EMPLOYMENT AGREEMENT

Exhibit 99.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of April 1, 2005, between NEXTMEDIA GROUP, INC., a Delaware corporation (“Employer”) and CARL E. HIRSCH (“Executive”).

 

WHEREAS, Executive is employed by Employer under an Employment Agreement, dated March 6, 2000 (the “Original Employment Agreement”); and.

 

WHEREAS, Executive and Employer desire to terminate the Original Employment Agreement effective as of January 1, 2005 and replace the Original Employment Agreement with this Agreement on the terms and conditions herein provided.

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Employer and Executive agree as follows:

 

1. Employment and Employment Period. During the period specified in this Section 1, Employer shall employ Executive, and Executive shall serve Employer, on the terms and subject to the conditions set forth herein. The term of Executive’s employment under this Agreement commenced on January 1, 2005 (the “Effective Date”) and, subject to prior termination as provided in Section 6 below, shall continue through the fifth anniversary of the Effective Date. The term of Executive’s employment under this Agreement is sometimes referred to below as the “Employment Period.”

 

2. Duties, Responsibilities, Reporting, No Services for Others.

 

(a) At all times during the Employment Period, Executive (i) shall serve as an Executive Chairman of the Board of Directors of Employer (the Board of Directors or any successor equivalent governing body of Employer, the “Board of Directors”) or such other comparable management position or positions as designated by the Board of Directors from time to time, (ii) shall perform duties in furtherance of the business of Employer, as may be assigned to him from time to time by the Chief Executive Officer of Employer, including specifically the duties relating to corporate strategy, operations, mergers and acquisitions, financing, and investor relations, and (iii) except as set forth in Section 2(b) hereof, shall devote his entire business time, energy, talent, and best efforts to the faithful and efficient performance of his duties as Executive Chairman of the Board of Directors.

 

(b) Executive shall not, at any time during the Employment Period, directly or indirectly, render any business, commercial, or professional services to any other person, firm, or organization (other than the Company and its Affiliates) for compensation without the prior approval of the Board of Directors. Nothing in this Agreement shall preclude Executive from devoting reasonable periods of time and effort to charitable and community activities or the management of his personal investment assets; provided, that

 

such activities do not interfere in any material respect with the performance by Executive of his duties hereunder.

 

3. Compensation.

 

(a) Base Salary. During the Employment Period, Employer shall pay to Executive an annual base salary (the “Base Salary”) in regular equal installments in accordance with Employer’s usual payroll practice. Executive’s Base Salary for the first contract year (January 1, 2005 through December 31, 2005) shall be Three Hundred Fifty Thousand Dollars ($350,000), which Base Salary shall be subject to appropriate increase each year thereafter at the discretion of the compensation committee of the Board of Directors (the “Compensation Committee”).

 

(b) Bonus. Executive shall be entitled to an annual bonus (the “Bonus”) for each fiscal year in which Executive is employed hereunder in an amount equal to such percentage of Executive’s Base Salary for such fiscal year as may be determined by the Compensation Committee in its reasonable discretion and based upon the recommendation of the Chief Executive Officer. Any bonus determined to be payable under this section shall be paid by Employer to Executive as soon as practicable following the completion of the annual audit of Employer.

 

(c) Withholdings. Employer shall, in accordance with applicable law, deduct from the Base Salary, the Bonus and all other cash amounts payable by Employer under the provisions of this Agreement to Executive, or, if applicable, to his estate, legal representatives or other beneficiary designated in writing by Executive, all social security taxes, all Federal, state and municipal taxes and all other charges and deductions that now or hereafter are required by law to be charges on the compensation of Executive or charges on cash benefits payable by Employer hereunder to Executive’s estate, legal representatives or other beneficiary.

 

4. Retirement and Employee Welfare Benefits. During the Employment Period, Executive shall be entitled to participate in, and shall receive benefits in accordance with the terms of, all retirement and welfare benefits plans, practices, policies, and programs that are made available by the Employer to other senior executives, which, at a minimum, shall include the following:

 

(a) Life Insurance. Employer shall provide Executive, and keep in full force and effect at all times during the Employment Period, without cost to Executive, a term life insurance policy with a death benefit equal to not more than $1,000,000, subject to Executive’s insurability at standard group rates. Employee shall be solely responsible for the payment of any Federal and /or state taxes that may be levied as a result of Employer furnishing such life insurance policy, and Executive, his estate and/or heirs hereby indemnify and hold harmless Employer from and against any and all taxes that may be

 

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payable in connection with such life insurance policy. Executive shall have the privilege of designating the beneficiary thereof and may change the beneficiary thereof by providing written notice to Employer and shall have such other rights of ownership provided by such life insurance policy, subject to the rules and regulations of the issuing insurance company. Executive shall have the right to assign such life insurance policy to Executive’s spouse or issue, or to a trust primarily for the benefit of Executive’s spouse and/or issue. Upon the termination of this Agreement for any reason, Employer shall assign such life insurance policy to Executive, without cost to Executive, provided that Executive shall pay all premiums and other costs relating to such life insurance policy from and after the date of such assignment.

 

(b) Medical Benefits. Employer shall provide to Executive and his immediate family, to the extent eligible and at all times during the Employment Period, major medical coverage and disability insurance in an amount not less than sixty percent (60%) of the Executive’s Base Salary then in effect. If Employer is notified that Executive does not qualify for such disability insurance at standard rates, Employer will so advise Executive within five (5) days after Employer has received such notification of non-qualification.

 

(c) Reimbursement for Business Expenses. Executive shall be permitted first class air travel and hotel accommodations for all business-related travel and entertainment. Employer shall reimburse Executive promptly upon production of reasonably detailed accounts, receipts, vouchers or other reasonable evidence of payment by Executive, for all ordinary, reasonable and necessary travel, entertainment and other expenses as shall be incurred by him in the performance of his duties hereunder.

 

(d) Automobile. During the Employment Period, Employer shall provide Executive with or pay or reimburse Executive for his lease or purchase of an automobile, the aggregate expense of which shall not exceed $10,000 per annum.

 

(e) Vacations. During each complete twelve (12) month period of the Employment Period, Executive shall be entitled to paid vacation time at the rate of not more than four (4) weeks per calendar year, provided that such vacation shall be taken at such time or times as Executive may determine in such a manner as to avoid undue disruption to the business of Employer. Executive shall also be entitled to such personal leave, holiday leave and sick leave as may be permitted pursuant to the general practice and policies of Employer.

 

(f) Club Membership. During the Employment Period, Employer shall reimburse Executive for membership dues, up to a maximum of Five Thousand Dollars ($5,000) per calendar year, for a tennis, fitness, business lunch club or similar facility to be used by Executive for business purposes. Employer shall have the right to approve the club membership, which approval shall not be unreasonably withheld.

 

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(g) Stock or other Equity Plans. Upon the consummation of an initial public offering of the stock of the Employer, Executive shall participate in such stock award, stock option or other similar equity plans as shall be determined by Employer’s Board of Directors to be fair, appropriate and customary for an employee in the position of Executive, in each case, subject to the provisions thereof.

 

(h) Location of Offices. Executive shall not be required to perform his duties under this Agreement at the permanent home/headquarters office or location for Employer, but may perform his duties from such other location or locations as the Executive may choose, provided that, the Executive is able to fully and effectively perform his duties from such location or locations.

 

(i) Excise Tax. Notwithstanding anything herein to the contrary, if it is determined that any payment or benefit provided by Employer to Executive (whether hereunder or otherwise, and including any payments or benefits provided pursuant to this Agreement) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (or any successor provision), or any interest or penalties with respect to such excise tax or any other similar excise tax or surcharge imposed by any applicable federal or state law, rule or regulation (such excise tax or surcharge together with any interest or penalties thereon, the “Excise Tax”), then Executive shall be entitled to an additional cash payment (a “Gross-Up Payment”) in an amount that will place Executive in the same after-tax economic position as Executive would have been in had the Excise Tax not applied to the payment or benefit. The amount of the Gross-Up Payment shall be determined by Employer’s regular independent auditors. No Gross-Up Payment shall be payable hereunder if Employer’s auditors determine that such payments or benefits are not subject to an Excise Tax. Employer shall be responsible for the payment of any fees and expenses of such auditors for any services provided in connection with any determination of a Gross-Up Payment.

 

5. Effect of Disability While in Employ of Employer. If, during the Employment Period, Executive becomes disabled, by reason of physical or mental impairment, disability or infirmity to such an extent that he is unable to perform his duties under this Agreement for more than ninety (90) working days in any twelve (12) consecutive month period, as determined in good faith by the Board of Directors (“Disability” or “Disabled”):

 

(a) Employer may relieve Executive of his duties under this Agreement for as long as Executive is so Disabled.

 

(b) Employer shall pay to Executive, net of the offset referred to in the last sentence of this Section 5(b), all Base Salary, if any, to which he would have been entitled under this Agreement had he continued to be actively employed by Employer to the earliest of (i) the first date on which he is no longer so Disabled, (ii) the date on which

 

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his employment is terminated by Employer due to Disability pursuant to Section 6(a), (iii) the date of his death, or (iv) the end of the Employment Period due to any reason other than termination by Employer due to Disability pursuant to Section 6(a) or death. Any payment referred to in this Section 5(b) shall be made at the same time as that payment would have been made if Executive were not Disabled. Payments under this Section 5(b) for any period shall be offset, dollar for dollar, by any disability benefits (other than benefits payable pursuant to any disability insurance policy all of the premiums for which were paid by Executive and not Employer) for that period that are received by Executive.

 

(c) Except as provided in this Section 5, Employer shall have no further obligations to Executive for Base Salary or Bonus for any period during which Executive is so Disabled.

 

(d) Executive agrees to submit such medical evidence regarding such Disability as may be reasonably requested by the Board of Directors.

 

6. Termination.

 

(a) Death or Disability. Executive’s employment hereunder will terminate immediately upon Executive’s death. Employer may terminate Executive’s employment hereunder as of the effective date specified in Employer’s notice of termination if Executive is Disabled, which effective date shall not be earlier than the ninety-first (91^st) working day (excluding vacation days) following the commencement of Executive’s Disability, provided, that such notice shall be delivered to Executive not later than ten (10) days from the effective date of termination specified in such notice.

 

(b) By Employer for Cause. Employer may terminate Executive’s employment under this Agreement for “Cause” (and Executive’s employment will be deemed to have been terminated for “Cause”) if, as of the date of termination, any of the following circumstances have occurred:

 

(i) Except as otherwise permitted by Section 2(b) hereof, Executive has refused to perform his duties as an employee of the Employer or failed to devote his entire business, time, energy, talent and best efforts to the performance of his duties under this Agreement in any material respect;

 

(ii) Executive has been convicted of, or entered a plea of nolo contendere to, a felony;

 

(iii) Executive has engaged in any fraudulent or dishonest conduct or acts in the course of his employment with Employer in connection with Employer, the Company or any of its Affiliates;

 

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(iv) Executive breaches any of his obligations hereunder in any material respect;

 

(v) Executive has been grossly negligent in the performance of his duties under this Agreement;

 

(vi) Executive has engaged in the illegal use of drugs or suffers from drug dependence or habitual insobriety;

 

(vii) Employer materially breaches any financial covenant contained in any of its contractual obligations and such breach is not cured or waived prior to the expiration of any applicable grace or cure periods;

 

(viii) Employer shall fail to pay the principal of, or interest on, or to make any required payment (regardless of amount) in connection with any of its indebtedness when and as the same may become due and payable and such failure is not cured or waived prior to the expiration of any applicable grace or cure periods;

 

(ix) Any event or circumstance shall have occurred the effect of which would permit the holder or holders (or a trustee on its or their behalf) of any indebtedness of Employer to cause or require such indebtedness to become due or to be redeemed or repurchased prior to its stated maturity (or to cause or require an offer to be made to effect such redemption or repurchase) and such event or circumstance is not cured or waived prior to the expiration of any applicable grace or cure periods; or

 

(x) Employer and its subsidiaries, if any, taken together, shall have failed to meet at least ninety percent (90%) of their budget in any given fiscal year, as such budget was recommended by the Chief Executive Officer and approved by the Board of Directors.

 

No termination of Executive pursuant to any of clauses (i), (iv), (v), or (vi) above will be effective unless and until Executive has first been given written notice of the conduct or circumstance purported to constitute “Cause” thereunder and, unless such conduct or circumstance is not reasonably susceptible of cure or such conduct or circumstance has already been the subject of notice hereunder and cured by Executive previously, Executive has failed to cure that conduct or omission within thirty (30) days following receipt of that notice by Executive. Any termination under any of clauses (ii), (iii), (vii), (viii), (ix) and (x) or subject to the exceptions provided for in the immediately preceding sentence shall be effective on such current or prospective date as may be specified by Employer when giving written notice of the termination.

 

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(c) By Employer Without Cause. Subject to Section 7(c) hereof, Employer may terminate Executive’s employment hereunder without Cause upon written notice from the Chief Executive Officer to Executive.

 

(d) By Executive for Good Reason. Executive may terminate his employment hereunder for “Good Reason” at any time if, as of the date of termination, any of the following circumstances have occurred:

 

(i) failure by Employer to pay Executive the Base Salary or the Bonus when due and payable under this Agreement, or a reduction in the Base Salary by Employer, other than a reduction pursuant to any retirement or welfare benefit plan;

 

(ii) failure by Employer to provide Executive with employee welfare benefits substantially in accordance with Section 4 hereof;

 

(iii) Executive’s position, duties and scope of responsibilities as described in Section 2(a) hereof are materially reduced from those in effect on the Effective Date other than for Cause without the consent of Executive (it being understood that the reassignment of Executive’s functions, duties or responsibilities other than those customarily performed by an executive chairman of the board of directors of a business of comparable size and complexity to one or more other persons who report directly or indirectly to Executive shall not be considered a reduction of Executive’s duties or responsibilities);

 

(iv) there is a change of control of the Employer such that (X) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the bo