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EXHIBIT 4.1
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement"), dated as
of March 15, 1999 is made by and between Chancellor Media Corporation, a
Delaware corporation (the "Company") and Xxxxxxx X. Xxxxxx (the "Optionee").
WHEREAS, the Company and the Optionee have entered into an agreement
(the "Termination Agreement") effective March 15, 1999 (the "Termination Date")
with respect to the parties' decision to jointly terminate the Optionee's
employment agreement after continuing certain provisions thereof; and
WHEREAS, pursuant to the Termination Agreement, the Company shall grant
the Optionee the opportunity to purchase shares of its $.01 par value Common
Stock ("Common Stock"); and
WHEREAS, the Committee (as hereinafter defined) has instructed the
undersigned officers to issue said Option.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto do hereby agree as follows:
ARTICLE 1
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.1. "Board" shall mean the Board of Directors of the Company.
Section 1.2. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
Section 1.3. "Committee" shall mean the Stock Option Committee or the
Compensation Committee (discharging the functions of the Stock Option Committee)
of the Board, as applicable.
Section 1.4. "Company" shall mean Chancellor Media Corporation.
Section 1.5. "Director" shall mean a member of the Board.
Section 1.6. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
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Section 1.7. "Officer" shall mean an officer of the Company, as defined
in Rule 16a-1(f) under the Exchange Act, as such Rule may be amended in the
future.
Section 1.8. "Option" shall mean the non-qualified option to purchase
Common Stock of the Company granted under this Agreement.
Section 1.9. "Parent Corporation" shall mean any corporation in an
unbroken chain of corporations ending with the Company if each of the
corporations other than the Company then owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
(1) of the other corporations in such chain.
Section 1.10. "Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such Rule may be amended in the future.
Section 1.11. "Secretary" shall mean the Secretary of the Company.
Section 1.12. "Securities Act" shall mean the Securities Act of 1933,
as amended.
Section 1.13. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with the Company if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one (1) of the other corporations in such chain.
Section 1.14. "Termination Date" shall mean March 15, 1999.
Section 1.15. "Transaction" shall mean any one or more transactions in
which the Company (a) consolidates with or merges into any other person or
entity and is not the continuing or surviving corporation of that consolidation
or merger, (b) permits any other person or entity to consolidate with or merge
into the Company with the Company being the continuing or surviving corporation
and, in connection with that consolidation or merger, common stock of the
Company is changed into or exchanged for cash, stock or other securities of any
other person or entity or any other property, (c) transfers all or substantially
all of its properties and assets to any person or entity, or (d) effects a
capital reorganization or reclassification of common stock of the Company.
ARTICLE 2
GRANT OF OPTION
Section 2.1. Grant of Option. For good and valuable consideration on
the date hereof the Company irrevocably grants to the Optionee the option to
Purchase any part or all of an aggregate of Eight Hundred Thousand (800,000)
shares of its Common Stock upon the terms and conditions set forth in this
Agreement.
Section 2.2. Purchase Price. The purchase price of each share of Common
Stock covered by the Option shall be equal to $47.0625, the average closing
price per
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share of Common Stock on the Nasdaq National Market System for the twenty (20)
trading days ending March 12, 1999, or $37,650,000 in the aggregate for all
shares covered by the Agreement.
ARTICLE 3
PERIOD OF EXERCISABILITY
Section 3.1. Commencement of Exercisability. The Option shall become
exercisable on the date hereof.
Section 3.2. Duration of Exercisability. The Option, which becomes
exercisable pursuant to Section 3.1, shall remain exercisable until it becomes
unexercisable under Section 3.3.
Section 3.3. Expiration of Option. The Option may not be exercised to
any extent by anyone after March 15, 2009, the expiration of ten (10) years from
the Termination Date.
In the event a Transaction occurs after the date hereof but before the
Option is exercised, then (and in the case of each such Transaction) the Option
shall continue in existence and the optioned stock shall represent, in lieu of
the Common Stock issuable upon exercise before the Transaction, the amount of
cash, securities or other property to which the Optionee would be entitled as a
stockholder of the Company as a result of the Transaction had the Optionee
properly exercised the Option immediately prior to such Transaction; provided,
however, that the Optionee may elect in his sole discretion for such Option to
be treated in the same manner, if different from the treatment provided in this
sentence, that options held by employees of the Company are generally treated in
connection with such Transaction.
ARTICLE 4
EXERCISE OF OPTION
Section 4.1. Person Eligible to Exercise. During the lifetime of the
Optionee, only the Optionee may exercise the Option or any portion thereof.
After the death of the Optionee, any exercisable portion of the Option may,
prior to the time when the Option becomes unexercisable under Section 3.3, be
exercised by his personal representative or by any person empowered to do so
under the Optionee's will or under the then applicable laws of descent and
distribution.
Section 4.2. Partial Exercise. Any exercisable portion of the Option or
the entire Option if then wholly exercisable, may be exercised in whole or in
part at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3; provided, however, that each partial exercise
shall be for not less than two hundred (200) shares and shall be for whole
shares only.
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Section 4.3. Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary or his office of
all of the following prior to the time when the Option or such portion becomes
unexercisable under Section 3.3:
(a) Notice in writing signed by the Optionee or the other
Person then entitled to exercise the Option or portion, stating that
the Option or portion is thereby exercised; and
(b) (i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is exercised; or
(ii) With the consent of the Committee, (A) shares of
the Company's Common Stock owned by the Optionee duly endorsed
for transfer to the Company or (B) subject to the timing
requirements of Section 4.4 shares of the Company's Common
Stock issuable to the Optionee upon exercise of the Option,
with a fair market value on the date of Option exercise equal
to the aggregate purchase price of the shares with respect to
which such Option or portion is exercised; or
(iii) With the consent of the Committee, a full
recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest
under the Code or successor provision) and payable upon such
terms as may be prescribed by the Committee. The Committee may
also prescribe the form of such note and the security to be
given for such note. The Option may not be exercised however,
by delivery of a promissory note or by a loan from the Company
when or where such loan or other extension of credit is
prohibited by law; or
(iv) With the consent of the Committee, any
combination of the consideration provided in the foregoing
subparagraphs (i), (ii) and (iii); and
(c) Full payment to the Company (or other employer
corporation) of all amounts which, under federal, state or local tax
law, it is required to withhold upon exercise of the Option; with the
consent of the Committee, (i) shares of the Company's Common Stock
owned by the Optionee duly endorsed for transfer, or (ii) subject to
the timing requirements of Section 4.4, shares of the Company's Common
Stock issuable to the Optionee upon exercise of the Option, valued at
fair market value at the date of Option exercise, may be used to make
all or part of such payment; and
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(d) In the event the Option or portion shall be exercised
pursuant to Section 4.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to
exercise the Option.
Section 4.4. Conditions to Issuance of Stock Certificates. The shares
of stock deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or issued shares which
have then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:
(a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed; and
(b) The completion of any registration or other qualification
of such shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any
other governmental regulatory body, which the Committee shall, in
its absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in
its absolute discretion, determine to be necessary or advisable;
and
(d) The payment to the Company (or other employer corporation)
of all amounts which, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time
establish for reasons of administrative convenience.
Notwithstanding the provisions of the Termination Agreement with respect to the
registration of the shares of stock deliverable upon the exercise of the
Option, the parties agree that the Company will register such shares on Form
S-8 or another appropriate form by June 3, 1999.
Section 4.5. Rights as Shareholder. The holder of the Option shall not
be nor have any of the rights or privileges of, a shareholder of the Company in
respect of any shares purchasable upon the exercise of any part of the Option
unless and until certificates representing such shares shall have been issued by
the Company to such holder.
Section 4.6. Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events. Subject to
the provisions of Section 3.3 (which shall prevail in the event of any conflict
with this Section 4.6), in the
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event that there occurs any dividend or other distribution (whether in the form
of cash, common stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of common stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, the Committee shall determine, in its good faith
and commercially reasonable discretion, whether any such occurrence affects the
Common Stock such that an adjustment is appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available with respect to the Option. If, in accordance with the immediately
preceding sentence, an adjustment is determined to be appropriate, then the
Company shall make such adjustment. For purposes of this Section 4.6, the term
"Company" shall be deemed to include any successor to the Company pursuant to
any Transaction and the term "Committee" shall be deemed to include any similar
committee of the governing body of any such successor to the Company (or, if
there is no such committee, the governing body of such successor).
ARTICLE 5
OTHER PROVISIONS
Section 5.1. Administration. The Committee shall have the power to
interpret this Agreement and to adopt such rules for the administration,
interpretation and application of this Agreement as are consistent therewith and
to interpret or revoke any such rules. All actions taken and all interpretations
and determinations made, by the Committee in good faith shall be final and
binding upon the Optionee, the Company and all other interested persons. No
member of the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Option. The Board shall
have no right to exercise any of the rights or duties of the Committee under
this Agreement.
Section 5.2. Option Not Transferable. Neither the Option nor any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his successors in interest or will
be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however that this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
Section 5.3. Shares To Be Reserved. The Company shall at all times
during the term of the Option reserve and keep available such number of shares
of stock as will be sufficient to satisfy the requirements of this Agreement.
Section 5.4. Notices. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any
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notice to be given to the Optionee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Optionee shall, if
the Optionee is then deceased, be given to the Optionee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.
Section 5.5. Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of this
Agreement.
Section 5.6. Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to the Optionee of
any sums required by federal, state or local tax law to be withheld with respect
to the issuance, vesting, exercise or payment of any Option. The Committee may
in its discretion and in satisfaction of the foregoing requirement allow such
Optionee to elect to have the Company withhold shares of Common Stock otherwise
issuable under such Option (or allow the return of shares of Common Stock)
having a fair market value equal to the sums required to be withheld.
Section 5.7. Construction. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware.
Section 5.8. Conformity to Securities Laws. The Optionee acknowledges
that this Agreement is intended to conform to the extent necessary with all
provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange Commission
thereunder, including without limitation Rule 16b-3. Notwithstanding anything
herein to the contrary, the Option is granted and may be exercised, only in such
a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
CHANCELLOR MEDIA CORPORATION
By: /s/ XXXXXXX X. XXXXXXXX, XX.
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Xxxxxxx X. Xxxxxxxx, Xx.
Executive Vice President and
General Counsel
ACCEPTED BY:
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Address: 0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxxx, Xxxxx 00000
Optionee's Taxpayer
Identification Number:
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