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EXHIBIT 10.71
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into this
18th day of May, 1999 (the "Execution Date"), to be effective as of March 15,
1999 (the "Effective Date"), between Chancellor Media Corporation, a Delaware
corporation (the "Company"), Chancellor Media Corporation of Los Angeles, a
Delaware corporation ("Los Angeles"), and Xxxxxxx X. X'Xxxxx (the "Executive"),
residing at 00 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, the Company, Los Angeles and the Executive are parties to an
existing Employment Agreement dated September 4, 1999, effective January 1,
1998 (the "Existing Employment Agreement");
WHEREAS, the parties desire that the Executive continue to be employed by
the Company but under the terms and conditions set forth in this Agreement;
WHEREAS, the parties hereto desire that the Existing Employment Agreement
expire as of March 14, 1999 and desire to enter into a new employment agreement
effective as of March 15, 1999 for the services of the Executive on the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
The following terms used in this Agreement shall have the meaning
specified below unless the context clearly indicates the contrary:
"Annual Bonus" shall mean the annual incentive bonus payable to the
Executive described in Section 4.
"Base Salary" shall mean the annual base salary payable to the Executive
at the rate set forth in Section 4.
"Board" shall mean the Board of Directors of the Company.
"Cause" shall mean the Executive's (a) habitual neglect of his material
duties or failure to perform his material obligations under this Agreement, (b)
refusal or failure to follow lawful directives of the Board, (c) commission of
an act of fraud, theft or embezzlement, or (d) conviction of a felony or other
crime involving moral turpitude; provided, however, that the Company shall give
the Executive written notice of any actions alleged to constitute Cause under
subsections (a) and (b) above, and the Executive
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shall have a reasonable opportunity (as specified by the Compensation
Committee) to cure any such alleged Cause.
"Change in Control" shall mean (a) the sale, lease or other transfer of
all or substantially all of the assets of the Company to any person or group
(as such term is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended); (b) the adoption by the stockholders of the Company of a
plan relating to the liquidation or dissolution of the Company; (c) the merger
or consolidation of the Company with or into another entity or the merger of
another entity into the Company or any subsidiary thereof with the effect that
immediately after such transaction the stockholders of the Company immediately
prior to such transaction (or their Related Parties) directly and indirectly
hold less than fifty percent (50%) of the total voting power of all securities
generally entitled to vote in the election of directors, managers or trustees
of the entity surviving such merger or consolidation; (d) the acquisition by
any person or group of more than fifty percent (50%) of the direct and indirect
voting power of all securities of the Company generally entitled to vote in the
election of directors of the Company; or (e) the majority of the Board's being
composed of members who (i) have served less than twelve (12) months and (ii)
were not approved by a majority of the Board at the time of their election or
appointment.
"Change in Operations" shall mean a change in the business operating
strategies of the Company (e.g., material cost controls or other material
restrictions on the Company's ability to increase its gross revenues) which are
imposed upon the Executive without his consent, and, in his reasonable
judgment, are fundamentally different from the business operating strategies in
effect at the Company on the Effective Date; provided, however, any expansion
of the Company's business into other media businesses, including, without
limitation, radio stations in small- or medium-sized markets, television,
outdoor advertising, internet related activities and international media
opportunities, shall not constitute a Change in Operations. Any dispute as to
whether a Change of Operations has occurred shall be resolved pursuant to
Section 14.
"Common Stock" shall mean $0.01 par value common stock of the Company.
"Compensation Committee" shall mean the Compensation Committee of the
Board.
"Consumer Price Index" shall mean the Consumer Price Index for All Urban
Consumers (1982-84=100) for all cities as reported by the United States Bureau
of Labor Statistics.
"Contract Payments" shall have the meaning ascribed to such term in
Section 17.
"Contract Year" shall mean each twelve (12) consecutive month period
during the Employment Term which begins on the Effective Date and each annual
anniversary thereof.
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"Employment Term" shall mean the period beginning on the Effective Date
and ending on the close of business on the effective date of the Executive's
termination of employment with the Company.
"Expiration Date" shall have the meaning ascribed to such term in Section
2.
"Good Reason" shall mean (a) the Company's material breach of any
provision hereof; (b) the Executive's no longer directly reporting to the Chief
Executive Officer of Chancellor Radio and Outdoor Division; (c) any material
adverse change in the Executive's job responsibilities, duties, functions,
status, offices, title, perquisites or support staff; (d) relocation of the
Executive's regular work address by more than twenty (20) miles without his
consent; (e) a Change in Operations; or (f) a Change in Control; provided,
however, that the Executive shall give the Company written notice of any
actions (other than those set out in subsections (e) or (f) above) alleged to
constitute Good Reason and the Company shall have a reasonable opportunity to
cure any such alleged Good Reason.
"Gross-Up Payment" shall have the meaning ascribed to such term in Section
17.
"Indemnification Agreement" shall mean the Indemnification Agreement
between the Company, Los Angeles and the Executive, to be effective as of the
Effective Date.
"Non-Solicitation Period" shall have the meaning ascribed to such term in
Section 6(c).
"Option Agreement" shall mean the form of Non-Qualified Stock Option
Agreement attached hereto as Exhibit A to be entered into between the Executive
and the Company pursuant to which an Option is granted to the Executive.
"Option Plan" shall mean the Chancellor Media Corporation 1999 Stock
Option Plan, as amended from time to time, and any successor thereto.
"Options" shall mean the non-qualified stock options to be granted to the
Executive pursuant to Section 4(c) hereof.
"Other Payments" shall have the meaning ascribed to the such term in
Section 17.
"Payments" shall have the meaning ascribed to such term in Section 17.
"Permanent Disability" shall mean the Executive's inability to perform the
duties contemplated by this Agreement by reason of a physical or mental
disability or infirmity which has continued for more than ninety (90) working
days (excluding vacation) in any twelve (12) consecutive month period as
determined by the Board. The
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Executive agrees to submit such medical evidence regarding such disability or
infirmity as is reasonably requested by the Board.
"Related Parties" shall mean with respect to any person (a) the spouse and
lineal ascendants and descendants of such person, and any sibling of any of
such persons and (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or persons beneficially holding
an eighty percent (80%) or more controlling interest of which consist of
persons referred to in subsection (a) above.
"Termination of Employment" shall mean the first to occur of the following
events:
(a) the date of death of the Executive;
(b) the effective date specified in the Company's written notice to
the Executive of the termination of his employment as a result of his
Permanent Disability, which effective date shall not be earlier than the
ninety-first (91st) working day (excluding vacation) following the
commencement of the Executive's inability to perform his duties hereunder;
(c) the effective date specified in the Company's written notice to
the Executive of the Company's termination of his employment without
Cause;
(d) the effective date specified in the Company's written notice to
the Executive of the Company's termination of his employment for Cause;
(e) the effective date specified in the Executive's written notice to
the Company of the Executive's termination of his employment for Good
Reason;
(f) the effective date specified in the Executive's written notice to
the Company of the Executive's termination of his employment without Good
Reason; and
(g) the date the Executive's employment terminates pursuant to
Section 2.
"Termination without Cause" shall mean a termination by the Company of the
Executive's employment without Cause.
2. EMPLOYMENT
The Company agrees to employ the Executive, and the Executive agrees to
provide services to the Company, from the date of this Agreement until the
close of business on the fifth anniversary of the Effective Date (the
"Expiration Date"), unless the
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Executive's employment is earlier terminated pursuant to a Termination of
Employment. The Executive will serve the Company subject to the general
supervision, advice and direction of the Board and the Chief Executive Officer
of Chancellor Radio and Outdoor Division and upon the terms and conditions set
forth in this Agreement.
3. TITLE AND DUTIES
(a) The Executive shall hold the positions of Executive Vice President of
the Company and Chief Operating Officer of Chancellor Radio Division. During
the Employment Term, the Executive shall have such authority and duties as are
usual and customary for such positions, and shall perform such additional
services and duties as the Board may from time to time designate consistent
with such positions.
(b) The Executive shall report solely to the Chief Executive Officer of
Chancellor Radio and Outdoor Division.
(c) The Executive shall devote his full business time and best efforts to
the business affairs of the Company; provided, however, that the Executive may
devote reasonable time and attention to:
(i) serving as a director, or member of a committee of the directors,
of any not-for-profit organization, or engaging in other charitable or
community activities; and
(ii) serving as a director of, or member of a committee of the
directors of, the corporations or organizations for which the Executive
presently serves in such capacity, and such other corporations and
organizations that the Board may from time to time approve in the future.
4. COMPENSATION AND BENEFITS
(a) Base Compensation. During the Employment Term, the Company shall pay
the Executive, in installments according to the Company's regular payroll
practice, Base Salary at the annual rate of Five Hundred Fifty Thousand Dollars
($550,000) for the first (1st) Contract Year; and subject to increase for each
subsequent Contract Year to an amount equal to the product of
(i) the Base Salary for the immediately preceding Contract Year; and
(ii) the ratio of the Consumer Price Index for the last complete
calendar month in such preceding Contract Year to the Consumer Price Index
for the same month in the year preceding such preceding Contract Year;
provided, however, that in no event shall the Base Salary for any subsequent
Contract Year be less than the Base Salary in the immediately preceding
Contract Year.
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(b) Annual Incentive Bonus. The Executive may receive an Annual Bonus for
each calendar year during which he is employed hereunder, with the amount of
each such Annual Bonus, if any, to be determined by, and to be in the sole
discretion of, the Compensation Committee, as recommended by the Chief
Executive Officer. The Executive's Annual Bonus awarded by the Compensation
Committee with respect to each calendar year shall be paid at the same time as
annual incentive bonuses with respect to that calendar year are paid to other
senior executives of the Company generally, but in no event later than March 31
of the following calendar year.
(c) Stock Options. The Executive has been granted Options, as of April 9,
1999, to purchase 500,000 shares of Common Stock at an exercise price of
$46.63. Such Options shall have the terms set forth in, and shall be subject
to, the Option Agreement and the Option Plan; provided, however, that if the
Option Plan is not approved by the stockholders of the Company at the first
annual stockholders' meeting after the date of grant, stock options or other
equity incentives shall be provided to the Executive on mutually satisfactory
terms that are no less favorable than the provisions of the Option Agreement
and the Option Plan.
(d) Vacation. During each complete twelve (12) month period of the
Employment Term, the Executive shall be entitled to no fewer than four (4)
weeks of paid vacation (unless, based on his length of service with the Company
and his position with the Company, the Executive is entitled to a greater
number of weeks of paid vacation under the Company's generally applicable
vacation policy, as determined by the Compensation Committee).
(e) Employee Benefit Plans. During the Employment Term, the Executive
shall be entitled to participate in all pension, profit sharing and other
retirement plans, all incentive compensation plans and all group health,
hospitalization and disability insurance plans and other employee welfare
benefit plans in which other senior executives of the Company may participate,
on terms and conditions no less favorable than those which apply to such other
senior executives of the Company.
(f) Company Payment of Health Benefit Coverage. During the Employment
Term, the Company shall pay the amount of premiums or other cost incurred for
coverage of the Executive and his eligible spouse and dependent family members
under the applicable Company health benefits arrangement (consistent with the
terms of such arrangement).
(g) Life Insurance Policy. In addition to the insurance coverage
contemplated by Section 4(e), during the Employment Term, the Company shall
maintain in effect term life insurance coverage for the Executive with a death
benefit consistent with the death benefits generally provided to other senior
executives of the Company, subject to the Executive's insurability at standard
rates and with the beneficiary or beneficiaries thereof designated by the
Executive. Notwithstanding Section 9 of this Agreement, such life insurance
policy or policies may be assigned to a trust for the benefit of any
beneficiary designated by the Executive.
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(h) Automobile; Other Benefits.
(i) During the Employment Term, the Executive shall be entitled to
receive a monthly automobile allowance equal to $1,200, which shall be
paid monthly in accordance with the customary practices of the Company;
and
(ii) During the Employment Term, the Company shall reimburse the
Executive for the reasonable membership dues for the Executive to belong
to the athletic club and country club of the Executive's choosing. Such
reimbursement shall be in accordance with the Company's expense
reimbursement policy.
(i) Most Favored Benefits. If the Company shall provide employment related
benefits (including, without limitation, benefits of the type referred to by
clauses (a) through (h) of this Section 4) in an aggregate amount greater than
or on more favorable terms and conditions (on an aggregate basis) as are
granted to any other executive vice president of the Company, the Executive
shall be provided such benefits in substantially comparable amount and/or under
the substantially comparable terms and conditions, as applicable, on an
aggregate basis.
5. REIMBURSEMENT OF EXPENSES
In addition to the compensation provided for under Section 4 hereof, upon
submission of proper vouchers, the Company will pay or reimburse the Executive
for all normal and reasonable travel and entertainment expenses incurred by the
Executive during the Employment Term in connection with the Executive's
responsibilities to the Company.
6. TERMINATION BENEFITS
(a) Upon the termination of the Executive's employment with the Company
for any reason, the Company shall provide to the Executive (or, in the case of
his death, his estate or other legal representative) (i) any Annual Bonus
awarded but not yet paid with respect to the preceding calendar year; (ii) all
benefits due him under the Company's benefits plans and policies for his
services rendered to the Company prior to the date of such termination
(according to the terms of such plans and policies); (iii) not later than
ninety (90) days after such termination, in a lump sum, all Base Salary earned
through the date of such termination; and (iv) not later than ninety (90) days
after such termination, in a lump sum, any Annual Bonus awarded by the
Compensation Committee with respect to that portion of the calendar year prior
to such termination.
(b) In the event that the Executive's employment hereunder is terminated
by the Company without Cause or by the Executive for Good Reason (but not by
reason of expiration or non-renewal of this Agreement), and subject to the last
sentence of this subsection (b), the Company shall make a one-time cash payment
to the Executive equal to two times the Executive's then current Base Salary.
Such payment shall be made at the time of any such termination without Cause or
within thirty (30) days
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of any such resignation for Good Reason. Such payment shall be in full
satisfaction of all obligations of the Company to the Executive hereunder
(other than those obligations set forth in Sections 4(c) and 6(a)) and shall be
conditioned on the Executive's giving a general release of the Company and
affiliates in the form used generally by the Company in the case of the
termination of employment of senior executives.
(c) The Company may, by written notice to the Executive given no later
than fifteen (15) days following his termination of employment, elect to
require the Executive to observe the provisions of Section 7(b) hereof for a
period of time not to extend beyond the fifth anniversary of the Effective Date
(such period of time to be set forth in the Company's notice to the Executive
and is referred to herein as the "Non-Solicitation Period"). In such event, the
Company shall continue to pay the Executive his Base Salary as set forth in
Section 4(a) through the Non-Solicitation Period (net of any other severance
payments made to the Executive pursuant to Section 6(b) hereof).
(d) In the event of any Termination of Employment, the Executive shall not
be required to seek other employment to mitigate damages, and any income earned
by the Executive from other employment or self-employment shall not be offset
against any obligations of the Company to the Executive under this Agreement.
7. PROTECTED INFORMATION; PROHIBITED SOLICITATION
(a) The Executive hereby recognizes and acknowledges that during the
course of his employment by the Company, the Company will furnish, disclose or
make available to the Executive confidential or proprietary information related
to the Company's business, including, without limitation, customer lists, ideas
and formatting and programming concepts and plans; that such confidential or
proprietary information has been developed and will be developed through the
Company's expenditure of substantial time and money; and that all such
confidential information could be used by the Executive and others to compete
with the Company. The Executive hereby agrees that all such confidential or
proprietary information shall constitute trade secrets, and further agrees to
use such confidential or proprietary information only for the purpose of
carrying out his duties with the Company and not to disclose such information
unless required to do so by subpoena or other legal process. No information
otherwise in the public domain (other than by an act of the Executive in
violation hereof) shall be considered confidential.
The Executive further agrees that all memoranda, notices, files, records
and other documents concerning the business of the Company, made or compiled by
the Executive during the period of his employment or made available to him,
shall be the Company's property and shall be delivered to the Company upon its
request therefor, and in any event upon the termination of the Executive's
employment with the Company, provided, however, that the Executive shall be
permitted to retain copies of personal correspondence generated or received by
him during the Employment Term, subject to the use restrictions of this Section
7(a).
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(b) Should the Company make the election set forth in Section 6(c) hereof,
the Executive hereby agrees that after any Termination of Employment, and
through the Non-Solicitation Period, the Executive will not directly or
indirectly induce any employee of any of the Protected Companies (as defined
below) to terminate such employment or to become employed by any other person,
firm, corporation or other entity that is directly or indirectly engaged in any
of the radio, television, outdoor advertising, broadcasting or related business
activities in which the Company and its subsidiaries or the Protected Companies
have significant involvement (collectively, the "Competing Business Areas"), in
each case at the effective time of such termination of employment.
(c) During the Employment Term and for a period of ninety days following
his termination of employment (including, without limitation, termination by
reason of expiration or non-renewal of this Agreement), the Executive agrees
that he shall not be employed by or perform activities on behalf of, or have an
ownership interest in, (i) any radio or television broadcasting station serving
the same "Area of Dominant Influence" (as reported by Arbitron) as any of the
radio or television broadcasting stations owned by the Company or its
subsidiaries or affiliates, or the subsidiaries or affiliates of any of the
Company's direct or indirect stockholders owning more than twenty percent (20%)
of the Company (collectively, the "Protected Companies"), or (ii) any person,
firm, corporation or other entity, or in connection with any business
enterprise, that is directly or indirectly engaged in any Competing Business
Area, in each case at the effective time of such Termination of Employment
(other than beneficial ownership of up to five percent (5%) of the outstanding
voting stock of a publicly traded company that owns such a competitor).
(d) The restrictions in this Section 7, to the extent applicable, shall
survive the termination of this Agreement and shall be in addition to any
restrictions imposed upon the Executive by statute or at common law.
(e) The parties hereby acknowledge that the restrictions in this Section 7
have been specifically negotiated and agreed to by the parties hereto and are
limited only to those restrictions necessary to protect the Protected Companies
from unfair competition. The parties hereby agree that if the scope or
enforceability of any provision, paragraph or subparagraph of this Section 7 is
in any way disputed at any time, and should a court find that such restrictions
are overly broad, the court may modify and enforce the covenant to the extent
that it believes to be reasonable under the circumstances. Each provision,
paragraph and subparagraph of this Section 7 is separable from every other
provision, paragraph, and subparagraph and constitutes a separate and distinct
covenant. The Executive acknowledges that the Protected Companies operate
throughout the United States and that the effect of Section 7(c) may be to
prevent him from working in the Competing Business Areas after his termination
of employment hereunder.
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8. INJUNCTIVE RELIEF
The Executive hereby expressly acknowledges that any breach or threatened
breach by the Executive of any of the terms set forth in Section 7 of this
Agreement may result in significant and continuing injury to the Company, the
monetary value of which would be impossible to establish. Therefore, the
Executive agrees that the Company shall be entitled to apply for injunctive
relief in a court of appropriate jurisdiction. The provisions of this Section 8
shall survive the Employment Term.
9. PARTIES BENEFITED; ASSIGNMENTS
This Agreement shall be binding upon the Executive, his heirs and his
personal representative or representatives, and upon the Company and Los
Angeles and their respective successors and assigns. Neither this Agreement nor
any rights or obligations hereunder may be assigned by the Executive, other
than by will or by the laws of descent and distribution.
10. NOTICES
Any notice required or permitted by this Agreement shall be in writing,
sent by registered or certified mail, return receipt requested, addressed to
the Board and the Company at its then principal office, or to the Executive at
the address set forth in the preamble, as the case may be, or to such other
address or addresses as any party hereto may from time to time specify in
writing for the purpose in a notice given to the other parties in accordance
with this Section 10. Notices shall be deemed given when received.
11. GOVERNING LAW
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Texas, without regard to conflict of
law principles.
12. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES
The Company shall indemnify the Executive to the fullest extent permitted
by the laws of the State of Delaware, as in effect at the time of the subject
act or omission, and shall advance to the Executive reasonable attorneys' fees
and expenses as such fees and expenses are incurred (subject to an undertaking
from the Executive to repay such advances if it shall be finally determined by
a judicial decision which is not subject to further appeal that the Executive
was not entitled to the reimbursement of such fees and expenses), and the
Executive will be entitled to the protection of any insurance policies that the
Company may elect to maintain generally for the benefit of its directors and
officers ("Directors and Officers Insurance") against all costs, charges and
expenses incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being or having
been a director, officer or employee of the Company or any of its subsidiaries,
or his serving or having served any other enterprise as a director, officer or
employee at the request of the Company (other than any dispute, claim or
controversy arising under or relating to this Agreement). The
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Company covenants to maintain during the Employment Term for the benefit of the
Executive (in his capacity as an officer and director of the Company) Directors
and Officers Insurance providing benefits to the Executive no less favorable,
taken as a whole, than the benefits provided to the other senior executives of
the Company by the Directors and Officers Insurance maintained by the Company
on the date hereof; provided, however, that the Board may elect to terminate
Directors and Officers Insurance for all officers and directors, including the
Executive, if the Board determines in good faith that such insurance is not
available or is available only at unreasonable expense.
13. REPRESENTATIONS AND WARRANTIES OF THE EXECUTIVE
The Executive represents and warrants to the Company that (a) the
Executive is under no contractual or other restriction which is inconsistent
with the execution of this Agreement, the performance of his duties hereunder
or the other rights of Company hereunder, and (b) the Executive is under no
physical or mental disability that would hinder the performance of his duties
under this Agreement.
14. DISPUTES
Any dispute or controversy arising under, out of, in connection with or in
relation to this Agreement shall, at the election and upon written demand of
either the Executive or the Company, be finally determined and settled by
arbitration in the city of the Company's headquarters in accordance with the
rules and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof. The Company
shall pay the costs and expenses of such arbitration and the fees of the
Executive's counsel and experts unless the finder of fact determines that the
Company is the prevailing party in such arbitration.
15. FACILITY OF PAYMENT
All cash payments to be made by the Company to or on behalf of the
Executive hereunder shall be an obligation of and made by Los Angeles.
16. MISCELLANEOUS
The provisions of this Agreement shall survive the termination of the
Executive's employment with the Company. This Agreement, the Option Agreement
and the Indemnification Agreement contain the entire agreement of the parties
relating to the subject matter hereof. This Agreement supersedes any prior
written or oral agreements or understandings between the parties relating to
the subject matter hereof. No modification or amendment of this Agreement shall
be valid unless in writing and signed by or on behalf of the parties hereto. A
waiver of the breach of any term or condition of this Agreement shall not be
deemed to constitute a waiver of any subsequent breach of the same or any other
term or condition. This Agreement is intended to be performed in accordance
with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provision of this Agreement, or the application
thereof to any person or circumstance, shall, for any reason and to any extent,
be held invalid or
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unenforceable, such invalidity and unenforceability shall not affect the
remaining provisions hereof or the application of such provisions to other
persons or circumstances, all of which shall be enforced to the greatest extent
permitted by law. The compensation provided to the Executive pursuant to this
Agreement shall be subject to any withholdings and deductions required by any
applicable tax laws. Any amounts payable under this Agreement to the Executive
after the death of the Executive shall be paid to the Executive's estate or
legal representative. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of any provision hereof.
17. GROSS-UP FOR CERTAIN TAXES
(a) In the event that any part of any payment or benefit received
(including, without limitation, acceleration of vesting of stock options)
pursuant to the terms of this Agreement or the Option Agreement (the "Contract
Payments") or any part of any payment or benefit received or to be received by
the Executive or for the Executive's benefit pursuant to any other plan,
arrangement or agreement of the Company or any affiliate ("Other Payments" and,
together with the Contract Payments, the "Payments") would be subject to the
Excise Tax determined as provided below, the Company shall pay to the
Executive, at the time specified in Section 17(b) below, an additional amount
(the "Gross-Up Payment") such that the net amount retained by the Executive,
after deduction of the Excise Tax on the Payments and any federal, state and
local income tax and the Excise Tax on the Gross-Up Payment, and any interest,
penalties or additions to tax payable by the Executive with respect thereto,
shall be equal to the total present value (using the applicable federal rate as
defined in Section 1274(d) of the Code in such calculation) of the Payments at
the time such Payments are to be made. For purposes of determining whether any
of the Payments will be subject to the Excise Tax and the amounts of such
Excise Tax, (1) the total amount of the Payments shall be treated as "parachute
payments" within the meaning of Section 280G(b)(2) of the Code, and all "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, except to the extent that, in the
opinion of independent counsel selected by the Company and reasonably
acceptable to the Executive ("Independent Counsel"), a Payment (in whole or in
part) does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in
part) are not subject to the Excise Tax, (2) the amount of the Payments that
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code (after applying
clause (1) hereof), and (3) the value of any noncash benefits or any deferred
payment or benefit shall be determined by Independent Counsel in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed
to pay federal income taxes at the highest marginal rates of federal income
taxation applicable to individuals in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation applicable to individuals as are in effect in the state and
locality of the Executive's residence in the calendar year in which the
Gross-Up Payment is to be made, net of the maximum reduction in federal income
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taxes that can be obtained from deduction of such state and local taxes, taking
into account any limitations applicable to individuals subject to federal
income tax at the highest marginal rates.
(b) The Gross-Up Payments provided for in Section 17(a) hereof shall be
made upon the earlier of (i) the payment to the Executive of any Payment or
(ii) the imposition upon the Executive or payment by the Executive of any
Excise Tax.
(c) If it is established pursuant to a final determination of a court or
an Internal Revenue Service proceeding or the opinion of Independent Counsel
that the Excise Tax is less than the amount taken into account under Section
17(a) hereof, the Executive shall repay to the Company within thirty (30) days
of the Executive's receipt of notice of such final determination or opinion the
portion of the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income tax imposed on the Gross-Up Payment being repaid by the
Executive if such repayment results in a reduction in Excise Tax or a federal,
state and local income tax deduction) plus any interest received by the
Executive on the amount of such repayment. If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding or the
opinion of Independent Counsel that the Excise Tax exceeds the amount taken
into account hereunder (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment), the
Company shall make an additional Gross-Up Payment in respect of such excess
within thirty (30) days of the Company's receipt of notice of such final
determination or opinion.
(d) In the event of any change in, or further interpretation of, Sections
280G or 4999 of the Code and the regulations promulgated thereunder, the
Executive shall be entitled, by written notice to the Company, to request an
opinion of Independent Counsel regarding the application of such change or
interpretation to any of the foregoing, and the Company shall use its best
efforts to cause such opinion to be rendered as promptly as practicable. All
fees and expenses of Independent Counsel incurred in connection with this
agreement shall be borne by the Company.
18. EXISTING EMPLOYMENT AGREEMENT
As of the Effective Date, the Existing Employment Agreement shall be of no
further force and effect.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first written above.
CHANCELLOR MEDIA CORPORATION
CHANCELLOR MEDIA CORPORATION
OF LOS ANGELES
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx
Chairman and Chief Executive
Officer
/s/ XXXXXXX X. X'XXXXX
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Xxxxxxx X. X'Xxxxx