EXHIBIT 10.15
CONSULTING AND NON-COMPETITION AGREEMENT
THIS CONSULTING AND NON-COMPETITION AGREEMENT (this "Agreement"), dated
as of September 17, 2004, is by and between Xxxxx Advertising Company, a
Delaware corporation ("Xxxxx"), and Xxxxx X. Xxxx, an individual and resident of
Eugene, Oregon ("Consultant").
RECITALS
WHEREAS, Consultant is presently employed by Xxxx Media Corporation, an
Oregon corporation (the "Company"), as its Chairman of the Board and Chief
Executive Officer;
WHEREAS, on September 17, 2004, Xxxxx, OMC Acquisition Corporation, a
Delaware corporation and direct, wholly owned subsidiary of Xxxxx ("Merger
Sub"), and the Company entered into that certain Agreement and Plan of Merger
(the "Merger Agreement"), pursuant to which the parties thereto agreed to merge
(the "Merger") the Company with and into Merger Sub pursuant to the terms
thereof. Unless otherwise defined herein, capitalized terms have the meanings
assigned to them in the Merger Agreement;
WHEREAS, pursuant to Section 6.3(d) of the Merger Agreement, it is a
condition precedent to the obligations of Xxxxx and Merger Sub to effect the
Merger that Xxxxx and Consultant shall enter into this Agreement;
WHEREAS, Xxxxx and Consultant desire to enter into this Agreement,
whereby Consultant will provide Xxxxx with consulting services as of, and
effective upon, the Effective Time of the Merger, as described further herein;
and
WHEREAS, at the Effective Time, Consultant's employment with the
Company will terminate and this Agreement will supersede and replace in their
entirety all agreements and understandings, written or oral, between the Company
and any of its Subsidiaries, on the one hand, and Consultant, on the other hand,
regarding Consultant's employment by the Company, severance, unemployment
compensation, parachute payment, bonus or otherwise.
NOW THEREFORE, in consideration of the premises and for such other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term of Agreement.
(a) Effective as of the Effective Time, Xxxxx hereby retains
Consultant's services hereunder for a period of five (5) years from the
Effective Time, unless this Agreement is earlier terminated in accordance with
Section 5 hereof (the "Term").
(b) In the event the Merger Agreement is terminated for any
reason prior to the Effective Time, this Agreement shall be null and void and
with no continuing obligations from either party to the other.
2. Scope of Engagement. During the Term, in consideration for the
compensation provided for in Section 3 hereof, Consultant will provide
consultation and advisory services (the "Consulting Services") to Xxxxx, which
shall consist of his personal advice and counsel to Xxxxx regarding (a) the
transition of the business of the Company to a new management and ownership
structure following the Merger, (b) related post-Merger long-range planning,
strategic direction and integration and rationalization processes, (c) the
Company's operations, customer and supplier relationships and growth expansion
opportunities and (d) other maters related to the Company's business. Consultant
shall provide Consulting Services as may be reasonably requested by Lamar's
Board of Directors or Chief Executive Officer (or his designee) from time to
time and at mutually agreeable times; provided, however, that commencing on (i)
the date that is 91 days following the Effective Time, Consultant shall not be
required to provide Consulting Services in an amount greater than ten hours per
month and (ii) the second anniversary of the Effective Time, Consultant shall
not be required to provide Consulting Services in an amount greater than five
hours per month. Consulting Services may be provided in person, telephonically,
electronically or by correspondence, to the extent appropriate under the
circumstances. Subject to this Sections 2 and 7 hereof, Consultant will be free
to spend such portions of Consultant's time, energy and skill in such manner and
with such Persons as he sees fit.
3. Fees and Expenses.
(a) Annual Consulting Fee. Xxxxx shall pay Consultant a fee at
the rate of $15,000 per annum (the "Consulting Fee"), payable monthly in advance
in prorated one-twelfth (1/12) portions during the Term.
(b) Non-Competition Payment. In consideration of the
non-competition and non-disclosure commitments of Consultant contained in
Sections 7 and 8 hereof, Xxxxx shall pay Consultant the sum of $613,580 (the
"Non-Competition Payment"), payable monthly in advance in prorated one-sixtieth
(1/60) portions during the Term.
(c) Expenses. Consultant shall be entitled to reimbursement
for all reasonable costs and expenses incurred by Consultant in the performance
of his obligations under Section 2 hereof (including reasonable travel expense
reimbursement) in accordance with the cost reimbursement policies in effect for
the non-employee members of Lamar's Board of Directors, provided that such
expenses are incurred at the written request of Lamar's Board of Directors or
Chief Executive Officer (or his designee).
(d) Insurance Policies. Prior to the Effective Time, pursuant
to Section 5.17 of the Merger Agreement and as further consideration for
Consultant's obligations hereunder, the Company will transfer to Consultant
ownership of the two life insurance policies identified on Schedule 3(c)
attached hereto (the "Insurance Policies"). If Consultant shall breach in any
manner the provisions of Sections 7 or 8 hereof, Consultant shall promptly
transfer ownership of the Insurance Policies to Xxxxx, free and clear of any
liens or other encumbrances; provided, that if Consultant shall no longer have
sole ownership to the Insurance Policies or shall have exercised his rights to
obtain the cash values thereunder, Consultant shall pay to Xxxxx a lump sum
payment equal to the aggregate cash values of the Insurance Policies as of the
Effective
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Time, together with interest thereon accruing from the Effective Time until
payment to Xxxxx at the rate of 8%.
(e) Stock Options. At the Effective Time, pursuant to a Notice
of Grant of Stock Options and Option Agreement in the form attached hereto as
Exhibit A (the "Option Agreement"), Xxxxx will xxxxx Consultant options (the
"Options") to acquire shares of Xxxxx Class A Common Stock, par value $0.001 per
share ("Xxxxx Common Stock"), in the amount and at the exercise price determined
in accordance with Schedule 3(e) attached hereto. The Options shall be for a
term of ten years from the Effective Time, shall vest immediately upon the grant
and shall be subject to the terms and conditions of the Option Agreement and the
Xxxxx Advertising 1996 Equity Incentive Plan, as amended, also attached hereto
as Exhibit A. In consideration of such grant, Consultant covenants and agrees
not to exercise at any time prior to the Effective Time any of the Company
Options owned by Consultant and outstanding as of the date hereof.
4. Assignment of Rights. The rights and obligations of Consultant under
this Agreement are personal rights and obligations of Consultant and may not be
assigned or transferred to any other Person without the prior, express, and
written consent of Xxxxx. Xxxxx may assign or transfer its rights under this
Agreement (a) to any Person of which Xxxxx, directly or indirectly, owns more
than 50% percent of the voting interest and thereafter continues to control or
(b) to any Person to whom or to which Xxxxx (and/or its subsidiaries) may
transfer any substantial portion (20% or more of the assets or last-twelve-month
revenues) of the transit advertising business of Lamar and its subsidiaries
taken as a whole; provided, that in each case (i) Lamar shall remain jointly and
severally liable with such assignee or transferee for the payment of the
Consulting Fee and (ii) any such assignee or transferee expressly assumes the
obligations of Xxxxx provided under this Agreement.
5. Termination; Effect of Termination
(a) The engagement of Consultant hereunder shall terminate
upon the earlier of (i) the death of Consultant, (ii) Consultant being rendered
incapable, because of physical or mental illness, of satisfactorily discharging
or performing his duties and responsibilities to Xxxxx under this Agreement for
a period of 60 consecutive days or for an aggregate of 90 days during any period
of 180 days, (iii) the fifth anniversary of the Effective Time, (iv) the
effective date of the parties' mutual written consent to terminate this
Agreement or (v) the date on which Xxxxx discharges Consultant for cause. For
purposes of this Agreement, "cause" shall mean (A) the conviction of Consultant
of a felony or other crime involving moral turpitude; (B) the determination by
final order or judgment of a court that Consultant is liable in damages to any
person for fraud or intentional misrepresentation; (C) the repeated or continued
breach of Consultant's obligations and duties hereunder if such breach is not
cured or discontinued within 30 days of receipt by Consultant of written notice
from Xxxxx of such breach; (D) the repeated failure of Consultant to honor the
reasonable requests of Xxxxx given pursuant to the terms of this Agreement, if
not cured within 30 days of receipt by Consultant of written notice from Xxxxx;
and (E) a breach by Consultant of the provisions of Sections 7 or 8 hereof.
Termination for cause shall be effective upon written notice Consultant of such
termination.
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(b) Upon termination of this Agreement in accordance with
Section 5(a), Xxxxx shall have no further obligation to pay Consultant the
Consulting Fee or reimburse Consultant for any expenses incurred on or after the
date of such termination. If this Agreement is terminated for any reason other
than (i) pursuant to Section 5(a)(iii) or (ii) for cause as defined in Section
5(a)(E), Xxxxx shall continue to pay Consultant the Non-Competition Payment up
to the fifth anniversary of the Effective Time, but only for so long as
Consultant shall not be in breach of the provisions of Sections 7 or 8 hereof.
6. Independent Contractor. The parties hereto acknowledge and agree
that Consultant is an independent contractor and nothing in this Agreement is
intended to create or creates an employee-employer relationship between the
parties. Consultant is not and will not be considered an employee or agent of
Xxxxx, and, except as expressly authorized in writing by the Board of Directors,
the Chief Executive Officer or the Chief Operating Officer of Xxxxx, will have
no authority to bind or obligate Xxxxx or to represent to others that he has any
such authority. Consultant shall not be eligible for any benefits, bonuses or
employee plans offered to Xxxxx employees. Consultant shall at all times be
responsible for all taxes due and payable on all fees paid pursuant to this
Agreement.
7. Non-Competition. Consultant covenants and agrees that, from the
Effective Time and for a period of five years thereafter, Consultant, unless
acting in accordance with Lamar's prior written consent, will not (directly or
indirectly for himself or for others), own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, principal,
agent, representative, consultant, investor, owner, partner, manager, joint
venturer or otherwise with, or permit his name to be used by or in connection
with, or lease, sell or permit to use any real property or interest therein
owned by Consultant in connection with, any business or enterprise engaged in
the business of (a) providing outdoor or out-of-home advertising services by
means of billboards and transit faces and structures ("Billboard and Transit
Advertising"), (b) leasing and/or permitting sites for Billboard and Transit
Advertising, (c) owning and operating any Billboard and Transit Advertising
displays, (d) constructing any Billboard and Transit Advertising displays and/or
structures and/or components of such displays or (e) marketing Billboard and
Transit Advertising services in any of the geographical areas listed on Schedule
7 attached hereto; provided, however, that the provisions of this Section 7
shall not be deemed to prohibit (x) the ownership by Consultant of not more than
five percent (5%) of any class of securities of any publicly traded corporation
having a class of securities registered pursuant to the Securities Exchange Act
of 1934 and (y) the continued leasing of those properties owned by Consultant or
Persons controlled by Consultant listed on Schedule 7(y) attached hereto to
third party lessees for the operation by such lessees of Billboard and Transit
Advertising displays on such properties. Each of Consultant and Lamar
acknowledges that (i) the provisions of this Section 7 are reasonable and
necessary to protect the legitimate interests of Xxxxx, (ii) any violation of
this Section 7 will result in irreparable injury to Xxxxx and that damages at
law would not be reasonable or adequate compensation to Xxxxx for a violation of
this Section 7 and (iii) Xxxxx shall be entitled to have the provisions of this
Section 7 specifically enforced by preliminary and permanent injunctive relief
without the necessity of proving actual damages and without posting bond or
other security. In the event that the provisions of this Section 7 should ever
be deemed to exceed the time, geographic, product or any other limitations
permitted by applicable law, then such provisions shall be deemed reformed to
the maximum permitted by applicable law.
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8. Non-Disclosure of Confidential Information.
(a) Consultant recognizes and acknowledges that: (i) in the
course of Consultant's employment by the Company he has obtained Confidential
Information (as hereafter defined) regarding the Company, and that in the course
of his providing consulting services hereunder he will acquire additional
Confidential Information regarding Xxxxx and its subsidiaries; (ii) at the
Effective Time, all Confidential Information regarding the Company will become
the property of Xxxxx; (iii) the unauthorized use, misappropriation or
disclosure of the Confidential Information could cause irreparable injury to
Xxxxx and its subsidiaries; and (iv) it is essential to the protection of
Lamar's goodwill and to the maintenance of Lamar's competitive position that the
Confidential Information be kept secret and that Consultant not disclose the
Confidential Information to others or use the Confidential Information to
Consultant's own advantage or the advantage of others or in any way to
disadvantage Xxxxx. "Confidential Information" means information, whether or not
reduced to writing, and whether in paper, electronic, digital, analog or other
format, relating to the past, present or planned business of, as appropriate,
(x) the Company and its subsidiaries or (y) Xxxxx and its subsidiaries, which
has not been made generally known to the public or the industry, including,
without limitation, trade secrets, know-how, inventions, new product and product
development information, research results, marketing and sales programs,
customer and supplier information, financial data, employee records, cost
information, pricing information, sales and marketing strategies, business
systems, computer systems, software, software systems and techniques, the
identity of customers, all information received under an obligation of
confidentiality to customers, and all information generated for customers.
(b) Consultant covenants and agrees that, from the Effective
Time and for a period of five years thereafter, Consultant will hold and
safeguard the Confidential Information in trust for Xxxxx, its successors and
assigns and agrees that he shall not, without the prior written consent of
Lamar's Board of Directors, use for Consultant's own benefit or purposes or
misappropriate or disclose or make available to any person for use outside of
Lamar's organization at any time (either while providing consulting service to
Xxxxx or subsequent to the termination of his consulting service with Xxxxx) for
any reason any of the Confidential Information or any copy, notes or item
embodying Confidential Information, whether or not developed by Consultant,
except (i) as required in the performance of Consultant's consulting services
and as authorized by Xxxxx and (ii) to the extent that such information (x) is
or becomes generally available to the public or the industry, other than as a
result of a disclosure by Consultant in violation of this Agreement, or (y) is
required to be disclosed pursuant to a court order or other legal process
(provided Consultant gives Xxxxx notice of such obligation promptly after
Consultant receives notice of such obligation and prior to any disclosure
pursuant to such obligation affords Xxxxx the opportunity and cooperates with
Xxxxx in any efforts by Xxxxx to limit the scope of such obligation and/or to
obtain confidential treatment of any material disclosed pursuant to such
obligation). Consultant agrees that his obligations with respect to Confidential
Information shall continue indefinitely after the end of the Term.
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9. Miscellaneous.
(a) Notice. Any notices, requests, demands or other
communication required or permitted hereunder will be in writing and may be (i)
sent by registered or certified mail, postage prepaid, return receipt requested,
(ii) served by personal delivery, (iii) made by facsimile transmission (with the
confirmation of receipt), or (iv) sent by overnight courier service to the
receiving parties as follows:
If to Lamar: Xxxxx Advertising Company
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attn.: Xxxxx X. XxXxxxxx
Telecopy: (000) 000-0000
If to Consultant: Xxxxx X. Xxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
with a copy to: Xxxxxx Xxxxxxxxx Saydack
Xxxxxxx Xxxxxxx & Xxxxxx, P.C.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxx 00000
Attn.: Xxxx X. Xxxxxx
Telecopy: (000) 000-0000
Any such notice or communication shall be deemed to be given, (i) if sent by
registered or certified mail, on the fifth (5th) business day after the mailing
thereof; (ii) if delivered in person, on the date delivered; (iii) if made by
facsimile transmission, on the date transmitted; or (iv) if sent by overnight
courier service, on the date delivered as evidenced by the xxxx of lading. Any
party sending a notice or other communication by facsimile transmission shall
also send a hard copy of such notice or other communication by one of the other
means of providing notice set forth in this Section 9(a). Any notice or other
communication shall be given to such other representative or at such other
address as a party to this Agreement may furnish to the other party pursuant to
this Section 9(a).
(b) No Waiver. The failure of any party to this Agreement to
insist upon the performance of any of the terms and conditions of this
Agreement, or the waiver or any breach of any of the terms and conditions of
this Agreement, shall not be construed as thereafter waiving any such terms and
conditions, but the same shall continue and remain in full force and effect as
if no such forbearance or waiver had occurred.
(c) Binding Effect. This Agreement shall be binding on and
inure to the benefit of the respective successors and permitted assigns of the
parties.
(d) Governing Law. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Oregon.
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(e) Entire Agreement. This Agreement, along with the Agreement
and Plan of Merger and any documents ancillary to the Agreement and Plan of
Merger executed by Consultant, shall constitute the entire agreement between the
parties and any prior understanding or representation of any kind preceding the
date of this Agreement shall not be binding upon any party hereto.
(f) Interpretation. Notwithstanding any provision in this
Agreement to the contrary, the parties agree that this Agreement shall be
interpreted without giving effect to any principle of construction that would
otherwise require this Agreement to be construed against a party that drafted it
solely because such party drafted this Agreement.
(g) Modification. Any modification of this Agreement or
additional obligation assumed by any party in connection with this Agreement
shall be binding only if placed in writing and signed by the parties.
(h) Paragraph Headings. The titles to the paragraphs of this
Agreement are solely for the convenience of the parties and shall not be used to
explain, modify or simplify, or aid in the interpretation of the provisions of
this Agreement.
(i) Severability.
(i) If a court of competent jurisdiction finds any
provision other than Section 7 hereof to be invalid or unenforceable as to any
Person or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
(ii) If a court of competent jurisdiction finds any
part of Section 7 hereof to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other Persons or circumstances. If feasible, upon such
occurrence, Section 7 hereof shall be deemed to be modified to be within the
limits of enforceability or validity; provided, however, that if Section 7
hereof cannot be so modified, Lamar's obligations under Sections 3(a), 3(b) and
3(c) hereof and Consultant's obligations under Section 2 hereof shall
automatically be terminated and all other provisions of this Agreement,
including Section 8, shall remain valid and enforceable.
(j) Counterparts. This Agreement may be executed in multiple
counterparts, each of which is considered an original and shall be binding upon
the party executing the same, and all of which shall constitute one and the same
agreement.
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IN WITNESS WHEREOF, Xxxxx and Consultant have executed and delivered
this Consulting and Non-Competition Agreement on the day and year first above
written.
XXXXX ADVERTISING COMPANY
By: /s/ Xxxxx X. Xxxxx
----------------------
Name:
------------------
Title:
-----------------
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
EXHIBIT A
FORM OF NOTICE OF GRANT OF STOCK OPTIONS AND OPTION AGREEMENT
AND RELATED DOCUMENTATION
SCHEDULE 3(C)
LIFE INSURANCE POLICIES
1. Transamerica Occidental Life Insurance Company Policy No. 92472157,
issued February 9, 1993, in the face amount of $1,000,000.
2. Transamerica Occidental Life Insurance Company Policy No. 92436170,
issued February 9, 1993, in the face amount of $1,000,000.
SCHEDULE 3(E)
CALCULATION OF XXXXX STOCK OPTIONS
The options granted to Consultant pursuant to Section 3(e) shall be for that
number of shares of Xxxxx Common Stock calculated as follows, rounded down to
the nearest whole number:
(50,000(1)) X $7.00(2)
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Average Closing Share Price(3)
The exercise price for the options granted to Consultant pursuant to Section
3(e) shall calculated as follows, rounded up to the nearest cent:
$3.17(4) divided by $7.00
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Average Closing Share Price
As an example, if the Average Closing Share Price of Xxxxx Common Stock,
calculated in accordance with the Merger Agreement, were to be $40.00, the
number of option shares to be granted to Consultant pursuant to Section 3(e)
would be 8,750, and the exercise price for each such option share would be
$18.12.
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(1) The number of option shares granted to Consultant by the Company
pursuant to the Option Agreement.
(2) The per share purchase price to be paid by Xxxxx for the outstanding
Company Common Shares (but excluding the Excluded Company Shares) at
the Effective Time.
(3) Calculated pursuant to Section 2.1(a)(i) of the Merger Agreement.
(4) The exercise price for Consultant's current outstanding Company
Options, as evidenced by that certain Nonqualified Stock Option
Agreement dated effective February 13, 2004 (the "Option Agreement").
SCHEDULE 7
GEOGRAPHIC AREA
California Washington
Montana Wyoming
Idaho Utah
South Dakota Texas
Oregon Florida
Connecticut Missouri
Indiana Kansas
The Canadian province of British Columbia
SCHEDULE 7(Y)
EXCLUDED LEASED PROPERTIES
1. The property commonly known as 0000 Xxxxxxx 00, Xxxxxx, Xxxxxx.
2. Real property on 0xx Xxxxxx approximately 150 feet east of High Street,
Eugene,
Oregon.
3. Parcels of real property located in Interstate 5 located approximately
750 feet south of Xxxxxxxxx Street and 1,250 feet south of Xxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxx.
