EXHIBIT 10.01
EMPLOYMENT AGREEMENT
--------------------
This Employment Agreement (the "Agreement") is entered into as of August 1,
1997, by and between Xxxxxx X. Xxxxxxxx III, an individual ("Executive"), and
Salem Communications Corporation, a California corporation (the "Company").
RECITALS
--------
WHEREAS, the Company desires to employ Executive in the capacity of
President and Chief Executive Officer of the Company on the terms and conditions
set forth herein; and
WHEREAS, Executive desires to serve in such capacity on behalf of the
Company and to provide to the Company the services described herein on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals, the terms and
conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Executive and the
Company hereby agree as follows:
1. EMPLOYMENT BY THE COMPANY AND TERM.
----------------------------------
(a) Full Time and Best Efforts. Subject to the terms set forth
--------------------------
herein, the Company agrees to employ Executive as President and Chief Executive
Officer and Executive hereby accepts such employment. As President and Chief
Executive Officer, Executive shall have responsibility for the day-to-day
operations of the Company and shall have the authority, functions, duties,
powers and responsibilities for Executive's corporate offices and positions
which are set forth in the Company's bylaws from time to time in effect and such
other authority, functions, duties, powers and responsibilities as the Board of
Directors of the Company may from time to time prescribe or delegate to
Executive, in all cases to be consistent with Executive's corporate offices and
positions. During the term of his employment with the Company, Executive will
apply, on a full-time basis, all of his skill and experience to the performance
of his duties in such employment and will not, without the prior consent of the
Board of Directors, devote substantial amounts of time to outside business
activities. The performance of Employee's duties shall be in Camarillo,
California, subject to reasonable travel as the performance of his duties in the
business may require. Notwithstanding the foregoing, Executive may devote a
reasonable amount of his time to civic, community, charitable or passive
investment activities.
(b) Company Policies. The employment relationship between the parties
----------------
shall be governed by the general employment policies and practices of the
Company, except that when the terms of this Agreement differ from or are in
conflict with the Company's general employment policies or practices, this
Agreement shall control.
(c) Term. The initial term of the employment of Executive under this
----
Agreement shall begin as of August 1, 1997 for an initial term ending on July
31, 2000 (such
three-year period, the "Initial Term"), subject to the provisions for
termination set forth herein and renewal as provided in Section 1(d) below.
(d) Renewal. Unless the Company or Executive shall have given the
-------
other party hereto notice that this Agreement shall not be renewed at least 90
days prior to the end of the Initial Term, the term of this Agreement shall be
automatically extended for a period of one year, such procedure to be followed
in each such successive period. Each extended term shall continue to be subject
to the provisions for termination set forth herein.
2. COMPENSATION AND BENEFITS.
-------------------------
(a) Salary. Executive shall receive for services to be rendered
------
hereunder an annual base salary as set forth on Exhibit A attached hereto ("Base
Salary"). The Base Salary will be reviewed by and shall be subject to
adjustment at the sole discretion of the Board each year during the term of this
Agreement.
(b) Participation in Benefit Plans. During the term hereof, Executive
------------------------------
shall be entitled to participate in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof. The Company may, in its sole
discretion and from time to time, amend, eliminate or establish additional
benefit programs as it deems appropriate. Executive shall also participate in
all fringe benefits offered by the Company to any of its Executives.
3. BONUSES.
-------
Subject to the provisions of Section 4 hereof, Executive shall receive an
annual bonus during the term of this Agreement at the discretion of the Board.
4. TERMINATION OF EMPLOYMENT.
-------------------------
The date on which Executive's employment by the Company ceases, under any
of the following circumstances, shall be defined herein as the "Termination
Date."
(a) TERMINATION FOR CAUSE.
---------------------
(i) Termination; Payment of Accrued Salary. The Board may
--------------------------------------
terminate Executive's employment with the Company at any time for cause,
immediately upon notice to Executive of the circumstances leading to such
termination for cause. In the event that Executive's employment is terminated
for cause, Executive shall receive payment for all accrued salary through the
Termination Date, which in this event shall be the date upon which notice of
termination is given. The Company shall have no further obligation to pay
severance of any kind nor to make any payment in lieu of notice.
(ii) Definition of Cause. "Cause" means the occurrence or
existence of any of the following with respect to Executive, as determined by a
majority of the disinterested
2
directors of the Board: (A) a material breach by Executive of any of his
obligations hereunder which remains uncured after the lapse of 30 days following
the date that the Company has given Executive written notice thereof, provided,
however, that the failure by the Company to achieve performance targets shall
not, in and of itself, constitute a material breach under this Section
4(a)(ii)(A); (B) any misappropriation, embezzlement, intentional fraud or
similar conduct involving the Company or any person or entity directly or
indirectly controlling, controlled by or under direct or indirect common control
with the Company (an "Affiliate"); (C) the conviction or the plea of nolo
contendere or the equivalent in respect of any felony or a crime involving moral
turpitude; or ([)) the repeated non-prescription use of any controlled substance
or the repeated use of alcohol or any other non-controlled substance which, in
any case described in this clause, the Board reasonably determines renders the
Executive unfit to serve in his capacity as an officer or employee of the
Company or its Affiliates.
(b) Termination by Executive. Executive shall have the right, at his
------------------------
election, to terminate his employment with the Company by written notice to the
Company to that effect (i) if the Company shall have failed to substantially
perform a material condition or covenant of this Agreement ("Company's Material
Breach") or (ii) if the Company materially reduces or diminishes Executive's
powers and responsibilities hereunder; provided, however, that a termination
under clauses (i) and (ii) of this Section 4(b) will not be effective until
Executive shall have given written notice specifying the claimed breach and,
provided such breach is curable, Company fails to correct the claimed breach
within 30 days after the receipt of the applicable notice or such longer term as
may be reasonably required by the nature of the claimed breach (but within 10
days if the failure to perform is a failure to pay monies when due under the
terms of this Agreement).
(c) Termination Upon Disability. The Company may terminate
---------------------------
Executive's employment in the event Executive suffers a disability that renders
Executive unable to perform the essential functions of his position, even with
reasonable accommodation, for 180 days within any 270 day period and fails to
return to work within 10 days of notice of intention to terminate. After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement except that Executive shall receive the accrued portion of any salary
and bonus through the Termination Date, less standard with holdings for tax,
social security purposes, payable, in the case of a bonus, upon such date or
over such period of time which is in accordance with the applicable bonus plan
plus severance equal to 100% of his then Base Salary without offset for any
disability payments Executive may receive, payable in monthly installments over
a fifteen month period.
(d) Termination Without Cause; Failure to Renew.
-------------------------------------------
(i) Termination Payments. In the event that, during the Initial
--------------------
Term,Executive's employment is terminated by the Company other than pursuant to
Section 4(a) or 4(c), or by Executive pursuant to Section 4(b)(i), (ii) or
(iii), the Company shall pay Executive as severance an amount equal to his then
Base Salary for the longer of six months or the remainder of the Initial Term,
less standard withholdings for tax and social security purposes, payable in
equal installments over six consecutive months, or, if longer, the number of
months remaining in
3
the Initial Term, commencing immediately following termination, in monthly pro
rata payments commencing as of the Termination Date, plus the accrued portion of
any bonus through the Termination Date, less standard withholdings for tax and
social security purposes, payable, in the case of a bonus, upon such date or
over such period of time which is in accordance with the applicable bonus plan.
In the event that after the Initial Term Executive's employment is terminated by
the Company other than pursuant to Section 4(a) or 4(c), or by Executive
pursuant to Section 4(b)(i) and (ii), or if the Company shall fail to renew the
term of this Agreement at the expiration of the Initial Term (including any
renewal term thereof), the Company shall pay Executive as severance an amount
equal to three months of his then Base Salary, less standard withholdings for
tax and social security purposes, payable in equal installments over three
consecutive months commencing immediately following termination or failure to
renew in monthly pro rata payments commencing as of the Termination Date, plus
the accrued portion of any bonus through the Termination Date, less standard
withholdings for tax and social security purposes, payable, in the case of a
bonus, upon such date or over such period of time which is in accordance with
the applicable bonus plan.
(e) Benefits Upon Termination. All benefits provided under Section
-------------------------
2(b) hereof shall be extended at the Executive's cost, to the extent permitted
by the Company's insurance policies and benefit plans, for six months after
Executive's Termination Date, except (a) as required by law (e.g. COBRA health
insurance continuation election) or (b) in the event of a termination described
in Section 4(a).
(f) Termination Upon Death. If Executive dies prior to the expiration
----------------------
of the term of this Agreement, the Company shall (i) continue coverage of
Executive's dependents (if any) under all applicable benefit plans or programs
of the type listed above in Section 2(b) herein for a period of 12 months, and
(ii) pay to Executive's estate the accrued portion of any salary and bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable, in the case of a bonus, upon such date or over such
period of time which is in accordance with the applicable bonus plan.
(g) No Offset. Executive shall have no duty to mitigate any of his
---------
damages or losses and the Company shall not be entitled to reduce or offset any
payments owed to Executive hereunder for any reason.
5. RIGHT OF FIRST REFUSAL ON CORPORATE OPPORTUNITIES.
-------------------------------------------------
During the term of employment under this Agreement, Executive agrees that
he will, prior to exploiting a Corporate Opportunity for his own account, offer
the Company a right of first refusal with respect to such Corporate Opportunity.
For purposes of this Section 5, "Corporate Opportunity" shall mean any business
opportunity that is in the same or a related business as any of the businesses
in which the Company is involved. The determination as to whether a business
opportunity constitutes a Corporate Opportunity shall be made by a majority of
the disinterested members of the Board, and their determination shall be based
on an evaluation of (i) the extent to which the opportunity is within the
Company's existing lines of business or its existing plans to expand; (ii) the
extent to which the opportunity supplements the
4
Company's existing lines of activity or complements the Company's existing
methods of service; (iii) whether the Company has available resources that can
be utilized in connection with the opportunity; (iv) whether the Company is
legally or contractually barred from utilizing the opportunity; (v) the extent
to which utilization of the opportunity by Executive would create conflicts of
interest with the Company; and (vi) any other factors the disinterested Board
members deem appropriate under the circumstances.
6. PROPRIETARY INFORMATION OBLIGATIONS.
-----------------------------------
During the term of employment under this Agreement, Executive will have
access to and become acquainted with the Company's confidential and proprietary
information, including but not limited to information or plans regarding the
Company's customer relationships, personnel, or sales, marketing, and financial
operations and methods; and other compilations of information, records, and
specifications (collectively "Proprietary Information"). Executive shall not
disclose any of the Company's Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information and similar items relating to the business of the
Company, whether prepared by Executive or otherwise coming into his possession,
shall remain the exclusive property of the Company and shall not be removed from
the premises of the Company under any circumstances whatsoever without the prior
written consent of the Company, except when (and only for the period) necessary
to carry out Executive's duties hereunder, and if removed shall be immediately
returned to the Company upon any termination of his employment and no copies
thereof shall be kept by Executive; provided, however, that Executive shall be
entitled to retain documents reasonably related to his prior interest as a
shareholder.
7. NONINTERFERENCE.
---------------
While employed by the Company, Executive agrees not to interfere with the
business of the Company by directly or indirectly soliciting, attempting to
solicit, inducing, or otherwise causing any employee of the Company to terminate
his or her employment in order to become an employee, consultant or independent
contractor to or for any other employer.
8. NONCOMPETITION.
--------------
Executive agrees that during the term of this Agreement and for a period of
two years thereafter, he will not, without the prior consent of the Company,
directly or indirectly, have an interest in, be employed by, be connected with,
or have an interest in, as an employee, consultant, officer, director, partner,
stockholder or joint venturer, in any person or entity owning, managing,
controlling, operating or otherwise participating or assisting in any business
that is in competition with the business of the Company (i) during the term of
this Agreement, in any location, and (ii) for the two-year period following the
termination of this Agreement, in any province, state or jurisdiction in which
the Company was conducting business at the date of termination of Executive's
employment and continues to do so thereafter; provided, however, that the
foregoing shall not prevent Executive from being a stockholder of less than one
percent of the
5
issued and outstanding securities of any class of a corporation listed on a
national securities exchange or designated as national market system securities
on an interdealer quotation system by the National Association of Securities
Dealers, Inc.
9. REMEDIES.
--------
Executive acknowledges that a breach or threatened breach by Executive of
any the provisions of Sections 5, 6, 7 or 8 will result in the Company and its
shareholders suffering irreparable harm which cannot be calculated or fully or
adequately compensated by recovery of damages alone. Accordingly, Executive
agrees that the Company shall be entitled to interim, interlocutory and
permanent injunctive relief, specific performance and other equitable remedies,
in addition to any other relief to which the Company may become entitled should
there be such a breach or threatened breach.
10. MISCELLANEOUS.
-------------
(a) Notices. Any notices provided hereunder must be in writing and
-------
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy or telex) on the third day after mailing by first
class mail to the recipient at the address indicated below:
To the Company:
Salem Communications Corporation
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxx, Executive Vice President
Telephone: (000) 000-0000, Ext. 108
Facsimile: (000) 000-0000
To Executive:
Xxxxxx X. Xxxxxxxx III
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000, Ext. 104
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) Severability. If any provision of this Agreement is determined to
------------
be invalid or unenforceable by a court of competent jurisdiction from which no
further appeal lies or is taken, that provision shall be deemed to be severed
herefrom, and all remaining provisions of this Agreement shall not be affected
thereby and shall remain valid and enforceable.
6
(c) Entire Agreement. This document constitutes the final, complete,
----------------
and exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral. Without limiting the generality of the
foregoing, except as provided in this Agreement, all understandings and
agreements, written or oral, relating to the employment of Executive by the
Company or the payment of any compensation or the provision of any benefit in
connection therewith or otherwise, are hereby terminated and shall be of no
further force and effect.
(d) Counterparts. This Agreement may be executed in separate
------------
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(e) Successors and Assigns. This Agreement is intended to bind and
----------------------
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the prior written consent of the Company.
(f) Amendments. No amendments or other modifications to this
----------
Agreement may be made except by a writing signed by both parties. No amendment
or waiver of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.
(g) Attorneys' Fees. If any legal proceeding is necessary to enforce
---------------
or interpret the terms of this Agreement, or to recover damages for breach
therefore, the prevailing party shall be entitled to reasonable attorney's fees,
as well as costs and disbursements, in addition to other relief to which he or
it may be entitled.
(h) Choice of Law. All questions concerning the construction,
-------------
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of California.
(i) Arbitration. The parties expressly agree that in the event of any
-----------
dispute, controversy or claim by any party concerning this Agreement, the
prevailing party shall be entitled to a reimbursement of its reasonable
attorneys' fees and costs from the other party to the proceeding. Any dispute,
controversy or claim arising hereunder or in any way related to this Agreement
shall be resolved by arbitration in the City of Los Angeles pursuant to the
rules of the American Arbitration Association. The Arbitrator's decision shall
be final and binding on both parties. The parties intend this arbitration
provision to be valid, enforceable, irrevocable and construed as broadly as
possible. The Arbitrator shall have full authority to award all legal and
equitable relief, including, without limitation, injunctive relief, to the same
extent as a court of competent jurisdiction; provided, however, that the
Arbitrator shall have no authority to award damages for emotional distress or
punitive damages. Judgment upon the award rendered by the Arbitrator may be
entered by any court having jurisdiction thereof . The parties agree that in
the event of a breach or threatened breach by any part of any one of more of the
covenants set forth
7
in this Agreement, the other party would not have any adequate remedy at law.
Accordingly, in the event of any such breach or threatened breach, such other
party may, in addition to the other remedies which may be available to it, seek
in arbitration to enjoin the breaching party from such breach or threatened
breach.
IN WITNESS WHEREOF, the parties have executed this agreement effective
as of the date first written above.
/s/ Xxxxxx X. Xxxxxxxx III
--------------------------
XXXXXX X. XXXXXXXX III
SALEM COMMUNICATIONS CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx
---------------------
Xxxx X. Xxxxxxxxx, Executive Vice President
8
EXHIBIT A
---------
The annual base salary of Executive shall be Four Hundred Thousand Dollars
($400,000) each year.
9
