EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of July 1,
2001 (this "Agreement"), between CUMULUS MEDIA INC., an Illinois 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 ("Prior Agreement");
WHEREAS, it is intended that the Executive will continue to serve the
Company as its Executive Vice Chairman and as a Director of the Company
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 Agreement; 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.
2. TERM
The period of this Agreement (the "Agreement Term") shall commence on
the date hereof and shall expire on the third anniversary of the date hereof
(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 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, (iii) managing his personal investments or (iv)
performing such services as are consistent with his position
with Stratford Research, Inc.; provided, further, that any
such activities set forth in clauses (i) through (iv) 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.
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 $500,000 per annum during the first 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
2
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
50% of his Base Salary (the "Target Bonus Amount") for each
fiscal year of the Company ending during the Employment
Period. An amount up to the Target Bonus Amount will be
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.
5. EQUITY INCENTIVES
As further consideration for the services rendered by the Executive
during the Employment Period, the Executive shall be granted time-vested stock
options (the "Time-Vested Options") and performance stock options (the
"Performance Options") to purchase shares of the Company's Class A common stock
(the "Common Stock") on the terms and conditions set forth below.
(a) TIME-VESTED OPTIONS. In connection with the annual grants to
be made in 2002, Time-Vested Options to purchase 250,000
shares of Common Stock shall be granted to the Executive. In
addition, in connection with the annual grants to be made in
2003 and 2004, Time-Vested Options to purchase an additional
250,000 shares of Common Stock shall be granted to the
Executive in each year;
3
provided however, that the grants in 2003 and 2004 shall be
made only if and to the extent that the percentage dilution
represented by the number of all then outstanding options to
employees of the Company (including any grants made pursuant
to this Agreement) divided by the number of shares of Common
Stock then outstanding would be no greater than the percentage
dilution, as of the date of this Agreement, represented by the
number of all then outstanding options to employees of the
Company (excluding any grants made pursuant to this Agreement)
divided by the number of shares of Common Stock then
outstanding. In the event that the grants in 2003 and/or in
2004 cannot be made, in whole or in part, due to the preceding
sentence, the Company and the Executive shall in good faith
negotiate the terms of a substitute compensatory arrangement.
Except as otherwise provided for in this Agreement, all
Time-Vested Options granted pursuant to this section shall
vest based on the continued employment of the Executive in
equal quarterly installments of 1/16 of the number of subject
shares on the last day of each of the 16 consecutive calendar
quarters ending following the date of grant. The exercise
price of the Time-Vested Options shall be the market price per
share on the date of each grant. The Time-Vested Options shall
have a 10-year term of exercise and, except as otherwise
provided in this Agreement, shall remain exercisable following
vesting for the full term without regard to the employment
status of the Executive. The Time-Vested Options shall be
intended to qualify as an "incentive stock option" to the
maximum extent permissible under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
(b) PERFORMANCE OPTIONS. In connection with the annual grants to
be made in 2002, Performance Options to purchase 250,000
shares shall be granted to the Executive and, in connection
with the annual grants to be made in 2003 and 2004,
Performance Options to purchase an additional 250,000 shares
shall be granted to the Executive in each year; provided
however, that the grants in 2003 and 2004 shall be made only
if and to the extent that the percentage dilution represented
by the number of all then outstanding options to employees of
the Company (including any grants made pursuant to this
Agreement) divided by the number of shares of Common Stock
then outstanding would be no greater than the percentage
dilution, as of the date of this Agreement, represented by the
number of all then outstanding options to employees of the
Company (excluding any grants made pursuant to this Agreement)
divided by the number of shares of Common Stock then
outstanding. In the event that the grants in 2003 and/or in
2004 of Time-Vested Options or Performance Options cannot be
made in part due to the preceding sentence, the Time-Vested
Options shall be granted prior to the grant of the Performance
Options to the extent they may be granted under the test
contained in the foregoing proviso. To the extent Performance
Options are not granted by virtue of the application of such
proviso, the Company and the Executive shall in good faith
negotiate the terms of a substitute compensatory arrangement.
Each grant of Performance Options shall be subject to the
terms of the stock option agreement which will accompany the
grant and will be entered into between the Company and the
Executive, provided, however, that the terms contained in such
stock option agreement shall be consistent with the terms of
this
4
Agreement. Except as otherwise provided for in this Agreement,
all Performance Options granted pursuant to this Section
shall, on the last day of each of the four consecutive fiscal
years ending following the date of grant, vest in equal annual
installments of 1/4 of the number of subject shares, provided
that (i) for such fiscal year the Company has achieved its
Board approved EBITDA budgeting goals for such year; and (ii)
the Executive has remained in the continuous employment of the
Company. Any Performance Options that have not vested pursuant
to the preceding sentence 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.
The exercise price of the Performance Options shall be the
market price per share on the date of each grant. The
Performance Options shall have a 10-year term of exercise and,
except as otherwise provided for in this Agreement, shall
remain exercisable following vesting for the full term without
regard to the employment status of the Executive. The
Performance Options shall be intended to qualify as an
"incentive stock option" to the maximum extent permissible
under Section 422 of the Code.
(c) CHANGE IN CONTROL. In the event of a Change in Control, as
defined in Section 8(c) hereof, the unvested portion of any
Time-Vested Options and any Performance Options shall become
immediately and fully vested and exercisable, and shall remain
exercisable for the full term thereof. This accelerated
vesting provision shall apply only to Time Vested Options and
Performance Options that have been granted as of the date
triggering acceleration and shall have no force or effect with
respect to any options described herein which are not then
issued.
(d) OTHER EQUITY INCENTIVES. In addition to the foregoing stock
option 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
5
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;
(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
6
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 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:
7
(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 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 Options and Performance
Options shall terminate immediately and be of no
further force or effect and, in the event the Company
terminates Executive's employment without Cause, 50
percent (50%) of any unvested Time-Vested Options and
Performance Options shall become immediately and
fully vested and exercisable, and shall remain
exercisable for the full term thereof, and the
remaining 50 percent (50%) of any Time-Vested Options
and Performance Options shall terminate immediately
and be of no further force or effect; 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(c) hereof) by the Company without Cause,
then, 100 percent (100%) of any unvested Time-Vested
Options and Performance Options shall become
immediately and fully vested and exercisable and
shall remain exercisable
8
for the full term thereof. This accelerated vesting
provision shall apply only to Time Vested Options and
Performance Options that have been granted as of the
date triggering acceleration and shall have no force
or effect with respect to any options described
herein which are not then issued.
(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 Options and
Performance Options shall terminate immediately and shall be
of no further force or effect.
(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.
9
(iii) EQUITY RIGHTS. As of the date of the Executive's
termination under this paragraph (c) any unvested
portion of the Time-Vested Options and the
Performance Options shall become immediately and
fully vested and exercisable, and shall remain
exercisable for the full term thereof.
(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. LOAN REDUCTION PROGRAM
As further consideration for the services rendered by the Executive
through December 31, 2006, the Company agrees, on the terms and conditions set
forth below, to the following reduction in the amounts due under the loan
between the Executive and the Company evidenced by that certain Promissory Note
dated February 2, 2000, in the original principal amount of $4,992,000 (the
"Loan").
(a) STATUS OF LOAN. Contemporaneously with the execution and
delivery of this Agreement, the Company has agreed to reduce
the per annum interest rate, effective as of the date hereof,
of the Loan from nine percent (9%) to seven percent (7%) and
to extend the maturity to December 31, 2006 (the "Loan
Maturity Date").
(b) LOAN REDUCTION. Except as set forth in subsection 8(b)(iii),
the Loan (principal and related accrued interest) shall be
forgiven in 2006, or sooner as indicated below, based, to the
extent indicated below, on the Executive's continued
employment with the Company through December 31, 2006, and on
the satisfaction of double trigger performance goals.
(i) The first trigger involves an annual determination
over the period 2001-05 of whether (A) the objective
Board approved EBITDA budgeting goals for each fiscal
year were satisfied or (B) the Compensation Committee
of the Board otherwise determines that the
Executive's performance for the year warrants a
determination that the first trigger shall be deemed
to be satisfied. For each of the years 2001-05 for
which the first trigger is satisfied, the maximum
Loan reduction would be 20% of the Loan principal and
related accrued interest. The actual reduction of the
Loan in such case shall be further contingent upon
the satisfaction of the second trigger.
(ii) The second trigger involves the price per share of
the Company's Company Stock. For each of the years
2001-05 for which the first trigger
10
has been satisfied (each a "First Trigger Year"), the
Loan reduction, expressed as a percentage of
principal and related accrued interest outstanding up
to 20% per each such year, shall be determined as
follows: should the highest closing sales price per
share of the Common Stock for any day in 2006 as
reported on the principal exchange on which the
shares of Common Stock are then traded ("Measurement
Price") equal or exceed such closing sales price per
share as of July 1, 2001, or if July 1, 2001 is not a
trading day, then such closing sales price per share
of the next succeeding trading day (such date the
"Measurement Date") plus 100% thereof, then the Loan
reduction percentage applicable to each First Trigger
Year shall be 20%; should the Measurement Price equal
or be less than such closing sales price per share as
of Measurement Date, plus 50% thereof, then the Loan
reduction percentage applicable to each First Trigger
Year shall be 0% (and there will be no corresponding
reduction in the Loan); and should the Measurement
Price be less than such closing sale price per share
as of Measurement Date plus 100% thereof but more
than such closing sales price per share as of
Measurement Date plus 50%, then a proportionate (on a
straight-line basis) reduction in the Loan for each
First Trigger Year shall be made (e.g., Loan
reduction percentage per First Trigger Year of 15% if
the Measurement Price is equal to Measurement Date
closing sales price per share plus 87.5% thereof).
(iii) No reduction in the Loan shall occur unless both
performance triggers have been satisfied except that
(A) if the first trigger has been satisfied for any
year and, prior to satisfying the second trigger on
or before the Loan Maturity Date, the Executive
voluntarily terminated his employment hereunder for
Good Reason or was terminated by the Company other
than for Cause, death or Disability, the Loan as of
the date of termination of employment shall be
reduced as if the second trigger were satisfied at
the maximum price per share level or (B) in the event
of a Change in Control prior to the Loan Maturity
Date, the Loan shall be forgiven in its entirety
regardless of achievement of either trigger, provided
either the Executive is employed by the Company on
the date of the Change in Control or the employment
of the Executive is terminated during the six-month
period immediately preceding a Change in Control by
the Company without Cause.
(iv) In the event of any reduction in the Loan, Executive
also shall receive from the Company an additional
cash payment to cover any taxes due as a result of
the Loan reduction (including any taxes due as a
result of any payment under this subsection).
(c) DEFINITIONS. For purposes of this Section 8, and as used
elsewhere in 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),
11
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 a Principal
or a Related Party of a Principal, (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 a Principal or a Related Party of a Principal 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, NationsBanc Capital Corp., 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.
"PRINCIPAL" means Xxxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxx, Xx.
"RELATED PARTY" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned subsidiary, or spouse or immediate family
member (in the case of an individual) of such principal 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 such Principal 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, 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).
(d) Notwithstanding any prior expiration of the Agreement Term
pursuant to Section 2, this Section 8 shall remain in effect
through December 31, 2006.
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
12
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 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
13
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 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
14
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. Any payment required to be made to the
Executive under this Agreement that is not made in a timely manner shall bear
interest until the date of payment at an interest rate equal to 120% of the
monthly compounded applicable federal rate as in effect under Section 1274 (d)
of the Code for the month in which payment is required to be made.
12. RESTRICTIVE COVENANTS
(a) COVENANT NOT TO DISCLOSE CONFIDENTIAL INFORMATION. The
Executive acknowledges that during the course of his
affiliation with the 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
15
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
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
16
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.
(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
17
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 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
18
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 Agreement, except for any and all
provisions of the Prior Agreement that relate to the grant of equity incentives
granted pursuant to Section 5 of the Prior Agreement, which provisions,
including any provisions under Section 5 or 7 of the Prior Agreement, shall
remain in effect throughout the Agreement Term of this Agreement. Any amendment
or modification of this Agreement shall not be binding unless in writing and
signed by the Company and the Executive. Notwithstanding the foregoing, the
parties hereto shall enter into stock option agreements in respect of the
Time-Vested Options and Performance Options 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
00
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 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.
20
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/
---------------------------------
By:
Title:
21
EXHIBIT A
Listening Areas
Bangor Albany
Canton/Salem Columbus-Starkville
Xxxxxxxx Xxxxx
Harrisburg Lake Xxxxxxx
Xxxxxx Beach Lexington
Tallahassee Melbourne
Wilmington Xxxxxxxxxx
Youngstown Saginaw
Shreveport
Fayetteville, AR
Fayetteville, NC Abilene
Ft. Xxxxx Amarillo
Kalamazoo Appleton
Mobile Beaumont
Monroe Grand Junction
Pensacola Green Bay
Rockford Houston
Savannah Killeen Temple
Xxxxxx Xxxxxx
Topeka
Bismarck Wichita Falls
Cedar Rapids
Dubuque
Xxxxxx
Xxxxxxxxx
Owatonna
Oxnard-Ventura
Quad Cities
Santa Xxxxxxx
Waseca
Waterloo
22
