1
EXHIBIT 10.34
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") made as of the first day of April,
1996 (the "Effective Date") by and between GulfStar Communications, Inc., a
Delaware corporation ("Company"), and Xxxx Xxxxxx ("Employee");
W I T N E S S E T H:
WHEREAS, the parties desire to enter into an agreement for the
Company's employment of Employee on the terms and conditions hereinafter
stated:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereby agree as follows:
1. Relationship Established. The Company hereby employs Employee
as the President and chief operating officer of the Company and to perform such
services and duties as the Company may from time to time reasonably designate
during the term hereof (the "Services"). Employee is a consultant for SFX
Broadcasting, Inc. ("SFX") under a verbal arrangement whereby he is obligated
to perform limited consulting duties at the request of SFX. Employee
represents to the Company that such consulting duties will not materially
interfere with his responsibilities to Employer. Except as may be reasonably
necessary to perform such consulting services to SFX, Employee agrees to accept
such employment with the Company on a full-time basis and to perform the
services diligently and to the best of his ability. Employee acknowledges that
Employee has been informed of and discussed with the Company the specific
activities which the Employee will perform as Services and that Employee
understands the scope of the activities that will constitute the Services.
2. Term of Employment. (a) The term of Employee's employment
hereunder shall commence on the Effective Date and shall continue for a term of
five (5) years ending March 31, 2001, unless sooner terminated by the first to
occur of the following:
(i) The death of Employee, in which event the Company
shall pay to the legal representative of Employee an aggregate sum equal to his
salary for twelve months at the rate provided in Paragraph 3(a) below (payable
in equal monthly installments) that is in effect for Employee at the time of
his death, plus a pro rata portion (based on the date of Employee's death) of
any bonuses that would otherwise have been payable under Paragraphs 3(b) and
3(c) below for the Interim Budget Period or Full Budget Year, as the case may
be, in which such death occurs; provided, however, that any such sums payable
pursuant to this clause (i) shall be reduced dollar for dollar by the amount of
any such sums paid pursuant to clause (ii) immediately below if the death of
Employee occurs during the Complete Disability (as defined in said clause (ii))
of Employee.
(ii) The Complete Disability of Employee, in which event
the Company shall pay to Employee or his legal representative an aggregate sum
equal to his salary for twelve months at the rate provided in Paragraph 3(a)
below (payable in equal monthly installments) that is in effect for Employee at
the time of his Complete Disability, less any sums that are payable to Employee
under any disability insurance benefits provided by the Company, plus a pro
rata portion (based on the date
2
of such Complete Disability) of any bonuses that would otherwise have been
payable under Paragraphs 3(b) and 3(c) below for the Interim Budget Period or
Full Budget Year, as the case may be, in which such Complete Disability occurs.
"Complete Disability," as used herein, shall mean the inability of Employee to
perform the substantial and material duties of his occupation for a period of
more than ninety (90) consecutive days or for more than ninety (90) days in any
180-day period;
(iii) The termination of employment of Employee by the
Company for Cause, in which event any obligations of the Company to pay the
compensation set forth in paragraphs (a), (b) and (c) of Paragraph 3 below from
and after the date of such termination shall immediately terminate and be of no
further force or effect. "Cause" means (A) after notice and thirty (30) days
to cure, the failure by Employee to diligently and competently perform in any
material respect, on a recurring basis, the services assigned by the Company to
Employee, (B) conviction of a felony or crime of moral turpitude, or (C)
engaging in any material misconduct, dishonesty, or misappropriation of the
assets of the Company or its shareholders, (D) gross negligence or other
wrongful acts detrimental in any material respect to the Company or its
shareholders.
(iv) The resignation of Employee from his employment
hereunder, provided that Employee shall have given not less than thirty (30)
days prior written notice of such resignation to the Company. Upon such
resignation of Employee, any obligations of the Company to pay the compensation
set forth in subparagraphs (a), (b) and (c) of Paragraph 3 below from and after
the date of such resignation shall immediately terminate and be of no further
force or effect; or
(v) The termination by the Company of Employee's
employment hereunder without Cause, provided that the Company shall have given
not less than thirty (30) days prior written notice of such termination to
Employee. In the event that the Company terminates Employee's employment
hereunder without Cause, and Employee has not materially breached this
Agreement, then the Company shall pay as severance at the salary rate (provided
in Paragraph 3(a) below) in effect for Employee at the time of such
termination, twelve (12) months of salary (payable in equal monthly
installments), plus a pro rata portion (based on the date of such termination
of employment) of any bonuses that would otherwise have been payable pursuant
to Paragraphs 3(b) and 3(c) below for the Interim Budget Period or Full Budget
Year, as the case may be, in which such termination of employment occurs.
(b) Notwithstanding anything to the contrary herein, Employee
shall have the right to terminate his employment under this Agreement upon the
material breach by the Company of any term or condition contained in this
Agreement, provided that Employee gives notice of such breach to the Company,
and such breach is not cured within thirty (30) days after the Company's
receipt of such notice, in which event the Company shall pay Employee at the
salary rate (provided in Paragraph 3(a) below) in effect for Employee at the
time of such termination, twelve (12) months of salary (payable in equal
monthly installments), plus a pro rata portion (based on the date of such
termination of employment) of any bonuses that would otherwise have been
payable pursuant to Paragraphs 3(b) and 3(c) below for the Interim Budget
Period or Full Budget Year, as the case may be, in which such termination of
employment occurs.
2
3
3. Compensation. During the term of his employment hereunder,
Employee will receive from the Company as compensation for the Services to be
performed by him hereunder a salary of (i) One Hundred Fifty Thousand and
No/100 Dollars ($150,000.00) per annum during the period from the Effective
Date to the first anniversary of the Effective Date (the "Initial Interim
Period"), (ii) One Hundred Sixty Thousand and No/100 Dollars ($160,000.00) per
annum during the period from the first anniversary of the Effective Date to the
second anniversary of the Effective Date, (iii) One Hundred Seventy Thousand
and No/100 Dollars ($170,000.00) per annum during the period from the second
anniversary of the Effective Date to the third anniversary of the Effective
Date, (iv) One Hundred Eighty Thousand and No/100 Dollars ($180,000.00) per
annum during the period from the third anniversary of the Effective Date to the
fourth anniversary of the Effective Date, and (v) One Hundred Ninety Thousand
and No/100 Dollars ($190,000.00) per annum during the period from the fourth
anniversary of the Effective Date through the fifth anniversary of the
Effective Date. Such salary shall be payable in equal monthly installments or
in such other installments or at such other intervals as may be agreed upon
between the Company and Employee. At such time as the consulting arrangement
between Employee and SFX is terminated, the Company will increase Employee's
salary level to the greater of (x) $200,000 per annum, and (y) his then current
salary level plus $50,000 per annum, effective as of the date such consulting
arrangement is terminated.
(b) A fixed bonus in the amount of $35,000 for the calendar year
1996. For each full calendar year during the term of this Agreement (each a
"Full Budget Year") following the calendar year 1996, Employee shall be paid an
achievement bonus (each an "Achievement Bonus") of Thirty-Five Thousand and
No/100 Dollars ($35,000.00), provided the Company achieves the Broadcasting
Cash Flow (as hereinafter defined) set forth in the operating budget approved
by the Board of Directors of the Company and used internally by management (the
"Board Approved Budget") for such Full Budget Year. Each such bonus shall be
paid within thirty (30) days following the date (the "Audit Report Date") that
the independent accountants who audit the financial statements of GulfStar for
the applicable year furnish to GulfStar such accountants' report thereon. In
the event that this Agreement is terminated during a calendar year (as opposed
to a calendar year end) and Employee is otherwise entitled to an achievement
bonus for such partial calendar year, such achievement bonus shall be equal to
an amount determined by (i) multiplying a fraction, the numerator of which will
be the number of days in the Interim Budget Period (defined below), and the
denominator of which will be 365, by (ii) the Achievement Bonus otherwise
payable for that Period, which shall be paid as soon as practicable following
the termination of this Agreement, provided that Employer achieves the
Broadcasting Cash Flow set forth in the Board Approved Budget for the calendar
year in which this Agreement is terminated (the "Interim Budget Period"). For
any Full Budget Year or Interim Budget Year in which Employee is entitled to an
Achievement Bonus as provided above, the amount of such bonus shall be
increased by an amount equal to the Achievement Bonus otherwise payable with
respect to such period, multiplied by the percentage increase in the consumer
price index (determined as provided in Paragraph 3(a)) with respect to the then
most recently available consumer price index, over the consumer price index for
1996. As used herein, the term "Broadcasting Cash Flow" shall mean, for a
particular period, the Company's operating revenues from continuing operations
with respect to the Stations (and no other radio stations) owned by the
Company, excluding the value of merchandise or services received under
3
4
trade-out agreements, less operating expenses for such period (not including as
operating expenses depreciation and amortization and other non-cash expenses,
income taxes, interest, the value of advertising time provided under trade-out
agreements and any extraordinary expenses) computed in accordance with
generally accepted accounting principles consistently applied.
(c) In addition to the Achievement Bonus, for the Initial Interim
Period and for each Full Budget Year thereafter during the term hereof,
Employee shall be paid a bonus (each an "Override Bonus") equal to five percent
(5%) of the amount, if any, that the actual Broadcasting Cash Flow for such
Initial Interim Year or such Full Budget Year, as the case may be, exceeds the
Broadcasting Cash Flow set forth in the Board Approved Budget for such Initial
Interim Year or Full Budget Year. Each such Override Bonus shall be paid
within thirty (30) days following the applicable Audit Report Date.
4. Performance. Employee hereby agrees that during the term of
his employment, except for the consulting arrangement with SFX referred to in
Paragraph 1, he will not accept employment with any other individual,
corporation, partnership, governmental authority or other entity, or engage in
any venture for profit which is in conflict with its best interests, is in
competition with its business or which may interfere with Employee's
performance of the Services hereunder.
5. Reimbursement for Expenses. During the term of this Agreement
and thereafter to the extent necessary to reimburse expenses reasonably
incurred by Employee during the term of this Agreement:
(a) The Company shall reimburse Employee for reasonable
expenses incurred for traveling, entertainment and other miscellaneous expenses
incurred by Employee on behalf of the Company and its business, but payments
shall be made only against an itemized list of such expenses, and, to the
extent reasonably requested by the Company, receipts and invoices evidencing
such expenses, and such expenses shall be subject to examination and approval
by the Company.
(b) The Company shall furnish Employee with the use of an
automobile, provided that the aggregate monthly lease expense to the Company
for such automobile will not exceed the aggregate monthly lease expense being
incurred by the Company as a result of its assumption from SFX of the
automobile lease of the BMW vehicle currently being driven by Employee. The
automobile will be leased by the Company pursuant to a three year lease, and to
the extent not covered by such lease, the Company will also pay all reasonable
expenses arising out of the operation of such automobile by Employee within the
scope of his employment hereunder, including insurance, gasoline and repair
expenses. Employee shall have the right to receive an assignment of all of the
Company's rights under any such lease at the expiration thereof and upon
termination of his employment for any reason whatsoever, provided that the
lessor under such lease consent to the assignment thereof.
4
5
(c) The Company shall promptly reimburse Employee for the
customary and reasonable costs incurred by Employee to cause a moving company
to move his personal property from Greenville, South Carolina to Austin, Texas.
6. Benefits. Employee shall be entitled to participate in any
employee benefit plans maintained by the Company for the benefit of its
employees of a class in which Employee shall qualify; and specifically,
Employee, and his eligible dependents (including Employee's spouse in the event
that Employee marries), will be entitled to participate in any such group
insurance plans, health insurance plans, major medical plans and the like, and
the premiums therefor will be paid by the Company, including without limitation
Disability Income Policy No. 00-000-0000000 issued by Provident Life and
Accident Insurance Company. Employee shall be entitled to four (4) weeks paid
vacation during each calendar year. Employee shall be entitled to the
privileges of an exercise club, which shall be the club for which Company
currently provides privileges to Company employees generally, or if Company
hereafter ceases to provide such privileges to Company employees generally,
then Employee shall be entitled to the privileges of an exercise club that is
generally equivalent in quality and cost. Employee's parking expense in the
building where the Company's offices are located, shall be paid by the Company.
7. Confidentiality. (a) Proprietary Information. Employee
acknowledges that he may from time to time have access to and be provided with
confidential, secret and proprietary information of the Company and its
affiliates. Employee agrees that he will not, without the prior written
consent of the Company, for any reason or at any time, use or disclose to any
individual, person, firm or entity ("Person") any fact or information not
generally available to the public concerning any aspect of the products and
business of the Company or its affiliates, including, without limitation,
compilations, programs, methods, data, financial plans, marketing or sales
strategies, and lists of actual or potential customers or suppliers. Such
information is hereinafter referred to as the "Proprietary Information."
(b) Exceptions. Notwithstanding the provisions of Section 7(a)
above, the following shall not be considered to be Proprietary Information:
(i) any information that was in the public domain through no fault or act of
Employee prior to the disclosure thereof by the Company to Employee; (ii) any
information that comes into the public domain through no fault or act of
Employee; (iii) any information that is disclosed to Employee by a third party
(which term shall not include the counsel, accountants and other non-employee
representatives of the Company) unless Employee knows such person does not have
the legal right to make such disclosure, and (iv) any confidential business
information that is not a trade secret under applicable law one (1) year after
Employee ceases to provide Services to the Company (provided, however, that the
limited duration of the confidentiality obligation with regard to confidential
business information not constituting a trade secret shall not operate or be
construed as affording Employee any right or license thereafter to use such
confidential business information, or as a waiver by the Company of the rights
and benefits otherwise available to the Company under the laws governing the
protection and enforceability of trade secrets and other intellectual
property).
5
6
8. Covenant Not to Compete. (a) In order to induce the Company
to enter into this Agreement, Employee agrees that, during the term of this
Agreement, and for a period of one (1) year from and after the date of
termination or expiration of this Agreement by its terms and except as required
in connection with performing the Services, Employee will not, without the
prior written consent of the Company, for his own account or jointly with
another, directly or indirectly, for or on behalf of any Person, as principal,
agent or otherwise:
(i) engage in, consult with, or own, control, manage or
otherwise participate in the ownership (other than not more than 5% of the
outstanding shares in a company that is publicly traded), control or management
of a business engaged in the ownership or operation of any broadcast radio
station, whether through direct or indirect ownership, joint sales agreement,
time brokerage agreement or LMA agreement (collectively, a "Broadcast
Activity"), or otherwise, within any part of any Station Area (as defined
below); or
(ii) solicit, call upon, or attempt to solicit the
patronage of any person having an office or place of business within any
Station Area (as defined below) for the purpose of having such person purchase
advertising with respect to any media that is in competition with any Station
(as defined below) and to whom and from whom any of the Company's subsidiaries
that own any radio station (each a "Station" and collectively, the "Stations")
sold any advertising during the one (1) year period immediately preceding the
date of termination of Employee's employment hereunder; or
(iii) solicit or induce, or in any manner attempt to
solicit or induce, any person who is employed by the Company or any Affiliate,
to leave such employment, or hire any person who is employed by the Company or
any Affiliate, whether or not such employment is pursuant to a written contract
with the Company or such Affiliate, or otherwise for a period of one (1) year.
As used herein the term "Affiliate" of any Person shall mean any individual,
partnership, corporation, trust, other entity, or group of any thereof,
directly or indirectly controlling, controlled by or under common control with
such Person.
(b) For purposes of this Section 8, a "Station Area" shall mean
the area within a radius of fifty (50) miles of main antenna tower site for any
Station.
9. Interpretation; Severability. All rights and restrictions
contained in this Agreement may be exercised and shall be applicable and
binding only to the extent they do not violate any applicable laws and are
intended to be limited to the extent necessary so that they will not render
this Agreement illegal, invalid or unenforceable. It is understood and agreed
that the provisions hereof are severable; if such provisions shall be deemed
invalid or unenforceable as to period of time, territory, or business activity,
such provisions shall be deemed limited to the extent necessary to render it
valid and enforceable.
10. Relief. The Company and Employee acknowledge that a breach of
the provisions of Section 7 or 8 of this Agreement by Employee would result in
material and irreparable damage and injury to the Company, and that it would be
difficult or impossible to establish the full monetary
6
7
value of such damage. Therefore, in the event of any threatened or actual
breach of such provisions of this Agreement by Employee, the Company shall be
entitled to injunctive relief in addition to any of the remedies it may have at
law or in equity.
11. Nonwaiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted hereunder or of the future performance of any such term or
condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by or on behalf of both parties.
12. Notices. Any notice or other communication required or
permitted hereunder shall be deemed sufficiently given if sent by registered or
certified mail, return receipt requested, postage and fees prepaid, addressed
to the party to be notified as follows:
(a) If to the Company:
GulfStar Communications, Inc.
One American Center, Suite 1410
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
with a copy to:
Xxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxxx, P.C.
0000 Xxxxxxxx Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxx, Xx.
(b) If to Employee:
Mr. Xxxx Xxxxxx
One American Center, Suite 1410
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
7
8
with a copy to:
Wyche, Burgess, Xxxxxxx & Xxxxxx, P.A.
00 Xxxx Xxxxxxxxxx Xxx
Post Office Box 728
Greenville, South Carolina 29602
or in each case to such other address as either party may from time to time
designate in writing to the other. Such notice or communication shall be
deemed to have been given as of the date so mailed.
13. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas.
14. Entire Agreement; Amendment. This Agreement contains the sole
and entire agreement between the parties hereto with respect to the Company's
employment of Employee and supersedes all prior discussions and agreements
between the parties and any such prior agreements shall, from and after the
date hereof, be null and void. This Agreement shall not be modified or amended
except by an instrument in writing signed by or on behalf of the parties
hereto.
15. Parties Benefitted. This Agreement shall inure to the benefit
of, and be binding upon, Employee, his heirs, executors and administrators, and
the Company, its successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
EMPLOYER:
GulfStar Communications, Inc.
By:
---------------------------------
Chairman of the Board
EMPLOYEE:
------------------------------------
Xxxx Xxxxxx
8
