1
EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement") is made as of October 18,
1993, by and between Westwood One, Inc., a Delaware corporation, having its
principal offices at 9540 Washington Boulevard, Culver City, California
90232-2689 (the "Company") and Norman J. Pattiz (the "Employee").
W I T N E S S E T H
WHEREAS, Employee founded the Company and is now and has since its
inception been its Chairman of the Board of Directors and Chief Executive
Officer;
WHEREAS, Company wishes to assure itself of the continued exclusive
services of Employee in such capacities for an additional five (5) years upon
the terms and conditions set forth herein; and
WHEREAS, Employee is willing to enter into this Agreement upon the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth herein, the parties agree as follows:
1. Employment.
Company shall employ Employee, and Employee shall serve, as the sole
Chairman of the Board and sole Chief Executive Officer during the term hereof.
Employee shall have all powers and authority necessary to enable him to
discharge his duties in the offices which he holds as well as all powers and
authority which are commonly incident to the offices of Chairman of the Board
and Chief Executive Officer of a company which is a major producer and
distributor of programs in broadcast and telecast media. All executives and
employees of the Company shall report to Employee or his designees. Employee
shall have total and final executive, business and creative control over the
Company, subject only to the Board of Directors. Employee shall report only
and directly to the Board of Directors. Company shall use its best efforts to
keep Employee a member of the Board of Directors throughout the term, including
placing Employee on management's slate of nominees for election as a director
at every shareholders' meeting at which his term as a director would otherwise
expire. Employee shall, subject to his election or appointment as such, serve
as a member of such committees of the Board of Directors as the Board of
Directors deems appropriate. If the Board of Directors shall establish an
executive committee (or its equivalent), Employee shall be a member of such
committee.
1
EXHIBIT 10.1
2
Employee shall render his services at the Company's headquarters in the greater
Los Angeles metropolitan area. Employee shall engage in reasonable travel on
behalf of the Company but shall not be required to relocate. Employee shall
have the office, executive assistant and parking place of his choice, and
Employee's office shall be furnished and equipped as Employee chooses generally
consistent with the state of Employee's office immediately prior to the
execution of this Agreement but upgraded as required. No change shall be made
in Employee's duties, functions, responsibilities, powers or authority, all of
which shall remain as immediately prior to the execution of this Agreement.
Employee shall retain all of the foregoing positions, duties, functions,
powers, responsibilities and authority in any successor company by reason of
merger, combination, consolidation, acquisition, organization or otherwise.
2. Term of Employment.
Employee shall be employed for a term of five (5) years beginning
December 1, 1993.
3. Compensation and Other Benefits.
3.1 Salary and Bonus.
The Company shall pay to Employee during the term hereof a base
salary at the annual rates set forth on Schedule 1 attached hereto and
incorporated herein by this reference. Such salary shall be payable in equal
bi-monthly installments during the term hereof. Employee shall also be
entitled to receive cash incentive compensation determined and payable as set
forth in Schedule 2 attached hereto and incorporated herein by this reference.
In addition, within ninety (90) days after the end of each year of the term of
this Agreement, the Board of Directors (excluding Employee) shall meet and
discuss whether any other cash bonus based upon Employee's performance would be
appropriate and shall award Employee such cash bonuses as it may deem to be
appropriate in the exercise of its business judgment. The evaluation of
Employee's performance shall include such areas as creativity, leadership,
decision-making and overall management.
3.2 Other Benefits.
(a) During the term hereof, Employee (and his
dependents where applicable) shall be entitled to participate
and shall be included in any employee benefit plans, including
but not limited to, any group health and life insurance,
disability insurance, pension, profit-sharing, deferred
compensation or similar plans of Company now existing or
established hereafter. In addition, Company shall pay on
behalf of
2
3
Employee or reimburse Employee for any medical, health or dental
expenses incurred by Employee, his dependents or Bonnie Pattiz,
that are not covered by the insurance plans of the Company.
(b) During the term hereof, Employee shall be
entitled to the stock option benefits described in Section 4
hereof.
(c) During the term hereof, Employee shall be
entitled to six (6) weeks of vacation each contract year during
which time his compensation shall be paid in full.
(d) During the term hereof, Company shall provide
Employee with an automobile of Employee's choice and shall pay
for all expenses in connection therewith, including but not
limited to all insurance, repairs, maintenance, gas, oil and
mobile telephone. Employee may, at his election, purchase the
automobile from Company at the automobile's fair market value,
which fair market value shall be deemed to be the value set
forth in the Kelly Blue Book. Company, however, shall pay for
such automobile expenses whether Employee or Company owns the
automobile.
(e) During the term hereof, Company shall pay
all expenses incurred in connection with the performance of
Employee's duties hereunder or in promoting the business of
the Company, including without limitation business-related
entertainment expenses. Further, Company shall reimburse
Employee for all other out-of-pocket expenses, including air
and ground transportation, lodging and other travel expenses,
incurred by Employee in connection with the performance of
Employee's duties hereunder or to promote the business of the
Company on the same basis and to the same extent as provided
to Employee immediately prior to the execution of this Agreement.
(f) As soon as reasonably practicable, to the
extent available at reasonable cost to the Company, the Company
shall purchase, and maintain during the term hereof, indemnity
insurance on behalf of Employee in the amount of not less than
$5,000,000 against any liability asserted against or incurred by
Employee arising out of or related to his employment with
Company.
3
4
(g) Company and Employee shall enter into a
Registration Rights Agreement, of even date herewith, pursuant
to which the Company grants Employee full "piggy back
registration rights" and limited demand registration rights
with respect to any and all of the Common Stock of the Company
("Common Stock") owned by the Employee, substantially in the
form of the Registration Rights Amendment as set forth on
Schedule 3 attached hereto and incorporated herein by this
reference.
(h) Company shall pay all expenses of Employee
(including without limitation all legal, accounting and
financial planning fees and expenses) in connection with
this Agreement.
(i) During the term hereof, Company shall pay
directly or reimburse Employee for up to $25,000 in personal
legal, accounting and financial planning services annually.
(j) During the term hereof, Company shall pay
directly or reimburse Employee for one-half of Employee's home
security system, maintenance and fees.
(k) During the term hereof, Employee shall
receive, at his election, an "Executive Producer" credit
(equal in all respects to best producer or similar credit
provided any other individual) on each entertainment or talk-
oriented programming produced or co-produced by Company
consistent with past practices.
Employee is required to pay any amounts required by Federal,
state or local tax law with respect to the benefits paid to Employee pursuant
to this Section 3.2 and the Company may withhold such amounts from the salary
or other cash compensation payable to Employee hereunder; provided, however,
that, at the election of Employee, such amounts may be paid in shares of Common
Stock which have been registered under the Securities Act of 1933 or, in the
opinion of counsel to the Company, may otherwise be freely traded.
3.3 Salary and Benefit Continuation.
The Company will continue Employee's compensation (base salary
and cash incentive compensation) at the full rate and in bi-monthly installments
for a period of twelve (12) months after Employee is declared permanently and
totally disabled (including by reason of Employee's death) and unable to
perform the duties of Chairman of the Board and Chief Executive Officer of the
Company. Thereafter, the Company will pay to Employee
4
5
seventy-five percent (75%) of Employee's annual salary, payable in bi-monthly
installments, for the remainder of the term of this Agreement (i.e., through
November 30, 1998). Furthermore, in the event of such permanent and total
disability (including by reason of Employee's death), only the benefits
described in Section 3.2(a), 3.2(b), and 3.2(f) shall continue for the balance
of the term of this Agreement; the benefits described in Section 3.2(i) shall
continue for twelve (12) months after the event of such permanent and total
disability; and the benefits described in Section 3.2(g) shall continue in
accordance with the terms of the document described therein.
For purposes of this Section, the determination of whether or
not Employee is declared permanently and totally disabled shall be made by
Employee's physician, by written notice to the Board of Directors. In the
event the Board of Directors disagrees with the determination by Employee's
physician, the Board of Directors shall appoint, at Company's expense, another
physician to make such determination. If the physician so appointed by the
Board of Directors disagrees with the determination made by Employee's
physician, then the two physicians shall appoint a mutually acceptable third
physician, at Company's expense, to make the final determination of whether
Employee is permanently and totally disabled, which determination shall be
binding upon all parties hereto.
3.4. Retirement Benefits.
The Company has previously purchased a policy of key-man
insurance covering Employee, the cash value of which shall be used to fund
annual payments to Employee in the amount of $475,000 per year for 15 years
beginning in the year that Employee reaches age 62. The Company shall pay all
premiums required to keep such policy in full force and effect for as long as
necessary to enable Employee to receive the payments required by this Section
3.4.
3.5 Limitation on Annual Compensation.
Notwithstanding any provision herein to the contrary, the
payment of any remuneration (within the meaning of Internal Revenue Code
Section 162(m)) in excess of $1,000,000 in any taxable year of Employee during
the term hereof which would otherwise be payable to Employee pursuant to this
Agreement in the absence of this Section 3.5 ("Excess Remuneration") shall be
deferred until the first taxable year that the payment of such Excess
Remuneration would not result in the payment by Company to Employee in such
year of remuneration in excess of $1,000,000; provided, however, that this
Section 3.5 shall not apply to the extent that the material terms of the
performance based compensation payable under this Agreement are approved by the
5
6
Company's shareholders prior to the payment of any Excess Remuneration. The
Company shall submit the material terms of the performance based compensation
payable under this Agreement to its shareholders for approval at the 1994
annual meeting of shareholders.
4. Stock Options.
Effective as of the date hereof (the "Date of Grant"), the Company
grants to Employee an option to purchase all or any part of 350,000 shares of
Common Stock (the "Option Shares") under the Company's 1989 Stock Incentive
Plan, as Amended and Restated effective March 3, 1993 (the "Plan"), upon the
terms and subject to the conditions set forth below and in the Plan.
4.1 Term of Option.
Such option shall expire 10 years after the Date of Grant,
unless such option shall have been terminated earlier in accordance with the
provisions hereof.
4.2 Exercisability of Option.
Such option shall become exercisable as to 70,000 of the Option
Shares (an "Exercise Increment") on each anniversary of the date hereof through
and including November 30, 1998, and shall remain exercisable for the term
provided in Section 4.1. Option Shares as to which such option becomes
exercisable pursuant to the foregoing provisions may be purchased at any time
thereafter prior to the expiration or termination of the option.
If a Partial Event of Change or an Event of Change occurs (as
defined in Section 8 hereof), the option shall become exercisable at the
election of Employee in accordance with Sections 8.4 or 8.5 hereof.
4.3 Exercise Price.
The exercise price for each Option Share shall be 100% of the
Fair Market Value (as defined in the Plan) of a share of Common Stock on the
Date of Grant. Employee shall be offered Reload Stock Options (as defined in
the Plan) if and to the extent that any holder of options granted pursuant to
the Plan is offered Reload Stock Options.
4.4 Manner of Exercise.
All or any portion of each Exercise Increment may be exercised
by written notice delivered to the Company stating
6
7
the number of Option Shares with respect to which the option is being
exercised, together with cash or a check in the amount of the purchase price of
such shares, or, at the election of Employee, shares of Common Stock held at
least six months having an aggregate Fair Market Value equal to such purchase
price.
4.5 Termination of Employment.
If Employee's employment with the Company terminates for any
reason other than death or disability, all Option Shares which are then
exercisable may be exercised during the period ending three (3) months after
such termination. If Employee's employment is terminated by death or
disability of Employee, Option Shares which have become exercisable will expire
to the extent not exercised by Employee or his authorized representative (in
the event of disability) or the executor or appropriate representative of
Employee's estate (in the event of death) within one (1) year from the date of
such death or disability. Notwithstanding any provision herein to the
contrary, no Option Share shall be exercisable following the expiration of the
term of the option. For purposes of this Section 4.5, "disability" shall have
the meaning specified in Section 2.6 of the Plan.
The Company's obligation in Section 4.9 to include any Option
Shares in any registration statement then currently used to register the resale
of shares of Common Stock received by other employees pursuant to the exercise
of options granted under the Plan, shall remain in full force and effect until
such time as Employee or his estate has sold the Option Shares pursuant to any
such registration statement.
4.6 Assignment or Transfer.
The option granted hereunder is personal to Employee. Except
for transfers by will or the laws of descent or distribution, or as otherwise
permitted by the Plan, the option may not be transferred, in whole or in part,
to any Person, whether by gift or otherwise. If transferred by will or the
laws of descent or distribution, the option must be exercised by Employee's
executor or other personal representative within the time specified in Section
4.5 hereof.
4.7 No Rights as Shareholder.
Promptly upon receipt of the notice and payment described in
Section 4.4 hereof, the Company will instruct its transfer agent to issue
forthwith a stock certificate reflecting the number of Option Shares purchased
by Employee. Employee shall have no rights as a shareholder with respect to
the Option Shares until the date of the issuance of a stock certificate or
7
8
stock certificates. No adjustment will be made for dividends or other rights
for which the record date is prior to the date such stock certificate or
certificates are issued.
4.8 Adjustments Upon Changes in Capitalization.
The option and the Option Shares shall be subject to adjustment
in the event of certain corporate transactions, including the merger,
consolidation or liquidation of the Company, and certain changes in the
Company' capitalization, including changes resulting from any stock dividend,
subdivision or consolidation of the Common Stock, pursuant to the terms of
Article XI of the Plan; povided,however, that in no event will the option or
the Option Shares be cancelled, in whole or in part, pursuant to Section
11.2(a)(iii) of the Plan.
4.9 Securities Act of 1933.
The Option Shares have been registered with the Securities and
Exchange Commission pursuant to a registration statement on Form S-8 and the
Company will use its best efforts to keep such registration statement current.
Further, Company agrees to include any Option Shares received upon exercise of
the option in any registration statement then currently used to register the
resale of shares of Common Stock received by other employees pursuant to the
exercise of options granted under the Plan, and to use its best efforts to keep
any such registration statement current.
Employee represents and agrees that if Employee exercises the
option in whole or in part at a time when there is not in effect under the
Securities Act of 1933 (the "Act") a registration statement relating to the
Option Shares and available for delivery to Employee a prospectus meeting the
requirements of Section 10(a) (3) of the Act, Employee will acquire the Option
Shares upon such exercise not with a view to their resale or distribution and
that, upon each such exercise of the option, Employee will furnish to the
Company a written statement to such effect on such form as the Company may
request.
5. Non-Competition/Unfair Competition.
5.1 Non-Competition.
During the term of this Agreement, Employee shall not knowingly,
directly or indirectly, engage or participate in any business that is in
competition with the business of the Company. The foregoing obligation of
Employee not to compete with the Company shall not prohibit Employee from
owning or purchasing any corporate securities of any corporation that are
8
9
regularly traded on a recognized stock exchange or over-the-counter market so
long as Employee does not own, in the aggregate, five percent (5%) or more of
the voting equity securities of any such corporation. Notwithstanding the
foregoing, with the consent of the Board of Directors (which consent shall not
be unreasonably withheld), Employee may engage or participate in outside
business activities which do not significantly interfere with the services
required of Employee to the Company hereunder.
5.2 Unfair Competition.
The Company treats certain information, including but not
limited to, information about its affiliated radio stations, marketing
programs, or radio programs, as confidential information (the "Confidential
Information"). Employee acknowledges and agrees that, during the term of this
Agreement, the sale or unauthorized use or disclosure of any Confidential
Information obtained by Employee during his employment with the Company
constitutes unfair competition. Employee promises and agrees not to engage in
unfair competition with the Company during the term of this Agreement.
6. Termination Provisions.
6.1 Termination by Company.
If Employee is not elected to the Board of Directors by the
stockholders of the Company, such failure shall not constitute grounds for the
Company to terminate this Agreement. This Agreement may be terminated by
Company only as provided in this Section and for no other cause or reason:
(a) Upon ninety (90) days' advance written notice,
Company may terminate this Agreement by a two-thirds vote of
the Board of Directors (excluding Employee) for "Cause"
defined only as follows: willful commission by Employee of a
material act (which action first occurs during the term of
this Agreement) of fraud or gross misconduct having a material
adverse effect upon the business of the Company, or
competition by Employee with the Company in violation of
Section 5 hereof, which is not cured or ceased by Employee
within such 90-day period.
(b) Except as otherwise provided herein, this
Agreement shall terminate upon the death of Employee.
(c) Except as otherwise provided herein, this
Agreement shall terminate as of the date Employee is
9
10
declared permanently and totally disabled and unable to
perform the duties of Chairman of the Board and Chief
Executive Officer of the Company.
6.2 Termination by Employee.
This Agreement may be terminated by Employee as follows:
(a) Upon thirty (30) days' advance written
notice, Employee may terminate this Agreement if it is
materially breached by the Company.
(b) Except for the foregoing, Employee may
terminate this Agreement by ninety (90) days' advance
written notice.
(c) Pursuant to Section 11.7 hereof.
7. Indemnity.
Company hereby agrees to indemnify, defend and hold harmless
Employee to the maximum extent permitted by Delaware law, on the terms and
conditions set forth in numbered paragraphs 3 through 15, inclusive, of the
form entitled "Indemnification Agreement" attached hereto as Schedule 4 (with
"Indemnified Party" as used therein deemed to refer to Employee), which
paragraphs are incorporated by reference herein as though set forth in full.
The indemnity provided for herein shall not be deemed exclusive of, or
dependent or conditional upon, any other indemnity obligations running to
Employee, nor shall any other indemnity obligations running to Employee
(including without limitation any indemnity obligations which may arise if
Company and Employee enter into a separate Indemnity Agreement in the form
attached hereto as Schedule 4 or otherwise) be deemed exclusive of, or
dependent or conditional upon, the indemnity obligations contained in this
Agreement. The indemnity obligations contained herein shall survive the
termination of employment of Employee or expiration of this Agreement for any
reason whatsoever, and shall, where appropriate, inure to the benefit of and
cover Employee's estate.
8. Change of Control.
8.1 Partial Event of Change Defined.
For the purposes of this Agreement, a Partial Event of
Change shall be deemed to have occurred as of the date when there is a
reduction in the per share voting power of the Company's Class B Stock held by
Employee, which reduction is not caused by Employee, or directly or indirectly
agreed to by
10
11
Employee in his role as Chief Executive Officer or member of the Board of
Directors of the Company; provided, that if such reduction occurs as a result
of the passage, adoption or amendment of any Federal or State legislation,
rules or regulations, or the adoption or amendment of any rules or regulations
of the National Association of Securities Dealers, Inc., the Partial Event of
Change shall be deemed to occur (or to have occurred) ten (10) business days
prior to the effective date of the legislation, rule or regulation.
8.2 Event of Change Defined.
For purposes of this Agreement, an Event of Change shall
be deemed to occur upon the happening of any of the following events:
(a) Company becomes a Participant in any
transaction or event that contemplates the dissolution or
liquidation of the Company or a substantial reduction in the
business operations of the Company;
(b) Company becomes a Participant in any merger,
consolidation, acquisition or transfer of property or assets
other than one in which it will be the acquirer both in form
and substance;
(c) Company becomes a Participant in any
transaction whereby all or substantially all of the property
or assets of the Company are proposed to be sold or
transferred to one or more Third Parties;
(d) Assuming the prior or contemporaneous
occurrence of a Partial Event of Change and further assuming
no direct or indirect encouragement or involvement by the
Company or Employee,
(i) Any Third Party acquires, whether in one
transaction or more than one transaction, or by
conversion of non-voting securities, beneficial
ownership (whether voting or investment or both) of a
number of the voting securities of Company which, when
added to the shares (if any) of voting securities of
Company already beneficially owned by said Third Party
and/or the affiliates of such Third Party, would
comprise twenty-five percent or more of the voting
power of Company's outstanding securities;
(ii) Any Third Party commences a tender or
exchange offer (whether for cash, securities or other
consideration) for voting securities of Company which,
when added to the shares (if any)
11
12
of voting securities of Company beneficially owned by
such Third Party and/or the affiliates of such Third
Party, would comprise twenty-five percent or more of
the voting power of Company's outstanding securities;
(iii) Any Third Party commences a tender
or exchange offer (whether for cash securities or
other consideration) for non-voting securities of
Company which are convertible into voting securities
and which, if they were converted and if the voting
securities received thereby were added to the shares
(if any) of voting securities of Company beneficially
owned by such Third Party and/or the affiliates of
such Third Party, would result in an amount
comprising twenty-five percent or more of the voting
power of Company's outstanding securities;
(iv) Any Third Party solicits proxies or
consents to remove a majority of the Directors of the
Company and/or to elect a majority of the Directors
of the Company at any meeting of the Company's
stockholders or by written consent.
(e) Any one or more of the events described in
Section 8.2(d)(i) through (iv), inclusive, occur without the
prior or contemporaneous occurrence of a Partial Event of
Change, and subsequently a Partial Event of Change occurs.
8.3 Other Definitions.
(a) "Person" as used herein means a natural
person, corporation, unincorporated entity, trust or any other
entity capable of holding an equity interest in a business;
(b) "Group of Persons" as used herein means two
or more Persons who agree to act together for the purpose of
acquiring, holding, voting or disposing of any securities of a
company;
(c) "Third Party" as used herein means any Person
or Group of Persons other than Employee, his immediate family
or the Company;
(d) Company becomes a "Participant" as used herein
upon the happening of the earlier of the following events:
12
13
(i) Without the approval of Employee,
Company enters into an agreement providing for the
liquidation, dissolution, substantial reduction in
business operations, merger, consolidation,
acquisition, or transfer or sale of property or
assets;
(ii) Without the approval of Employee,
Company's Board of Directors votes to approve, or to
submit to shareholders for approval, any agreement,
plan, resolution, article, certificate, bylaw, or
motion providing for, or approving any agreement for,
liquidation, dissolution, substantial reduction in
business operations, merger, consolidation,
acquisition, or transfer or sale of property or
assets; or
(iii) Without the approval of Employee,
Company or any Third Party announces, by press
release or any filing pursuant to Federal or State
law, rule or regulations, that it intends to enter
into an agreement providing for the liquidation,
dissolution, substantial reduction in business
operations, merger, consolidation, acquisition or
transfer or sale of property or assets.
8.4 Rights Upon Partial Event of Change.
If a Partial Event of Change occurs, immediately at
the election of Employee, the option granted pursuant to Section 4 shall
become exercisable as to one half of the Option Shares as to which such option
has not yet become exercisable.
8.5 Rights Upon Event of Change.
(a) Upon the occurrence of an Event of Change,
immediately at the election of Employee, the option granted pursuant
to Section 4 shall become exercisable as to the Option Shares as to
which such option has not yet become exercisable; provided, however,
that for the purpose of this Section 8.5 the transaction contemplated
by the Letter of Intent dated October 10, 1993 among Employee,
Infinity Broadcasting Corporation and the Company shall not constitute
an Event of Change.
If any of the events constituting an Event of Change
is not in fact finally consummated or otherwise fails for any reason
(including, but not limited to, any affirmative action to counter such
event taken personally by Employee), Employee agrees that the exercise
schedule for the Option Shares shall automatically revert to the
schedule
13
14
described in Section 4.2 hereof, except to the extent that Employee
has already exercised his option to purchase some or all of the Option
Shares.
(b) If, after the occurrence of any Event of Change,
Company terminates this Agreement or terminates the employment of
Employee, Employee (or his estate) shall continue to receive, (in
addition to the rights described in Section 8.5(a) above and without
waiver or prejudice to any other rights or remedies Employee may have
by virtue of any improper termination), the salary compensation (base
salary and cash incentive compensation) Employee would have been
entitled to receive for the remaining term of this Agreement if it had
continued in force for the full period set forth in Section 2 of this
Agreement and if Employee had rendered services during said period.
9. No Mitigation.
In the event of a breach of this Agreement by Company, Employee
shall have no duty or obligation to mitigate damages. Any income and any other
employment benefits received by Employee before or after the breach, expiration
or termination of this Agreement shall in no way reduce or otherwise affect
Company's obligation to make payments and afford benefits hereunder or
Company's liability for damages by virtue of any breach hereof.
10. Representations and Warranties.
Company represents and warrants that:
(a) it has the requisite corporate power and authority to
enter into this Agreement and to perform its obligations hereunder;
(b) the execution and delivery of this Agreement by the
Company and the consummation of the transactions contemplated hereby
have been duly authorized by the Compensation Committee of the Board
of Directors of Company;
(c) the execution and delivery of this Agreement by
Company and the consummation of the transactions contemplated hereby,
including without limitation the issuance, grant and delivery of the
option and the Option Shares hereunder and the conveyance of rights in
connection therewith, are not in violation of or in conflict with, and
will not result in a breach of, the charter or bylaws of the Company
or any material note, bond, mortgage, indenture, deed of trust,
license, lease, judgement, order, decree, statute, rule, regulation,
agreement or other instrument or
14
15
obligation to which Company or any of its properties or assets
are or may be subject.
Company shall indemnify, defend and hold harmless Employee
from any and all liabilities, claims, actions, judgments, costs, penalties and
expenses (including without limitation legal fees) resulting from or relating
to any breach of the foregoing representations and warranties.
11. Miscellaneous Provisions.
11.1 Notices.
All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if personally delivered or sent by prepaid
telegram or first class mail, postage prepaid, registered or certified,
as follows:
If to Employee: Norman J. Pattiz
Westwood One, Inc.
8966 Washington Blvd.
Culver City, California 90232
With Copy to: Don Parris
Gibson, Dunn & Crutcher
2029 Century Park East,
Suite 4100
Los Angeles, California 90067
If to Company: Chief Financial Officer
Westwood One, Inc.
8966 Washington Blvd.
Culver City, California 90232
Either party may change the address to which such
communications are to be delivered by giving written notice to the other party.
Any notice personally given shall be deemed received upon delivery to the
address designated; any notice by mail as provided in this Section shall be
deemed given on the third business day following such mailing; and any notice
given by telegram as provided herein shall be deemed delivered the business
day following the delivery of such notice to the telegraph company for
transmission.
11.2 Entire Agreement.
This Agreement contains all of the terms and
conditions agreed upon by the parties hereto with reference to the subject
matter hereof and, upon its effectiveness, supersedes
15
16
any and all prior written or verbal employment agreements. This Agreement may
not be modified except by a written instrument executed by both parties or
their permitted successors in interest, if any.
11.3 Assignment.
Except as expressly provided herein, this Agreement
shall not be assignable by any party hereto without the prior written consent
of the other party. Subject to the preceding sentence, this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors and assigns and upon any successor to the Company,
whether by merger, combination, consolidation, acquisition, reorganization or
otherwise, as fully as if such successor were a signatory hereto and the
Company shall cause such successor to, and such successor shall, expressly
assume Company's obligations hereunder. The term "Company", as used in this
Agreement shall include all such successors. Whenever this Agreement provides
for any payment to Employee, such payment may be made instead to Employee's
estate (in the event of Employee's death) or to such beneficiary or
beneficiaries as Employee may have designated in a writing filed with the
Company. Employee shall have the right to revoke any such designation and to
redesignate a beneficiary or beneficiaries by written notice to Company (and
to any applicable insurance company) to such effect.
11.4 Counterparts.
This Agreement may be executed in counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same instrument. This Agreement shall be effective as
of the date first above written despite the fact that various dates of
execution by the parties hereto may differ therefrom.
11.5 Waiver.
No action taken pursuant to this Agreement shall be deemed
to constitute a waiver by the party taking such action of complete compliance
with the representations, warranties, covenants and agrees contained herein.
No waiver shall be binding unless in writing and signed by the person making
the waiver. A waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach. Any party or parties may waive or modify performance of any act
which is intended solely for their benefit as long as the party for whom
such act is intended to benefit consents to such waiver or modification in
writing.
16
17
11.6 Applicable Law and Jurisdiction.
The formation, construction and performance of this
Agreement shall be construed in accordance with the laws of the State of
California, except to the extent that the indemnification provisions set forth
in Exhibit B hereof are governed by the Law of the State of Delaware.
11.7 Severability.
Employee and Company acknowledge that they believe
all terms of this Agreement to be valid, binding and enforceable. However, if
any term(s) or provision(s) of this Agreement or the application thereof to any
person or circumstances shall be held invalid or unenforceable to any extent,
the remainder of this Agreement or the application of such term(s) or
provision(s) to persons or circumstances, other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each and
every term of this Agreement shall be valid and enforced to the fullest extent
permitted by law. Notwithstanding the foregoing, if any material right or
benefit of Employee, or obligation owing to Employee, under Sections 4 or 8, or
Sections 3.1, 3.2(b) or (g) is held to be invalid or unenforceable to any
extent, Employee may, at his sole option, by written notice to Company, advise
Company that he wishes to renegotiate some or all of the terms of this
Agreement. If within fifteen (15) business days after receipt of said notice,
Company and Employee have not been able to renegotiate this Agreement to the
satisfaction of Employee, Employee may either declare the Agreement at an end
as though it had expired in accordance with its terms, or reaffirm the
Agreement (except those terms declared to be invalid or unenforceable) in which
case Company and Employee shall continue to render performances hereunder.
11.8 Attorney's Fees.
In the event of any legal action or other proceeding
or arbitration is brought for enforcement of this Agreement, the prevailing
party will be entitled to recover from the other party reasonable attorneys'
fees and other costs incurred in connection with that action or proceeding, and
in any petitions for appeal or appeals therefrom, in addition to any other
relief to which such party may be entitled.
11.9 Arbitratration.
Any dispute or claim in connection with the
interpretation, performance or breach of this Agreement, including any claim
based on contract, tort or statute, shall be settled, at the request of
Employee, in his sole and absolute discretion, by arbitration conducted in
Los Angeles, California
17
18
in accordance with the then existing Rules for Commercial Arbitration of the
American Arbitration Association, and judgment upon any award rendered by the
arbitrator may be entered by any State or Federal court having jurisdiction
thereof. The sole arbitrator shall be a retired or former judge of the Los
Angeles Superior Court. Any controversy concerning whether a dispute is an
arbitrable dispute shall be determined by the arbitrator. The provisions of
California Code of Civil Procedure Section 1283.05 are incorporated into and
made applicable to this Agreement. Depositions may be taken and discovery may
be obtained in any arbitration under this Agreement in accordance with Section
1283.05. In any award, the arbitrator shall allocate against the losing
parties all costs of arbitration, including without limitation the fees of the
arbitrator, and reasonable attorneys' fees, costs and expert witness expenses
of the parties and all costs and expenses in connection with enforcing any
arbitration award. The parties intend that this agreement to arbitrate be
valid, enforceable and irrevocable; provided, however, that if Employee does
not elect to proceed by arbitration, then any dispute or claim shall be
resolved by judicial proceeding solely and exclusively in Superior Court for
the County of Los Angeles, California or the Federal District Court of the
Central District of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
NORMAN J. PATTIZ WESTWOOD ONE, INC.
- --------------------------------
Norman J. Pattiz
(the "Employee")
By: BRUCE KANTER
-------------------------
Bruce Kanter
Executive Vice President
(the "Company")
18
19
SCHEDULE 1
BASE SALARY
Contract Year Amount
------------- --------
First $750,000
Second $750,000
Third $750,000
Fourth $750,000
Fifth $750,000
S-1-1
20
SCHEDULE 2
CASH INCENTIVE COMPENSATION
For each fiscal year of the Company, commencing with the fiscal year
ending November 30, 1994, that the Company meets or exceeds its EBITAD target
as mutually established by the Board of Directors and Employee, Employee will
be entitled to receive cash incentive compensation ("CIC Bonus") as follows:
Fiscal Year CIC Bonus
----------- ---------
1994 $250,000
1995 $275,000
1996 $302,500
1997 $332,750
1998 $366,025
If the termination date of this Agreement is other than the last day
of a fiscal year, Employee will be entitled to a pro-rated CIC Bonus for the
portion of the year preceding the termination date if the EBITAD target is met
through the end of the month ending on or next preceding the termination date.
EBITAD means earnings before interest, taxes, amortization and
depreciation as reported in the Company's Form 10-K for the fiscal year, or, if
for a portion of the year, as approved by the Board based on the Company's
books and records.
The CIC Bonus for any year shall be paid not later than 30 days after
the filing by the Company of its Form 10-K with the Securities and Exchange
Commission for such year, of if the CIC Bonus is for a part of the year, not
later than 60 days after the end of the last month taken into account in
determining whether the EBITAD target is met.
S-2-1
21
SCHEDULE 3
REGISTRATION RIGHTS AGREEMENT
This Agreement is made as of the 18th day of October, 1993, by and
among Westwood One, Inc., a California corporation (the "Company"), and Norman
Pattiz (the "Shareholder").
WITNESSETH
WHEREAS, Shareholder is the owner of the outstanding capital stock of
the Company; and
WHEREAS, in order to induce Mr. Pattiz to enter into an employment
agreement with the Company and to act as chief executive officer of the
Company, the Company, in such employment agreement, agreed to grant to him the
registration rights set forth below;
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, the parties do hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933, as
amended.
"Registrable Securities" means (i) any shares of the Company's Common
Stock or Class B Stock held in the name of the Shareholder or any nominee of
the Shareholder, and (ii) any Common Stock or Class B Stock of the Company
issued as a dividend or other distribution with respect to, or in exchange or
in replacement of, such Common Stock or Class B Stock; provided, however, that
all shares of Class B Stock must be converted into Common Stock before being
registered pursuant to this Agreement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Section 2.1 hereof including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, fees and disbursements of counsel for the Shareholder,
blue sky fees and expenses, and the expense of any audits incident to or
required by any such registration
S-3-1
22
(but excluding the compensation and expenses of employees of the Company which
shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Common Stock by the Company or the
Shareholder.
2. Registration Rights. The Company covenants and agrees as
follows:
2.1 Shareholder's "Piggyback" Rights.
(a) If at any time or from time to time, the
Company shall determine to register any of its Common Stock for its own
account or for the account of any shareholder exercising demand registration
rights, other than a registration relating solely to employee benefit plans,
or a registration relating solely to a Commission Rule 145 transaction or any
Rule adopted by the Commission in substitution thereof or in amendment thereto,
or a registration on any registration form which does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of Registrable Securities, the Company shall:
(i) promptly give to the Shareholder written
notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to
qualify such securities under applicable "blue sky" laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all Registrable Securities
specified in a written request made by the Shareholder within
thirty (30) days after receipt of such written notice from the
Company.
(b) If the registration of which the Company
gives notice is for a registered public offering involving an underwriter,
the Company shall so advise the Shareholder as a part of the written notice
given pursuant to Section 2.1(a)(i). In such event the Shareholder shall
have registration rights pursuant to Section 2.1, and shall be entitled to
participate in such underwriting and to include in such underwriting such
Registrable Securities as provided herein. If the Shareholder proposes to
distribute his securities through such underwriting, the Shareholder shall
(together with the Company and any other shareholder distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the
S-3-2
23
underwriter or underwriters selected for such underwriting by the Company. The
underwriter may determine that marketing factors require a limitation on the
number of shares to be underwritten in order to permit the Company to sell the
full amount of shares desired to be sold by the Company, in which event the
underwriter may exclude all or any portion of the Registrable Securities of the
Shareholder from such registration and underwriting; provided, however, that
the number of such Registrable Securities may only be excluded in proportion to
the respective amounts of other securities proposed to be so distributed
through such offering by all other shareholders other than the Company. If the
Shareholder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the underwriter. The
Registrable Securities so withdrawn from such underwriting shall also be
withdrawn from such registration.
2.2 Shareholder's Demand Registration Rights. Shareholder
may (or, if Shareholder no longer holds any Registrable Securities, the holders
of 51% or more of the Registrable Securities may) on one or more occasions at
any time after the expiration or termination of Shareholder's employment
agreement, by written notice to the Company ("Demand Notice"), demand that
the Company file, and the Company shall file within (30) days of such demand
(or such longer period as may be agreed upon), one or more registration
statements covering not less than 25% of the aggregate number of shares of
the Registrable Securities held by Shareholder (and any other holders of
Registrable Securities) on the date of the first Demand Notice received by the
Company from Shareholder (or any other holders of Registrable Securities)
pursuant to this Section 2.2. Such registration statements) shall be on such
form as shall be appropriate under the Securities Act of 1933, as amended
("Securities Act"), and the rules and regulations thereunder for the sale of
such Registrable Securities and for which the Company then qualifies ("Demand
Registration Statement"). The Company also shall file all registrations,
qualifications and other filings necessary to register or qualify the
Registrable Securities in such states as the managing underwriter or
underwriters or Shareholder (or, if Shareholder no longer holds any Registrable
Securities, the holders of 51% of the Registrable Securities) shall reasonably
request (the "Blue Sky Filing"). The Company shall use its best efforts to
cause the Demand Registration Statement(s) and Blue Sky Filings to be declared
effective on the date requested by the managing underwriter or underwriters (if
any) for the offering, and shall keep the Demand Registration Statement(s) and
Blue Sky Filings effective until the offering has been completed and thereafter
as long as required by the Securities Act and the rules and regulations
thereunder.
S-3-3
24
Shareholder (or transferees of Shareholder holding 51% or more
of the Registrable Securities) shall determine whether Registrable Securities
covered by the Demand Registration Statement(s) will be sold by the holders
thereof in an underwritten offering through a managing underwriter or
underwriters. If Registrable Securities are sold in an underwritten offering,
Company and Shareholder will enter into a purchase agreement or underwriting
agreement with the underwriter(s) selected containing such terms, conditions,
warranties, representations and covenants (including holdbacks) as are
customary for such transactions. If underwriters are used, the managing
underwriter for any offering must be reasonably satisfactory to the Company.
If the underwriter determines that marketing factors require a limitation on
the number of shares to be underwritten, the securities of the Company held by
officers and directors of the Company (other than Registrable Securities) or by
other stockholders shall first be excluded from such registration to the extent
so required by such limitation and if a limitation to the number of shares is
still required, then Shareholder shall so advise all holders of Registrable
Securities whose securities would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities and other securities that
may be included in the registration and underwriting shall be allocated among
all such holders of Registrable Securities in proportion to the respective
amounts of Registrable Securities and other securities held by them at the time
of filing the registration statement.
2.3 Expenses of Registration. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 2.1 and Section 2.2 shall be borne by the Company, and all
Selling Exenses shall be borne by the holders of the securities so registered
pro-rata on the basis of the number of shares so registered.
2.4 Registration Procedures. In the case of each
registration, qualification or compliance effected by the Company pursuant to
Section 2.1 and Section 2.2, the Company will keep the Shareholder advised in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense the Company will:
(a) Keep such registration, qualification or
compliance effective for a period of one hundred twenty (120) days or until the
Shareholder has completed the distribution described in the registration
statement relating thereto, whichever first occurs; and
S-3-4
25
(b) Furnish such number of prospectuses and other
documents incident thereto as the Shareholder may from time to time request.
2.5 Indemnification.
(a) The Company will indemnify the Shareholder,
with respect to which any registration, qualification or compliance has been
effected pursuant to this Section 2, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on (i) any
untrue statement (or alleged untrue statement) of a material fact contained in
any prospectus, offering circular or other similar document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, or (ii) any violation by the Company
of any federal, state or common law rule or regulation applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance, and will
pay for or reimburse the Shareholder for any legal and any other expenses
incurred in connection with investigating or defending any such claim, loss,
damage, liability or action provided that the Company will not be liable to the
extent that any such claim, loss, damage, liability or expense arises out of
any untrue statement or omission based upon written information furnished to
the Company by an instrument duly executed by the Shareholder and stated to be
specifically for use therein.
(b) The Shareholder will, if Registrable
Securities held by the Shareholder are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of, or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other similar document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and will reimburse the
Company for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged
S-3-5
26
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by the Shareholder and
stated to be specifically for use therein; provided, however, that the
obligations of the Shareholder hereunder shall be limited to an amount equal to
the proceeds received by the Shareholder from the sale of Registrable
Securities as contemplated herein.
(c) Each party entitled to indemnification under
this Section 2.5. (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party has acknowledged any such claim or any litigation
resulting therefrom, provided that counsel for the Indemnifying Party, who
shall conduct the defense of such claim or litigation, shall be approved in
writing by the Indemnified Party. The Indemnified Party may participate in
such defense at such party's expense. The failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations herein. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the written consent of the Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff of a release from all liability in respect to such claim or
litigation to such Indemnified Party.
2.6 Information by Shareholder. The Shareholder
participating in any registration shall furnish to the Company such information
regarding the Shareholder and the distribution proposed by the Shareholder as
the Company may request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Section 2.
2.7 Transfer of Registration Rights. The rights to cause
the Company to register securities granted Shareholder under section 2.1 may be
assigned or otherwise conveyed by the Shareholder; provided, that the Company
is given written notice by such transferee, stating the name and address of
said transferee and said transferee's agreement to be bound by the provisions
of this agreement, and; provided, further, that such rights may be assigned or
otherwise conveyed only to a transferee of at least five percent (5%) of the
Registrable Securities now held by the Shareholder effecting such transfer
(approximately adjusted to reflect stock splits, stock dividends or similar
capital adjustments) in a transaction not involving any public offering.
S-3-6
27
3. Miscellaneous.
3.1 Entire Contract. This Agreement constitutes the
entire contract between the parties hereto regarding rights to registration and
no party shall be liable or bound to the other in any manner by any warranties,
representations or covenants except as specifically set forth herein. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties hereto.
Nothing in this Agreement express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement, except as expressly provided herein.
3.2 Governing Law. This Agreement shall be governed by
and construed under the laws of the State of California.
3.3 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles of the Sections and
Subsections of this Agreement are not to be considered in construing this
Agreement.
3.5 Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given and received
upon personal delivery or upon deposit in the United States Post Office, by
registered or certified mail, addressed to each party at the address listed
below:
If to Company: Westwood One, Inc.
9540 Washington Blvd.
Culver City, CA 90230
Attn: Chief Financial Officer
If to Shareholder: Westwood One, Inc.
9540 Washington Blvd.
Culver City, CA 90230
Attn: Norman Pattiz
3.6 Amendment. Any provision of this Agreement may be
amended, waived or modified upon the written consent of the Company and the
Shareholder (or his assignees to whom Shareholder has expressly assigned his
rights under this Agreement).
S-3-7
28
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
WESTWOOD ONE, INC.
NORMAN PATTIZ By BRUCE E. KANTER
- -------------------------- --------------------------
Norman Pattiz Bruce E. Kanter
Executive Vice President
S-3-8
29
SCHEDULE 4
INDEMNIFICATION AGREEMENT
THIS AGREEMENT, dated , is between WESTWOOD ONE, INC., a
Delaware corporation (the "Corporation") and ("Indemnified Party"),
and is made with reference to the following facts:
A. Indemnified Party is a member of the Board of Directors or an
officer of the Corporation and in that capacity is performing a valuable
service for the Corporation.
B. The Corporation and Indemnified Party recognize that the
vagaries of public policy and the interpretation of ambiguous statutes,
regulations, court opinions and the Corporation's Certificate of
Incorporation and By-laws are too uncertain to provide the Corporation's
directors and officers with adequate or reliable advance knowledge or
guidance with respect to the legal risks and potential liabilities to
which they may become personally exposed as a result of performing their
duties in good faith for the Corporation;
C. The Corporation and Indemnified Party are aware of the
substantial growth in the number of lawsuits filed against corporate
directors and officers in connection with their activities in such
capacities and by reason of their status as such;
D. The Corporation and Indemnified Party recognize that the cost
of defending against such lawsuits, whether or not meritorious, is typically
beyond the financial resources of most directors and officers of the
Corporation;
E. The Corporation and Indemnified Party recognize that the legal
risks and potential liabilities, and the very threat thereof, associated
with lawsuits filed against the directors and officers of the Corporation,
and the resultant substantial time, expense, harassment, ridicule, abuse
and anxiety spent and endured in defending against such lawsuits bears no
reasonable or logical relationship to the amount of compensation received
by the Corporation's directors and officers, and thus, poses a significant
deterrent to and results in an increased reluctance on the part of
experienced and capable individuals to serve as directors or officers of
the Corporation;
F. The Corporation has investigated the availability and
sufficiency of liability insurance to provide its directors and
officers with adequate protection against the foregoing legal risks and
potential liabilities and has concluded that such insurance currently
provides both inadequate and unacceptable protection to its directors and
officers, and, thus, it would be in the best interests of the Corporation
and its stockholders to contract with its directors and officers, including
Indemnified Party, to indemnify them to the fullest extent permitted by law
against personal liability for actions taken in the good faith performance
of their duties to the Corporation;
G. Section 145(f) of the Delaware General Corporation Law
(the "DCL") specifically provides that the indemnification and
advancement of expenses provided by Section 145 of the DCL is not exclusive
of indemnification arrangements approved by vote of the stockholders, and
thereby contemplates that separate, enforceable, stockholder-approved
arrangements may be entered into between the Corporation and its directors
or officers with respect to indemnification of such persons;
H. In order to induce and encourage highly experienced and
capable persons such as Indemnified Party to serve as directors or
officers of the Corporation and to otherwise promote the desirable end that
such persons will resist what they consider unjustifiable lawsuits and
claims made against them in connection with the good faith performance of
their duties to the Corporation, secure in the knowledge that certain
expenses, costs and liabilities incurred by them in their defense of such
litigation will be borne by the Corporation and that they will receive the
maximum protection against such risks and liabilities as may be afforded by
law, the Board of Directors of the Corporation has determined, after due
consideration and investigation of the terms and provisions of this
Agreement and the various other options available to the Corporation and
Indemnified Party in lieu hereof, that the following Agreement is not only
reasonable and prudent but necessary to promote and ensure the best
interests of the Corporation and its stockholders;
S-4-1
30
I. The Corporation desires to have Indemnified Party continue
to serve as a director or an officer of the Corporation free from undue
concern for unpredictable, inappropriate or unreasonable legal risks and
personal liabilities by reason of his acting in good faith in the
performance of his duty to the Corporation; and Indemnified Party desires to
continue to serve as a director or an officer of the Corporation; provided,
and on the express condition, that he is furnished with the indemnity set
forth hereinafter.
NOW, THEREFORE, in consideration of Indemnified Party's continued
service as a director or an officer after the date hereof the Corporation
and Indemnified Party agree as follows:
1. Agreement to Serve.
Indemnified Party agrees to serve or continue to serve as a director
or an officer of the Corporation at the will of the Corporation or under
separate contract, as the case may be, for so long as he is duly elected or
appointed or until such time as he tenders his resignation in writing.
2. Maintenance of Insurance.
(a) Subject only to the provisions of Section 2(b) of
this Agreement, the Corporation hereby agrees that, so long as
Indemnified Party shall continue to serve as a director or an officer
of the Corporation (or shall continue at the request of the Corporation
to serve as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and
thereafter so long as Indemnified Party shall be subject to any
possible claim or any threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative, by reason of the
fact that Indemnified Party was a director or an officer of the
Corporation (or served in any of such other capacities), the
Corporation will purchase and maintain in effect for the benefit of
Indemnified Party one or more valid, binding and enforceable policies
of D&O Insurance providing the broadest coverage generally available to
directors and officers of publicly held corporations in an amount of at
least $10,000,000.00.
(b) The Corporation shall not be required to maintain any
such policies of D&O Insurance in effect if such insurance is not
reasonably available or if, in the reasonable business judgment of the
directors of the Corporation, either (i) the premium cost for such
insurance is substantially disproportionate to the amount of coverage
provided or (ii) the coverage provided by such insurance is so limited
by exclusions that there would be insufficient benefit from such
insurance.
3. Indemnity.
Subject only to the exclusions set forth in Section 4 of this
Agreement, the Corporation hereby agrees to hold harmless and indemnify
Indemnified Party:
(a) To the fullest extent provided by (i) Section 145 of
the DCL (exclusive of any amendment thereof limiting or restricting the
power of a corporation to indemnify directors or officers) or other
statutory provision authorizing or permitting such indemnification that
is adopted after the date of this Agreement and (ii) Article V of the
Corporation's By-Laws; and
(b) Against any and all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by Indemnified Party in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action by
or in the right of the Corporation) to which Indemnified Party is, was
at the date hereof or at any time becomes a party, or is threatened to
be made a party, by reason of the fact that Indemnified Party is, was
or at any time becomes a director, officer, employee or agent of the
Corporation, or is or was serving or at any time serves at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
S-4-2
31
4. Limitations on Additional Indemnity.
No indemnity pursuant to Section 3(b) hereof shall be paid by the
Corporation:
(a) with respect to remuneration paid to Indemnified
Party, if it shall be determined by a final judgment or other final
adjudication by a court of competent jurisdiction that such remuneration
was in violation of law;
(b) on account of any suit in which final judgment is
tendered by a court of competent jurisdiction against Indemnified Party
for an accounting of profits made from the purchase or sale by
Indemnified Party of securities of the Corporation pursuant to the
provisions of Secion 16(b) of the Securities Exchange Act of 1934;
(c) on account of Indemnified Party's conduct that is
finally adjudged by a court of competent jurisdiction to have been
knowingly fraudulent or otherwise violative of Section 102(b)(7) of the
DCL; or
(d) in the case of third party proceedings unless it is
determined pursuant to Section 10 of this Agreement or by a court of
competent jurisdiction before which such action was brought, that
Indemnified Party acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of
the Corporation and, in the case of a criminal proceeding, in addition,
had no reasonable cause to believe that his conduct was unlawful. The
termination of any such proceeding by final judgment, final order of
court, settlement, conviction, or upon a plea of nolo contendere, or
its equivalent, shall not, of itself, create a presumption that
Indemnified Party did not act in good faith in a manner which he
reasonably believed to be in the best interests of the Corporation, and
with respect to any criminal proceeding, that such person had
reasonable cause to believe that his conduct was unlawful.
(e) in the case of proceedings by or in the right of the
Corporation, only if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of
the Corporation, except that no indemnification for expenses shall be
made in respect of any claim, issue or matter as to which Indemnified
Party shall have been adjudged to be liable to the Corporation, unless
and only to the extent that any court in which such proceeding is
brought shall determine upon application that, despite the adjudication
of liability, but in view of all the circumstances of the case,
Indemnified Party is fairly and reasonably entitled to indemnity for
such expenses as such court shall deem proper.
5. Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent
that Indemnified Party has been successful on the merits or otherwise, in
defense of any proceedings or in defense of any claim, issue or matter
therein, including the dismissal of an action without prejudice, Indemnified
Party shall be indemnified against all expenses incurred in connection
therewith.
6. Advances of Expenses.
The expenses incurred by Indemnified Party pursuant to Section 3 of
this Agreement in any proceeding shall be paid by the Corporation in advance
at the written request of Indemnified Party if Indemnified Party shall
undertake to repay such amount to the extent that it is ultimately
determined that Indemnified Party is not entitled to indemnification.
7. Repayment of Expenses.
Indemnified Party hereby undertakes that Indemnified Party will
reimburse the Corporation for all reasonable expenses paid by the
Corporation in defending any civil or criminal action, suit or proceeding
against Indemnified Party in the event and only to the extent that it shall
be ultimately
S-4-3
32
determined by a court of competent jurisdiction that Indemnified Party is
not entitled to be indemnified by the Corporation for such expenses under
the provisions of this Agreement or any other agreement containing indemnity
provisions.
8. Continuation of Indemnity.
All agreements and obligations of the Corporation contained in this
Agreement shall continue during the period Indemnified Party is a director,
officer, employee or agent of the Corporation (or is or was serving at the
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise)
and shall continue thereafter so long as Indemnified Party (or his estate)
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal or investigative, by
reason of the fact that Indemnified Party was a director or an officer of
the Corporation or serving in any other capacity referred to herein.
9. Notification and Defense of Claim.
Promptly after receipt by Indemnified Party of notice of the
commencement of any action, suit or proceeding. Indemnified Party will, if
a claim in respect thereof is to be made against the Corporation under this
Agreement, notify the Corporation of the commencement thereof; but the
omission to so notify the Corporation will not relieve it from any liability
which it may have to Indemnified Party otherwise than under this Agreement.
With respect to any such action, suit or proceeding as to which Indemnified
Party notifies the Corporation of the commencement thereof:
(a) The Corporation will be entitled to participate
therein at its own expense; and,
(b) Except as otherwise provided below, to the extent that
it may wish, the Corporation jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with
counsel satisfactory to Indemnified Party. After notice from the
Corporation to Indemnified Party of its election to so assume the
defense thereof, the Corporation will not be liable to Indemnified
Party under this Agreement for any legal or other expenses subsequently
incurred by Indemnified Party in connection with the defense thereof
other than reasonable costs of investigation or as otherwise provided
below. Indemnified Party shall have the right to employ its own counsel
in such action, suit or proceeding but the fees and expenses of such
counsel incurred after notice from the Corporation of its
assumption of the defense thereof shall be at the expense of
Indemnified Party unless (i) the employment of counsel by Indemnified
Party has been authorized by the Corporation, (ii) Indemnified Party
shall have reasonably concluded that there may be a conflict of
interest between the Corporation and Indemnified Party in the conduct
of the defense of such action or (iii) the Corporation shall not in
fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the Corporation. The Corporation shall not be entitled to
assume the defense of any action, suit or proceeding brought by or on
behalf of the Corporation or as to which Indemnified Party shall have
made the conclusion provided for in (ii) above.
The Corporation shall not be liable to indemnify Indemnified Party
under this Agreement for any amounts paid in settlement of any action or
claim effected without its written consent. The Corporation shall not settle
any action or claim without Indemnified Party's written consent. Neither the
Corporation nor Indemnified Party will unreasonably withhold consent to any
proposed settlement.
10. Enforcement.
Any indemnification or advance under this Agreement shall be made no
later than 30 days after receipt of the written request of Indemnified Party
unless a determination is made within said 30 day period by (a) the Board of
Directors of the Corporation by a majority vote of a quorum thereof
consisting of directors who were not parties to such proceedings, or (b)
independent legal counsel in a written opinion (which counsel shall be
appointed if such a quorum is not obtainable), that Indemnified Party has
not met the relevant standards for indemnification set forth herein.
S-4-4
33
The right to indemnification or advances as provided by this Agreement
shall be enforceable by Indemnified Party in any court of competent
jurisdiction. The burden of proving that indemnification or advances are not
appropriate shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors or independent legal counsel)
to have made a determination prior to the commencement of such action that
indemnification or advances are proper in the circumstances because
Indemnified Party has met the applicable standard of conduct, nor an actual
determination by the Corporation (including its Board of Directors or
independent legal counsel) that Indemnified Party has not met the applicable
standard of conduct, shall be a defense to the action or create a
presumption that Indemnified Party has not met the applicable standard of
conduct. Indemnified Party's expenses incurred in connection with
successfully establishing his right to indemnification or advances, in whole
or in part, in any such proceeding shall also be indemnified by the
Corporation.
11. Indemnification Hereunder Not Exclusive.
The indemnification provided by this Agreement shall not be deemed
exclusive of any other rights to which Indemnified Party may be entitled
under the Certificate of Incorporation, the By-Laws, any agreement, any vote
of stockholders or disinterested directors, the Delaware DCL, or otherwise,
both as to action in his official capacity and as to action in another
capacity while holding such office.
12. Partial Indemnification.
If Indemnified Party is entitled under any provision of this Agreement
to indemnification by the Corporation for some or a portion of the expenses,
judgments, settlement amounts, fines or penalties actually and reasonably
incurred by him in the investigation, defense, appeal or settlement of any
proceeding but not, however, for the total amount thereof, the Corporation
shall nevertheless indemnify Indemnified Party for the portion of such
expenses, judgments, settlement amounts, fines or penalties to which
Indemnified Party is entitled.
13. Term.
This Agreement shall be effective as of 12:01 a.m., Pacific Time, on
March 2, 1987. It shall continue in full force and effect until the earlier
of (i) the effectiveness of Indemnified Party's voluntary resignation as a
director or an officer, (ii) the effective date of Indemnified Party's
involuntary removal from office or termination as an officer, (iii) if
Indemnified Party is a director, the election and qualification of his duly
nominated successor, or (iv) Indemnified Party's death; provided, however,
that the term set forth in this Section 13 shall in no way limit the
continuation of indemnity provisions set forth in Section 8 hereof.
14. Separability.
Each of the provisions of this Agreement is a separate and distinct
agreement and independent of the others, so that if any provision hereof
shall be held to be invalid or unenforceable for any reason, such invalidity
or unenforceability shall not affect the validity or enforceability of the
other provisions hereof.
15. Miscellaneous.
(a) This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware. If a court of
competent jurisdiction shall make a final adjudication that the
provisions of the law of any state other than Delaware govern
indemnification by the Corporation of its officers and directors, then
the indemnification provided under this Agreement shall in all
instances be enforceable only to the extent permitted under such law,
notwithstanding any provision of this Agreement to the contrary.
(b) This Agreement shall be binding upon Indemnified Party
and upon the Corporation, its successors and assigns, and shall inure
to the benefit of Indemnified Party, his heirs, estate, personal
representatives and assigns and to the benefit of the Corporation, its
successors and assigns.
S-4-5
34
(c) No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing
signed by both parties hereto.
(d) The section headings have been inserted for
convenience of reference only, and shall not affect the interpretation
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
INDEMNIFIED PARTY WESTWOOD ONE, INC.
By
- ------------------------- -------------------------
S-4-6