XXXXXXXX BROADCAST GROUP, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of April 10, 1996, (the "Option date"), between Xxxxxxxx
Broadcast Group, Inc., a Maryland corporation (the "Company"), and Xxxxx Xxxxx
(the "Optionee").
RECITALS
WHEREAS, the Company has adopted the 1996 Long-Term Incentive
Plan of Xxxxxxxx Broadcast Group, Inc. (the "Plan") to reward certain key
individuals for making major contributions to the Company and its subsidiaries
by enabling them to acquire shares of Class A Common Stock, part value $.01 per
share ("Common Stock"), of the Company;
WHEREAS, the Optionee and the Company have executed an
Employment Agreement (the "Employment Agreement") of even date herewith, and
WHEREAS, as part of its inducement to the Optionee to enter
into the Employment Agreement, the Company desires to grant the Optionee an
option to purchase shares of Common Stock pursuant to the Plan and upon the
terms and subject to the conditions hereinafter set forth:
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing premises,
the parties to this Agreement agree as follows:
1. Grant of Option. Subject to the terms and conditions set
forth in this Agreement, the Company hereby grants to the Optionee an option
(the "Option") to purchase from the Company up to but not exceeding in the
aggregate 1,382,435 shares of Common Stock at a price per share ("Exercise
Price") equal to the average of the closing share prices of the Common Stock as
reported on the NASDAQ National Market for the 21 trading days consisting of the
Option Date and each of the ten trading days immediately prior to such date and
each of the ten trading days immediately following such date, but in no event
less than $21.00 per share, such number of shares and such price per share being
subject to adjustment as provided in Section 13 of the Plan. The Company shall
not (a) purchase, or take any actions designed or intended to influence the
price of, Common Stock during such period, (b) permit any Xxxxx Family Member
(hereinafter defined) to purchase, or take any actions designed or intended to
influence the price of, Common Stock during such period, or (c) ask or encourage
any of its affiliates, associates or any other person to purchase, or take any
action designed or intended to influence the price of, Common Stock during such
period;
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provided, however, that nothing contained in this Section shall be deemed to
prohibit the Company from acting in the normal course of business to communicate
with financial analysts or otherwise educate the market on the terms of the
River City Acquisition (as defined in the Employment Agreement.) For purposes of
this Agreement, "Xxxxx Family Member" means Xxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxx,
J. Xxxxxx Xxxxx and Xxxxxx X. Xxxxx and any of their respective parents,
grandparents, children, grandchildren, aunts, uncles, nephews, nieces or first
cousins and any trust or other entity which any such person individually, or
collectively with another person or persons, controls.
2. Company Covenants. The Company represents that the Plan has
been adopted by the Board of Directors of the Company and the Compensation
Committee thereof. The Company agrees to recommend approval and to solicit
proxies for the approval of the Plan by Xxxxxxxx'x stockholders at the next
meeting of the Company's stockholders, to be held no later than June 30, 1996,
such that upon such approval, grants of options under the Plan will be treated
as exempt purchases under Rule 16b-3 issued by the Securities Exchange
Commission pursuant to Section 16 of the Exchange Act. The Company shall cause
the Common Stock issuable upon exercise of the Option to be registered in a
shelf registration statement pursuant to the Securities Act of 1933, as amended,
and all other applicable federal securities laws and state securities or blue
sky laws, shall cause such securities to be approved for quotation on the NASDAQ
National Market, and shall bear all expenses in connection with such
registration, quotation and compliance.
3. Relationship to Plan. The Option is issued in accordance
with and subject to all of the terms, conditions and provisions of the Plan, as
amended from time to time, and administrative interpretations thereunder, if
any, which have been adopted by the Committee thereunder and are in effect on
the date hereof. Except as defined herein or otherwise stated, capitalized terms
shall have the same meanings ascribed to them under the Plan.
4. Vesting and Exercise Schedules.
(a) The Option shall be vested with respect to 50% of
the aggregate number of shares of Common Stock subject to the
Option immediately upon the occurrence of the First Closing,
(as defined in the Employment Agreement). On the first
anniversary of the First Closing, the Option shall vest with
respect to an additional 25% of the aggregate number of shares
of Common Stock subject to the Option. On the second
anniversary of the First Closing, the Option shall vest with
respect to the remaining balance of the aggregate number of
shares subject to the Option.
(b) The Option shall immediately vest and become
fully exercisable, irrespective of the limitations set forth
in subparagraph (a) above, in the event of:
(i) the Optionee's death;
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(ii) the Optionee's Disability (as such
term is defined in Section 10.2 of
the Employment Agreement);
(iii) the termination of the Agreement
Term (as defined in the Employment
Agreement), by the Company, not "for
cause" (as defined in Section 9 of
the Employment Agreement); or
(iv) the termination of the Agreement
Term, by Optionee, pursuant to
Section 10.3.1 of the Employment
Agreement.
(c) If the Agreement Term is terminated (i) by the
Company, "for cause" (as defined therein) or (ii) by Optionee,
pursuant to Section 10.3.3 of the Employment Agreement, the
Option shall terminate and be of no force and effect with
respect to any shares of Common Stock as to which the Option
has not previously vested.
5. Termination of Option. Unless earlier terminated pursuant
to Section 4 hereof, the Option shall terminate and be of no force and effect
with respect to any shares of Common Stock not previously purchased by the
Optionee on the tenth anniversary of the First Closing.
6. Exercise of Option. The Option may be exercised with
respect to the shares of Common Stock then vested, in whole or in part, at any
time on or prior to the tenth anniversary of the First Closing, regardless of
the Optionee's service status, by written notice to the Company at its principal
executive office, which notice shall (a) specify the number of shares with
respect to which the Option is being exercised and the purchase price to be paid
therefor; (b) if the person exercising this Option is not the Optionee himself;
contain or be accompanied by satisfactory evidence of such person's right to
exercise this Option; and (c) be accompanied by payment in full of the purchase
price in cash or by a certified cashier's check to the order of the Company.
7. Transferability. The Option shall not be transferable
except by will or by the laws of descent and distribution. During the Optionee's
lifetime, the Option may be exercised only by the Optionee. No assignment or
transfer of the Option, whether voluntary or involuntary, by operation of law or
otherwise, except a transfer by will or by the laws of descent or distribution,
shall vest in the assignee or transferee any interest or right whatsoever in the
Option.
8. Certain Payments. Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Optionee (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement, but determined without regard to any Gross-Up Payment required under
this Section 8) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or
any interest or penalties are incurred by the Optionee with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Optionee
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shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Optionee of all income taxes (and any
interest and penalties imposed with respect thereto), but excluding any Excise
Tax imposed upon the Gross-Up Payment, the Optionee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
9. No Rights as Stockholder. The Optionee shall not have any
rights as a stockholder of the Company with respect to any of the shares subject
to the Option, except to the extent that such shares shall have been purchased
and transferred to him.
10. No Right to Employment. The Option shall not confer on the
Optionee any right to continue in the service of the Company or any of its
subsidiaries or affect the right of the Company or any subsidiary to terminate
Optionee's employment at any time; and nothing contained in this Agreement shall
be deemed a waiver or modification of any provision contained in any agreement
between the Optionee and the Company or any parent or subsidiary thereof . This
Option shall not affect the right of the Company or any parent or subsidiary
thereof to reclassify, recapitalize, or otherwise change its capital or debt
structure or to merge, consolidate, convey any or all of its assets, dissolve,
liquidate, wind up, or otherwise reorganize.
11. Dissolution or Merger. Upon the dissolution or liquidation
of the Company, a merger or consolidation in which the Company is not the
surviving corporation, or a transaction in which another individual or entity
becomes the owner of 50% or more of the total combined voting power of all
classes of stock of the Company, the unexercised portion of this Option shall
terminate, but the Optionee shall have the right to exercise the unexpired and
unexercised portion of this Option, whether vested or unvested, immediately
prior to such event.
12. Withholding for Tax Purposes. Any amount of Common Stock
that is payable or transferable to the Optionee hereunder may be reduced by any
amount or amounts which the Company is required to withhold under the then
applicable provisions of the Internal Revenue Code of 1986, as amended, or its
successors, or any other federal, state or local tax withholding requirement. If
the Optionee does not elect to satisfy withholding requirements in this fashion,
the issuance of the shares of Common Stock payable or transferable to the
Optionee hereunder shall be contingent upon the Optionee's satisfaction of any
withholding obligations that may apply and the Optionee's presentation of
evidence satisfactory to the Board that such withholding obligations have been
satisfied.
13. Notice. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder will be deemed
to be delivered on the date that it is personally delivered, or, whether
actually received or not, on the third business day after it is deposited in the
United States mail, certified or registered, postage prepaid, addressed to the
person who is to receive it at the address that such person has theretofore
specified by written notice delivered in accordance herewith. The Company or
Optionee may change, at any time and from time to time, by written notice to the
other, the address that it or he had therefore specified
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for receiving notices. Until changed in accordance herewith, the Company and the
Optionee specify their respective addresses as set forth below:
Company:
Xxxxxxxx Broadcasting Group, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
with copy to:
Xxxxxx & Xxxxxxxx, P.A.
The USF&G Tower
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Optionee:
Xxxxx Xxxxx
River City Broadcasting, L.P.
0000 Xxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000-0000
with a copy to:
Xxxxx & Xxxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
14. Amendment. Notwithstanding any other provision hereof,
this Agreement may not be supplemented or amended from time to time without the
consent of the Optionee.
15. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Maryland
applicable to agreements made and to be performed entirely in Maryland.
16. Counterparts. This Agreement may be executed in multiple
counterparts. The Company and Optionee may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together
represent the same agreement.
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IN WITNESS WHEREOF, the Company and the Optionee have caused
this Agreement to be executed as of the date first above written.
XXXXXXXX BROADCAST GROUP, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Chief Executive Officer
OPTIONEE
By: /s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
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