1
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of August 18, 1995 by and between XXXXX MEDIA COMPANY, a
Delaware corporation (the "Company") and Xxxx Xxxxx ("Executive").
WHEREAS, the Company has been formed to acquire and operate
certain outdoor advertising businesses, including the business of Xxxxxxx Media
Group and PMG Holdings (the closing of the acquisition of which by a Subsidiary
of the Company is hereinafter referred to as the "Closing"); and
WHEREAS, the Company wishes to employ Executive and Executive
is prepared to serve in those capacities required by the Company.
NOW, THEREFORE, the parties agree as follows:
1. Position and Authority. The Company employs the Executive,
and the Executive accepts such employment and agrees to serve the Company as the
Chairman of the Board of Directors and Chief Executive Officer of the Company
and its respective Subsidiaries, for the compensation and benefits detailed in
Sections 3 and 4 hereof and the Options provided in Section 5. It is understood
that the Executive will report directly to the Board of Directors. The Executive
shall have (in all cases subject to the overall authority and control of the
board) such authority as is typical for executives having similar positions in
similar companies. A "Subsidiary" shall be any company in which the Company
beneficially owns more than 50% of the voting power of such company's
outstanding voting securities.
2. Duties. Executive shall devote substantially all of his
business time (subject to reasonable vacation consistent with Company policy as
set by the Board of Directors) to the affairs of the Company during the
employment term, except as may be consented to by the Board of Directors.
Executive shall perform such duties and responsibilities as the Board of
Directors of the Company may from time to time reasonably determine.
3. Base Compensation. Executive will be compensated at a base
salary rate of $400,000 per year during the employment term. Base compensation
will be paid monthly in two approximately equal installments each month. All
compensation and benefits will be subject to reduction by all federal, state,
local and other withholdings and similar taxes and payments required by
applicable law. At each anniversary of this Agreement the Executive's Base
Salary shall be increased by the percentage (if any) that the Consumer Price
Index (U.S. (All Items) increased during the most recent calendar year. In
addition to Executive's base compensation, Executive may receive bonus
compensation at the sole discretion of the Board of Directors.
2
4. Benefits. During Executive's employment by the Company,
Executive will receive the same (or substantially similar) employee benefits to
those provided by the Company or its Subsidiaries to other members of senior
management from time to time.
5. Option to Purchase Shares in the Company.
(a) Subject to the terms of this Agreement, Executive is
hereby granted the option (the "Option") to purchase shares of common stock of
the Company (the "Shares"), as follows:
(1) Executive may purchase 111.513 Shares at a price
per Share equal to $100,000 (the "Base Option");
(2) If the Internal Rate of Return (as defined below)
on the Shares purchased by Xxxxxxx & Xxxxxxxx Capital Partners III, L.P., H&F
International Partners III, L.P. and H&F Orchard Partners III, L.P.
(collectively "HFCP III") at Closing exceeds 25% per annum, for the period from
the Closing through December 31, 2000, or such earlier date as a majority of the
voting power of the Company is acquired by a Person other than HFCP III or an
Affiliate thereof, or all or substantially all of the Company's assets are sold
to, or the Company merges or consolidates with, another Person if the Person
surviving such transaction is not controlled by the stockholders of the Company
(each a "Sale of the Company"), Executive shall have the option to purchase an
additional 43.838 Shares at a price per Share equal to $100,000 (the "25%
Option"); and
(3) If the Internal Rate of Return (as defined below)
on the Shares purchased by HFCP III at Closing, for the period from the Closing
through December 31, 2000 or such earlier date as a Sale of the Company shall
occur, exceeds 30% per annum, Executive shall have the option to purchase an
additional 45.776 Shares at a price per Share equal to $100,000 (the "30%
Option").
For the purposes of Paragraphs (2) and (3) of this Section 5,
"Internal Rate of Return" shall be defined as the annual compounded rate of
return on the initial capital investment by HFCP III in the Company's shares of
$100,000 per share. If the Company and the Shareholder cannot agree as to the
Internal Rate of Return by February 15, 2001 (or, in the case of a Sale of the
Company, by a date 15 days prior to the Closing of such Sale), the Internal Rate
of Return shall be determined by an independent appraiser selected by the
Company reasonably acceptable to both HFCP III and Executive.
(b) The Base Option shall be exercisable as to 20% of the
total number of Shares covered thereby from the Closing and as to the remaining
80% in four equal parts on December 31, 1995, 1996, 1997 and 1998, respectively.
If the respective Internal Rate of Return targets are met, the 25% Options and
the 30% Options shall become exercisable on the earlier of April 1, 2001 or a
Sale of the Company. All options shall expire to the extent not exercised before
April 1, 2002. In the case of a Sale of the Company, all presently exercisable
options may be exercised by Executive immediately prior
2
3
to the closing of such Sale. All options not so exercised (including any
unvested portion of the Base Option), shall expire upon any Sale of the Company.
(c) The number of Shares that may be acquired upon exercise
of the Options granted in this section (and the exercise price therefor) shall
be proportionately adjusted in the event of stock splits and reverse stock
splits affecting the Company's common stock and for dividends payable in shares
of common stock. If the common stock is reclassified or exchanged for other
securities of the Company in connection with a recapitalization, Executive shall
have the option to acquire such number and type of securities as the number of
shares of common stock subject to the options granted hereunder would have been
converted into.
(d) The Executive may not Transfer (as defined in the
Stockholders Agreement) any Options. All Shares acquired upon exercise of
Options shall be held by the Executive pursuant to the Stockholders Agreement.
Transfer of the Shares purchased through the exercise of the Options shall be
subject to the provisions of the Stockholders Agreement.
6. Term. This Employment Agreement shall have a term of four (4)
years, provided that Sections 5, 8, 9 and 10 shall survive such expiration in
accordance with their terms.
7. Termination.
(a) This Employment Agreement may be terminated by the
Company at any time for Cause upon written notice to Executive, which notice
shall specify the reason for termination. As used herein, "Cause" shall mean (A)
willful misconduct or gross negligence by executive in respect of his
obligations under this Agreement, (B) commission of a crime involving moral
turpitude, (C) disloyal or dishonest conduct of the Executive that materially
xxxxx the Company or its business or materially undermines the confidence of the
Board in the Executive, or (D) willful breach of this Agreement.
(b) Executive may terminate the Employment Agreement for
Good Reason by giving thirty (30) days prior written notice to the Company. Good
Reason shall exist only if (i) Executive is removed or is not re-appointed as
the Company's Chief Executive Officer, except in connection with termination of
this Employment Agreement by the Company for cause or due to death or
disability, (ii) Executive is assigned duties or authority is withdrawn from
Executive inconsistent with Executive's authority pursuant to Section 1, without
Executive's express written consent, or (iii) breach by the Company of any
material obligation of the Company under this Agreement.
(c) Should the Executive terminate this Agreement for Good
Reason, or should the Company terminate this Agreement without Cause, then the
Executive shall be entitled to receive, for a period equal to the remainder of
the Term, all compensation and benefits provided for in Sections 3 and 4 hereof;
provided that if such benefits cannot be legally provided, or the provision
thereof would disqualify and plan for favorable tax
3
4
treatment under the International Revenue Code, a financially equivalent
substitute shall be provided.
(d) If the Company terminates this Agreement with Cause or
if the Executive terminates this Agreement without Good Reason, then the
Executive shall, from the date of such termination, no longer be entitled to any
compensation under Section 3 or 4.
(e) If this Agreement is terminated by either party for any
reason prior to the expiration of its term, then (i) all Base Options not then
presently exercisable shall be terminated and (ii) a portion of each of the 25%
Option and 30% Option equal to the portion of the Base Option not then
exercisable shall be terminated. All Options presently exercisable at the time
of any termination of this Agreement shall continue to be exercisable for the
period provided in Section 5, subject to any right of repurchase provided in
Section 9 of the Stockholders Agreement of even date herewith.
(f) Termination of this Agreement shall not discharge any
liability existing at the date of termination. Further, notwithstanding any
termination, the provisions of Sections 5, 9 and 10 shall survive in accordance
with their terms.
8. Effective Date. This Agreement shall take effect immediately
upon the Closing.
9. Non-Competition.
(a) For a period beginning on the date hereof and ending
one year after the termination of this Agreement, Executive shall not, directly
or indirectly, by himself, or as a shareholder, employee, director, officer,
partner, contractor, consultant or agent of another, enter into any business or
activity in any metropolitan area in which the Company does business in
competition with the Company, its subsidiaries, affiliates or related entities
involved in outdoor advertising.
(b) The Executive agrees that the restrictions imposed by
this Section 9 are reasonable in both geographic scope and duration. The
Executive understands that the provisions of Section 9 may affect or limit his
ability to earn a livelihood in a business similar to the businesses engaged in
by the Company. The Executive acknowledges that this non-competition agreement
is a material part of the consideration for both this Agreement and the
Contribution Agreement pursuant to which the Executive has purchased his shares.
10. Solicitation of Other Employees. Executive shall not, until
one year subsequent to the expiration or termination of this Agreement, solicit
or seek to influence any employee or consultant, designer or contractor under
contract with the Company, its subsidiaries, affiliates or related entities to
enter into any employment agreement, independent contractor arrangement, or any
other contractual arrangement whereby such individual would perform services for
compensation, either directly or indirectly, for any
4
5
person, firm, corporation or other entity or business that provides products or
services in competition with the Company, its subsidiaries, affiliates or
related entities.
11. Key Man Life Insurance. For a period of three years from the
date hereof, Executive will arrange (unless otherwise notified by the Company)
for the Company to purchase key man insurance on his life in the amount of $5
million. The premiums for such policy will be payable by the Company, and the
sole beneficiary of such policy shall be the Company.
12. Arbitration. Any claim arising out of or relating to this
Employment Agreement (including disputes regarding the presence or absence of
"Cause" or "Good Reason" in the event of a termination), or otherwise arising
out of or relating to the Executive's employment by the Company, will be subject
to arbitration in Los Angeles, California, in accordance with the Federal
Arbitration Act and the rules of the American Arbitration Association relating
to commercial disputes.
13. Severability. If any provision of this agreement is determined
to be invalid or unenforceable, it shall be adjusted rather than voided, to
achieve the intent of the parties to the extent possible, and the remainder of
the agreement shall be enforced to the maximum extent possible.
14. Entire Agreement. This letter agreement constitutes the entire
agreement between Executive and the Company with respect to the terms and
conditions of the employment of Executive by the Company, and supersedes all
prior or concurrent arrangements, discussions, agreements or understandings with
respect to your employment.
15. Governing Law. This Agreement shall be governed by the laws of
Arizona.
16. Notice. Any notice, or other written communication to be given
pursuant to this Agreement for whatever reason shall be deemed duly given and
received (a) if delivered personally, from the date of delivery, or (b) by
certified mail, postage pre-paid, return receipt requested, three (3) days after
the date of mailing, addressed to the above parties as follows:
If to the Company:
XXXXX MEDIA COMPANY
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Chief Financial Officer
5
6
with a copy to:
Heller, Ehrman, White & XxXxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
If to Executive:
Xxxx Xxxxx
0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
17. Certain Definitions. Capitalized terms not otherwise defined
herein shall have the meaning ascribed to such terms in the Stockholders
Agreement of even date herewith.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the date and year first above written.
XXXXX MEDIA COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Treasurer and Secretary
/s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx
6
