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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made as of October 1, 1997, between TransWestern Publishing
Company, L.P., a Delaware limited partnership (the "Partnership"), TransWestern
Communications Company, Inc., general partner of the Partnership ("TCC"), and
Xxxxxxxx X. Xxxxx ("Executive").
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Partnership shall employ Executive, and
Executive accepts employment with the Partnership, upon the terms and
conditions set forth in this Agreement for the period beginning on the date
hereof and ending as provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the
Chairman of the Board of Directors of TCC (the "Board") and Chairman of the
Partnership and shall have the normal duties, responsibilities and authority of
the Chairman of the Board, subject to the ultimate authority of the Board.
(b) Executive shall report to the Board and shall devote his
reasonable efforts to the business and affairs of the Partnership and its
Subsidiaries, it being understood that Executive may engage in other activities
and businesses and may invest in and be an officer and/or director of unrelated
business entities, subject only to his obligations pursuant to this paragraph
and paragraph 7 below. Executive shall perform his duties and responsibilities
to the best of his abilities in a diligent, trustworthy, businesslike and
efficient manner.
(c) For purposes of this Agreement, "Subsidiary" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Partnership,
directly or through one of more Subsidiaries.
3. Compensation.
(a) Base Salary. As compensation for Executive's services during
Executive's employment hereunder, the Partnership will pay Executive, so long
as Executive's employment hereunder continues, annual base salary of $222,167
through April 30, 1998 and, effective May 1, 1998, and on each anniversary
thereafter such base salary will be increased by a percentage which corresponds
with the increase in the Consumer Price Index for such year as determined by
the Board. The amount of such salary as adjusted in any year is referred to
herein as the "Base Salary."
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The Base Salary will be payable in installments at such regular intervals as
the Partnership at the time is using for the payment of salaries.
(b) Bonus. Each year Executive will be entitled to an annual bonus
of up to 100% of the Base Salary based on achievement of Target EBITDA (as
defined in Section 4(c) below) or such lesser EBITDA Target as approved by the
Board, in a manner consistent with past practice. As used herein, EBITDA
means, for any period, the net income of the Partnership for any such period
plus the amount deducted (or in the case of extraordinary gains, minus any
amount added) in the computation thereof for (i) all federal, state and local
income taxes, (ii) interest expense, (iii) any extraordinary gains or losses,
(iv) depreciation and (v) amortization of goodwill and other intangibles
determined in accordance with generally accepted accounting principles
consistently applied. For purposes of this Agreement, EBITDA will be
determined, after deduction of any bonus payments paid or payable with respect
to such period, from the audited financial statements of the Partnership and
the components of EBITDA contained in the financial statements will be
conclusive and binding upon the parties.
(c) Insurance and Fringe Benefits. During the Employment Period,
Executive shall be entitled to receive insurance benefits and fringe benefits
that are substantially similar to those provided to Executive by the
Partnership as of the date hereof, including participation in the Partnership's
long-term disability program, and shall be entitled to participate in all of
the Partnership's employee benefit programs for which senior executive
employees of the Partnership are generally eligible. In addition, during the
Employment Period, the Partnership shall continue to provide Executive with a
life insurance policy in the face amount of $2,000,000 on terms and conditions
(including price) similar to those in effect with respect to the policy as in
effect as of the date hereof and a car allowance not to exceed $600 per month.
(d) Equity Participation Plan. Executive will have an opportunity
to purchase equity of the Partnership on the date hereof, subject to a vesting
period as provided in the Executive's Executive Agreement.
4. Term.
(a) Unless renewed by the mutual agreement of the Partnership and
Executive, the Employment Period shall end on the fifth anniversary of the date
of this Agreement; provided that (i) the Employment Period shall terminate
prior to such date upon Executive's resignation, death or permanent disability
or incapacity (as determined by the Board in its good faith judgment) and (ii)
the Employment Period may be terminated by the Partnership at any time prior to
such date for Cause (as defined below) or without Cause.
(b) If immediately after the fifth anniversary of the date of this
Agreement Executive ceases to be employed by the Partnership due to (i) the
Partnership's failure to renew Executive's employment without Cause or (ii)
Executive's refusal to renew his employment with Good Reason, Executive shall
be entitled to receive his Base Salary (as in effect on such fifth anniversary)
payable on the Company's regular payroll dates for a period of one year after
such termination, so long as Executive has not breached the provisions of
paragraphs 5, 6 and 7 hereof.
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(c) If the Employment Period is terminated by the Partnership without
Cause or by Executive with Good Reason or due to Executive's death or permanent
disability or incapacity prior to the fifth anniversary of the date of this
Agreement, Executive or his estate, as the case may be, shall be entitled to
receive his Base Salary (as in effect on the date of such termination) payable
on the Partnership's regular payroll dates for a period of one year after such
termination, so long as Executive has not breached the provisions of paragraphs
5, 6 and 7 hereof. For purposes of this Agreement, "Good Reason" shall mean
(i) a reduction in Executive's Base Salary by more than 20% of the Base Salary,
(ii) any reduction in Executive's Base Salary (in effect immediately prior to
such reduction) if in the fiscal year prior to such reduction the EBITDA for
such prior fiscal year was equal to or greater than 80% of the Target EBITDA
for such prior year, (iii) any wilful action by the Partnership that is
intentionally inconsistent with the terms of this Agreement or Executive's
Executive Agreement, dated as of the date hereof, between Executive and the
Partnership or (iv) any material reduction by General Partner or the
Partnership in the powers, duties or responsibilities of which Executive was
entitled to exercise as of the date of this Agreement (except such reduction
which is the result of Executive's termination for Cause). The "Target EBITDA"
as of the end of each fiscal year shall be the amount set forth opposite such
year end below:
Fiscal Year End Target EBITDA
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1998 $31.0 million
1999 35.5 million
2000 42.0 million
2001 50.1 million
2002 59.3 million
; it being understood that the foregoing calculation of the Target EBITDA
assumes that the Partnership's fiscal year ends on April. In the event that
the Partnership's fiscal year is changed, the foregoing calculation of Target
EBITDA may be adjusted by the Board to reflect the impact of such change.
(d) If the Employment Period is terminated for any other reason,
including voluntary resignation or termination by the Partnership for Cause,
Executive shall only be entitled to receive his Base Salary through the date of
termination.
(e) All of Executive's rights to fringe benefits will continue for a
period of one year after termination, provided such termination is without
Cause by the Partnership or with Good Reason by Executive. Bonuses hereunder
(if any) accruing after the termination of the Employment Period shall cease
upon such termination.
(f) For purposes of this Agreement, "Cause" shall mean (i) the
commission of a felony or a crime involving moral turpitude or the commission
of any other act involving dishonesty, disloyalty or fraud with respect to the
Partnership or any of its Subsidiaries, (ii) conduct tending to bring the
Partnership or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) substantial and repeated failure to perform duties as
reasonably directed by the Board,
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(iv) gross negligence or willful misconduct with respect to the Partnership or
any of its Subsidiaries or (v) any other material breach of this Agreement
which is not cured within 15 days after written notice thereof to Executive.
5. Confidential Information. The Executive acknowledges that the
information, observations and data obtained by him while employed by the
Partnership concerning the business or affairs of the Partnership or any
Subsidiary ("Confidential Information") are the property of the Partnership or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions to act or
required by law to be disclosed. Executive shall deliver to the Partnership at
the termination of the Employment Period, or at any other time the Partnership
may request, all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product (as defined in Section 6 hereof) or the
business of the Partnership or any Subsidiary which he may then possess or have
under his control.
6. Inventions and Patents. Executive agrees that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, and all similar or related information which relate to the
Partnership's or any of its Subsidiaries' actual or anticipated business,
research and development or existing or future products or services and which
are conceived, developed or made by Executive while employed by the Partnership
or any Subsidiary ("Work Product") belong to the Partnership or such
Subsidiary. Executive will promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. Non-Compete, Non-Solicitation.
(a) Executive acknowledges that in the course of his employment with
the Partnership he will become familiar with the Partnership's trade secrets
and with other confidential information concerning the Partnership and its
predecessors and that his services have been and will be of special, unique and
extraordinary value to the Partnership. Therefore, Executive agrees that,
during the Employment Period and (i) for three years thereafter in the case of
a termination of Executive's employment by the Partnership with Cause or by
Executive without Good Reason and (ii) for two years thereafter in all other
cases (the "Noncompete Period"), he shall not directly or indirectly own,
manage, control, participate in, consult with, render services for, or in any
manner engage in any yellow page directory publishing business or any business
competing for the same customers as the businesses of the Partnership or its
Subsidiaries as such businesses exist or are in process on the date of the
termination of Executive's employment within any geographical area in which the
Partnership or its Subsidiaries engage or plan to engage in such businesses.
Nothing herein shall prohibit Executive from (i) being a passive owner of not
more than 5% of the outstanding stock of any class of any corporation, so long
as Executive has no active participation in the business of such corporation,
(ii) becoming employed by a competitor; provided that
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Executive is not directly or indirectly responsible for, or does not have
control over, the business of such competitor which directly competes with any
of the businesses of the Partnership or (iii) becoming an officer or director
of any entity (other than a competitor) not affiliated with the Partnership.
(b) During the Employment Period and for three years thereafter,
Executive shall not directly or indirectly through another entity (i) induce
or attempt to induce any employee of the Partnership or any Subsidiary to leave
the employ of the Partnership or such Subsidiary, or in any way interfere with
the relationship between the Partnership or any Subsidiary and any employee
thereof, (ii) hire any person who was an employee of the Partnership or any
Subsidiary at any time during the Employment Period, or (iii) induce or attempt
to induce any customer, supplier, licensee or other business relation of the
Partnership or any Subsidiary to cease doing business with the Partnership or
such Subsidiary, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Partnership or any
Subsidiary.
(c) If, at the time of enforcement of this paragraph 7, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law.
(d) In the event of the breach or a threatened breach by Executive
of any of the provisions of this paragraph 7, the Partnership, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security).
8. Executive Representations. Executive hereby represents and
warrants to the Partnership that (i) the execution, delivery and performance
of this Agreement by Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which Executive is a party or by which he is bound, (ii)
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity and
(iii) upon the execution and delivery of this Agreement by the Partnership,
this Agreement shall be the valid and binding obligation of Executive,
enforceable in accordance with its terms.
9. Survival. Paragraphs 5, 6 and 7 shall survive and continue in
full force in accordance with their terms notwithstanding any termination of
the Employment Period.
10. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class
mail, return receipt requested, to the recipient at the address below
indicated:
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Notices to Executive:
Xxxxxxxx X. Xxxxx
c/o TransWestern Publishing Company, L.P.
0000 Xxxxxxxxxx Xxxx Xxxx.
Xxx Xxxxx, XX 00000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx
Notices to the Partnership:
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TransWestern Publishing Company, L.P.
c/o Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
X. Xxxxxx Xxxx
with a copy to:
Xxxxxx & Xxxxxxx
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision, but this Agreement will be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
12. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements
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or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way, including without limitation
the Employment Agreement dated May 13, 1993 between Executive and the
Partnership.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
14. Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive, the Partnership
and their respective heirs, successors and assigns, except that Executive may
not assign his rights or delegate his obligations hereunder without the prior
written consent of the Partnership.
15. Choice of Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of California,
without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of California or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
California.
16. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Partnership and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
TRANSWESTERN PUBLISHING COMPANY, L.P.
By TransWestern Communications Company, Inc.
Its General Partner
By /s/ Xxxxxxx Xxxxxx
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Its Chief Executive Officer
/s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT]
