EMPLOYMENT AGREEMENT

Exhibit 99.5

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT is dated as of April 1, 2005 (this “Agreement”), by and among NEXTMEDIA OUTDOOR, INC., a Delaware corporation (“Employer”), NEXTMEDIA GROUP, INC., a Delaware corporation (“Group”), and SCOT MCARTOR (“Executive”).

 

WHEREAS, Executive is employed by Employer under an Employment Agreement, dated June 14, 2001 (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 receipt and sufficiency 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 be employed by 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 Vice President of Employer and as the Chief Operating Officer of Employer’s traditional outdoor division or in such other comparable management position or positions as may be designated by the Board of Directors of Employer (the Board of Directors of Employer, or any successor equivalent governing body of Employer, is herein referred to as the “Board of Directors”) from time to time, (ii) shall perform duties in furtherance of the business of Employer, as may have been determined to be appropriate by the Chief Executive Officer of Employer, including, specifically, duties relating to the day-to-day operations of Employer’s traditional outdoor division, (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 an Executive Vice President of Employer and as the Chief Operating Officer of Employer’s traditional outdoor division and (iv) shall report directly to the Chief Executive Officer of Employer or his designees.

 

(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 to Employer 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 to the management of Executive’s 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 Two Hundred Ten Thousand Dollars ($210,000), which Base Salary shall be subject to appropriate increase each year thereafter at the discretion of the compensation committee of the board of directors of Group (the “Compensation Committee”). Any annual increase in Executive’s Base Salary shall be based upon increases in the cash flow generated by Employer’s traditional outdoor division.

 

(b) Annual Bonus. Executive shall be entitled to an annual bonus for each fiscal year in which Executive is employed hereunder in an amount equal to a percentage of Executive’s Base Salary for such fiscal year as may be determined by the Compensation Committee in its reasonable discretion based upon the recommendation of the Chief Executive Officer of Employer. The parties to this Agreement currently anticipate that the annual bonus payable pursuant to this Section 3(b) shall not be less than forty percent (40%) of the Base Salary then due and payable to Executive; however, the parties acknowledge that no bonus amount is guaranteed. Any bonus determined to be payable under this Section 3(b) shall be paid by Employer to Executive as soon as practicable following the completion of Employer’s annual audit.

 

(c) Withholdings. Employer shall, in accordance with applicable law, deduct from the Base Salary, any bonus amount and any other cash amounts payable by Employer under the provisions of this Agreement to Executive, or, if applicable, to Executive’s estate, legal representatives or other beneficiaries 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 beneficiaries.

 

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

 

(a) Life Insurance. Group shall provide to Executive, and shall 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 Six Hundred Forty Thousand Dollars ($640,000), subject to Executive’s insurability at standard group rates. Executive shall be solely responsible for the payment of any federal and/or state taxes

 

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that may be levied as a result of Group furnishing such life insurance policy, and Executive, his estate and/or heirs hereby agree to indemnify and hold harmless Employer and Group from and against any and all taxes that may be 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 Group 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, Group 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. Group 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 accordance with Group’s Executive Medical Benefit Plan. If Group is notified that Executive does not qualify for such disability insurance at standard rates, Group will so advise Executive within five (5) days after Group has received such notification of non-qualification.

 

(c) Reimbursement for Business Expenses. Employer shall reimburse Executive promptly upon production by Employee 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) Vacation. 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; and, provided further, that any accrued but unused vacation at the end of any calendar year shall expire without consideration to Executive. 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 Group, Executive shall be entitled to participate in such stock award, stock option or other similar equity plans as shall be determined by the board of directors of Group to be fair, appropriate and customary for an employee in the position of Executive, in each case, subject to the provisions thereof.

 

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, in its sole discretion (“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 Executive would have been entitled under this Agreement had Executive 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 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 any bonus for any period during which Executive is so Disabled.

 

(d) Executive agrees to submit such medical evidence regarding Executive’s Disability as may be reasonably requested by the Chief Executive Officer of Employer.

 

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

 

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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 Employer or has 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 has 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 or any of its Affiliates;

 

(iv) Executive has breached 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 or Group 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 or Group 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 or Group 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, Group and their 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 and approved in accordance with relevant corporate policy.

 

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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) or (x) or any termination which is 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.

 

(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 of Employer 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 any annual 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 or Group 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 vice president and a chief executive officer of a division 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) The failure of Employer to obtain in writing the assumption of its obligation to perform this Agreement by any successor to all or substantially all of the assets of Employer and/or Employer’s traditional outdoor division within fifteen (15) days after such sale or after a merger, consolidation, sale or similar transaction in which Employer is not the surviving entity, as applicable;

 

(v) Employer requires a physical transfer or relocation of Executive to a location unacceptable to Executive in order for Executive to continue to perform his duties and responsibilities under this Agreement; or

 

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(vi) There is a change of control of Group such that (X) during any period of twelve consecutive calendar months, individuals who at the beginning of such period constituted the board of directors of Group shall not consist of a majority of Continuing Directors for any reason other than death or disability of a director then in office; (Y) the employment of Steven Dinetz and/or Carl Hirsch is terminated by (1) Group other than for ‘Cause’ or (2) by either such individual for “Good Reason”, in each case as such terms are defined in their respective employment agreements; or (Z) all or substantially all of the assets of Group are sold to a third party.

 

No termination by Executive pursuant to any of clauses (i), (ii) or (iii) above will be effective unless and until Employer has first been given written notice of the conduct or circumstance purported to constitute “Good Reason” 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 Employer previously (in which case, such termination shall be effective on such current or prospective date as may be specified by Executive when giving written notice of the termination), Employer has failed to cure that conduct or omission within thirty (30) days following receipt of that written notice by Employer, except that if such conduct or circumstance is the failure to pay any moneys due to Executive under Section 3 hereof, then the cure period shall be fifteen (15) days following receipt of such written notice. Any termination under clause (iv), (v) or (vi) or any termination which is 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 Executive when giving written notice of the termination.

 

(e) By Executive Without Good Reason. Executive may terminate his employment hereunder without Good Reason (as defined above) at any time upon notice from Executive to the Chief Executive Officer of Employer.

 

7. Payments Upon Termination.

 

(a) Termination by Employer for Cause or by Executive Other Than for Good Reason. If Executive’s employment hereunder is terminated by Employer for Cause, other than pursuant to Section 6(b)(vii), (viii), (ix) or (x) o