the Optionee's promissory note pursuant to Section 10, then the repurchase
price for such shares of Stock shall be first applied to the repayment of the
outstanding amount, if any, due under such note in respect of the repurchased
shares, and any accrued but unpaid interest thereon. The Company's right to
repurchase shares of Stock (or other shares or securities) may be exercised at
any time during the period beginning on the date of the Optionee's termination
of employment or involvement and ending ninety (90) days after the later of (a)
the date of such termination and (b) the date on which shares of Stock (or other
shares or securities) subject to the repurchase rights of this Section are
acquired by the Optionee. Any such shares of Stock (or other shares or
securities) as to which the Company does not exercise its repurchase rights
within such period shall thereafter be free of the restrictions of this Section.

Repurchase Price. As used herein the term "Repurchase Price" shall mean
----------------
the fair market value of a share of Stock (or other shares or securities) as
determined in accordance with the provisions of Section 7 of the Plan, except
that in making its determination of fair market value of a share of Stock the
Committee shall be entitled to take into account that the shares of Stock (or
other shares and securities) may be illiquid, may be subject to restrictions on
transfer or may constitute a minority interest in the Company.

Stockholder Agreement. Unless an Optionee's Option Agreement specifically
---------------------
provides to the contrary, it shall be a condition of each Optionee receiving any
shares of Stock upon any exercise of an Option that he or shall enter into the
Stockholder Agreement, dated as of November 1, 1993, as then in effect, among
the Company and certain of its stockholders.

Other Provisions. The Committee may, in its sole and absolute discretion,
----------------
also require a key employee, as a condition to receiving any option, to enter
into a noncompetition agreement in such form as the Committee may, from time to
time in its sole and absolute discretion, determine.

20. EFFECTIVE DATE AND DURATION OF THE PLAN

The Plan shall become effective and shall be deemed to have been adopted on
December 16, 1993 subject only to ratification by the holders of a majority of
the outstanding shares of capital stock entitled to vote thereon (voting as a
single class) within twelve (12) months after such date. Unless the Plan shall
have terminated earlier, the Plan shall terminate on the tenth (10th)
anniversary of its effective date, and no Option shall be granted pursuant to
the Plan after the day preceding the tenth (10th) anniversary of its effective
date.

-11-
<PAGE>

AMERICAN RADIO SYSTEMS CORPORATION

Stock Option Agreement
----------------------
Option Certificate: No.

Specific Terms of the Option
- ----------------------------

Subject to the terms and conditions hereinafter set forth and the terms and
conditions of the American Radio Systems Corporation Amended and Restated 1993
Stock Option Plan (the "Plan"), American Radio Systems Corporation, a Delaware
corporation (the "Company" which term shall include, unless the context
otherwise clearly requires, all Subsidiaries [as defined in the Plan] of the
Company) hereby grants the following option to purchase [Class A] [Class B]
Common Stock, par value $.01 per share (the "Stock") of the Company:

1. Name of Person to Whom the Option is granted (the "Optionee"):

2. Date of Grant of Option:

3. An Option for shares of Stock.

4. Option Exercise Price (per share): $

5. Term of Option: Subject to Section 9 below, this Option expires at
5:00 p.m. Eastern Time on

6. Exercise Schedule: Provided that on the dates set forth below the Optionee
is still employed by the Company or, if the Optionee is
not employed by the Company the Optionee is still
actively involved in the Company (as determined by the
Committee) the Option will become exercisable as
follows and as provided in Section 9 below:

Date Number of Shares Cumulative Number
---- ---------------- -----------------

7. Does the next to the last paragraph of Section 19 of the Plan apply to
Stock covered by this Option? Yes No .

American Radio Systems Corporation

By:__________________________ X_______________________
Title:____________________ (Signature of Optionee)
Date:___________________

Optionee's Address:

-12-
<PAGE>

OTHER TERMS OF THE OPTION
- -------------------------

WHEREAS, the Board of Directors (the "Board") has authorized the grant of
stock options upon certain terms and conditions set forth in the Plan and
herein; and

WHEREAS, the Compensation Committee (the "Committee") has authorized the
grant of this stock option pursuant and subject to the terms of the Plan, a copy
of which is available from the Company and is hereby incorporated herein;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Company and the Optionee, intending to be
legally bound, covenant and agree as set forth on the first page hereof and as
follows:

8. Grant. Pursuant and subject to the Plan, the Company does hereby grant
-----
to the Optionee a stock option (the "Option") to purchase from the Company the
number of shares of Stock set forth in Section 3 on the first page hereof upon
the terms and conditions set forth in the Plan and upon the additional terms and
conditions contained herein. This Option is a [INCENTIVE] [NONQUALIFIED] stock
option and [IS] [IS NOT] intended to qualify for special federal income tax
treatment as an "incentive stock option" pursuant to Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").

9. Option Price. This Option may be exercised at the option price per
------------
share of Stock set forth in Section 4 on the first page hereof, subject to
adjustment as provided herein and in the Plan.

10. Term and Exercisability of Option. This Option shall expire on the
---------------------------------
date determined pursuant to Section 5 on first page hereof and shall be
exercisable prior to that date in accordance with and subject to the conditions
set forth in the Plan and those conditions, if any, set forth in Section 6 on
first page hereof. If before this Option has been exercised in full, the
Optionee ceases to be an employee of the Company for any reason other than a
termination for a reason specified in Section 16 of the Plan, the Optionee may
exercise this Option to the extent that he or she might have exercised it on the
date of termination of his or her employment, but only during the period ending
on the earlier of (a) the date on which the Option expires in accordance with
Section 5 of this Agreement or (b) three (3) months after the date of
termination of the Optionee's employment with the Company. If the Optionee dies
before the date of expiration of this Option and while in the employ of the
Company or during the three month period described in the preceding sentence, or
in the event of the retirement of the Optionee for reasons of disability (within
the meaning of Code (S) 22(e)(3)), the Option shall terminate on the earlier of
such date of expiration or one year following the date of such death or
disability retirement. If the Optionee dies before this Option has been
exercised in full, the personal representative of the Optionee may exercise this
Option as set forth in the preceding sentence.

11. Method of Exercise. To the extent that the right to purchase shares
------------------
of Stock has accrued hereunder, this Option may be exercised from time to time
by written notice to the Company

-13-
<PAGE>

substantially in the form attached hereto as Exhibit A, stating the number of
shares with respect to which this Option is being exercised, and accompanied by
payment in full of the option price for the number of shares to be delivered, by
means of payment acceptable to the Company in accordance with Section 10 of the
Plan. As soon as practicable after its receipt of such notice, the Company
shall, without transfer or issue tax to the Optionee (or other person entitled
to exercise this Option), deliver to the Optionee (or other person entitled to
exercise this Option), at the principal executive offices of the Company or such
other place as shall be mutually acceptable, a certificate or certificates for
such shares out of theretofore authorized but unissued shares or reacquired
shares of its Stock as the Company may elect; provided, however, that the time
of such delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with any applicable
requirements of law. Payment of the option price may be made in cash or cash
equivalents or, in accordance with the terms and conditions of Section 10 of the
Plan, (a) in whole or in part in shares of Common Stock of the Company, or (b)
in part by promissory note of the Optionee in the form attached hereto as
Exhibit B; provided, however, that the Board reserves the right upon receipt of
any written notice of exercise from the Optionee to require payment in cash with
respect to the shares contemplated in such notice. If the Optionee (or other
person entitled to exercise this Option) fails to pay for and accept delivery of
all of the shares specified in such notice upon tender of delivery thereof, his
or her right to exercise this Option with respect to such shares not paid for
may be terminated by the Company.

12. Nonassignability of Option Rights. This Option shall not be
---------------------------------
assignable or transferable by the Optionee except by will or by the laws of
descent and distribution. During the life of the Optionee, this Option shall be
exercisable only by him or her.

13. Compliance with Securities Act. The Company shall not be obligated to
------------------------------
sell or issue any shares of Stock or other securities pursuant to the exercise
of this Option unless the shares of Stock or other securities with respect to
which this Option is being exercised are at that time effectively registered or
exempt from registration under the Securities Act of 1933, as amended, and
applicable state securities laws. In the event shares or other securities shall
be issued which shall not be so registered, the Optionee hereby represents,
warrants and agrees that he or she will receive such shares or other securities
for investment and not with a view to their resale or distribution, and will
execute an appropriate investment letter satisfactory to the Company and its
counsel.

14. Legends. The Optionee hereby acknowledges that the stock certificate
-------
or certificates evidencing shares of Stock or other securities issued pursuant
to any exercise of this Option will bear a legend setting forth the restrictions
on their transferability described in Section 13 hereof, in Section 19 of the
Plan, and under any applicable agreements between the Optionee and the Company
or any of its stockholders.

15. Rights as Stockholder. The Optionee shall have no rights as a
---------------------
stockholder with respect to any shares of Stock or other securities covered by
this Option until the date of issuance of a certificate to him or her for such
shares or other securities. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.

-14-
<PAGE>

16. Certain Agreements. The Optionee hereby agrees, unless otherwise set
------------------
forth in Section 7 on the first page hereof, as a condition to any exercise of
this Option, to enter into the Stockholders Agreement, dated as of November 1,
1993, as then in effect, among the Company and certain of its stockholders. The
Optionee further agrees, at the request of the Company, to enter into a
noncompetition agreement substantially in the form heretofore furnished to the
Optionee.

17. Withholding Taxes. The Optionee hereby agrees, as a condition to any
-----------------
exercise of this Option, to provide to the Company an amount sufficient to
satisfy its obligation to withhold certain federal, state and local taxes
arising by reason of such exercise (the "Withholding Amount") by (a) authorizing
the Company to withhold the Withholding Amount from his or her cash
compensation, or (b) remitting the Withholding Amount to the Company in cash;
provided, however, that to the extent that the Withholding Amount is not
provided by one or a combination of such methods, the Company in its sole and
absolute discretion may refuse to issue such shares of Stock or may withhold
from the shares of Stock delivered upon exercise of this Option that number of
shares having a fair market value, on the date of exercise, sufficient to
eliminate any deficiency in the Withholding Amount.

18. Termination or Amendment of Plan. The Board may in its sole and
--------------------------------
absolute discretion at ant time terminate or from time to time modify and amend
the Plan, but no such termination or amendment will affect rights and
obligations under this Option.

19. Effect Upon Employment. Nothing in this Option or the Plan shall be
----------------------
construed to impose any obligation upon the Company to employ or retain in its
employ, or continue its involvement with, the Optionee.

20. Time for Acceptance. Unless the Optionee shall evidence his or her
-------------------
acceptance of this Option by execution of this Agreement within seven (7) days
after its delivery to him or her, the Option and this Agreement shall be null
and void.

21. General Provisions.
------------------

(a) Amendment; Waivers. This Agreement, including the Plan, contains
------------------
the full and complete understanding and agreement of the parties hereto as to
the subject matter hereof and may not be modified or amended, nor may any
provision hereof be waived, except by a further written agreement duly signed by
each of the parties. The waiver by either of the parties hereto of any
provision hereof in any instance shall not operate as a waiver of any other
provision hereof or in any other instance.

(b) Binding Effect. This Agreement shall inure to the benefit of and
--------------
be binding upon the parties hereto and, to the extent provided herein and in the
Plan, their respective heirs, executors, administrators, representatives,
successors and assigns.

(c) Construction. This Agreement is to be construed in accordance
------------
with the terms of the Plan. In case of any conflict between the Plan and this
Agreement, the Plan shall control. The

-15-
<PAGE>

titles of the sections of this Agreement and of the Plan are included for
convenience only and shall not be construed as modifying or affecting their
provisions. The masculine gender shall include both sexes; the singular shall
include the plural and the plural the singular unless the context otherwise
requires.

(d) Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the applicable laws of the United State of
America and the law (other than the law governing conflict of law questions) of
The Commonwealth of Massachusetts except to the extent the laws of any other
jurisdiction are mandatorily applicable.

(e) Notices. Any notice in connection with this Agreement shall be
-------
deemed to have been properly delivered if it is in writing and is delivered in
hand or sent by registered mail to the party addressed as follows, unless
another address has been substituted by notice so given:

To the Optionee: To his or her address as
listed on the books of the Company.

To the Company: American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116

Copy to:

Sullivan & Worcester
One Post Office Square
Boston, MA 02109
Attention: Jonathan B. Dubitzky

-16-
<PAGE>

Exhibit A to Stock Option

[FORM FOR EXERCISE OF STOCK OPTION]

American Radio Systems Corporation
[Address as specified in Section 21(e)
of the Option Agreement]

RE: Exercise of Option under American Radio Systems Corporation
-----------------------------------------------------------
Amended and Restated 1993 Stock Option Plan
-------------------------------------------

Gentlemen:

Please take notice that the undersigned hereby elects to exercise the stock
option granted to ______________________ on _______________, 199 by and to the
extent of purchasing ________ shares of [Class A] [Class B] Common Stock, par
value $.01 per share, of American Radio Systems Corporation (the "Company") for
the option price of $__________ per share, subject to the terms and conditions
of the Stock Option Agreement between ______________ and the Company dated as of
___________, 199 (the "Option Agreement").

The undersigned encloses herewith payment, in cash or in such other
property as is permitted under the Plan of the purchase price for said shares.

If the undersigned is making payment of any part of the purchase price by
- -------------------------------------------------------------------------
delivery of shares of Common Stock of the Company, he or she hereby confirms
- ----------------------------------------------------------------------------
that he or she has investigated and considered the possible income tax
- ----------------------------------------------------------------------
consequences to him or her of making such payments in that form. The
- ---------------------------------------------------------------
undersigned hereby agrees to provide the Company an amount sufficient to satisfy
the obligation of the Company to withhold certain taxes, as provided in Section
17 of the Option Agreement.

The undersigned hereby specifically confirms to American Radio Systems
Corporation that he or she is acquiring said shares for investment and not with
a view to their sale or distribution, and that said shares shall be held subject
to all of the terms and conditions of said Stock Option Agreement and the
Stockholder Agreement referred to in Section 16 of the Option Agreement, a copy
of which will be signed by the undersigned prior to receipt of said shares.

Very truly yours,

- --------- -----------------
Date (Signed by _________________ or other party duly
exercising option)

-17-
<PAGE>

Exhibit B to Stock Option

[FORM OF TERM NOTE IN PAYMENT OF EXERCISE PRICE OF OPTIONS]

PROMISSORY NOTE

$_____________ Date:__________

FOR VALUE RECEIVED, the undersigned (the "Payor") hereby promises to pay to
the order of American Radio Systems Corporation (the "Payee") at the principal
office of Payee in _______, Massachusetts ON DEMAND and in any event on or
before _____________, 19__ the sum of _________________________________________
($__________) with interest from the date hereof on the principal amount hereof
from time to time unpaid at the rate of ten percent (10%) per annum (being the
"prime rate" of The Bank of New York on the date hereof). Interest on the
outstanding principal amount hereof shall be due and payable monthly on the last
business day of each month in each year during the term of this Note, and at
maturity commencing __________. The Payor authorizes the Payee to withhold such
interest from his regular monthly or other salary payment or other compensation
and to apply such withheld amount to interest due hereon and also agrees to
execute such instruments and other documents as the Payee may from time to time
request to reflect such right of withholding. [THE PAYOR SHALL ON __________
OF EACH YEAR, COMMENCING IN ____, PAY AN AMOUNT EQUAL TO PERCENT ( %) OF THE
ORIGINAL PRINCIPAL AMOUNT OF THIS NOTE, TOGETHER WITH ALL ACCRUED AND UNPAID
INTEREST THEREON.]

All payments on this Note shall be first applied against accrued but unpaid
interest to the extent thereof, and then to the outstanding principal amount.

The Payor shall have the right to prepay the principal amount of this Note
in whole or in part at any time without penalty, but together with all but
unpaid accrued interest on the outstanding principal amount. No such prepayment
shall affect the obligation of the Payor to make the payments required by the
last sentence of the first paragraph of this Note.

Payor shall pay principal, interest, and other amounts under, and in
accordance with the terms of, this Note, free and clear of and without deduction
for any and all present and future taxes, levies, imposts, deductions, charges,
withholdings, and all liabilities with respect thereto, excluding taxes measured
by income.

Should the indebtedness evidenced by this Note or any part thereof be
collected by legal action, or in bankruptcy, receivership or other court
proceedings, or should this Note be placed in the hands of attorneys for
collection after default, Payor agrees to pay, upon demand by Holder, in
addition to principal and interest and other sums, if any, due and payable
hereon, court costs and reasonable attorneys' fees and other reasonable
collection charges, to the maximum extent permitted by applicable law.

-18-
<PAGE>

This Note represents the obligation of the Payor to pay on an installment
basis the balance of the purchase price of shares of Common Stock of the Payee
to be issued to the Payor promptly after the date hereof (the "Shares"), plus
interest on such purchase price, pursuant to a stock option granted pursuant to
the Stock Option Agreement dated __________, 199 (the "Agreement").

Upon the occurrence of any of the following events (an "acceleration
event"):

(a) Failure of the Payor to perform or observe any of his obligations
under this Note or the Agreement, or acceleration of the payor's obligation to
make payment of the purchase price of the Shares pursuant to the provisions of
the Agreement; or

(b) Commencement of voluntary or involuntary proceedings in respect of
the Payor under any federal or state bankruptcy, insolvency, receivership or
other similar law; or

then, and in any such event, the holder of this Note at its election may
forthwith declare the entire principal amount of this Note, together with
accrued interest thereon, immediately due and payable, and this Note shall
thereupon forthwith become so due and payable without presentation, protest or
further demand or notice of any kind, all of which are expressly waived.

The Payor hereby waives the presentment, demand, notice of protest and all
other demands and notices in connection with delivery, acceptance, performance,
default or enforcement hereof. No delay or omission on the part of the holder of
this Note in exercising any right hereunder shall operate as a waiver of such
right or of any other right hereunder, no course of dealing between the Payor
and the holder shall operate as a waiver of any of the holder's rights hereunder
unless set forth in a writing signed by the holder, and a waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion. The Payor further agrees to pay the costs, fees and expenses
(including reasonable attorneys' fees) of collection and enforcement of this
Note.

Any provision of this Note to the contrary notwithstanding, changes in or
additions to this Note may be made, or compliance with any term, covenant,
agreement, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the consent in writing of Holder and Payor,
and each such change, addition or waiver shall be binding upon each future
holder of the Note and Payor. Any consent may be given subject to satisfaction
of conditions stated therein.

This Note shall be binding upon and shall inure to the benefit of the Payor
and the Payee and their respective successors and assigns, including, without
limitation, successors by operation of law pursuant to any merger, consolidation
or sale of assets involving any of the parties.

This Note shall be deemed to be a contract made under and to be construed
in accordance with and governed by the applicable law of the United States of
America and the laws (other than the law governing conflict of law matters) of
The Commonwealth of Massachusetts.

-19-
<PAGE>

If the last or appointed day for taking of any action required or permitted
hereby (other than the payment of principal of or interest or premium, if any,
hereon) shall be a Saturday, Sunday or legal holiday in Boston, Massachusetts,
or a day on which banking institutions in Boston, Massachusetts are authorized
by law or executive order to close, then such action may be taken on the next
succeeding business day for banking institutions in such city.

This Note is executed as, and shall be effective as, a sealed instrument
and shall be binding upon the estate and any successor of the Payor.

Witness:__________________ _______________________
Payor

-20-