EXHIBIT 10.1
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT, made and entered
into October 14, 2004 (this "Agreement"), between CUMULUS MEDIA INC., a Delaware
corporation (the "Company"), and XXXXX X. XXXXXX, XX. (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is a radio broadcasting company focused on the
acquisition, operation and development of radio stations in mid-size and smaller
radio markets;
WHEREAS, the Company and the Executive previously entered into an
employment agreement dated May, 1998 (the 1998 Employment Agreement) and an
amended and restated employment agreement dated as of July 1, 2001 (the First
Amended and Restated Employment Agreement) (the 1998 Employment Agreement and
the First Amended and Restated Employment Agreement are collectively referred to
as the "Prior Agreements");
WHEREAS, it is intended that the Executive will continue to serve the
Company as its Chairman, President and Chief Executive Officer following the
execution and delivery of this Agreement and that this Agreement, except as
provided in Section 15, shall amend and restate and, thus, supercede the Prior
Agreements; and
WHEREAS, the Company wishes to assure itself of the continued services of
the Executive so that it will have the benefit of his ability, experience and
services, and the Executive is willing to enter into this Agreement to that end,
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
covenant and agree as follows:
1. EMPLOYMENT
The Company hereby agrees to continue to employ the Executive, and the
Executive hereby agrees to continue to remain in the employ of the Company, on
and subject to the terms and conditions of this Agreement. Although this
Agreement is being entered into on the date indicated above the parties intend
it and its terms to apply retroactively to July 1, 2004 (the "Effective Date"),
and will take whatever actions reasonably necessary to effect same.
2. TERM
The period of this Agreement (the "Agreement Term") shall commence as of
the Effective Date and shall expire on the third anniversary of the Effective
Date (the "Initial Term"). The Agreement Term shall be automatically extended
for an additional year at the
expiration of the Initial Term, or any succeeding term, unless written notice of
non-extension is provided by either party to the other party at least 180 days
prior to the expiration of the Initial Term or any succeeding term, as the case
may be. The period of the Executive's employment under this Agreement (the
"Employment Period") shall commence as of the Effective Date hereof and shall
expire at the end of the Agreement Term, unless terminated or extended in
accordance with the terms and conditions of this Agreement.
3. POSITION, DUTIES AND RESPONSIBILITIES
(a) The Executive shall serve as, and with the title, office and
authority of, the Chairman of the Board of Directors, President and
Chief Executive Officer of the Company. The Executive shall also
hold similar titles, offices and authority with the Company's
subsidiaries and its successors. The Company shall use its best
efforts to cause the Executive to be nominated and elected to the
Board of Directors of the Company (the "Board") and of its
subsidiaries and its successors for the duration of the Employment
Period.
(b) The Executive shall have effective supervision and control over, and
responsibility for, the strategic direction and general and active
day-to-day leadership and management of the business and affairs of
the Company and the subsidiaries of the Company, subject only to the
authority of the Board, and shall have all of the powers, authority,
duties and responsibilities usually incident to the position and
office of Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. The Executive shall report
directly to the Board.
(c) The Executive agrees to devote substantially all of his business
time, efforts and skills to the performance of his duties and
responsibilities under this Agreement; provided, however, that
nothing in this Agreement shall preclude the Executive from devoting
reasonable periods required for (i) participating in professional,
educational, philanthropic, public interest, charitable, social or
community activities, (ii) serving as a director or member of an
advisory committee of any corporation or other entity that the
Executive was serving on as of the date of the Prior Agreement or
any other corporation or entity that is not in competition with the
Company, or (iii) managing his personal investments; provided,
further, that any such activities set forth in clauses (i) through
(iii) above do not materially interfere with the Executive's regular
performance of his duties and responsibilities hereunder.
(d) The Executive shall perform his duties at the offices of the Company
located in Atlanta, Georgia, but from time to time the Executive may
be required to travel to other locations in the proper conduct of
his responsibilities under this Agreement.
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4. COMPENSATION AND BENEFITS
In consideration of the services rendered by the Executive during the
Employment Period, the Company shall pay or provide the Executive the
compensation and benefits set forth below.
(a) SALARY. The Company shall pay the Executive a base salary (the "Base
Salary") equal to $750,000 per annum during the first 12 months of
the Agreement Term; $800,000 during the second 12 months of the
Agreement Term; and $850,000 during the third 12 months of the
Agreement Term. In its sole discretion, the Compensation Committee
of the Board (the "Compensation Committee") may review the Base
Salary with a view toward consideration of merit increases as the
Compensation Committee deems appropriate. The Base Salary shall be
paid in arrears in substantially equal installments at monthly or
more frequent intervals, in accordance with the normal payroll
practices of the Company.
(b) INCENTIVE BONUSES. The Company shall provide the Executive with the
opportunity to earn an annual target bonus of up to 75 percent (75%)
of his Base Salary (the "Target Bonus Amount") for each fiscal year
of the Company ending during the Employment Period, payable to the
Executive in the event that the annual bonus targets established by
the Compensation Committee (in consultation with the Executive) are
met during the relevant year. Any Target Bonus Amount shall be paid
as promptly as practicable following the calculation of the
broadcast cash flow for the preceding calendar year. The Executive
shall participate in all other short-term and long-term bonus or
incentive plans or arrangements in which other senior executives of
the Company are eligible to participate from time to time with the
Executive's short-term and long-term bonus or incentive compensation
opportunities under such plans and arrangements to be determined by
the Compensation Committee.
(c) EMPLOYEE BENEFITS. The Executive shall be entitled to participate in
all employee benefit plans, programs, practices or arrangements of
the Company in which other senior executives of the Company are
eligible to participate from time to time, including, without
limitation, any qualified or non-qualified pension, profit sharing
and savings plans, any death benefit and disability benefit plans,
any medical, dental, health and welfare plans and any stock purchase
programs that are approved by the Compensation Committee on terms
and conditions at least as favorable as provided to other senior
executives of the Company.
(d) FRINGE BENEFITS AND PERQUISITES. The Executive shall be entitled to
all fringe benefits and perquisites that are generally made
available to senior executives of the Company from time to time that
are approved by the Compensation Committee. In addition, the
Executive shall receive a car allowance of $1,000 per month.
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5. EQUITY INCENTIVES
As further consideration for the services rendered by the Executive during
the Employment Period, the Executive shall be granted time-vested restricted
shares (the "Time-Vested Restricted Shares") and performance restricted shares
(the "Performance Restricted Shares") constituting shares of the Company's Class
A common stock (the "Common Stock") on the terms and conditions set forth below.
(a) TIME-VESTED RESTRICTED SHARES. In connection with the annual grants
to be made in each of years 2005, 2006 and 2007, Time-Vested
Restricted Shares constituting 125,000 shares of Common Stock shall
be granted in each year to the Executive. Except as otherwise
provided for in this Agreement, fifty percent (50%) of all
Time-Vested Restricted Shares granted pursuant to this Section shall
vest on the second (2nd) anniversary of the date of grant, and the
remaining fifty percent (50%) shall vest in equal installments of
one-eighth (1/8th) of such Time-Vested Restricted Shares on the last
day of each of the eight (8) consecutive calendar quarters ending
following the second (2nd) anniversary of the date of grant, all
based on the continued employment of the Executive through such
respective dates.
(b) PERFORMANCE RESTRICTIVE SHARES. In connection with the annual grants
to be made in each of the years 2005, 2006 and 2007, Performance
Restricted Shares constituting 125,000 shares shall be granted in
each year to the Executive. Except as otherwise provided for in this
Agreement, all Performance Restrictive Shares granted pursuant to
this Section shall vest according to the following schedule:
Number of Shares Vesting Depends On Vesting Date
---------------- ------------------ ------------
1/2 of grant Achievement of Board approved EBITDA 2nd Anniversary of Date of Grant
budgeting goal for fiscal year of the date of
grant and Continuous Employment for 2 years
from Date of Grant
1/2 of grant Achievement of Board approved EBITDA 2nd Anniversary of Date of Grant
budgeting goal for first fiscal year
succeeding the fiscal year of the date of
grant and Continuous Employment for 2 years
from Date of Grant
Any Performance Restricted Shares that have not vested pursuant to the preceding
schedule shall vest on the eighth anniversary of the date of grant, provided the
Executive has remained in the continuous employment of the Company through such
date.
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(c) CHANGE IN CONTROL. In the event of a Change in Control, as defined
in Section 8 hereof, the unvested portion of any Time-Vested
Restricted Shares and any Performance Restricted Shares shall become
immediately and fully vested. This accelerated vesting provision
shall apply only to Time Vested Restricted Shares and Performance
Restricted Shares that have been granted as of the date triggering
acceleration and shall have no force or effect with respect to any
restricted shares described herein which are not then issued.
(d) FORFEITURE OF RESTRICTED SHARES. Subject to Sections 5(c),
7(a)(iii), and 7(c)(iii), any Restricted Shares that have not
theretofore become vested shall be forfeited if the Executive ceases
to be continuously employed by the Company at any time prior to the
applicable vesting date.
(e) RESTRICTIONS ON TRANSFER OF RESTRICTED SHARES. The Restricted Shares
may not be transferred, sold, pledged, exchanged, assigned or
otherwise encumbered or disposed of by the Executive, except to the
Company, until they have become vested. The certificate(s)
representing the Restricted Shares shall be held in custody by the
Company, together with a stock power endorsed in blank by the
Executive with respect thereto, until those shares have become
vested, and at such time the certificate(s) representing such vested
shares shall be promptly issued to the Executive.
(f) OTHER EQUITY INCENTIVES. In addition to the foregoing restricted
shares grants, the Executive shall be given consideration from time
to time by the Compensation Committee for the grant of stock options
or other equity incentives with respect to the Common Stock under
any stock option or equity-based incentive plan or arrangement of
the Company approved by the Compensation Committee for which senior
executives of the Company are eligible to participate.
6. TERMINATION OF EMPLOYMENT
The Employment Period will be terminated upon the happening of any of the
following events:
(a) RESIGNATION FOR GOOD REASON. The Executive may voluntarily terminate
his employment hereunder for Good Reason. For purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent
with the Executive's position (including status, offices,
titles or reporting relationships), authority, duties or
responsibilities as contemplated by Section 3 hereof, any
adverse change in the Executive's reporting responsibilities,
or any action by the Company that results in a diminution in
such position, authority, duties or responsibilities, but
excluding for these purposes an isolated and insubstantial
action not taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the
Executive;
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(ii) the failure of the Company to nominate the Executive to the
Board or the failure of the Board to recommend that the
Company's stockholders elect the Executive to the Board;
(iii) any failure by the Company to comply with the compensation and
benefits provisions of Sections 4 or 5 hereof or to comply
with any other material obligation of the Company under this
Agreement, including, without limitation, any failure by the
Company to obtain an assumption of this Agreement by a
successor corporation as required under Section 13 (a) hereof;
(iv) a notice of non-extension of the Agreement Term given by the
Company to the Executive as set forth in Section 2 hereof
prior to the expiration of the Initial Term; or
(v) the relocation, without the consent of the Executive, of the
Executive's office to a location more than 40 miles from its
current location in Atlanta, Georgia.
However, in no event shall the Executive be considered to have terminated his
employment for "Good Reason" unless and until the Company receives written
notice from the Executive identifying in reasonable detail the acts or omissions
constituting "Good Reason" and the provision of this Agreement relied upon, and
such acts or omissions are not cured by the Company to the reasonable
satisfaction of the Executive within 15 days of the Company's receipt of such
notice.
(b) RESIGNATION WITHOUT GOOD REASON. The Executive may voluntarily
terminate his employment hereunder for any reason at any time,
including for any reason that does not constitute Good Reason.
(c) TERMINATION FOR CAUSE. The Company may terminate the Executive's
employment hereunder for Cause. For purposes of this Agreement, the
Executive shall be considered to be terminated for "Cause" only upon
(i) the conviction of the Executive of a felony under the laws of
the United States or any state thereof, whether or not appeal is
taken, (ii) the conviction of the Executive for a violation of
criminal law involving the Company and its business, (iii) the
willful misconduct of the Executive, or the willful or continued
failure by the Executive (except as provided in Section 6(e) hereof)
to substantially perform his duties hereunder, in either case which
has a material adverse effect on the Company; or (iv) the willful
fraud or material dishonesty of the Executive in connection with his
performance of duties to the Company. However, in no event shall the
Executive's employment be considered to have been terminated for
"Cause" unless and until the Executive receives a copy of a
resolution adopted by the Board finding that, in the good faith
opinion of the Board, the Executive is guilty of acts or omissions
constituting Cause, which resolution has been duly adopted by an
affirmative vote of a majority of the Board, excluding the Executive
and any individual alleged to have participated in the acts
constituting "Cause." Any
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such vote shall be taken at a meeting of the Board called and held
for such purpose, after reasonable written notice is provided to the
Executive setting forth in reasonable detail the facts and
circumstances claimed to provide a basis of termination for Cause
and the Executive is given an opportunity, together with counsel, to
be heard before the Board. The Executive shall have the opportunity
to cure any such acts or omissions (other than items (i) or (ii)
above) within 15 days of the Executive's receipt of such resolution.
The foregoing shall not limit the right of the Company to suspend
the Executive from his day-to-day responsibilities with the Company
pending the completion of such notice and cure procedures.
(d) TERMINATION WITHOUT CAUSE. The Board shall have the right to
terminate the Executive's employment hereunder other than for Cause
at any time, subject to the consequences of such termination as set
forth in this Agreement.
(e) DISABILITY. The Executive's employment hereunder shall terminate
upon his Disability. For purposes of this Agreement, "Disability"
shall mean the inability of the Executive to perform his duties to
the Company on account of physical or mental illness or incapacity
for a period of four and one-half consecutive months, or for a
period of 135 calendar days, whether or not consecutive, during any
365 day period, as a result of a condition that is treated as a
total or permanent disability under the long-term disability
insurance policy of the Company that covers the Executive. The
Executive's employment hereunder shall be deemed terminated by
reason of Disability on the last day of the applicable period;
provided, however, in no event shall the Executive be terminated by
reason of Disability unless the Executive receives written notice
from the Company, at least 15 days in advance of such termination,
stating its intention to terminate the Executive for reason of
Disability.
(f) DEATH. The Executive's employment hereunder shall terminate upon his
death.
7. COMPENSATION UPON TERMINATION OF EMPLOYMENT
In the event the Executive's employment by the Company is terminated
during the Agreement Term, the Executive, in addition to any benefits provided
pursuant to Section 15, shall be entitled to the severance payments and benefits
specified below:
(a) RESIGNATION FOR GOOD REASON; TERMINATION WITHOUT CAUSE. In the event
the Executive voluntarily terminates his employment hereunder for
Good Reason or is terminated by the Company other than for Cause,
death or Disability, the Company shall pay the Executive and provide
him with the following:
(i) ACCRUED RIGHTS. Upon the Executive's termination of
employment, the Company shall pay the Executive a lump-sum
amount equal to the sum of (A) his earned but unpaid Base
Salary through the date of termination, (B) any earned but
unpaid Target Bonus Amount for any completed fiscal
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year, and (C) any unreimbursed business expenses or other
amounts due to the Executive from the Company as of the date
of termination. The Company shall also pay to the Executive,
upon the final preparation of the Company's audited financial
statements for the year in which termination of employment
occurs, an additional lump-sum amount calculated based on the
degrees of achievement of the bonus target applicable to the
Target Bonus Amount for such year, determined in accordance
with the terms of the bonus plan for such year but prorated on
a daily basis to reflect the partial year of service. In
addition, the Company shall provide to the Executive all
payments, rights and benefits due as of the date of
termination under the terms of the Company's employee and
fringe benefit plans and programs in which the Executive
participated during the Employment Period (together with the
lump-sum payments described above, the "Accrued Rights").
(ii) SEVERANCE PAYMENT. The Company shall pay the Executive the
greater of (A) the amount equal to the aggregate Base Salary
payments (at the rate in effect at the time of termination)
that remain payable to the Executive from the date of
termination until the expiration of the Agreement Term, or (B)
the amount equal to the sum of (1) the annual Base Salary in
effect at the time of termination and (2) the amount of the
annual bonus paid to the Executive pursuant to Section 4(b)
hereof for the fiscal year ended immediately prior to the year
of termination. Any amount payable pursuant to clause (A) or
clause (B) above shall be payable in four equal consecutive
quarterly installments, with the first such payment to be made
within 15 days following the date of termination.
(iii) EQUITY RIGHTS. In the event the Executive voluntarily
terminates his employment hereunder for Good Reason, all
unvested Time-Vested Restricted Shares and Performance
Restricted Shares shall be forfeited and, in the event the
Company terminates Executive's employment without Cause, 50
percent (50%) of any unvested Time-Vested Restricted Shares
and Performance Restricted Shares shall become immediately and
fully vested, and the remaining 50 percent (50%) of any
Time-Vested Restricted Shares and Performance Restricted
Shares shall be forfeited; provided, however, in the event
that the employment of the Executive is terminated during the
six-month period immediately preceding a Change of Control (as
defined in Section 8 (hereof) by the Company without Cause,
then, 100 percent (100%) of any unvested Time-Vested
Restricted Shares and Performance Restricted Shares shall
become immediately and fully vested. This accelerated vesting
provision shall apply only to Time Vested Restricted Shares
and Performance Restricted Shares that have been granted as of
the date triggering acceleration and shall have no force or
effect with respect to any restricted shares described herein
which are not then issued.
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(iv) CONTINUED BENEFITS. For the 12-month period following the date
of the Executive's termination of employment, the Company
shall continue to provide the Executive and his eligible
dependents, at its sole cost, with the medical, dental,
disability and life insurance coverages that were provided to
the Executive immediately prior to termination of employment,
subject to cancellation by the Company in the event that the
Executive obtains coverage under comparable substitute plans
of another employer. Following the expiration of such 12-month
period and for the lifetime of the Executive, the Executive
and his eligible dependents shall be entitled to continue
participating (at the Executive's sole expense) in the
Company's group medical, dental, disability and life insurance
coverages, with the Executive's cost to be determined on a
basis consistent with the method for determining employee
payments under the health care continuation requirements of
the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA").
(b) RESIGNATION WITHOUT GOOD REASON; TERMINATION FOR CAUSE. In the event
the Executive voluntarily terminates his employment hereunder other
than for Good Reason or is terminated by the Company for Cause, the
Company shall pay the Executive and provide him with any Accrued
Rights under Section 7(a)(i). Upon such termination, (i) the
Executive shall not be entitled to receive, and the Company shall
have no obligation to provide, any severance payments under this
Agreement, (ii) the Executive and his dependents shall not be
entitled to receive, the Company shall have no obligation to provide
to the Executive or his dependents, any medical, dental, disability
or life insurance coverage except as required by COBRA or other
applicable law or under the terms of the applicable plans and (iii)
all unvested Time-Vested Restricted Shares and Performance
Restricted Shares shall be forfeited.
(c) DISABILITY; DEATH. In the event the Executive's employment hereunder
is terminated by reason of the Executive's Disability or death, the
Company shall pay and provide the Executive (or his legal
representative) with the following:
(i) ACCRUED RIGHTS. The Company shall pay and provide to the
Executive (or his legal representative) any Accrued Rights,
including all disability or life insurance benefits (as
applicable).
(ii) SALARY CONTINUATION. The Company shall provide the Executive
(or his legal representative) with continued payment of the
Executive's then-current Base Salary for a period of 12
months.
(iii) EQUITY RIGHTS. As of the date of the Executive's termination
under this paragraph (c) any unvested portion of the
Time-Vested Restricted Shares and the Performance Restricted
Shares shall become immediately and fully vested.
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(iv) CONTINUED BENEFITS. For the 12-month period following the date
of the Executive's Disability or death, the Company shall
continue to provide the Executive and/or his eligible
dependents (as applicable), at its sole cost, with the
medical, dental, disability and life insurance coverages that
were provided to the Executive immediately prior to
termination of employment. Following the expiration of such
12-month period, the Executive shall be entitled to continue
group benefit coverages on the same basis as described in
Section 7(a)(iv) hereof.
8. CHANGE OF CONTROL DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings given below:
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (a "Person") or group of related Persons (a "Group") (as
such terms are used in Section 13(d)(3) of the Securities Exchange Act of 1934)
other than the Executive or a Related Party of the Executive, (ii) the adoption
of a plan relating to the liquidation or dissolution of the Company, (iii) the
consummation of any transaction (including, without limitation, any purchase,
sale, acquisition, disposition, merger or consolidation) the result of which is
that any Person or Group other than the Executive or a Related Party of the
Executive becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Securities Exchange Act of 1934) of more than 50% of
the aggregate voting power of all classes of capital stock of the Company having
the right to elect directors under ordinary circumstances, or (iv) the first day
on which a majority of the members of the Board are not Continuing Directors.
For purposes of the foregoing, B.A. Capital Company, L.P., State of Wisconsin
Pension Board and their respective affiliates shall be treated as a Group of
Related Persons.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board who (i) was a member of the Board on the IPO Date or (ii) was
nominated for election or elected to the Board with the approval of (4)
two-thirds of the Continuing Directors who were members of the Board at the time
of such nomination or election or (y) two-thirds of those Directors who were
previously approved by Continuing Directors.
"RELATED PARTY" with respect to the Executive means (A) any controlling
stockholder, 80% (or more) owned subsidiary, or spouse or immediate family
member (in the case of an individual) of the Executive or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners owners or Persons beneficially holding an 80% or more controlling
interest of which consist of the Executive and/or such other Persons referred to
in the immediately preceding clause (A).
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock, entitled (without regard to the occurrence of
any contingency) to vote in the election of directors,
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managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole general
partner or the managing general partner of which is such Person or a Subsidiary
of such Person or (b) the only general partners of which are such person or of
one or more Subsidiaries of such Person (or any combination thereof).
9. PARACHUTE TAX INDEMNITY
(a) If it shall be determined that any amount paid, distributed or
treated as paid or distributed by the Company to or for the
Executive's benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise,
but determined without regard to any additional payments required
under this Section 9) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, being
hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Executive of all federal, state and local taxes (including any
interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under this Section 9,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by a nationally
recognized accounting firm (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
requested by the Company. The Accounting Firm shall be appointed
jointly by two other nationally recognized accounting firms, one of
which is appointed by the Executive and one of which is appointed by
the Company for such purpose. The Accounting Firm shall not be an
accounting firm serving as accountant or auditor for the individual,
entity or group effecting the Change of Control. All fees and
expenses of the Accounting Firm shall be borne by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 9, shall be
paid by the Company to the Executive within five days of the receipt
of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive.
As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to this Section 9 and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm
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shall determine the amount of the Underpayment that has occurred and
any such Underpayment shall be promptly paid by the Company to or
for the Executive's benefit.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later then ten business
days after the Executive is informed in writing of such claim and
shall apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid. The Executive shall not
pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it
desires to contest such claim, the Executive shall: (i) give the
Company any information reasonably requested by the Company relating
to such claim; (ii) take such action in connection with contesting
such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the Company; (iii) cooperate with the Company in good
faith in order to effectively contest such claim; and (iv) permit
the Company to participate in any proceeding relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expense. Without limitation on the foregoing provisions of
this Section 9, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive,
on an interest-free basis, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes
for the Executive's taxable year with respect to which such
contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest
shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to
settle or contest, as the case may be, any other issue
12
raised by the Internal Revenue Service or any other taxing
authority, so long as such action does not have a material adverse
effect on the contest being pursued by the Company.
(d) If, after the Executive's receipt of an amount advanced by the
Company pursuant to this Section 9, the Executive becomes entitled
to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
this Section 9) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the Executive's receipt of an
amount advanced by the Company pursuant to this Section 9, a
determination is made that the Executive shall not be entitled to
any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial
of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be
paid.
10. NO MITIGATION OR OFFSET
The Executive shall not be required to seek other employment or to reduce
any severance benefit payable to him under Section 7 hereof, and, except as
provided in Section 7(a)(iv) hereof, no such severance benefit shall be reduced
on account of any compensation received by the Executive from other employment.
The Company's obligation to pay severance benefits under this Agreement shall
not be reduced by any amount owed by the Executive to the Company.
11. TAX WITHHOLDING; METHOD OF PAYMENT
All compensation payable pursuant to this Agreement shall be subject to
reduction by all applicable withholding, social security and other federal,
state and local taxes and deductions. Any lump-sum payments provided for in this
Agreement shall be made in a cash payment, net of any required tax withholding,
no later than the fifth business day following the Executive's date of
termination or other payment date. If the Company shall be required to withhold
any federal, state or local tax in connection with the vesting of any Restricted
Shares pursuant to this Agreement, the Executive shall pay the tax or make
provisions that are satisfactory to the Company for the payment thereof. Unless
the Executive elects to satisfy all or any part of any such withholding
obligation by the payment to the Company of immediately available funds on or
before the date such withholding is required, then the Company is hereby
authorized to and shall cause a surrender of a portion of the nonforfeitable
shares of Common Stock that are to be transferred to the Executive hereunder,
and the shares of Common Stock so surrendered shall be credited against any such
withholding obligation at the fair market value per share of such shares on the
date of such surrender.
12. RESTRICTIVE COVENANTS
(a) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The Executive
acknowledges that during the course of his affiliation with the
13
Company he has or will have access to and knowledge of certain
information and data which the Company considers confidential or
proprietary and the release of such information or data to
unauthorized persons would be extremely detrimental to the Company.
As a consequence, the Executive hereby agrees and acknowledges that
he owes a duty to the Company not to disclose, and agrees that
without the prior written consent of the Company, at any time,
either during or after his employment with the Company, he will not
communicate, publish or disclose, to any person anywhere, or use for
his own account any Confidential Information (as hereinafter
defined), except as may be necessary or appropriate to conduct his
duties hereunder, provided the Executive is acting in good faith and
in the best interest of the Company, or as may be required by law or
judicial process. The Executive will use his best efforts at all
times to hold in confidence and to safeguard any Confidential
Information from falling into the hands of any unauthorized person
and, in particular, will not permit any Confidential Information to
be read, duplicated or copied. The Executive will return to the
Company all Confidential Information in the Executive's possession
or under the Executive's control whenever the Company shall so
request, and in any event will promptly return all such Confidential
Information if the Executive's relationship with the Company is
terminated for any or no reason and will not retain any copies
thereof. For purposes hereof the term "Confidential Information"
shall mean any information or data used by or belonging or relating
to the Company or any of its subsidiaries or Affiliates that is not
known generally to or available for use by the industry in which the
Company is or may be engaged, other than as a result of the
Executive's acts or omissions to act, and which the Company
maintains on a confidential basis, including, without limitation,
any and all trade secrets, proprietary data and information relating
to the Company's business and products, price list, customer lists,
processes, procedures or standards, know-how, manuals, business
strategies, records, drawings, specifications, designed, financial
information, whether or not reduced to writing, or information or
data which the Company advises the Executive should be treated as
confidential information. The covenants made in this Section 12(a)
shall remain in effect during the term of the Executive's
relationship with the Company and, in the case of Confidential
Information that constitutes trade secrets under the Uniform Trade
Secrets Act, shall survive the termination of such relationship for
any reason indefinitely, and, in the case of all other Confidential
Information, shall survive for a period of five (5) years after such
termination. The Executive further agrees and acknowledges that
Confidential Information, as between the Company and the Executive,
shall be deemed and at all time remain and constitute the exclusive
property of the Company.
(b) COVENANT NOT TO COMPETE. The Executive acknowledges that he has
established and will continue to establish favorable relations with
the customers, clients and accounts of the Company and will have
access to trade secrets of the Company and that the Company would be
irreparably damaged if the Executive were to provide similar
services to any person or entity competing with the Company or
engaged in a similar business in the markets served or to be served
by the Company. Therefore, in consideration of such relations and to
further
14
protect trade secrets, directly or indirectly, of the Company, the
Executive agrees that during the term of his employment by the
Company and for a period of eighteen months from the date of
termination of the Executive, except that such eighteen month period
shall not apply in the event of termination of employment (i) by the
Company other than for Cause, (ii) by the Executive for Good Reason
or (iii) by the Company or the Executive for any reason within one
year following a Change of Control, the Executive will not, directly
or indirectly, without the express written consent of the Company:
(i) act as a manager of a business substantially similar to, a
supervisor of officers or employees rendering services for, or
as an advisor with respect to the conduct of, whether on the
Executive's own behalf or as an employee, director, or
independent contractor of, any business that consists of radio
broadcasting services (the "Business") and serves the
listening areas (as defined by the Arbitron Metro Survey Area)
set forth on Exhibit A, within which area the Executive
acknowledges the Company currently conducts its business or
has definite or immediate plans to conduct its business, (the
"Competitive Businesses");
(ii) solicit, or attempt to solicit, clients, customers or accounts
of the Company, (a) which during the twelve (12)-month period
prior to the date of termination of the Executive has obtained
or contracted to obtain services from the Company and with
which the Executive had contact during the term of the
Executive's employment by the Company or (b) whose name and/or
address both would constitute Confidential Information and
became known to Executive as a customer or client or potential
customer or client of the Company in any manner during the
term of the Executive's employment by the Company, for, on
behalf of or otherwise related to any such Competitive
Businesses or any products related thereto; or
(iii) solicit or in any manner influence or encourage any person who
is an employee of the Company at the time the Executive's
employment terminates or who was such an employee with the
Company at any time during the twelve (12)-month period
immediately preceding the date of such termination and with
whom the Executive had contact during the term of the
Executive's employment by the Company to leave such employ or
service with the Company for any employment opportunity with a
competitive business.
Notwithstanding the foregoing, if any court determines that the covenant not to
compete, or any part thereof, is unenforceable because of the duration of such
provision or the geographic area or scope covered thereby, all of which the
Executive acknowledges are reasonable under the circumstances, such court shall
have the power to reduce the duration, area or scope of such provisions and, in
its reduced form, such provision shall then be enforceable and shall be
enforced.
15
(c) In the event that, and each time during the Executive's
employment with the Company, as, the Company (a) establishes
the Business hereinafter in a territory other than those areas
listed on Exhibit A or (b) adds a substantially different
service line to the Business, the Executive agrees to execute
and deliver an amendment to this Agreement adding the
territory or additional service line or some combination
thereof upon payment to the Executive by the Company of the
sum of $100.00.
(d) SPECIFIC PERFORMANCE. Recognizing the irreparable damage will
result to the Company in the event of the breach or threatened
breach of any of the foregoing covenants and assurances by the
Executive contained in paragraphs (a) or (b) hereof, and that
the Company's remedies at law for any such breach or
threatened breach will be inadequate, the Company and its
successors and assigns, in addition to such other remedies
which may be available to them, shall be entitled to an
injunction, including a mandatory injunction, to be issued by
any court of competent jurisdiction ordering compliance with
this Agreement or enjoining and restraining the Executive, and
each and every person, firm or Company acting in concert or
participation with him, from the continuation of such breach
and, in addition thereto, he shall pay to the Company all
ascertainable damages, including costs and reasonable
attorneys' fees sustained by the Company by reason of the
breach or threatened breach of said covenants and assurances.
The obligations of the Executive and the rights of the
Company, its successors and assigns under Section 12 of this
Agreement shall survive the termination of this Agreement. The
covenants and obligations of the Executive set forth in
Section 12 hereof is in addition to and not in lieu of or
exclusive of any other obligations and duties of the Executive
to the Company, whether express or implied in fact or in law.
(e) POTENTIAL UNENFORCEABILITY OF ANY PROVISION. If a final
judicial determination is made that any provision of this
Agreement is an unenforceable restriction against the
Executive, the provisions hereof shall be rendered void only
to the extent that such judicial determination finds such
provisions unenforceable, and such unenforceable provisions
shall automatically be reconstituted and become a part of this
Agreement, effective as of the date first written above, to
the maximum extent in favor of the Company that is lawfully
enforceable. A judicial determination that any provision of
this Agreement is unenforceable shall in no instance render
the entire Agreement unenforceable, but rather the Agreement
will continue in full force and effect absent any
unenforceable provision to the maximum extent permitted by
law.
13. SUCCESSORS
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and any person, firm,
corporation or other entity which succeeds to all or
substantially all of the business, assets or property of the
Company. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the
16
business, assets or property of the Company, to expressly
assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in
this Agreement, the "Company" shall mean the Company as
hereinbefore defined and any successor to its business, assets
or property as aforesaid which executes and delivers an
agreement provided for in this Section 13 or which otherwise
becomes bound by all the terms and provisions of this
Agreement by operation of law. Notwithstanding the foregoing
provisions of this Section 13(a), this Agreement shall not be
assignable by the Company without the prior written consent of
the Executive.
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts are due and payable to
him hereunder, all such amounts, unless otherwise provided
herein, shall be paid to the Executive's designated
beneficiary or, if there be no such designated beneficiary, to
the legal representatives of the Executive's estate.
14. NO ASSIGNMENT
Except as to withholding of any tax under the laws of the United States or
any other country, state or locality, neither this Agreement nor any right or
interest hereunder nor any amount payable at any time hereunder shall be subject
in any manner to alienation, sale, transfer, assignment, pledge, attachment, or
other legal process, or encumbrance of any kind by the Executive or the
beneficiaries of the Executive or by his legal representatives without the
Company's prior written consent, nor shall there be any right of set-off or
counterclaim in respect of any debts or liabilities of the Executive, his
beneficiaries or legal representatives, except in the case of termination of
employment for Cause; provided, however, that nothing in this Section 14 shall
preclude the Executive from designating a beneficiary to receive any benefit
payable on his death, or the legal representatives of the Executive from
assigning any rights hereunder to the person or persons entitled thereto under
his will or, in case of intestacy, to the person or persons entitled thereto
under the laws of intestacy applicable to his estate.
15. ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof and, except as specifically provided
herein, cancels and supersedes any and all other agreements between the parties
with respect to the subject matter hereof. In particular, this Agreement amends
and restates and, thus, supercedes the Prior Agreements, except for (a) any and
all provisions of the Prior Agreements that relate to the grant of equity
incentives granted pursuant to Section 5 of the Prior Agreements, which
provisions, including any provisions under Section 5 or 7 of the Prior
Agreements, shall remain in effect throughout the Agreement Term of this
Agreement and (b) any and all provisions of the loan reduction program set forth
in Section 8 of the First Amended and Restated Employment Agreement which
provisions shall remain in effect according to the original terms and conditions
thereof with no changes. Any amendment or modification of this Agreement shall
not be binding unless in
17
writing and signed by the Company and the Executive. Notwithstanding the
foregoing, the parties hereto shall enter into restricted stock option
agreements in respect of the Time-Vested Restricted Shares and Performance
Restricted Shares setting forth terms and conditions consistent with the
provisions of this Agreement and such other terms and conditions approved by the
Compensation Committee.
16. SEVERABILITY
In the event that any provision of this Agreement is determined to be
invalid or unenforceable, the remaining terms and conditions of this Agreement
shall be unaffected and shall remain in full force and effect, and any such
determination of invalidity or unenforceability shall not affect the validity or
enforceability of any other provision of this Agreement.
17. NOTICES
All notices which may be necessary or proper for either the Company or the
Executive to give to the other shall be in writing and shall be delivered by
hand or sent by registered or certified mail, return receipt requested, or by
air courier, to the Executive at:
Xx. Xxxxx X. Xxxxxx, Xx.
0000 Xxxxxxxx Xxxx
Xxxxxxxx 00, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
and shall be sent in the manner described above to the Secretary of the Company
at the Company's principal executives offices at 0000 Xxxxxxxx Xxxx, Xxxxxxxx
00, 00xx Xxxxx, Xxxxxxx, Xxxxxxx 00000 or delivered by hand to the Secretary of
the Company, and shall be deemed given when sent, provided that any notice
required under Section 6 hereof or notice given pursuant to Section 2 hereof
shall be deemed given only when received. Any party may by like notice to the
other party change the address at which he or they are to receive notices
hereunder.
18. GOVERNING LAW
This Agreement shall be governed by and enforceable in accordance with the
laws of the State of Georgia, without giving effect to the principles of
conflict of laws thereof.
19. ARBITRATION
Any controversy or claim arising out of, or related to, this Agreement, or
the breach thereof, shall be settled by binding arbitration in the City of
Atlanta, Georgia, in accordance with the rules then obtaining of the American
Arbitration Association, and the arbitrator's decision shall be binding and
final, and judgment upon the award rendered may be entered in any court having
jurisdiction thereof.
20. LEGAL FEES AND EXPENSES
To induce the Executive to execute this Agreement and to provide the
Executive with reasonable assurance that the purposes of this Agreement will not
be frustrated by the cost of its
18
enforcement should the Company fail to perform its obligations hereunder, the
Company shall pay and be solely responsible for any attorneys' fees and expenses
and court costs incurred by the Executive as a result of a claim that the
Company has breached or otherwise failed to perform this Agreement or any
provision hereof to be performed by the Company, regardless of which party, if
any, prevails in the contest.
19
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first above written.
EXECUTIVE
/s/ XXXXX X. XXXXXX, XX.
------------------------------------------
XXXXX X. XXXXXX, XX.
CUMULUS MEDIA INC.
/s/ XXXXXX X. XXXXXXX
------------------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
20
EXHIBIT A
Abilene
Albany
Amarillo
Appleton
Bangor
Beaumont
Bismarck
Blacksburg
Bridgeport
Canton Salem
Cedar Rapids
Columbia-Jefferson City
Columbus Starkville
Danbury
Dubuque
Xxxxxx
Xxxxxxxxx
Fayetteville, AR
Fayetteville, NC
Xxxxx
Xxxxxxxx
Ft. Xxxxx
Ft Xxxxxx
Grand Junction
Greenbay
Harrisburg
Houston
Huntsville
Kalamazoo
Kansas City
Killeen Temple
Lake Xxxxxxx
Lexington
Macon
Melbourne
Mobile
Monroe
Xxxxxxxxxx
Xxxxxx Beach
Nashville
Odessa-Midland
Owatonna
Oxnard - Ventura
Pensacola
Poughkeepsie
Quad Cities
Rochester
Rockford
Santa Xxxxxxx
21
Savannah
Shreveport
Sioux Falls
Tallahassee
Toledo
Topeka
Waterloo
Westchester
Wichita Falls
Wilmington
Youngstown
22
