SBC Memo SBC
604 N. Kiwanis, Sioux Falls, SD 57104
Phone 6O5/334-l1l7 Fax 6O5/338-0326

DATE: 3/22/92

TO:Bill Grady Ft Doddge

FROM:Dean Sorenson

RE:Tenured Compensation/Stock Plan

Grady Ft Dodge

Bill:

I don't believe I've addressed the above plan.

Here's my suggested document.

Review and we'll talk....3/19....when I visit Ft Dodge.

For the value, here's what I did. In past 3-1/2 years I've tossed
over $3OOK cash into those stations. Ray Lamb matched everything
til last October. I'd like $100 credited for that investment. And
then there's a $512K note et First Interstate-Ft Dodge. That makes the $6l2K.

Hope you feel that's a fair amount.

Thanks. . . Dean

FTD2.LTR 3/12/92

EMPLOYMENT and INCENTIVE COMPENSATION AGREEMENT

Ttsrs rGREErrrENr l.e .ud.\lru cntered Lnto thie

\QR[L

$

day of

, lel? H, .ou betueen trilllam Grady

,

hereinafter referred to as EtIpIOyEE, rnd KVFD-AM/KUEL-FM

, a South Dakota corporatLon yhose
beadguarters Ls Sioux Fa1le, South Dakota, hereinafter referred to
es EI.IPLOYER. It ls understood KVFD/KUELT oS of this date
ls owned by Dodge Comm, and Ioua Corporation, with the
same ownershlp as Sorenson Broadcasting.
IIHEREI'S, EI|PLOYER le engaged ln the radio broadcaet lnduetry;
end

IHEREI'S, EIiPIOIEE has a grcat deal of crpcrlcnce ln the redio

broadcast industryl rnd
TEEREAS, EttProyER ls ln aecd of EtproyEErg rervl.ces ee

hereLnafter eet forth; and
TBEREAS, EITIPT0YEE le uilltng to be cnployed by tHprI)yER, rnd

Dl,tPtoyER Le rilung

to cnploy Ettpr,oyEE upon the tenae rnd conditlons hereLnafter lct lorthl
rot TEEREFORE, ln conslderatlon of thc lutual covenants
hereLnaftcr ret forth Bt{prorER end l}tproyEE agree ra follors:
. EECrION ONE
lmplorment
EIiPLOYBR hereby cnproya, Gngages ud

ranager of radio rtation(sl
IUPI,OyER and locatcd ln

hLrcs EltproyEE ae

KVFD/KUEL

ovned by ttre

Fort Dodge, Iowa

As nanager of raid radlo rtatlon(rl ElfpI,oyEE rhall be rcsponsiblc

for the hiring and firlng of cmployees, procurement of radio
advertieing accounte, cetabrLshnent of guidell.nes for radio
Progr.qming and for ruch other duties and responsibilltLes as rre
normally, handled by radio rtatLon Danagera. Elrpr,oyEE hercby
accepta'and agrees to ruch hirlng and does further agree to devote
to ttre EI{PLOYER his fulI tlrre and efforts to provlde the aervLces
above set forth.
SECTION TTTO

Term of Aqreement

Thie Agreement rhall cmence on the datc bereof rnd rha1l
contLnue untll teroinated as bereinafter ret forth.

Bouever,

El,tPrPYEErs cnprolznent Lg et ttre uill

of EltproyER rnd aottring
contal.ned bcrcln rhall be deened ln rny ranner to glvc Erpu)yEB
any rlght to contLnucd cmplolment.
SEErION IBREE

neation of

(Al EIIPI,OYER rhal pay EI{PIOYEE and
from
ln full pa
t for EIIPI,OYEE rs
baee
nratlon et the ra of

rhall tccept
rvlcce bercunder,

the tem of thfu
perccnt (_fl

of,

rtatlon(e!,
be determLned

aet cash flor

$r,+*
cenent, plua
the radio
rhall

of the last day of

payable ulthln nl\ty

(901 days ttrereof . J for the purposes of thta

Agree'ent, caeh flow le defined es the operatlng lncone lLnug
operatlng Gxpenses of ttre rtatlon (e) deter:uined on rn lccrual

basis uith depreciation, lnterest and anortization added back.
?he base conpensation paid to EttpIoyEE shall be considered as an
Cxpenae ltem for purposes of arrivlng at the net operating income

of the. r3dl1o. gtation(s).
(B) Additlonally, lt Ls recognized that El.rpLoyEE ehall be
devotLng ful} time to the growth and developrnent of the radio
rtatLon(el, and as a result of these efforts and other factors not
Deceaaarl.ly enumented hereln, the atation(el ghould increase ln
value. ls additlonal compensation to EITIPIOYEE, BttpIOyER agrees to
provlde to EIiPI,OYEE for EIIPIOYEE'S contributlon touard the grorth
end developnent of the ttatLon(s) additional cmpensation deterlined as follors:
t. Before rny provLslon of ttris Agrcenent provrding for
edditlonal conpeneatLon rhall rpply ExPIOxBE rtritt have
completed thrppycars ee [anager of the radio
rtation (sl .
Employment began LZ/LO/9I.
2. llhe baae year for the purposeE of this calculatlon rhall
be the period from
through
.
The
Dase
Nnf
net
billings
s rhall
rhall be
.
,Afull,inahle
(gross btrrings, less .gency couniaslona
the
net billlng
and aet bad debts) for the base year. ihe base cash
frow rharl be the cash flow as determined in rectron (Al
lbove for the base year.

3.

lfter detcrminlng the base year net btlllngs end the
base year cash flow, a base ycar value rill be deterlined ts follors:
Basc year act billlng

I

Base year net cash flor

x --6--0.-

r.5=

ITOTAT:

x .50
ji12,000

Base year value
Valued

a.

for Purposes of this agreement
ln the event the rtatlon(e) are rold to a third party
purchaser during the perlod of EUPI,OYEE rS eqrlolment3

specified herein, EUPIOYEE ehall receive as additional

conpensation under thie plan Twenty Five percent
l_22 U of that portion of the-s5$Ece iepresenting
eial-rrcrease l.n tle value over the baie year valuation-

calculated as follows:
l.
fhe base value ghall be detemined in accordance
uith Section Three (8, (3) of ttris Agreement;

b.

c.

d.

5.

The base value shall be lncreased by any capital
expenditurea nade aince ttre first day of the year
following the end of the base year and by the

cunulative negative cash flow, lf any, for the
period comnencing rith the first day of the year
folloulng the base year as such base year is
detemined ln accordance rith the provieLons of
Section Three (B) 121 of ttris Agreement. fhe rnount
lo determined rhall become the adjustcd base valuei
'llhe adjusted base value as deternined ln Section
lfhree (B) (a) (b) of this Agreement shall be rubtracted fron the rales price to determine the
lncrease Ln value for the purposes of this portion
of ttrc lgrecment.

rhall reccive ttre edditl.onal coupcnBatLon
upon the rame terms BIiPIOYER receives for ttre rale

BITTPIOYEE

of the rtatLon(s) on I prorata basis. In other
rords EUPI,OYERTE obllgation to pay ttre edditional
conpensation Le governed by the tane terms as the
thlrd party purchase rgreetrent and then only to the
cxtcnt that euch palzments are lctually rccclved.
c. ft la understood ttrat for the purpoBes of calculatlng both 'lale price' end 'adjusted base yalue.,
caeh on hand and lccounts receivable are r1rcclflcally
cxcluded. fhusr rDy nrsr lncluded ln the
t3alc price'
for cither caeh on hand or tccountg
recelvable rhall be deducted prlor to aaking any of
the calculatlons ret forth rbove.
t. tn uy rltuatlon uhere the rtatft, or ttatlon in
question has been recently purchased or constructcd
rnd no base lrcriod La calculable for EltpLOyERrS
osnerrhip the total cost of ecguisition of euch
rtation(s) rhall bc deemed ttre base value for
purposes of thle provision.
fn the cvent that this eurplolzarent contract ls tenninated
by the EI,IPIOYER for any reaeon other than those ret
forth hereafter, ttre EIIPLOYEE rhall be cntltled to
tddltlonal compensatl.on as follows:

I

!.

b.

The value of the atatlon(sl for the purposes of
this Agreement shall be eomputed as ehoyn in
Section Three (B) above, Gxcept that the net
billings and the net cash flow amounts ehall be the
average of the i-mrediate preceding three complete

fiscal years or the conpleted fiecal years followlng the base year Lf three have not been completedrFrom the anount determined ln (a) above, shall be
subtracted the adjusted base value determined Ln
accordance with Section three (B) ({l (b) above.
The anount so determined shall be the increase in
value for the purpose of this portion of the

AgreenentS
G.

d.

6.

BI,IPIOYEE thall

then be cntitled to Tr.renrv trivs
(-:rr)
of the exceas, l.f any, ciilculated
Percent
ln accordance ylth (b) above payable 1n
Twentv Four (24)
palments the first belng due
uithin 3I days of the termlnatlon and e rLuilar
amount ffiE
end of each additional ,I
days,
until paid Ln fuII, uithout interest.If EIIPIOYEE ls teroinated for good end just cauae
for any rct of theft, liaapproprlation or disloyalty toards EIIPLOYER, then thc provLsl.ons ln thls
Agreeuent relatlng to additional cmpenaatl.on rhall
be deened to be rupcraeded end uaived end lltPIrYEE
rhall be cntltled to aothing Ln tlre form of tddi-

tLonal compenBation.
In the rvent EI{PIOYEE ls disabled as ls hereinafter ret
forth or ln ttre cvent of EI{PIOyEETS death during the
terur of this Agrcement, he shall be entitled to actditional conpensatlon as dctemined ln Eectlon Three (8,
(51 of this Agreernent.
EI.IPIOyEE rhall

the folloring:

!.

be deemed disabled upon the occurrcnce of

thall have ruffered lental or physical
lnJury or lllness vhich has kept hin fron perforulng his dutics hereln for a peifoa of three

EI,IPIOYEE

consecutivc aonths;
b.

7.

It rhall be detcrnlned by rcaaonable and competcnt
aedical cvidence that lt la unllkely that EII{PIOYEE
ulII be able to return to hls duties hereunder ln
the foreseeable futurc a6 a dlrcct result of the
lental or physical lnjury or lllnees.

If EIfPIOYEE yoluntarily tcrnlnates his cnplolment he
rhall be entitled to additlonal cmpensatlon calculated
Pursuant to Sectlon Three (B) (51 of ttris Agrcement,
5

cxcept that the rtght to receive this additional contrrcnaation ghaIl vest on the first day of the firat year
ilnnedlately ruccceding the base period and EllpLoyse
alqrr.onry be entitred to recelve that portion of ttre
additlonal compensation based upon gUpLoyprrs continuoua
years_of service 1n the position defined ln this AgreeDent from and after the date of this Agree'rent acc5rding
to' the folloring fomula:
Conpleted

Vested
Percentage

Iears of Service
I

0t
0r

2
3

30s

a0r

a

5

503

60r
70r
80r
90r

5

7

I

9

10

1003

A partial year of servLce eharl be decroed a furl year of
rervlce under ttris foluula lf E{PIOyEE uorked forEI,IPIIYER for 180 days durl.ng that partlal year. All
other_partiar years rervlce rhalr be dieregarded under
ttrls formula.

rny paynent due-pursuant to thls Agreenent for voluntary
termination rhall be aade ln annuar Lnstalr.nents rl.th
ten lrcrcent (_l!_f) down tt the tine of terminatlon
and rith the re'nainder payable over two years. fhe
deferred portlon rharl beir lnterestat-trre-rate of
oight percent (8tl per annun.
8.

rf EttPLoYEE le tranefcrred to other radio prolrcrtlea or

busineaees orned by ElrproyER elr rlghts to eaartlonal
cotrpen8atlon pursuant to thla Agreenent ahall be deterained ag of the date of transfei, but rhall not be patd
qllll any of the avents rpecified tn Eection fhree ig)
(5r, (6, or (71 of thlc Agreenent tball have occurred
end palment rhall then be aade as rpeclfied in thlr
Agreement for ttre quallfylng cvent. Eouever, all
rubsequent years of ElrtproyEErs continuoue tervice ulth
E{PIOYER after t}re trangfer rhall bc congLdered 1n
determinlng the 'Vceted perccntage. as defined i'n
Sectlon Three (Bl l7l of ttrie Agrcetrent. Thue upon

transfer ElrPLoYEErs'additional conpensation, rrrltt ue
dcternincd but the .vested percentage. shal1 only be
determined uhen appllcabre based upon contlnuous ycarg
of rervlce from ttre date of thls agre.'nent yhethel
beforc or after the date of transfir.
6

EECTION FOUR

Other Emplorment

It le agreed by EHPLOYEE that the cnploynent herein egrccified
ehall be fulltime enplolznent nnd Bt{pLOyEE eha1l aaintain no
bueinees lnterest or outslde actlvity during the courae of thie
contract uhich conflicts directly with EI.tpLoyERrS busl.negE or
confricts rith Eupr,oyEErE duties aa a furrtine Danager.
SECTION FIVE

Covenant Not To Compete

rn consideratl.on of trre cnploynent obtaincd by Eltpr,oyEE
hereunder and aII other conslderation aforesaid, EH,pu)yEE covenants end agreea aa folloss:
l.
rn the cvent of EltproyEErg termination as ranager
hereunder, Et'tproyEE rharr not for a period of i,hree (3)
years frour the date of such tcroinatlon cngage ln the
radio broadcast or broadcastlng bugLnees ai in lndividulI, partner, rtockholder, direitor,
clcrt,
principal, egent or cnpl0yee or any officcr,
ottrer
riration
or
capacLty yhatgoever ln ridius of 50 miles
nf trnrt Dndgp, fnwa

2.

3.

Por three year6 after ruch cmproyurent rl.th Eupr,oyER

.

ceaaes, EIIPIOYEE thall not directly or indirectly
rorl.clt or aid.ln roriclttng any busincga
to
radio, telcvlsion or newspaper ldvertielngreratlirg
from eiy-customer or customers vho have rithln tuo yeare prior to
the ceseatl.on of thlg cmprolment dealt ritlr gr.rpriyen
cxccpt for chaln or departn-nt ltores yhich have outlete
ln norc ttran the lrca ln questLon.

tf EUPT0YER ovee EHpIoyEE any deferrcd palments
for
edditlonal eonpensatlon ana ir Ertrpl,oyEE' slralt -uriiiurry
vlolate aTy provieion of thie 'covenant Not to courpetei
both _parties rpeciflcally rgree ttrat .a an additioirai
reuedy for EttProyER end not-in linltatlon of any othir
renedies avalrable to Ettpr,oyER uhethcr for rpecirtc
cnforcement of the provieione hereof or for iamages,
Et'{PLoyER nay at lts electlon auspend palment on thedef-erred cotrpensatlon uLthout ttrl neclsitty of cstabrlshing an cacrow account for ruch fund unitt
tine
as the partles I rLghts hereunder .re determl.nedsuch
cither

by agreeuent or by a eourt of cmpetent Jurisdictlon.
The lnrtl.es agree and recognize ttrat the additional
compensation provision of ttrie agrea'nent ls ln part
consl.deration for thie 'Covenant Not to Copeter and if
EITiPITYEE rhall be deemed to be in violation of thie
covenant or lf ttre covenant rhall for any reason be
deemed unenforceable than EI{PIOYER Ls cntitled to e ret
Off against danages sustained by EtlpLOyER or an eguitable reductLon ln the araount of additional compenoation.
EECTION SIX

llodification of Contract
No uaiver or nodification of this Agreement or of any coveaant, condition or llnitation herein contained ehall be valid
unless ln rritlng end duly cxecuted by the party to be charged
thererith tnd ttre parties further agree that the provielons of
ttris Eectl.on ray trot be uaived axcept as hercia provided.
SECTION SETIEN

Aqreenents Outslde of Contract

Ihts Agreement contaLns the cmplete rgrccllent betueen the
parties concernLng the cnplolment lrrangenent. The partlee
rtipulate that neither of then has aade any reprceentation rlth
rcspect to the rubject latter of ttris Agreement or lny repreeentatlona lncluding the cxccution rnd delivery hereof cxcept ruch
rePreaentatl.ons la lre rgrcciflcally ret forttr hereln end cach of
the partlcs hercto ecknorlcdge that he or lt has relied on ltc orn
Judgurent ln cnterlng lnto the tgreerrent. llothlng contaLned hereln
rhall prohlbtt Et'tPIoyER from aaking additl.onal palments to EuplpyEE outsl.de of this Agreement lf EIIPI,OYER rhould clect to do .o.
Eowever, lf cuch palzaente are nade auch palments shall not be
deemed to ln any lanner lodify or ruapend any provLal,ons hereof.

8

IN !|ITNESS IHEREOF, the partl,cs bave cxecuted thia Agrcenent
on the day ud date first ebove rrLtten.

fK' !*^*^ \st'

I