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EXHIBIT 10.34
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into on
September 4, 1997, effective January 1, 1998, between Evergreen Media
Corporation, a Delaware corporation ("Evergreen," but to be known, following
the Merger, as Chancellor Media Corporation and referred to herein, both before
and after the Merger, as the "Company"), Evergreen Media Corporation of Los
Angeles, a Delaware corporation (to be known, following the Merger, as
Chancellor Media Corporation of Los Angeles and referred to herein, both before
and after the Merger, as "Los Angeles") and Kenneth J. O'Keefe, an individual
("Employee"). WITNESSETH
WHEREAS, Evergreen and the Executive are parties to an existing
Employment Agreement effective March 1, 1996 and amended March 1, 1997;
WHEREAS, in connection with the merger of Chancellor Broadcasting
Company and Chancellor Radio Broadcasting Company (collectively "Chancellor")
with and into subsidiaries of Evergreen and Evergreen's subsequent change of
name to Chancellor Media Corporation (collectively, the "Merger"), the Company
and the Executive desire the existing Employment Agreement to expire as of
December 31, 1997 and desire to enter into a new employment agreement effective
January 1, 1998;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and obligations hereinafter set forth, the parties agree as follows:
1. Employment. The Company hereby agrees to continue to employ the
Employee and the Employee hereby accepts continued employment from the Company
as the Company's Executive Vice President - Operations for the Term and under
the conditions described herein.
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2. Performance of Duties. During the Term of employment and subject to
the other provisions of this Agreement including without limitation Section 11,
the Employee will devote all of his business time, services and attention to
the Company as its Executive Vice President - Operations and shall perform all
of his duties conscientiously and to the full extent of his abilities. Employee
shall have such duties, powers and authority as are customary for such position
and shall perform such other duties as may be reasonably required by the
Company. Employee shall report to the Company's Chief Executive Officer and
Chief Operating Officer. The Company shall not require Employee to relocate
from his current area of residence. However, Employee understands and agrees
that he will be required to engage in reasonable travel in order to perform his
job duties.
3. Term of Employment. This Agreement shall commence January 1, 1998
and shall continue until December 31, 2000 inclusive, subject to the other
provisions of this Agreement ("Term"). Each "Contract Year" shall commence on
January 1 and end on the December 31 of the same calendar year.
4. Base Salary. Subject to the provisions contained elsewhere in this
Agreement, Company shall pay Employee the following "Base Salary."
PERIOD ANNUALIZED BASE SALARY
1/01/98 - 12/31/98 ("Contract Year One") $500,000
1/01/99 - 12/31/99 ("Contract Year Two") $525,000
1/01/00 - 12/31/00 ("Contract Year Three") $550,000
Base Salary shall be payable, minus all lawful deductions, in accordance with
the Company's standard policy for payment of salary to management personnel.
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5. Potential Bonus Compensation
(a) For each Contract Year during the Term, Employee shall be eligible
to receive an annual bonus (the "Annual Bonus") determined on the basis of the
ratio of Broadcast Cash Flow for such Contract Year to the Cash Flow Target for
such year (the "BCF Ratio") as follows:
(i) if the BCF Ratio is less than 95% then the Annual Bonus
shall be $0;
(ii) if the BCF Ratio is greater than or equal to 95% but less
than 100% then the Annual Bonus shall be $150,000;
(iii) if the BCF Ratio is greater than or equal to 100% but less
than 105% then the Annual Bonus shall be $300,000;
(iv) if the BCF Ratio is greater than or equal to 105% but less
than 110% then the Annual Bonus shall be $400,000;
(v) if the BCF Ratio is greater than or equal to 110% then the
Annual Bonus shall be $600,000.
(b) "Annual Broadcast Cash Flow" for a Contract Year shall mean
station operating income for such Contract Year for the stations owned by the
Company as of the last day of such Contract Year on a consolidated basis
excluding depreciation, amortization and corporate, general and administrative
expense, calculated in a manner consistent with the presentation of "broadcast
cash flow" in the Company's periodic reports filed with the Securities and
Exchange Commission
(c) "Broadcast Cash Flow Target" for each Contract Year shall mean the
amount designated by the Company as the Company's Broadcast Cash Flow Target
for such
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Contract Year and shall be based on the targets established during the
Company's budgeting process for stations owned by the Company at the beginning
of such Contract Year. The Company may modify the Broadcast Cash Flow Target
during the Contract Year to reflect the purchase or sale of stations during the
Contract Year and the cash flow targets for such acquired or sold stations.
(d) Except as provided in Section 9 herein, in order to earn an Annual
Bonus, Employee must be employed by the Company during the entire Contract Year
for which the Bonus applies. Any bonus payments under this Section 5 shall be
paid at the same time annual incentive bonuses are paid to the Company's
executives generally and shall be reduced by deductions authorized by law.
6. Additional Benefits.
(a) General Benefits. During the Term, Employee shall be entitled to
participate in all pension, profit sharing and other retirement plans, all
group health, hospital, life and disability insurance plans, and all other
employee welfare benefit plans in which other executive employees of the
Company at the level of Executive Vice President or below may participate.
Employee's participation shall be on terms and conditions no less favorable
than those terms and conditions which apply to other senior executives of the
Company.
(b) Expenses. The Employee shall be reimbursed for entertainment,
travel and other business related expenses reasonably and necessarily incurred
and advanced by him in performing his duties for the Company, in accordance
with Company policy as it exists from time to time regarding expense
reimbursement.
(c) Vacation. The Employee shall be entitled to four (4) weeks (20
business days) of paid vacation during each year. Selection of days of vacation
shall be taken
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subject to approval of the Company which approval shall not be
unreasonably withheld. Vacations cannot be carried over from year to year and
are forfeited if not taken prior to the end of the year.
(d) Automobile Allowance. During the Term, the Company will provide
the Employee with an automobile allowance of $800 per month or, at its option,
may provide to Employee an automobile for his use which in Employee's
reasonable discretion is acceptable.
(e) Club Dues. During the Term, the Company shall reimburse Employee
for the reasonable membership dues for Employee to belong to an athletic club
and country club of his choice. Such reimbursement shall be in accordance with
the Company's expense reimbursement policy.
7. Stock Options.
(a) Subject to subsection (b), on February 9, 1996 the Company granted
Employee non-qualified stock options ("Options") for the purchase of (taking
account of a subsequent stock split) 150,000 shares of the Class A common stock
of the Company ("Common Stock") with an exercise price (split adjusted) of
$21.33.
(b) (i) To the extent that such Options have not otherwise become
unexercisable, and subject to the Employee's employment under this Agreement on
February 28, 1999, such Options shall become exercisable in full on such date.
(ii) To the extent that such Options have not otherwise become
unexercisable, in the event Employee's employment is terminated
during the Term
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(A) due to Employee's death or Disability (as defined in
Section 9 below), or
(B) due to the Employee's resignation of employment with
the Company following the Company's material breach of this
Agreement which breach is not cured within 30 days following
notice from Employee to Company of such breach,
then as of such date of termination of employment the Option shall be
exercisable as to that portion of the 150,000 shares of Common Stock subject to
the Option equal to the ratio of (x) the number of full months Employee is
actually employed by the Company from and after March 1, 1996 hereunder (and
under the prior Employment Agreement) divided by (y) 36.
(iii) To the extent that such Options have not otherwise become
unexercisable, in the event that
(C) Employee's employment hereunder is terminated without
Cause (as defined in Section 9 below), or
(D) there is a Change in Control (as defined in Section
7(e) below),
all of such Options shall thereupon become exercisable.
(c) In addition, on each of the following dates on which the Employee
is employed hereunder, the Company shall grant him fully exercisable
non-qualified stock options for the purchase of 50,000 shares of Common Stock,
with an exercise price, in each case, equal to the fair market value of a share
of Common Stock on the date of grant:
(i) January 1, 1998;
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(ii) January 1, 1999.
(d) All stock options described in this Section 7 shall be exercisable
for seven years from the date of grant and] shall be subject to: (i) the
approval of the Company's shareholders; (ii) a definitive Stock Option
Agreement ("Option Agreement") between the parties which will set forth all of
the rights, duties, and obligations regarding such stock options; and (iii) the
terms and conditions contained in the Company's 1995 Non-Qualified Option Plan
as amended from time to time in the Company's sole discretion and its
successors ("Option Plan").
(e) "Change in Control" shall mean (i) the sale, lease or other
transfer of all or substantially all of the assets of the Company to any person
or group (as such term is used in Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended); (ii) the adoption by the stockholders of the Company
of a plan relating to the liquidation or dissolution of the Company; (iii) the
merger or consolidation of the Company with or into another entity or the
merger of another entity into the Company or any subsidiary thereof with the
effect that immediately after such transaction the stockholders of the Company
immediately prior to such transaction (or their Related Parties) hold less than
fifty percent (50%) of the total voting power of all securities generally
entitled to vote in the election of directors, managers or trustees of the
entity surviving such merger of consolidation; (iv) the acquisition by any
person or group of more than fifty percent (50%) of the voting power of all
securities of the Company generally entitled to vote in the election of
directors of the Company; or (v) that the majority of the Board of Directors of
the Company (the "Board") is composed of members who (A) have served less than
twelve months and (B) were not approved by a majority of the Board at the time
of their election or appointment.
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(f) "Related Parties" shall mean with respect to any person (i) the
spouse and lineal ascendents and descendants of such person, and any sibling of
such person and (ii) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or persons beneficially holding
an 80% or more controlling interest of which consists of persons and/or other
persons referred to in clause (i) of this paragraph.
8. Company Policies.Except where in conflict with other terms of this
Agreement, Employees shall comply with all reasonable present and future
policies and requirements of the Company in connection with the Company's
business and will fully comply with all requirements, rules and regulations of
the Federal Communications Commission applicable to any phase of Employee's
duties or undertakings.
9. Termination
(a) Death or Disability.This Agreement shall terminate immediately
upon Employee's death or Disability and, subject to Section 7, the Company's
sole obligation will be to pay Employee his Base Salary through the last day
worked and a pro rata share of any Annual Bonus earned for the portion of the
Contract Year which Employee worked prior to such termination. For purposes of
this Agreement, Disability shall mean the Employee's inability to perform the
essential functions of his job because of ill health, injury, physical or
mental disability or for other medical causes for a cumulative total of more
than twelve (12) weeks (whether or not consecutive) during any twelve month
period.
(b) Cause.This Agreement shall terminate without any liability to or
upon the Company other than to pay Base Salary for services rendered prior to
the date of termination if Employee is terminated for "Cause." "Cause" shall be
defined as (i) Employee's theft or embezzlement or attempted theft or
embezzlement of money or tangible or intangible
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assets or property of the Company; (ii) any act or acts of moral turpitude by
Employee which materially and negatively affects the interest, property,
operations, business or reputation of the Company, (iii) Employee's violation
of a federal, state or local law or the rules of the Federal Communications
Commission, any of which materially and negatively affects the interest,
property, operations, business or reputation of the Company, (iv) gross
negligence or material misconduct in the performance of Employee's duties; (v)
Employee's material failure to perform his duties under this Agreement, and/or
(vi) a material breach of this Agreement. Prior to a termination for Cause, the
Company shall give Employee notice of such Cause for termination and, if such
Cause is curable, ten business days during which to cure such Cause to the
Company's satisfaction.
(c) Without Cause.If the Company discharges Employee without Cause
during the Term, then, subject to Section 7, the Company's sole liability shall
be as severance to continue to pay Employee his Base Salary and to provide
health and life insurance coverage (on the same basis that such benefits are
provided to the Company's executive employee) until the earlier of the
expiration of the Term or the date on which Employee becomes employed by
another person or entity in a position providing substantially similar
compensation as provided under this Agreement. In addition, Employee shall be
entitled to a pro rata share of any Annual Bonus earned for the portion of the
Contract Year worked prior to such termination.
(d) Resignation.In the event Employee resigns his employment
hereunder, the Company's sole liability shall be to pay Employee his Base
Salary and any accrued benefits through the last day worked.
(e) Proration.For purposes of Sections 9(a) and (c), the pro-rated
Annual Bonus for the Contract Year in which occurs the Executive's termination
of employment
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shall be equal to the product of the (i) the fraction of such Contract Year
during which the Employee is employed hereunder and (ii) the Annual Bonus, if
any, that would be payable hereunder on the basis of a Contract Year commencing
January 1 of the year of termination of employment and ending on the last day
of the Terminal Month in such year. For the sole purpose of calculating the
pro-rated Annual Bonus, if any, payable pursuant to Sections 9(a), (c) and (e),
the Cash Flow Target for such deemed short Contract Year shall be determined by
the Company in a manner analogous to the determination of Cash Flow Target for
a full Contract Year. "Terminal Month" shall mean the last complete calendar
month ending coincident with or prior to the Executive's termination of
employment hereunder.
10. Confidential Information.
(a) The term "Confidential Information" shall mean information and
data not generally known outside the Company (unless as a result of a breach of
any of the obligations imposed by this Agreement) concerning the Company's
business, including, without limitation, information relating to: (i) the
identities of its customers and their purchasing habits, needs, credit
histories, contact personnel and other information; (ii) suppliers' and
vendors' costs, products, discounts, margins, contact personnel and other
information; (iii) the Company's trade secrets, price lists, margins,
discounts, financial and marketing data, personnel and compensation
information, and business plans; (iv) information or data regarding the
Company's research, techniques, and equipment; and (v) the Company's
programming ideas, formatting, concepts and plans. Employee acknowledges that
the Company has expended substantial time and money to develop Confidential
Information and that all such Confidential Information would be of value to a
competitor of the Company. Confidential Information is solely the property of
the Company.
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(b) Except as otherwise herein provided, Employee agrees that during
the period of his employment by the Company, and thereafter, he will hold in
strictest confidence and will not use or disclose to any person or entity
without the written authorization of the Board or its designated officer, any
of the Company's Confidential Information, except as such use or disclosure may
be required in connection with his work for the Company or by operation of law,
or to the extent that such information becomes known in the public or trade
other than as a result of Employee's actions or failure to act. Employees
understands that this Agreement applies to art work and music, computerized and
written information and to other information, whether or not in written form.
(c) Employee agrees that he will not take with him any Confidential
Information, whether in written, computerized, machine readable, model, sample,
or other form capable of physical delivery, upon or after the termination for
any reason of his employment with the Company, without the prior written
consent of the Board or its designated officer. Employee also agrees that upon
the expiration of the Term, the termination for any reason of his employment
with the Company or at any other time that the Company may request, he shall
deliver promptly and return to the Company all such documents and materials,
along with any other Confidential information and all other property of the
Company and property relating to the Company's suppliers, customers and
business, in his possession or control.
11. Exclusive Services. During the term of this Agreement, the
Employee shall devote his full time, attention, knowledge, skills and efforts
exclusively to the business and affairs of the Company and shall do his utmost
to promote its interest. During such times the Employee shall not, directly or
indirectly, in any manner or capacity, own, manage, consult with, operate,
join, control, be employed full or part time by or otherwise participate in, or
have any
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beneficial interest in, the ownership, management, operation or control of any
business or in any activity which, in the reasonable discretion of the Board or
its designated officer, is competitive with the business of the Company or
which may conflict with the full and faithful performance of Employee's duties
with the Company; provided however, that the ownership of up to one percent of
the outstanding stock of any publicly traded company shall not, in and if
itself, constitute a violation of this Agreement, so long as Employee does not
participate in the management of such company. Employee may spend reasonable
time in charity work and in managing his own investments so long as such
activities do not materially interfere with his duties hereunder. Employee may
also serve on the boards of directors of corporations which do not compete with
the Company with the prior approval of the Board or its designated officer,
such approval not to be unreasonably withheld. The Company acknowledges that
Employee may engage in the limited activities necessary to wind up the affairs
of KISS, L.P.
12. Restrictive Covenants.
(a) Non-Competition. During the Term of this Agreement and for a
period of ninety (90) days after the termination of Employee's employment under
this Agreement for any reason including without limitation the expiration of
this Agreement ("Restrictive Period"), Employee agrees that he will not be
employed by, consult with, perform activities on behalf of, or have an
ownership interest in any radio broadcasting station or any owner or operator
of any radio broadcasting station(s) serving the same Area of Dominant
Influence ("ADI") as any of the radio broadcasting stations which are owned by
the Company or any of its subsidiaries at the time of such employment
termination; provided however, that the ownership of up to one percent of the
outstanding stock of any publicly traded company shall
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not, in and of itself, constitute a violation of this Agreement, so long as
Employee does not participate in the management of such company.
(b) Non-Solicitation. The Employee agrees that during the Restrictive
Period, he will not on his own behalf or on behalf of any other person or
entity, without the express written consent of the Board or its designated
officer, solicit or attempt to solicit any then current employee,
representative or on-air talent of the Company to terminate or modify his or
her employment or business relationship with the Company.
13. Indemnification. The Company will provide defense costs and legal
counsel to the Employee and will indemnify him from any liability if he is sued
in connection with the performance of his duties as Executive Vice
President-Operations for the Company to the extent such indemnification is
permitted under the laws of the state of Delaware as in effect at the time of
the subject act or omission; provided that this indemnification shall not
extend to allegations of willful and wanton misconduct or gross negligence by
the Employee. In the event that the Company advances any fees or expenses for
the benefit of Employee under this Section 13 and it is determined by a court
of competent jurisdiction that Employee was not entitled to such advances or
indemnification under the circumstances, Employee agrees to repay any amounts
advanced by the Company.
14. Non-Waiver of Rights. Failure to insist upon strict compliance with
any of the terms, provisions or covenants of this Agreement shall not be deemed
to be a waiver of any such term, provision or covenant, nor shall any one or
more waivers or relinquishments of any rights or powers provided in this
Agreement be deemed to be a waiver or relinquishment of such rights or powers
at any other time.
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15. Remedies and Arbitration.
(a) Remedies. Employee acknowledges that Sections 10 through 12 of
this Agreement have been specifically negotiated by the parties and are
reasonable and necessary for the protection of the Company's confidential
information and its legitimate business interests. The Employee acknowledges
that any violation of any of Sections 10 through 12 could not reasonably and
adequately be compensated by damages in an action at law, and therefore, a
breach or threat of breach of such Sections shall give the Company, in addition
to other remedies it may have, the absolute right to injunctive or other
equitable relief. Certain of the terms of this Agreement, including without
limitation Sections 10 through 12 and 15, shall remain effective and shall
survive any termination or expiration of this Agreement.
(b) Arbitration. Except for the Company's rights to damages and/or
injunctive relief under Section 15(a) above, relating to a violation of any of
Sections 10 through 12 above, any disputes or disagreements between the parties
relating to the terms of this Agreement or the alleged breach thereof shall be
submitted to arbitration. If the parties are unable to agree upon an arbitrator
in 7 days, an arbitrator shall be selected from a panel furnished by the
American Arbitration Association in accordance with its procedures. The award
of the arbitrator shall be final and binding upon all parties. The arbitrator
shall have no authority to order specific performance or to add to, subtract
from or modify this Agreement, but shall have the authority only to interpret
this Agreement. The arbitrator's fee and other common expense of the
arbitration shall be borne equally by the parties, except that each party shall
be responsible for its own attorney's fees and the fee of the court reporter,
if any.
(c) Notice. All notices required to be given or which may be given
under this Agreement shall be in writing and shall be deemed given when
personally delivered or
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four (4) days after being mailed by certified mail, postage prepaid, return
receipt requested, addressed to the parties as follows:
If to the Company:
Evergreen Media Corporation
875 North Michigan Avenue
Chicago, Illinois 60611
Attention: James de Castro
with a copy to
Jed W. Brickner
Latham & Watkins
885 Third Avenue
Suite 1000
New York, NY 10022
If to Employee:
Mr. Kenneth J. O'Keefe
76 Royalston Road
Wellesley, Massachusetts 02181
Either party may change the address to which such notices are to be addressed
by notice thereof to the other party in the manner set forth above.
16. Amendments: Any amendment of this Agreement must be in writing and
signed by the parties.
17. Construction. This Agreement shall be construed in accordance with
the laws of the State of Illinois.
18. Severability.
(a) If any provision of this Agreement is ruled to be invalid or
unenforceable, the remaining provisions shall not be affected.
(b) If any court of competent jurisdiction determines that the scope,
area, or time limits contained in any of the restrictive covenants in this
Agreement are
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unenforceable under the circumstances then existing, the court shall modify
such provision to the maximum scope, area or time limit reasonable under such
circumstances.
19. No Conflicting Contracts. Employee represents and warrants that he
is not subject to any non-compete covenant in any contract and no contract,
agreement, other commitment or matter exists which would prevent his full
performance of this Agreement.
20. Successors and Assigns. The Company shall have the right to assign
this Agreement to any affiliated entity or any successor-in-interest to the
Company or its assigns only with the mutual consent of the parties.
21. Entire Agreement. This Agreement reflects the entire understanding
of the parties and supersedes any and all other agreements, either oral or
written, regarding Employee's employment by the Company. This Agreement may be
executed in one or more counterparts.
22. Prior Employment Agreement. The prior Employment Agreement shall
remain in full force and effect through December 31, 1997 and thereafter,
except as specifically set forth herein, shall be of no force and effect.
23. Facility of Payment. All cash payments to be made by the Company
to or on behalf of the Executive hereunder shall be an obligation of and made
by Los Angeles.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date and at the place hereinabove specified.
Evergreen Media Corporation
By:
-------------------------------------
By: Scott K. Ginsburg
Title: Chief Executive Officer
Evergreen Media Corporation of Los Angeles
By:
-------------------------------------
By: Scott K. Ginsburg
Title: Chief Executive Officer
-----------------------------------------
Kenneth J. O'Keefe
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