1
EXHIBIT 10.68
NONQUALIFIED STOCK OPTION GRANT AGREEMENT
GRANTED TO: D. Xxxxxxxx Xxxxxxxxx
DATE OF GRANT: April 9, 1999
GRANTED PURSUANT TO: 1999 Chancellor Media Corporation
Stock Option Plan
NUMBER OF UNDERLYING SHARES: 500,000 shares
EXERCISE PRICE: $46.63 per share
VESTING SCHEDULE: As described in Paragraph 4 below
This Nonqualified Stock Option Grant Agreement (the "Agreement") is
made and entered into as of April 9, 1999 (the "Date of Grant") between
Chancellor Media Corporation, a Delaware corporation (the "Company"), and D.
Xxxxxxxx Xxxxxxxxx (the "Employee"). It is the intent of the Company and the
Employee that the Option (as defined in Paragraph 1 below) will not qualify as
an "incentive stock option" under Section 422 of the Internal Revenue Code of
1986, as amended from time to time. Terms not defined herein shall have the
meanings ascribed thereto in the Plan.
1. Grant. The Employee is granted an option to purchase 500,000 shares
(the "Option Shares") of the Common Stock of the Company (the "Option"). The
Option is granted under the 1999 Chancellor Media Corporation Stock Option
Plan, as it may be amended from time to time (the "Plan"), a copy of which is
enclosed herewith, and is subject to the terms of the Plan and of this
Agreement. The Option granted hereunder is a matter of separate inducement and
is not in lieu of salary or other compensation for the Employee's services. The
Employee acknowledges and understands that as of the Date of Grant the Plan has
not been approved by the stockholders of the Company and, as provided in
Paragraph 6, that the Option shall expire and no longer be exercisable if such
stockholder approval is not obtained at the first annual stockholders meeting
after the Date of Grant.
2. Exercise Price. The Option's exercise price is $46.63 per share
(the "Exercise Price").
3. Term. The Option, unless sooner terminated or exercised in full,
shall expire at 5:00 p.m., Dallas, Texas time, on the 10th anniversary of the
Date of Grant, and, except as expressly contained in this Agreement, no portion
of the Option may be exercised after such date.
4. Vesting and Exercisability.
(a) Except as otherwise provided in Paragraph 5, the Option Shares
shall become "Vested Option Shares" with respect to 20% of the Option Shares on
each anniversary of the Date
2
of Grant, so that all of the Option Shares shall be vested and become Vested
Option Shares by the fifth anniversary of the Date of Grant.
(b) Except as otherwise provided in Paragraph 6, the Option shall
become exercisable to acquire Vested Option Shares at any time or from time to
time after the first to occur of (i) a Change in Control (as defined in
Paragraph 18) or (ii) the date on which the average Fair Market Value of the
Common Stock, calculated on a daily basis (when added to any cash consideration
attributable to any prior Capital Reorganization (as defined in Paragraph 17),
equals or exceeds $100.00 per share (the "Exercisability Value") for a period
of 30 consecutive days (excluding non-Business Days (as defined in Paragraph
18) for purposes of calculating the average Fair Market Value during such
30-day period) during the period from (and including) the Date of Grant through
(and including) the fifth anniversary of the Date of Grant. Upon the completion
of a Common Stock Reorganization (as defined in Paragraph 17), the
Exercisability Value shall be adjusted, effective immediately after the record
date at which the holders of shares of Common Stock are determined for purposes
of such Common Stock Reorganization, to a dollar amount determined by
multiplying the Exercisability Value in effect immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding on such record date before giving effect to such
Common Stock Reorganization and the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such Common Stock
Reorganization.
5. Termination of Employment. Notwithstanding Paragraph 4:
(a) Upon the termination of the Employee's employment with the
Company or any Subsidiary due to the Employee's death, the Option Shares shall
become Vested Option Shares on the date of the Employee's Termination of
Employment (as defined in Paragraph 18). If the Option has become exercisable
on or before the date of the Employee's Termination of Employment, then the
executor or administrator of the estate of the deceased Employee or the person
or persons to whom the deceased Employee's rights with respect to the Option
shall pass by will or the laws of descent and distribution may, until the
earlier to occur of 5:00 p.m., Dallas, Texas time, on the tenth anniversary of
the Date of Grant or the first anniversary of the date of the Employee's
Termination of Employment, exercise the Option with respect to all or any part
of the Vested Option Shares; provided, however, that in no event will the
executor or administrator of the estate of the deceased Employee or the person
or persons to whom the deceased Employee's rights with respect to the Option
shall pass by will or the laws of descent and distribution have less than 90
days after the date of the Employee's Termination of Employment to exercise the
Option. If the Option has not become exercisable on or before the date of the
Employee's Termination of Employment, then (i) the Option shall remain in full
force and effect and (ii) if the Option becomes exercisable on or before the
fifth anniversary of the Date of Grant, then the executor or administrator of
the estate of the deceased Employee or the person or persons to whom the
deceased Employee's rights with respect to the Option shall pass by will or the
laws of descent and distribution may exercise the Option with respect to all or
any part of the Vested Option Shares until 5:00 p.m., Dallas, Texas time, on
the first anniversary of the date on which the Option becomes exercisable.
-2-
3
(b) Upon the termination of the Employee's employment with the
Company or any Subsidiary due to the Employee's Permanent Disability (as
defined in Paragraph 18), the Option Shares shall become Vested Option Shares
on the date of the Employee's Termination of Employment. If the Option has
become exercisable on or before the date of the Employee's Termination of
Employment, then the Employee or the Employee's legal representatives may,
until the earlier to occur of 5:00 p.m., Dallas, Texas time, on the tenth
anniversary of the Date of Grant or the first anniversary of the date of the
Employee's Termination of Employment, exercise the Option with respect to all
or any part of the Vested Option Shares; provided, however, that in no event
will the Employee or the Employee's legal representatives have less than 90
days after the date of the Employee's Termination of Employment to exercise the
Option. If the Option has not become exercisable on or before the date of the
Employee's Termination of Employment, then (i) the Option shall remain in full
force and effect and (ii) if the Option becomes exercisable on or before the
fifth anniversary of the Date of Grant, then the Employee or the Employee's
legal representatives may exercise the Option with respect to all or any part
of the Vested Option Shares until 5:00 p.m., Dallas, Texas time, on the first
anniversary of the date on which the Option becomes exercisable.
(c) Upon the termination of the Employee's employment with the
Company or any Subsidiary due to the Employee's termination of employment for
Cause (as defined in Paragraph 18) or the Employee's resignation for other than
Good Reason (as defined in Paragraph 18), no additional Option Shares shall
vest after the date of the Employee's Termination of Employment. If the Option
has become exercisable on or before the date of the Employee's Termination of
Employment, then the Employee may, until the earlier to occur of 5:00 p.m.,
Dallas, Texas time, on the tenth anniversary of the Date of Grant or the 90th
day after the date of the Employee's Termination of Employment, exercise the
Option with respect to all or any part of the Vested Option Shares; provided,
however, that in no event will the Employee have less than 90 days after the
date of the Employee's Termination of Employment to exercise the Option. If the
Option has not become exercisable on or before the date of the Employee's
Termination of Employment, then (i) the Option shall remain in full force and
effect and (ii) if the Option becomes exercisable on or before the fifth
anniversary of the Date of Grant, then the Employee may exercise the Option
with respect to all or any part of the Vested Option Shares until 5:00 p.m.,
Dallas, Texas time, on the 90th day after the date on which the Option becomes
exercisable.
(d) Upon the termination of the Employee's employment with the
Company or any Subsidiary due to the Employee's termination of employment
without Cause or the Employee's resignation for Good Reason, the Option Shares
shall become Vested Option Shares on the date of the Employee's Termination of
Employment. If the Option has become exercisable on or before the date of the
Employee's Termination of Employment, then the Employee may, until the later to
occur of 5:00 p.m., Dallas, Texas time, on the tenth anniversary of the Date of
Grant or the 90th day after the date of the Employee's Termination of
Employment, exercise the Option with respect to all or any part of the Vested
Option Shares. If the Option has not become exercisable on or before the date
of the Employee's Termination of Employment, then (i) the Option shall remain
in full force and effect and (ii) if the Option becomes exercisable on or
before the fifth anniversary of the Date of Grant, then the Employee may
exercise the Option with respect to all or any part of the Vested Option Shares
until 5:00 p.m., Dallas, Texas time, until the tenth anniversary of the Date of
Grant.
-3-
4
(e) If, pursuant to Paragraph 6, the Option shall terminate earlier
than provided for in this Paragraph 5, then the provisions of Paragraph 6 shall
prevail.
6. Termination of Option. Notwithstanding any provision of the Option
to the contrary, the Option shall expire and no longer be exercisable (a) on
April 9, 2004, if the Option Shares have not become exercisable by 5:00 p.m.,
Dallas, Texas time on such date, or (b) on the date of the first annual meeting
of the holders of Common Stock after the Date of Grant if the Plan has not been
approved by the requisite vote of the stockholders of the Company by 5:00 p.m.,
Dallas, Texas time on such date.
7. Option Not Transferable. During the Employee's lifetime, the Option
shall not be subject in any manner to alienation, anticipation, sale,
assignment, pledge, encumbrance or other transfer and shall be exercisable only
by the Employee. Upon the death of the Employee, (a) the Option shall be
exercisable only by the executor or administrator of the estate of the deceased
Employee or the person or persons to whom the deceased Employee's rights with
respect to the Option shall pass by will or the laws of descent and
distribution, and (b) the Option shall be exercisable as specified in this
Agreement.
8. Impact of Other Options. The Employee may exercise the exercisable
portion of the Option regardless of whether any other stock option that the
Employee has been granted by the Company remains unexercised. In no event may
the Employee exercise the Option for a fraction of a share of Common Stock.
9. Method of Exercise. Any exercise of the Option shall be in writing
addressed to the Corporate Secretary of the Company at the principal business
office of the Company, specifying the Option being exercised and the number of
shares of Common Stock to be purchased, and specifying a business day not more
than 10 days from the date such notice is given for the payment of the purchase
price against delivery of the shares of Common Stock being purchased. Subject
to the terms of the Plan and this Agreement, the Company shall cause
certificates for the shares of Common Stock so purchased to be delivered at the
principal business office of the Company, against payment of the full purchase
price, on the date specified in the notice of exercise. The Option's Exercise
Price shall be paid by the Employee in cash or, if permitted by the Committee
in its sole discretion at the time of exercise, in shares of Common Stock
currently held by the Employee at the time of exercise, or by a combination of
cash and such currently held shares. Any shares of Common Stock delivered in
payment of the Exercise Price shall be valued at their then Fair Market Value.
10. Taxes. By his acceptance of this Agreement, the Employee agrees to
reimburse the Company for any taxes required by any government to be withheld
or otherwise deducted and paid by the Company with respect to the issuance or
disposition of the shares of Common Stock subject to the Option. In lieu
thereof, the Company shall have the right to withhold the amount of such taxes
from any other sums due or to become due from the Company to the Employee. The
Company may, in its discretion, hold the stock certificate or certificates to
which the Employee is entitled upon the exercise of the Option as security for
the payment of such withholding tax liability until cash sufficient to pay that
liability has been accumulated. In addition, at any time that the Company
becomes subject to a withholding obligation under applicable law with respect
to the Option (the
-4-
5
"Tax Date"), except as set forth below, the Employee may elect to satisfy, in
whole or in part, the Employee's related personal tax liabilities (an
"Election") by (a) directing the Company to withhold from shares of Common
Stock issuable in the related exercise either a specified number of shares of
Common Stock or shares of Common Stock having a specified value (in each case
not in excess of the related personal tax liabilities), (b) tendering shares of
Common Stock previously issued pursuant to the exercise of a stock option or
other shares of Common Stock owned by the Employee, or (c) combining any or all
of the foregoing Elections in any fashion. An Election shall be irrevocable.
The withheld shares and other shares of Common Stock and other shares of Common
Stock tendered in payment shall be valued at their Fair Market Value on the Tax
Date. The Committee may disapprove of any Election, suspend or terminate the
right to make Elections or provide that the right to make Elections shall not
apply to particular shares of Common Stock or exercises. The Committee may
impose any additional conditions or restrictions on the right to make an
Election as it shall deem appropriate, including any limitations necessary to
comply with Section 16 of the Exchange Act.
11. No Rights as a Stockholder. The Employee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock underlying
the Option until the Option is exercised and the Employee receives such shares.
12. Restrictive Legend. If the Company, in its sole discretion, shall
determine that it is necessary, to comply with applicable securities laws, the
certificate or certificates representing the shares of Common Stock purchased
pursuant to the exercise of the Option shall bear an appropriate legend in form
and substance, as determined by the Company, giving notice of applicable
restrictions on transfer under or with respect to such laws.
13. Employee Certification. The Employee covenants and agrees with the
Company that if, at the time of exercise of the Option, there does not exist a
Registration Statement on an appropriate form under the Securities Act (as
defined in Paragraph 18), which Registration Statement shall have become
effective and shall include a prospectus that is current with respect to the
shares subject to the Option, then the Employee shall execute and deliver a
certificate to the Company indicating (a) that he is purchasing the shares for
his own account and not with a view to the resale or distribution thereof, (b)
that any subsequent offer for sale or sale of any such shares shall be made
either pursuant to (i) a Registration Statement on an appropriate form under
the Securities Act, which Registration Statement shall have become effective
and shall be current with respect to the shares being offered and sold, or (ii)
a specific exemption from the registration requirements of the Securities Act
and any rules and regulations thereunder and applicable state securities laws
and regulations, but in claiming such exemption, the Employee shall, prior to
any offer for sale or sale of such shares, obtain a favorable written opinion
from counsel for or approved by the Company as to the applicability of such
exemption, and (c) that the Employee agrees that the certificate or
certificates evidencing such shares shall bear a legend to the effect of the
foregoing.
14. Plan is Controlling. This Agreement is subject to all terms,
conditions, limitations and restrictions contained in the Plan, which shall be
controlling in the event of any conflicting or inconsistent provisions.
-5-
6
15. Not a Contract of Employment. This Agreement is not a contract of
employment and the terms of the Employee's employment shall not be affected
hereby or by any agreement referred to herein except to the extent specifically
so provided herein or therein. Nothing herein shall be construed to impose any
obligation on the Company to continue the Employee's employment, and it shall
not impose any obligation on the Employee's part to remain in the employ of the
Company.
16. No Duty to Disclose. The Employee acknowledges and agrees that
neither the Company, its stockholders nor its directors and officers, has any
duty or obligation to disclose to the Employee any material information
regarding the business of the Company or affecting the value of the Common
Stock before or at the time of a termination of the employment of the Employee
by the Company, including, without limitation, any information concerning plans
for the Company to make a public offering of its securities or to be acquired
by or merged with or into another firm or entity.
17. Anti-Dilution Provisions.
(a) Adjustments Generally. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of the Option shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Paragraph 17.
(b) Common Stock Reorganization. If the Company shall after the
date of issuance of the Option subdivide its outstanding shares of Common Stock
into a greater number of shares or consolidate its outstanding shares of Common
Stock into a lesser number of shares (any such event being called a "Common
Stock Reorganization"), then (i) the Exercise Price shall be adjusted,
effective immediately after the record date at which the holders of shares of
Common Stock are determined for purposes of such Common Stock Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on such record date before giving
effect to such Common Stock Reorganization and the denominator of which shall
be the number of shares of Common Stock outstanding after giving effect to such
Common Stock Reorganization, and (ii) the number of shares of Common Stock
subject to purchase upon exercise of the Option shall be adjusted, effective at
such time, to a number determined by multiplying the number of shares of Common
Stock subject to purchase immediately before such Common Stock Reorganization
by a fraction, the numerator of which shall be the number of shares outstanding
after giving effect to such Common Stock Reorganization and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
before such Common Stock Reorganization.
(c) Capital Reorganization. If after the date of issuance of the
Option there shall be any consolidation or merger to which the Company is a
party (whether or not the Company is the surviving entity), other than a
consolidation or a merger in which the Company is a continuing corporation and
which does not result in any reclassification of, or change (other than a
Common Stock Reorganization or a change in par value), in, outstanding shares
of Common Stock, or any sale, assignment, lease, exchange, conveyance or other
transfer (in one transaction or series of related transactions) of the property
of the Company as an entirety or substantially as an entirety or all or
-6-
7
substantially all of the outstanding equity securities of the Company to any
person or group of related persons for the purposes of Section 13(d) of the
Exchange Act (any such event being called a "Capital Reorganization"), then,
effective upon the effective date of such Capital Reorganization, the Employee
shall have the right to purchase, upon exercise of the Option, the kind and
amount of shares of stock and other securities and property (including cash)
which the Employee would have owned or have been entitled to receive after such
Capital Reorganization if the Option had been exercised immediately prior to
such Capital Reorganization. As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to the Employee an agreement as to the
Employee's rights in accordance with this Paragraph 17(c), providing for
subsequent adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Paragraph 17(c). The provisions of this
Paragraph 17(c) shall similarly apply to successive Capital Reorganizations.
(d) Certain Other Events. If any event occurs after the date of
issuance of the Option as to which the foregoing provisions of this Paragraph
17 are not strictly applicable or, if strictly applicable, would not, in the
good faith judgment of the Committee, fairly protect the purchase rights of the
Employee in accordance with the essential intent and principles of such
provisions, then the Committee shall make such adjustments in the application
of such provisions, in accordance with such essential intent and principles, as
shall be reasonably necessary, in the good faith opinion of the Committee, to
protect such purchase rights as aforesaid.
(e) Adjustment Rules. (i) Any adjustments pursuant to this
Paragraph 17 shall be made successively whenever an event referred to herein
shall occur.
(ii) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization
or Capital Reorganization, and shall legally abandon such action prior to
effecting such action, then no adjustment shall be made pursuant to this
Paragraph 17 in respect of such action.
(iii) Any other adjustments provided for in the Plan shall
also be applicable to the Option.
(iv) No adjustment in the amount of shares purchasable upon
exercise of the Option or in the Exercise Price shall be made hereunder unless
such adjustment increases or decreases such amount or price by one percent or
more, but any such lesser adjustment shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which together
with any adjustments so carried forward shall serve to adjust such amount or
price by one percent or more.
(v) No adjustment in the Exercise Price shall be made
hereunder if such adjustment would reduce the exercise price to an amount below
par value of the Common Stock, which par value shall initially be $.01 per
share of Common Stock.
(f) Notice of Adjustment. The Company shall give the Employee
reasonable notice of the record date or effective date, as the case may be, of
any action which requires or might
-7-
8
require an adjustment or readjustment pursuant to this Paragraph 17. Such
notice shall describe such event in reasonable detail and specify the record
date or effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give reasonable
notice to the Employee of such adjustment and computation promptly after such
adjustment becomes determinable.
18. Certain Defined Terms. The following terms, as used in this
Agreement, have the following respective meanings:
(a) "Affiliate" means, with respect to any Person, any Person who,
directly or indirectly, controls, is controlled by or is under common control
with that Person.
(b) "Business Day" means (i) if any class of common stock of the
Company is listed or admitted to trading on a national securities exchange, a
day on which the principal national securities exchange on which such class of
common stock is listed or admitted to trading is open for business or (ii) if
no class of common stock of the Company is so listed or admitted to trading, a
day on which the New York Stock Exchange is open for business.
(c) "Capital Reorganization" shall have the meaning set forth in
Paragraph 17(c).
(d) "Cause" shall have the meaning set forth in Section 1 of the
Employment Agreement.
(e) "Change in Control" shall have the meaning set forth in
Section 1 of the Employment Agreement.
(f) "Common Stock Reorganization" shall have the meaning set forth
in Paragraph 17(b).
(g) "Employment Agreement" means that certain Employment Agreement
dated as of May ___, 1999, as it may be amended from time to time, by and
between the Company and the Employee.
(h) "Exercisability Value" shall have the meaning set forth in
Paragraph 4(b).
(i) "Good Reason" shall have the meaning set forth in Section 1 of
the Employment Agreement.
(j) "Permanent Disability" shall have the meaning set forth in
Section 1 of the Employment Agreement.
(k) "Person" or "person" means any individual, corporation,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or other agency or political
subdivision thereof.
-8-
9
(l) "Securities Act" shall mean the Securities Act of 1933 and any
similar or successor federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
(m) "Termination of Employment" shall have the meaning set forth
in Section 1 of the Employment Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-9-
10
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date written below.
DATED: May 18, 1999 CHANCELLOR MEDIA CORPORATION
By: /s/ XXXXXX X. XXXXX
-------------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
ACCEPTED BY:
/s/ D. XXXXXXXX XXXXXXXXX
-----------------------------------
Signature of Employee
Name and Address of Optionee:
D. Xxxxxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxxx
Xxxxxx, Xxxxx 00000
-----------------------------------
Optionee Taxpayer Identification Number
-10-
