Employment Agreement - Clear Channel Communications Inc. and L. Lowry Mays
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of October 1, 1999, by and between Clear
Channel Communications, Inc., a Texas corporation (the Company), and L. Lowry
Mays (Executive).
IN CONSIDERATION of the premises and the mutual covenants set
forth below, the parties hereby agree as follows:
1. Employment. The Company hereby agrees to continue to employ
Executive as the Chairman and Chief Executive Officer of the Company, and
Executive hereby accepts such continued employment, on the terms and conditions
hereinafter set forth.
2. Term. The period of employment of Executive by the Company
under this Agreement (the Employment Period) shall commence on October 1, 1999
(the Commencement Date) and shall continue through the seventh anniversary
thereof; provided, that, the Employment Period shall automatically be extended
for one (1) additional day each day during the Employment Period unless either
party gives written notice not to extend this Agreement. The Employment Period
may be sooner terminated by either party in accordance with Section 6 of this
Agreement.
3. Position and Duties. During the Employment Period,
Executive shall serve as Chairman and Chief Executive Officer of the Company,
and shall report solely and directly to the Companys Board of Directors of the
Company (the Board). Executive shall have those powers and duties normally
associated with the position of Chairman and Chief Executive Officer of entities
comparable to the Company and such other powers and duties as may be prescribed
by the Board; provided that, such other powers and duties are consistent with
Executives position as Chairman and Chief Executive Officer. Executive shall
devote as much of his working time, attention and energies during normal
business hours (other than absences due to illness or vacation) to
satisfactorily perform his duties for the Company. Notwithstanding the above,
Executive shall be permitted, to the extent such activities do not substantially
interfere with the performance by Executive of his duties and responsibilities
hereunder to (i) manage Executives personal, financial and legal affairs, (ii)
to serve on civic or charitable boards or committees (it being expressly
understood and agreed that Executives continuing to serve on any such board
and/or committees on which Executive is serving, or with which Executive is
otherwise associated, as of the Commencement Date shall be deemed not to
interfere with the performance by Executive of his duties and responsibilities
under this Agreement) and (iii) deliver lectures or fulfill speaking
engagements. During the Employment Period, Executive shall also serve as a
director of the Company.
4. Place of Performance. The principal place of employment of
Executive shall be at the Companys principal executive offices in San Antonio,
Texas.
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5. Compensation and Related Matters.
(a) Base Salary and Bonus. During the Employment Period, the Company shall
pay Executive a base salary at the rate of not less than $1,000,000 per year
(Base Salary). Executives Base Salary shall be paid in approximately equal
installments in accordance with the Companys customary payroll practices. The
Compensation Committee of the Board (the Committee) shall review Executives
Base Salary for increase (but not decrease) no less frequently than annually and
consistent with the compensation practices and guidelines of the Company. If
Executives Base Salary is increased by the Company, such increased Base Salary
shall then constitute the Base Salary for all purposes of this Agreement. In
addition to Base Salary, Executive shall be paid an annual bonus (the Bonus)
as provided for under the Performance Based Compensation Plan of the Company and
any other annual incentive plan maintained by the Company or any successor plans
thereto as determined by the Committee.
(b) Expenses. The Company shall promptly reimburse Executive for all
reasonable business expenses upon the presentation of reasonably itemized
statements of such expenses in accordance with the Companys policies and
procedures now in force or as such policies and procedures may be modified with
respect to all senior executive officers of the Company. In addition, during the
Employment Period, Executive shall be entitled to, at the sole expense of the
Company, the use of an automobile appropriate to his position and no less
favorable than the automobile provided immediately prior to the date of this
Agreement.
(c) Vacation. Executive shall be entitled to the number of weeks of paid
vacation per year that he was eligible for immediately prior to the date of this
Agreement, but in no event less than four (4) weeks annually. Unused vacation
may be carried forward from year to year. In addition to vacation, Executive
shall be entitled to the number of sick days and personal days per year that
other senior executive officers of the Company with similar tenor are entitled
under the Companys policies.
(d) Services Furnished. During the Employment Period, the Company shall
furnish Executive, with office space, stenographic and secretarial assistance
and such other facilities and services no less favorable than those that he was
receiving immediately prior to the date of this Agreement or, if better, as
provided to other senior executive officers of the Company.
(e) Welfare, Pension and Incentive Benefit Plans. During the Employment
Period, Executive (and his spouse and dependents to the extent provided therein)
shall be entitled to participate in and be covered under all the welfare benefit
plans or programs maintained by the Company from time to time for the benefit of
its senior executives including, without limitation, all medical,
hospitalization, dental, disability, accidental death and dismemberment and
travel accident insurance plans and programs. The Company shall at all times
provide to Executive (and his spouse and dependents to the extent provided under
the applicable plans or programs) (subject to modifications affecting all senior
executive officers) the same type and levels of participation and benefits as
are being provided to other senior executives (and their spouses and dependents
to the extent provided under the applicable plans or programs) on the
Commencement Date. In addition, during the Employment Period, Executive shall be
eligible to participate in all pension, retirement, savings and other employee
benefit plans and programs maintained from time to time by the Company for the
benefit of its senior executives.
(f) Stock Options.
(i) During each calendar year of the Employment Period occurring after
December 31, 1999, the Committee shall cause the Company to grant Executive a
stock option to acquire at least 100,000 shares of the Companys common stock
(each, an Option and collectively the Options) at such time(s) as the
Company has historically granted stock options to its senior executive officers
during the year; provided, that, such grants shall be made by at least December
31 of each calendar year occurring after December 31, 1999. Notwithstanding the
foregoing, unless otherwise waived by Executive in his sole discretion,
Executive shall receive no less than the number of Options granted during any
prior year of employment. In addition, to the extent necessary to carry out the
intended terms of this paragraph (f)(i), such number of options shall be
adjusted as is necessary to take into account any change in the common stock of
the Company in a manner consistent with adjustments made to other option holders
of the Company.
(ii) All Options described in paragraph (i) above shall be granted subject
to the following terms and conditions: (A) except as provided below, the Options
shall be granted under and subject to the Companys stock option plan; (B) the
exercise price per share of each Option shall be equal to the last reported sale
price of the Companys common stock on the New York Stock Exchange (or such
other principal trading market for the Companys common stock) at the close of
the trading day immediately preceding the date as of which the grant is made;
(C) each Option shall be vested and exercisable as determined by the Committee;
(D) each Option shall be exercisable for the ten (10) year period following the
date of grant whether or not Executive is then employed; and (E) each Option
shall be evidenced by, and subject to, a stock option agreement whose terms and
conditions are consistent with the terms hereof.
6. Termination. Executives employment hereunder may be terminated during the
Employment Period under the following circumstances:
(a) Death. Executives employment hereunder shall terminate upon his death.
(b) Disability. If, as a result of Executives incapacity due to physical
or mental illness, Executive shall have been substantially unable to perform his
duties hereunder for an entire period of six (6) consecutive months, and within
thirty (30) days after written Notice of Termination is given after such six (6)
month period, Executive shall not have returned to the substantial performance
of his duties on a full-time basis, the Company shall have the right to
terminate Executives employment hereunder for Disability, and such
termination in and of itself shall not be, nor shall it be deemed to be, a
breach of this Agreement.
(c) Cause. The Company shall have the right to terminate Executives
employment for Cause, and such termination in and of itself shall not be, nor
shall it be deemed to be, a breach of this Agreement. For purposes of this
Agreement, the Company shall have Cause to terminate Executives employment
upon Executives:
(i) final conviction of a felony involving moral turpitude; or
(ii) willful misconduct that is materially and demonstrably injurious
economically to the Company.
For purposes of this Section 6(c), no act, or failure to act, by Executive shall
be considered willful unless committed in bad faith and without a reasonable
belief that the act or omission was in the best interests of the Company or any
entity in control of, controlled by or under common control with the Company
(Affiliates) thereof. Cause shall not exist under paragraph (ii) unless and
until the Company has delivered to Executive a copy of a resolution duly adopted
by three-quarters of the Board (excluding Executive) at a meeting of the Board
called and held for such purpose (after reasonable (but in no event less than
thirty (30) days) notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in paragraph
(ii) and specifying the particulars thereof in detail. This Section 6(c) shall
not prevent Executive from challenging in any arbitration or court of competent
jurisdiction the Boards determination that Cause exists or that Executive has
failed to cure any act (or failure to act) that purportedly formed the basis for
the Boards determination.
(d) Good Reason. Executive may terminate his employment for Good Reason
anytime after Executive has actual knowledge of the occurrence, without the
written consent of Executive, of one of the following events:
(i) (A) any change in the duties or responsibilities (including reporting
responsibilities) of Executive that is inconsistent in any adverse respect with
Executives position(s), duties, responsibilities or status with the Company
immediately prior to such change (including any diminution of such duties or
responsibilities) or (B) an adverse change in Executives titles or offices
(including, membership on the Board) with the Company;
(ii) a reduction in Executives Base Salary or Bonus opportunity;
(iii) (A) any requirement that Executive travel on Company business to an
extent substantially greater than the travel obligations of Executive
immediately prior to the date of this Agreement or (B) the relocation of the
Companys principal executive offices or Executives own office location to a
location more than fifteen (15) miles from their location immediately prior to
the date hereof;
(iv) the failure of the Company or any Affiliate to continue in effect any
material employee benefit plan, compensation plan, welfare benefit plan or
fringe benefit plan in which Executive is participating immediately prior to the
date of this Agreement or the taking of any action by the Company or any
Affiliate which would adversely affect Executives participation in or reduce
Executives benefits under any such plan, unless Executive is permitted to
participate in other plans providing Executive with substantially equivalent
benefits;
(v) any refusal by the Company or any Affiliate to continue to permit
Executive to engage in activities not directly related to the business of the
Company which Executive was permitted to engage in prior to the date of this
Agreement;
(vi) any purported termination of Executives employment for Cause which is
not effected pursuant to the procedures of Section 6(c) (and for purposes of
this Agreement, no such purported termination shall be effective);
(vii) the Companys or any Affiliates failure to provide in all material
respects the indemnification set forth in Section 11 of this Agreement;
(viii) a Change in Control of the Company; provided, that, the transaction
contemplated by the Company and AMFM, Inc. shall not be deemed to be a Change in
Control for purposes of this clause (viii);
(ix) the failure of the Company to obtain the assumption agreement from any
successor as contemplated in Section 13(a);
(x) the Company or any Affiliate providing Executive
the notice not to renew the Employment Period as contemplated by
Section 2 hereof;
(xi) any other breach of a material provision of this Agreement by the
Company or any Affiliate.
For purposes of clauses (i) through (vii) and (xi) above, an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company within ten (10) days after receipt of notice thereof given by
Executive shall not constitute Good Reason. Executives right to terminate
employment for Good Reason shall not be affected by Executives incapacity due
to mental or physical illness and Executives continued employment shall not
constitute consent to, or a waiver of rights with respect to, any event or
condition constituting Good Reason.
(e) Without Cause. The Company shall have the right to terminate
Executives employment hereunder without Cause by providing Executive with a
Notice of Termination at least thirty (30) days prior to such termination, and
such termination shall not in and of itself be, nor shall it be deemed to be, a
breach of this Agreement.
(f) Without Good Reason. Executive shall have the right to terminate his
employment hereunder without Good Reason by providing the Company with a Notice
of Termination at least thirty (30) days prior to such termination, and such
termination shall not in and of itself be, nor shall it be deemed to be, a
breach of this Agreement.
For purposes of this Agreement, a Change in Control of the Company means
the occurrence of one of the following events:
(1) individuals who, on the Commencement Date, constitute the Board (the
Incumbent Directors) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to the
Commencement Date whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Director;
(2) any person (as such term is defined in Section
3(a)(9) of the Securities Exchange Act of 1934 (the Exchange Act) and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes, after the Commencement Date, a beneficial owner (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Companys then outstanding securities eligible to
vote for the election of the Board (the Company Voting Securities);
provided, however, that an event described in this paragraph (2) shall
not be deemed to be a Change in Control if any of following becomes
such a beneficial owner: (A) the Company or any majority-owned
subsidiary (provided, that this exclusion applies solely to the
ownership levels of the Company or the majority-owned subsidiary), (B)
any tax-qualified, broad-based employee benefit plan sponsored or
maintained by the Company or any majority-owned subsidiary, (C) any
underwriter temporarily holding securities pursuant to an offering of
such securities, (D) any person pursuant to a Non-Qualifying
Transaction (as defined in paragraph (3)), or (E) Executive or any
group of persons including Executive (or any entity controlled by
Executive or any group of persons including Executive).
(3) the approval by the shareholders of the Company
of a merger, consolidation, share exchange or similar form of
transaction involving the Company or any of its subsidiaries, or the
sale of all or substantially all of the Companys assets (a Business
Transaction), unless immediately following such Business Transaction
(i) more than 65% of the total voting power of the entity resulting
from such Business Transaction or the entity acquiring the Companys
assets in such Business Transaction (the Surviving Corporation) is
beneficially owned, directly or indirectly, by the Companys
shareholders immediately prior to any such Business Transaction, and
(ii) no person (other than the persons set forth in clauses (A), (B),
or (C) of paragraph (2) above or any tax-qualified, broad-based
employee benefit plan of the Surviving Corporation or its Affiliates)
beneficially owns, directly or indirectly, 20% or more of the total
voting power of the Surviving Corporation (a Non-Qualifying
Transaction); or
(4) Board approval of a liquidation or dissolution of
the Company, unless the voting common equity interests of an ongoing
entity (other than a liquidating trust) are beneficially owned,
directly or indirectly, by the Companys shareholders in substantially
the same proportions as such shareholders owned the Companys
outstanding voting common equity interests immediately prior to such
liquidation and such ongoing entity assumes all existing obligations of
the Company to Executive under this Agreement.
7. Termination Procedure.
(a) Notice of Termination. Any termination of Executives employment by the
Company or by Executive during the Employment Period (other than termination
pursuant to Section 6(a)) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 14. For purposes of this
Agreement, a Notice of Termination shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Executives employment under the provision so
indicated.
(b) Date of Termination. Date of Termination shall mean (i) if
Executives employment is terminated by his death, the date of his death, (ii)
if Executives employment is terminated pursuant to Section 6(b), thirty (30)
days after Notice of Termination (provided that Executive shall not have
returned to the substantial performance of his duties on a full-time basis
during such thirty (30) day period), and (iii) if Executives employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within thirty (30) days after the giving of such
notice) set forth in such Notice of Termination.
8. Compensation Upon Termination or During Disability. In the event
Executive is disabled or his employment terminates during the Employment
Period, the Company shall provide Executive with the payments and benefits
set forth below. Executive acknowledges and agrees that the payments set
forth in this Section 8 constitute liquidated damages for termination of
his employment during the Employment Period.
(a) Termination By Company without Cause or By Executive for Good
Reason. If Executives employment is terminated by the Company without
Cause or by Executive for Good Reason:
(i) within five (5) days following such termination,
the Company shall pay to Executive (A) his Base Salary, Bonus and
accrued vacation pay through the Date of Termination, as soon as
practicable following the Date of Termination, and (B) a lump-sum cash
payment equal to seven (7) times (the Severance Multiple) the sum of
Executives Base Salary and highest Bonus paid to Executive in the
three year period preceding such termination (including, for this
purpose, any and all bonuses paid to Executive prior to the date of
this Agreement); provided, that, for purposes of this Section 8(a)(i),
Executives Bonus shall be deemed to be no less than $3,000,000; and
(ii) the Company shall maintain in full force and
effect, for the continued benefit of Executive, his spouse and his
dependents for a period of seven (7) years following the Date of
Termination the medical, hospitalization, dental, and life insurance
programs in which Executive, his spouse and his dependents were
participating immediately prior to the Date of Termination at the level
in effect and upon substantially the same terms and conditions
(including without limitation contributions required by Executive for
such benefits) as existed immediately prior to the Date of Termination;
provided, that, if Executive, his spouse or his dependents cannot
continue to participate in the Company programs providing such
benefits, the Company shall arrange to provide Executive, his spouse
and his dependents with the economic equivalent of such benefits which
they otherwise would have been entitled to receive under such plans and
programs (Continued Benefits), provided, that, such Continued
Benefits shall terminate on the date or dates Executive receives
equivalent coverage and benefits, without waiting period or
pre-existing condition limitations, under the plans and programs of a
subsequent employer (such coverage and benefits to be determined on a
coverage-by-coverage or benefit-by-benefit, basis); and
(iii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iv) Executive shall be entitled to any other rights,
compensation and/or benefits as may be due to Executive in accordance
with the terms and provisions of any agreements, plans or programs of
the Company; and
(v) As of the Date of Termination, Executive shall be
granted a stock option to acquire 1,000,000 shares of the Companys
common stock (Termination Option) under the following conditions, (A)
except as provided below, the Termination Option shall be granted under
and subject to the Companys stock option plan; (B) the exercise price
per share of the Termination Option shall be equal to the last reported
sale price of the Companys common stock on the New York Stock Exchange
(or such other principal trading market for the Companys common stock)
at the close of the trading day immediately preceding the Date of
Termination; (C) the Termination Option shall be 100% vested and
exercisable on the date of grant; (D) the Termination Option shall be
exercisable for the ten (10) year period following the Date of
Termination whether or not Executive is still providing services to the
Company; and (E) each Option shall be evidenced by, and subject to, a
stock option agreement whose terms and conditions are consistent with
the terms hereof. In addition, to the extent necessary to carry out the
intended terms of this paragraph (a)(v), such number of Termination
Options shall be adjusted as is necessary to take into account any
change in the common stock of the Company in a manner consistent with
adjustments made to other option holders of the Company. The Company
shall take all action necessary such that the shares of common stock
issuable upon exercise of the Termination Options (and all other shares
of common stock held by Executive) are registered on Form S-4 or Form
S-8 (or any successor or other appropriate forms).
(vi) Notwithstanding the terms or conditions of any
stock option, stock appreciation right or similar agreements between
the Company and Executive to the contrary, and for purposes thereof,
such agreements shall be deemed to be amended in accordance with this
Section 8(a)(vi) if need be as of the Date of Termination and neither
the Company, the Board nor the Committee shall take or assert any
position contrary to the foregoing, Executive shall vest, as of the
Date of Termination, in all rights under such agreements (i.e., stock
options that would otherwise vest after the Date of Termination) and
thereafter shall be permitted to exercise any and all such rights until
the end of the term of such awards (regardless of any termination of
employment restrictions therein contained) and restricted stock held by
Executive shall become immediately vested as of the Date of
Termination; and
(vii) Executive shall be paid a lump sum payment
equal to the amount of compensation or contributions (as the case may
be) by the Company that Executive would have been entitled to receive
(assuming he would have received the maximum amount payable or
contributable under each plan or arrangement for any year) under any
plan or arrangement he was then participating (or entitled to
participate in) for a seven (7) year period following the Date of
Termination; and
(viii) Any and all insurance benefits or policies for
the benefit of Executive shall become the sole property of Executive
and, to the extent applicable, all of the Companys rights therein
(including repayment of premiums) shall be forfeited by the Company
and, to the extent not already made, the Company shall make all
contributions or payments required of such policies for the year of
termination; and
(ix) Any amount payable under this Section 8(a) shall
also include an additional cash payment which shall equal any and all
federal, state and local taxes due upon the provision of any such
benefits or payments thereunder (other than taxes due under the
operation of Section 4999 of the Code which Section of the Code is
addressed in Section 8(e) hereof and, if applicable, shall work in
conjunction with this Section 8(a)(ix)), which shall be payable to
Executive within five (5) business days following his Date of
Termination and such additional payment shall be grossed-up for any
additional taxes due thereon (and any taxes thereon, etc.) in a manner
consistent with the manner set forth in Section 8(e) of this Agreement,
whether or not such Section 8(e) is applicable.
(b) Cause or By Executive Without Good Reason. If Executives
employment is terminated by the Company for Cause or by Executive (other
than for Good Reason):
(i) the Company shall pay Executive his Base Salary,
Bonus and his accrued vacation pay through the Date of Termination, as
soon as practicable following the Date of Termination; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company.
(c) Disability. During any period that Executive fails to perform his
duties hereunder as a result of incapacity due to physical or mental
illness (Disability Period), Executive shall continue to receive his full
Base Salary set forth in Section 5(a) until his employment is terminated
pursuant to Section 6(b). In the event Executives employment is terminated
for Disability pursuant to Section 6(b):
(i) the Company shall pay to Executive (A) his Base
Salary, Bonus and accrued vacation pay through the Date of Termination,
as soon as practicable following the Date of Termination, and (B)
continued Base Salary (as provided for in Section 5(a)) and Continued
Benefits for seven (7) years; and
(ii) the Company shall reimburse Executive pursuant
to Section 5 for reasonable expenses incurred, but not paid prior to
such termination of employment; and
(iii) Executive shall be entitled to any other
rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any agreements, plans or
programs of the Company; and
(iv) Executive shall be paid the amount of
compensation or contributions (as the case may be) by the Company that
Executive would have been entitled to receive (assuming he would have
received the maximum amount payable or contributable under each plan or
arrangement for any year) under any plan or arrangement he was then
participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(d) Death. If Executives employment is terminated by his death:
(i) the Company shall pay in a lump sum to
Executives beneficiary, legal representatives or estate, as the case
may be, Executives Base Salary, Bonus and accrued vacation pay through
the Date of Termination and $3,750,000 (which may be paid through
insurance) and shall provide Executives spouse and dependents with
Continued Benefits for seven (7) year; and
(ii) the Company shall reimburse Executives
beneficiary, legal representatives, or estate, as the case may be,
pursuant to Section 5 for reasonable expenses incurred, but not paid
prior to such termination of employment; and
(iii) Executives beneficiary, legal representatives
or estate, as the case may be, shall be entitled to any other rights,
compensation and benefits as may be due to any such persons or estate
in accordance with the terms and provisions of any agreements, plans or
programs of the Company; and
(iv) Executives beneficiary, legal representatives
or estate, as the case may be shall be paid the amount of compensation
or contributions (as the case may be) by the Company that Executive
would have been entitled to receive (assuming he would have received
the maximum amount payable or contributable under each plan or
arrangement for any year) under any plan or arrangement he was then
participating (or entitled to participate in) for a seven (7) year
period following the Date of Termination.
(e) Additional Payments. (i) Anything in this Agreement to the
contrary notwithstanding, in the event it shall be determined that any
payment, award, benefit or distribution (or any acceleration of any
payment, award, benefit or distribution) by the Company or any entity which
effectuates a Change in Control (or other change in ownership) to or for
the benefit of Executive (the Payments) would be subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the Excise Tax), then the Company shall pay to Executive
an additional payment (a Gross-Up Payment) in an amount such that after
payment by Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in Executives adjusted gross income and the highest
applicable marginal rate of federal income taxation for the calendar year
in which the Gross-Up Payment is to be made. For purposes of determining
the amount of the Gross-Up Payment, Executive shall be deemed to (A) pay
federal income taxes at the highest marginal rates of federal income taxes
at the highest marginal rate of taxation for the calendar year in which the
Gross-Up Payment is to be made, (B) pay applicable state and local income
taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state
and local taxes and (C) have otherwise allowable deductions for federal
income tax purposes at least equal to those which could be disallowed
because of the inclusion of the Gross-Up Payment in Executives adjusted
gross income.
(ii) Subject to the provisions of Section 8(e)(i), all
determinations required to be made under this Section
8(e), including whether and when a Gross-Up Payment is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such
determinations, shall be made by a nationally recognized public accounting firm
that is selected by Executive (the Accounting Firm) which shall provide
detailed supporting calculations both to the Company and Executive within
fifteen (15) business days of the receipt of notice from the Company or
Executive that there has been a Payment, or such earlier time as is requested by
the Company or Executive (collectively, the Determination). All fees and
expenses of the Accounting Firm shall be borne solely by the Company and the
Company shall enter into any agreement requested by the Accounting Firm in
connection with the performance of the services hereunder. The Gross-Up Payment
under this Section 8(e) with respect to any Payments made to Executive shall be
made no later than thirty (30) days following such Payment. If the Accounting
Firm determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on Executives applicable federal income tax
return should not result in the imposition of a negligence or similar penalty.
(iii) As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the
Determination, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (Underpayment) or Gross-Up Payments
are made by the Company which should not have been made (Overpayment),
consistent with the calculations required to be made hereunder. In the event
that Executive thereafter is required to make payment of any Excise Tax or
additional Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly
paid by the Company to or for the benefit of Executive. In the event the amount
of the Gross-Up Payment exceeds the amount necessary to reimburse Executive for
his Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by Executive (to the extent he has received a refund if the applicable Excise
Tax has been paid to the Internal Revenue Service) to or for the benefit of the
Company. Executive shall cooperate, to the extent his expenses are reimbursed by
the Company, with any reasonable requests by the Company in connection with any
contest or disputes with the Internal Revenue Service in connection with the
Excise Tax.
9. Mitigation. Executive shall not be required to mitigate
amounts payable under this Agreement by seeking other employment or otherwise,
and there shall be no offset against amounts due Executive under this Agreement
on account of subsequent employment except as specifically provided herein.
Additionally, amounts owed to Executive under this Agreement shall not be offset
by any claims the Company may have against Executive and the Companys
obligation to make the payments provided for in this Agreement and otherwise to
perform its obligations hereunder, shall not be affected by any other
circumstances, including, without limitation, any counterclaim, recoupment,
defense or other right which the Company may have against Executive or others.
10. Restrictive Covenants.
(a) Confidential Information. Executive shall hold in a fiduciary
capacity for the benefit of the Company all trade secrets and confidential
information, knowledge or data relating to the Company and its businesses
and investments, which shall have been obtained by Executive during
Executives employment by the Company and which is not generally available
public knowledge (other than by acts by Executive in violation of this
Agreement). Except as may be required or appropriate in connection with his
carrying out his duties under this Agreement, Executive shall not, without
the prior written consent of the Company or as may otherwise be required by
law or any legal process, or as is necessary in connection with any
adversarial proceeding against the Company (in which case Executive shall
use his reasonable best efforts in cooperating with the Company in
obtaining a protective order against disclosure by a court of competent
jurisdiction), communicate or divulge any such trade secrets, information,
knowledge or data to anyone other than the Company and those designated by
the Company or on behalf of the Company in the furtherance of its business
or to perform duties hereunder.
(b) Non-Solicitation.Executive hereby agrees, in
consideration of his employment hereunder and in view of the
confidential position to be held by Executive hereunder, that after his
termination of employment in which he is entitled to the benefits set forth in
Section 8(a) hereof and through the second anniversary thereof, Executive shall
not directly or indirectly induce any employee of the Company to terminate such
employment or to become employed by any other radio broadcasting station.
(c) Non-Competition. Executive hereby agrees, in
consideration of his employment hereunder and in view of the
confidential position to be held by Executive hereunder, that after his
termination of employment in which he is entitled to the benefits set forth in
Section 8(a) hereof and through the second anniversary thereof, he shall not be
employed by or perform activities on behalf of, or have an ownership interest
in, any person, firm, corporation or other entity, or in connection with any
business enterprise, that is directly or indirectly engaged in any of the radio,
television, or related business activities in which the Company and its
subsidiaries have significant involvement (other than direct or beneficial
ownership of up to five percent (5%) of any entity whether or not in the same or
competing business.
(e) Blue Pencil. The parties hereby acknowledge that the restrictions
in this Section 10 have been specifically negotiated and agreed to by the
parties hereto and are limited only to those restrictions necessary to
protect the Company and its subsidiaries from unfair competition. The
parties hereby agree that if the scope or enforceability of any provision,
paragraph or subparagraph of this Section 10 is in any way disputed at any
time, and should a court find that such restrictions are overly broad, the
court may modify and enforce the covenant to the extent that it believes to
be reasonable under the circumstances. Each provision, paragraph and
subparagraph of this Section 10 is separable from every other provision,
paragraph, and subparagraph and constitutes a separate and distinct
covenant. Executive acknowledges that the Company operates in major, medium
and small sized markets throughout the United States and North America and
that the effect of Section 10(c) may be to prevent him from working in a
competitive business after his termination of employment hereunder.
(f) Remedies. Executive hereby expressly acknowledges that
any breach or threatened breach by Executive
of any of the terms set forth in Section 10 of this Agreement may result in
significant and continuing injury to the Company, the monetary value of which
would be impossible to establish. Therefore, Executive agrees that the Company
shall be entitled to apply for injunctive relief in a court of appropriate
jurisdiction.
11. Indemnification.
(a) General. The Company agrees that if Executive is made a party or a
threatened to be made a party to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a Proceeding), by
reason of the fact that Executive is or was a trustee, director or officer
of the Company or any subsidiary of the Company or is or was serving at the
request of the Company or any subsidiary as a trustee, director, officer,
member, employee or agent of another corporation or a partnership, joint
venture, trust or other enterprise, including, without limitation, service
with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a trustee,
director, officer, member, employee or agent while serving as a trustee,
director, officer, member, employee or agent, Executive shall be
indemnified and held harmless by the Company to the fullest extent
authorized by Texas law, as the same exists or may hereafter be amended,
against all Expenses incurred or suffered by Executive in connection
therewith, and such indemnification shall continue as to Executive even if
Executive has ceased to be an officer, director, trustee or agent, or is no
longer employed by the Company and shall inure to the benefit of his heirs,
executors and administrators.
(b) Expenses. As used in this Agreement, the term Expenses shall
include, without limitation, damages, losses, judgments, liabilities,
fines, penalties, excise taxes, settlements, and costs, attorneys fees,
accountants fees, and disbursements and costs of attachment or similar
bonds, investigations, and any expenses of establishing a right to
indemnification under this Agreement.
(c) Enforcement. If a claim or request under this Agreement is not
paid by the Company or on its behalf, within thirty (30) days after a
written claim or request has been received by the Company, Executive may at
any time thereafter bring suit against the Company to recover the unpaid
amount of the claim or request and if successful in whole or in part,
Executive shall be entitled to be paid also the expenses of prosecuting
such suit. All obligations for indemnification hereunder shall be subject
to, and paid in accordance with, applicable Texas law.
(d) Partial Indemnification. If Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof,
the Company, shall nevertheless indemnify Executive for the portion of such
Expenses to which Executive is entitled.
(e) Advances of Expenses. Expenses incurred by Executive in connection
with any Proceeding shall be paid by the Company in advance upon request of
Executive that the Company pay such Expenses; but, only in the event that
Executive shall have delivered in writing to the Company (i) an undertaking
to reimburse the Company for Expenses with respect to which Executive is
not entitled to indemnification and (ii) an affirmation of his good faith
belief that the standard of conduct necessary for indemnification by the
Company has been met.
(f) Notice of Claim. Executive shall give to the Company notice of any
claim made against him for which indemnification will or could be sought
under this Agreement. In addition, Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be
within Executives power and at such times and places as are convenient for
Executive.
(g) Defense of Claim. With respect to any Proceeding as to which
Executive notifies the Company of the commencement thereof:
(i) The Company will be entitled to participate therein at its own
expense; and
(ii) Except as otherwise provided below, to the extent that it may
wish, the Company will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Executive, which in the Companys sole
discretion may be regular counsel to the Company and may be counsel to
other officers and directors of the Company or any subsidiary. Executive
also shall have the right to employ his own counsel in such action, suit or
proceeding if he reasonably concludes that failure to do so would involve a
conflict of interest between the Company and Executive, and under such
circumstances the fees and expenses of such counsel shall be at the expense
of the Company.
(iii) The Company shall not be liable to indemnify Executive under
this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any
action or claim in any manner which would impose any penalty or limitation
on Executive without Executives written consent. Neither the Company nor
Executive will unreasonably withhold or delay their consent to any proposed
settlement.
(h) Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final
disposition conferred in this Section 11 shall not be exclusive of any
other right which Executive may have or hereafter may acquire under any
statute, provision of the declaration of trust or certificate of
incorporation or by-laws of the Company or any subsidiary, agreement, vote
of shareholders or disinterested directors or trustees or otherwise.
12. Arbitration. Except as provided for in Section 10 of this
Agreement, if any contest or dispute arises between the parties with respect to
this Agreement, such contest or dispute shall be submitted to binding
arbitration for resolution in San Antonio, Texas in accordance with the rules
and procedures of the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect. The decision of the arbitrator shall be
final and binding on both parties, and any court of competent jurisdiction may
enter judgment upon the award. The Company shall pay all expenses relating to
such arbitration, including, but not limited to, Executives legal fees and
expenses, regardless of outcome.
13. Successors; Binding Agreement.
(a) Companys Successors. No rights or obligations of the
Company under this Agreement may be assigned or transferred except that the
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets 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, Company shall mean the Company as herein before defined and any
successor to its business and/or assets (by merger, purchase or otherwise) which
executes and delivers the 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.
(b) Executives Successors. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive other
than his rights to payments or benefits hereunder, which may be transferred only
by will or the laws of descent and distribution. Upon Executives death, this
Agreement and all rights of Executive hereunder shall inure to the benefit of
and be enforceable by Executives beneficiary or beneficiaries, personal or
legal representatives, or estate, to the extent any such person succeeds to
Executives interests under this Agreement. Executive shall be entitled to
select and change a beneficiary or beneficiaries to receive any benefit or
compensation payable hereunder following Executives death by giving the Company
written notice thereof. In the event of Executives death or a judicial
determination of his incompetence, reference in this Agreement to Executive
shall be deemed, where appropriate, to refer to his beneficiary(ies), estate or
other legal representative(s). If Executive should die following his Date of
Termination while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts unless otherwise provided herein shall be
paid in accordance with the terms of this Agreement to such person or persons so
appointed in writing by Executive, or otherwise to his legal representatives or
estate.
14. Notice. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered either
personally or by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to Executive:
L. Lowry Mays
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
If to the Company:
Clear Channel Communications, Inc.
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
Attention: President
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, Texas
Attention: Michael Dillard
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
15. Miscellaneous. No provisions of this Agreement may be
amended, modified, or waived unless such amendment or modification is agreed to
in writing signed by Executive and by a duly authorized officer of the Company,
and such waiver is set forth in writing and signed by the party to be charged.
No waiver by either party hereto at any time of any breach by the other party
hereto of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The respective rights and obligations of the
parties hereunder of this Agreement shall survive Executives termination of
employment and the termination of this Agreement to the extent necessary for the
intended preservation of such rights and obligations. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Texas without regard to its conflicts of law
principles.
16. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain
in full force and effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
18. Entire Agreement. Except as other provided herein, this Agreement
sets forth the entire agreement of the parties hereto in respect of the
subject matter contained herein and supersede all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or
representative of any party hereto in respect of such subject matter.
Except as other provided herein, any prior agreement of the parties hereto
in respect of the subject matter contained herein is hereby terminated and
cancelled.
20. Withholding. All payments hereunder shall be subject to any
required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.
21. Noncontravention. The Company represents that the Company is not
prevented from entering into, or performing this Agreement by the terms of
any law, order, rule or regulation, its by-laws or declaration of trust, or
any agreement to which it is a party, other than which would not have a
material adverse effect on the Companys ability to enter into or perform
this Agreement.
22. Section Headings. The section headings in this Employment
Agreement are for convenience of reference only, and they form no part of
this Agreement and shall not affect its interpretation.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/Randall Mays
Name: Randall Mays
Title: Vice President
/s/L Lowry Mays
L. Lowry Mays