EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into effective the 12th day of May,
2000, by and between CUMULUS MEDIA INC., an Illinois corporation (the
"Company"), and Xxxxxx Xxxxxxx (the "Employee").
R E C I T A L S:
The Company desires to employ the Employee in the capacity of Executive
Vice President, Treasurer, and Chief Financial Officer and the Employee desires
to be so employed. Accordingly, the Company and the Employee desire to set forth
in this Agreement the terms and conditions under which the Employee is to be
employed by the Company.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
General Terms of Employment
During the term of this Agreement, the Company shall employ the
Employee and the Employee shall serve the Company as a full-time employee in the
capacity of Executive Vice President, Treasurer and Chief Financial Officer of
Cumulus Media Inc. Subject to the authority and direction of the Board of
Directors (and, at the discretion of the Board, the Executive Chairman), the
Employee shall be the principal treasury, financial and accounting officer of
the Company responsible for: (i) Company financial operations, planning and
budgeting; (ii) internal financial reporting to management, the Board and the
Audit Committee; (iii) external financial reporting to analysts, shareholders
and the SEC; (iv) the ongoing monitoring and analysis of business operations
versus plan and the analysis of variances from plan; (v) the development of
options for management to consider in correcting variances; (vi) the
implementation and operation of financial and operations information systems to
support all financial operations and to support management in the operation of
the business; (vii) monitoring debt agreements and covenants and compliance
reporting; (viii) and working with the Executive Chairman in developing and
maintaining the Company's relationships with analysts, lenders, bondholders and
shareholders; and (ix) such other duties as may be may be consistent with the
role of a senior executive and from time to time assigned by the President or
the Executive Chairman. The Employee agrees that during the term of this
Agreement he shall devote his best efforts, attention and skill on a full-time
basis to the business and affairs of the Company and its subsidiaries.
ARTICLE II
Compensation and Equity Incentives
2.1 Base Salary. During the term of this Agreement, the Company shall
pay to the Employee a base salary of Two Hundred Seventy-Five Thousand Dollars
($275,000) per annum (the "Base Salary") payable in equal installments not less
frequently than semi-monthly. The Base Salary will be increased annually by not
less than five percent (5%).
2.2 Bonus. In addition to the base salary provided for in Paragraph 2.1
hereof, the Employee shall be eligible to receive an annual bonus of up to Fifty
Percent (50%) of the Employee's Base Salary per annum (the "Potential Bonus"),
based on Employee's performance measured as follows. Employee shall be eligible
to receive up to Fifty Percent (50%) of the Potential Bonus (i.e., 25% of Base
Salary), as determined in the joint discretion of the Executive Chairman and the
Compensation Committee of the Board, who shall also consider the recommendation
of the President and the facts regarding the Employee's overall performance. The
Employee shall be eligible to receive up to a second Fifty Percent of the
Potential Bonus (i.e., 25% of Base Salary) in the event that the Company
achieves its Board-approved budget for annual Broadcast Cash Flow, or by such
other measure as Employee and the Executive Chairman shall mutually agree based
on the structure of other sales targets and commissions in the Company. The
Board will approve a budget for 2000 which takes into account performance to
date in setting a new Broadcast Cash Flow amount for purposes of determining the
Potential Bonus. The annual budget for Broadcast Cash Flow will be adjusted
upwards or downwards to reflect changes from assumptions in the original budget
in the timing of starting LMA's or taking over properties, and to reflect
acquisitions and LMA's not part of the original budget. Bonuses shall be based
on actual base salary paid to the Employee during the Company's Fiscal Year for
which Broadcast Cash Flow is measured; provided, however, that the Bonus for the
2000 fiscal year shall be based on Employee's full Base Salary on an annualized
basis. All bonus decisions and recommendations shall be made first by the
Executive Chairman and the President, and then shall be reviewed and approved by
the Compensation Committee of the Company's Board of Directors, subject to any
modifications that the Compensation Committee may make.
2.3 Equity Incentives. Within 7 days of the date of this Agreement, the
Compensation Committee will meet and grant to Employee an option to purchase a
total of 300,000 shares of the Company's Class A Common Stock (the "Time-Vested
Option"). The Time-Vested Option shall be subject to the terms of the stock
option agreement which will accompany the award and will be entered into between
the Company and the Employee, provided however that the terms contained in such
Stock Option Agreement shall be consistent with the terms of this Agreement.
With respect to exercise price, the stock option agreement shall provide that
(1) the exercise price with respect to 200,000 shares shall be the market price
on the date of grant (the "First Grant"); (2) the exercise price with respect to
50,000 shares shall be Twenty Dollars ($20) per share (the "Second Grant"); and
(3) the exercise price with respect to the remaining 50,000 shares shall be
Thirty Dollars ($30) per share (the "Third Grant"). With
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respect to vesting, the stock option agreement shall provide that (1) the option
shall vest with respect to 60,000 shares on each of the first through fifth
anniversaries of the date of grant, and (2) the option shall vest first with
respect to the First Grant, followed by the Second Grant, and the Third Grant,
until the option shares are fully vested.
ARTICLE III
Expenses and Benefits
3.1. Expenses. The Company shall pay or reimburse the Employee for all
reasonable out-of-pocket expenses incurred by the Employee in the course of
performing his duties for the Company in accordance with the Company's expense
account and reimbursement policies from time to time in effect. The Employee
shall keep accurate records and receipts of such expenditures and shall submit
such accounts and proof thereof as may from time to time be required in
accordance with such expense account or reimbursement policies that the Company
may establish for its personnel generally. In addition, the Employee shall
receive a car allowance of One Thousand Dollars ($1,000) per month. The Company
will also pay the direct costs of moving the Employee's personal effects to
Milwaukee, and (up to a maximum of Fifty Thousand Dollars ($50,000)) the real
estate commission and other direct costs associated with the sale of the
Employee's home in Livermore, CA. The Company will reimburse Employee for the
cost of coach class round trip air transportation travel to San Francisco for
weekend home visits no more frequently than every other weekend until the
Employee relocates his family to Milwaukee in the summer of 2000, and/or shall
reimburse Employee for several family trips to Milwaukee as may be mutually
agreed between Employee and the Executive Chairman. At its expense, the Company
will also provide temporary living accommodations for Employee while working in
Milwaukee.
3.2 Benefits. The Employee shall be entitled during the term hereof to
receive such incentive stock options as the Compensation Committee in its
discretion may decide. In addition, the Employee shall be entitled during the
term hereof to receive such fringe benefits and to participate in such benefit
programs as the Company may from time to time make available to its salaried
employees generally including, but not limited to, any group health and life
insurance, any profit sharing plan or any 401(k) plan now or hereafter adopted
by the Company. The Employee acknowledges that he shall have no vested rights
under any such benefit programs except as expressly provided by the terms
thereof and that such programs and the prerequisites thereof may be established
or eliminated at any time at the discretion of the Company.
ARTICLE IV
Term and Termination
4.1. Term. The term of this Agreement shall commence as of the date
hereof and shall continue thereafter for a term of three (3) years unless
earlier terminated by either party in
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accordance with Section 4.2 below. This Agreement shall automatically be renewed
for consecutive renewal terms of one (1) year, unless either Party notifies the
other Party of its desire not to renew the Agreement no less than sixty (60)
days prior to the last day of the initial three-year term, or no less than
thirty (30) days prior to the last day of any one-year renewal term.
4.2. Earlier Termination. Notwithstanding the term stated in Paragraph
4.1 hereof, the Employee's employment under this Agreement may be terminated
immediately upon any of the following:
(a) In the event of the Employee's death.
(b) In the event of the Employee's Disability. For purposes of
this Agreement, "Disability" shall mean the inability of the Executive to
perform his duties for the Company on account of physical or mental illness for
a period of six consecutive full months, or a period of nine full months during
any 12-month period. The Employee'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 Employee be terminated by reason of
Disability unless the Employee receives written notice from the Company, at
least 30 days in advance of such termination, stating its intention to terminate
the Employee for reason of Disability.
(c) By the Company forthwith upon notice to the Employee
whether or not the Employee has committed any acts constituting "Cause." For
purposes of this Agreement, "Cause" for termination of the Employee shall exist
if the Employee shall commit any of the following acts: (i) the gross negligence
or willful misconduct by the Employee in the performance of his duties for the
Company; (ii) commission by the Employee of any felony or act of fraud or
material dishonesty involving the Company or its business, or which, in the
reasonable judgment of the Board of Directors, is likely to have a material
adverse effect upon the business or reputation of the Company or the ability of
the Employee to perform his duties for the Company; (iii) a material breach by
the Employee of any agreement with the Company concerning noncompetition or the
confidentiality of proprietary information; or (iv) any material breach by the
Employee of his fiduciary duties to the Company or any subsidiary thereof.
(d) By the Employee through voluntary resignation.
(e) By the Employee for "Good Reason." "Good Reason" for
purposes of this Agreement shall occur in the event of (1) a material reduction
in the responsibilities, authority, power or status of Employee, including
reductions in support staff or any perquisite incident to Employee's position as
Executive Vice President, Treasurer, and Chief Financial Officer of the Company,
without the consent of Employee, or (2) relocation of Employee's job location to
a site more than one hundred (100) miles from Milwaukee, Wisconsin.
ARTICLE V
Compensation upon Termination of Employment
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In the event the Employee's employment is terminated during the
Agreement Term, the Employee shall be entitled to the severance payments and
benefits specified below:
5.1 Termination by Company Without Cause or by Employee for Good
Reason. In the event Employee is terminated by the Company other than for Cause,
death or Disability, or in the event the Employee resigns with Good Reason, the
Company shall pay the Employee and provide him with the following:
(a) Accrued Rights. The Company shall pay the Employee a
lump-sum amount equal to the sum of (1) his earned but unpaid Base Salary
through the date of termination, (2) any earned but unpaid Bonus under Section
2.2 above, and (3) any business expenses or other amounts due to the Employee
from the Company as of the date of termination. In addition, the Company shall
provide to the Employee 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 Employee participated during the term (together with
the lump-sum payment, the "Accrued Rights").
(b) Severance Payment. The Company shall pay the Employee as a
severance payment, the Base Salary in effect on the date of termination, in
accordance with the Company's regular payroll schedule, for a period of one (1)
year following the date of termination (the "Severance Period").
(c) Equity Rights. As of the date of the Employee's
termination under this paragraph, Employee shall be entitled to: (1) any vested
portion of the Time-Vested Option, which shall remain exercisable for the full
term thereof; and (2) that portion of the unvested Time-Vested Option which
would have vested had the Employee remain employed for one year beyond the date
of termination, shall become immediately and fully vested and exercisable and
shall remain exercisable for the full term thereof. The remainder of the
Time-Vested Option shall be forfeited.
5.2 Voluntary Resignation or Termination for Cause. In the event the
Employee's employment hereunder is terminated hereunder because of his voluntary
resignation other than for Good Reason or because the Company has terminated the
Employee for Cause, the Company shall pay the Employee and provide him with any
and all Accrued Rights. In addition, any vested portion of the Time-Vested
Option shall remain vested and exercisable for the full term thereof, while any
unvested portion of the Time-Vested Option shall be forfeited.
5.3 Disability; Death. In the event the Employee's employment hereunder
is terminated by reason of the Employee's Disability or death, the Company shall
pay and provide the Employee (or his legal representative or estate) with the
following:
(a) Accrued Rights. The Company shall pay and provide to the
Employee (or his legal representative or estate) any and all Accrued Rights,
including all disability or life insurance benefits as applicable);
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(b) Salary Continuation. The Company shall provide the
Employee (or his legal representative or estate) with continued payment of the
Employee's then-current Base Salary for a period of 12 months.
(c) Equity Rights. As of the date of the Employee's
termination under this paragraph, Employee shall be entitled to: (1) any vested
portion of the Time-Vested Option, which shall remain exercisable for the full
term thereof; (2) that portion of the unvested Time-Vested Option which would
have vested had the Employee remain employed for one year beyond the date of
termination, shall become immediately and fully vested and exercisable and shall
remain exercisable for the full term thereof; and (3) the remainder of the
unvested portion of the Time-Vested Option shall be forfeited.
5.4 Change in Control. In the event of a termination of employment by
the Employee by voluntary resignation or of a termination of employment by the
Company other than for Cause, which occurs within one year following a Change in
Control as defined below, then, Employee shall receive the benefits identified
in 5.3 (a), (b), and (c), and Employee shall also be entitled to any unvested
portion of the Time-Vested Option, which shall become immediately and fully
vested and exercisable and shall remain exercisable for the full term thereof.
For purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred by reason of:
(a) The sale, lease, transfer, conveyance, or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the assets of the
Company and its subsidiaries taken as a whole to any "person" or group of
related "persons" (a "Group") (as such terms are used in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act") other than Xxxxxxx X.
Xxxxxxx and Xxxxx X. Xxxxxx, Xx. (a "Principal") or (1) any controlling
stockholder, 80% (or more) owned subsidiary, or spouse or immediate family
member (in the case of an individual) of a Principal or (2) 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 other "persons" referred to
in the immediately preceding clause (1);
(b) The adoption of a plan relating to the liquidation or
dissolution of the Company;
(c) The consummation of any transaction (including, without
limitation, any purchase, sale, acquisition, disposition, merger, or
consolidation) the result of which is that any "person" (as defined above) or
Group becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act) of more than 35% of the aggregate voting
power of all classes of capital stock of the Company having the right to elect
directors under ordinary circumstances; or
(d) The first day on which a majority of the members of the
Board are not "Continuing Directors", where "Continuing Directors" are either
(1) members of the Board on
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the Effective Date or (2) members of the Board nominated for election or elected
to such Board with the approval of two-thirds of the Continuing Directors who
were members of the Board at the time of such nomination or election, or
two-thirds of those directors who were previously approved of by Continuing
Directors.
ARTICLE VI
Confidentiality and Noncompetition
6.1 Confidential Information. Employee acknowledges that trade secrets
and other proprietary information, observations and data obtained by him while
employed by the Company concerning the business or affairs of the Company
("Confidential Information") are the property of the Company. Therefore,
Employee agrees that he shall not disclose to any unauthorized person or use for
his own account any Confidential Information without the prior written consent
of the Board, unless and to the extent that the aforementioned matters become
generally known to and available for use by the public other than as a result of
Employee's acts or omissions to act. Employee shall deliver to the Company at
the termination of Employment, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computers, computer tapes and
software and other documents and data (an copies thereof) relating to the
Confidential Information, Work Product, or the business of the Company which he
may then possess or have under his control. Notwithstanding this Section 6.1,
Confidential Information may be disclosed pursuant to a subpoena or other order
of a court or administrative body.
6.2 Inventions. Employee agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports, and
all similar or related information which relates to the Company's actual or
anticipated business, research and development or existing or future services
which are conceived, developed or made by Executive while employed by the
Company ("Work Product") belong to the Company. Employee will promptly disclose
such Work Product to the Board and perform all actions reasonably requested by
the Board (whether during or after employment) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
6.3 Noncompete. Employee acknowledges that in the course of his
employment with the Company (i) he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company, (ii)
that his services have been and will be of special, unique and extraordinary
value to the Company, and (iii) that the Company would be irreparably damaged if
Employee 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, Employee covenants and agrees that, during the
employment period and any Severance Period, but in no event less than twelve
(12) months after the termination of employment (collectively, the "Noncompete
Period"), he shall not directly or indirectly, either for himself or for any
other individual, corporation, partnership, joint venture or other entity, own,
manage, control, participate in, consult with, render services for, be a
creditor for or in any manner engage in or render any direct or indirect
services or assistance for any
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business competing with the businesses of the Company, including the Company's
owned and operated radio stations as such businesses exist or have been
identified as potential acquisitions on the date of the termination of
Employee's employment, within any geographic area in which the Company engages
or has agreements pending regulatory approval to engage in such businesses;
provided, however, that in the event Company has terminated Employee without
cause or Employee has resigned for Good Reason, Employee shall not be subject to
the noncompete provisions of this Section 6.3 for the period in which Employee
does not receive any severance payments. Nothing herein shall prohibit Executive
from being a passive owner of not more than 2% of the outstanding stock of any
class of a corporation which is publicly traded, so long as Employee has no
active participation in the business of such corporation.
6.4 Nonsolicitation. During the Noncompete Period, Employee shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company to leave the employ of the Company or in any way
interfere with the relationship between the Company and any employee thereof,
(ii) hire any person who was an employee of the Company at any time during the
Employment Period, or (iii) induce or attempt to induce any customer, supplier,
licensee or other business relation of the Company to cease doing business with
the Company or in any interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company or a Subsidiary.
6.5 Enforcement. If, at the time of enforcement of Article VI of this
Agreement, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum,
period, scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area. Because Employee's services
are unique and because Employee has access to Confidential Information and Work
Product, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
ARTICLE VII
Miscellaneous
7.1. Withholding. All amounts payable to the Employee pursuant to this
Agreement are stated before any deductions therefrom for FICA taxes, state and
federal withholding taxes and other payroll deductions required to be made by
the Company under applicable law. The Company shall have the right to rely upon
an opinion of its regular accountants or other tax advisors if any questions
should arise as to any such deductions.
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7.2. Notices. Any notice required or permitted to be given or made by
either party to the other hereunder shall be in writing and shall be considered
to be given and received in all respects one business day after when hand
delivered, when sent by prepaid express or courier delivery service, or after
deposited in the United States mail, certified or registered mail, return
receipt requested, on the date shown on such return receipt, in each case
addressed to the parties at their respective addresses set forth opposite their
signatures hereto or to such changed address as either party shall designate by
proper notice to the other.
7.3. Severability. If for any reason one or more of the provisions of
this Agreement are deemed by a court of competent jurisdiction to be
unenforceable or otherwise void by operation of law, the remainder of this
Agreement will be deemed to be valid and enforceable and shall be construed as
if such invalid or unenforceable provision were omitted.
7.4. Nonassignment; Binding Affect. This Agreement is based upon the
personal services of the Employee and his rights and obligations hereunder shall
not be assignable. This Agreement shall be binding upon and shall inure to the
benefit of the Employee, the Company and their respective successors, heirs,
legal representatives and assigns.
7.5. Entire Agreement. This Agreement contains the entire understanding
between the parties with respect to the matters set forth herein and therein and
all prior discussions, negotiations, agreements, correspondence and
understandings between the parties (whether oral or written) are merged herein
and therein and superseded hereby. No provision in this Agreement may be amended
or modified other than in writing.
7.6. Waiver of Breach. No waiver by either party hereto of any breach
of any provision of this Agreement shall be deemed a waiver by such party of any
subsequent breach.
7.7 Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of Illinois.
7.8 Survival. Articles V and VI of this Agreement shall survive and
continue in full force in accordance with their terms notwithstanding any
termination of employment.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Address for Notice:
CUMULUS MEDIA INC.:
Cumulus Media Inc.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000 By:/s/ Xxxxxxx Xxxxxxx
Attention: Xxxxxxx Xxxxxxx ---------------------------------
Xxxxxxx Xxxxxxx
Executive Chairman
Address for Notice: EMPLOYEE:
000 Xxx Xxx Xxxx
Xxxxxxxxx, XX 00000 /s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
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