Exhibit 10.7
PHANTOM STOCK AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of January, 97 by and
between Xxxxx Outdoor Advertising Limited Partnership, a Minnesota Limited
Partnership (the "Company") and Xxxxx Xxxxxxx (the "President");
W I T N E S S E T H
WHEREAS, the Company owns and operates, an outdoor advertising business
internally referred to as Xxxxx Outdoor:
WHEREAS, President is the manager of the Company and the Company is desirous
of affording President incentives in the form of phantom stock of the Company;
WHEREAS, the parties hereto are desirous of memorializing in writing the terms
and conditions of President's employment and award of phantom stock interest;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the Company and President hereby agree as
follows:
ARTICLE I
EMPLOYMENT
Section 1.1. EMPLOYMENT. The Company hereby continues the employment of
President as President of the Company to perform such duties and discharge such
functions in and about the business and affairs of the Company as the president
of the managing general partner of Company or its board of directors may from
time to time determine. President agrees, during the term hereof, to diligently
and in good faith perform and discharge such duties and functions.
Section 1.2. BASIC COMPENSATION. The Company agrees to pay President a salary
in such amount as may be from time to time determined by the board of directors
of the managing general partner of Company. Basic compensation payable under
this section shall be payable in semi-monthly or bi-weekly installments in
accordance with such practices and procedures as are generally applicable to
other employees of the Company.
Section 1.3. FRINGE BENEFITS. While President is in the employ of the
Company, the Company agrees to provide to President such benefits as may be
provided by the Company from time to time to its similarly situated employees.
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EXHIBIT 10.7
Section 1.4. TERM. The term of this Agreement shall commence on the date
hereof and continue through the fifth anniversary of the date of this Agreement
provided, however, that President shall have the continuing option to
immediately terminate the employment provided by Section 1.1. hereof by giving
two weeks' notice thereof to the Company and the Company shall have the
continuing option to immediately terminate the employment provided by Section
1.1. hereof by giving written notice thereof to President which notice may be
effective immediately. Upon any such termination, the rights and obligations set
forth in this Article I shall terminate provided, only, that the Company shall
pay to President any compensation payable under Section 1.2 pertaining to
periods prior to the date of such notice and for two weeks thereafter.
ARTICLE II
PHANTOM STOCK INTERESTS
Section 2.1. AWARD OF PHANTOM STOCK INTERESTS. Provided that President shall
have been a full time employee of the Company for the twelve consecutive
calendar months preceding each such date, the Company agrees that President
shall be awarded one Phantom Stock Interest on each of on January 1, 1998,
January 1, 1999, January 1, 2000, January 1, 2001 and January 1, 2002.
Notwithstanding the foregoing, if the Company, substantially all of the assets
thereof or substantially all of the equity interests therein, shall be sold
(except to an entity controlled by, controlling or under common control with the
Company, Xxxxxxx Xxxxx or their respective affiliates) after President shall
have been a full time employee of the Company for 24 consecutive calendar months
but prior to time that there has been awarded to the President all of the
Phantom Stock Interests to be awarded to him pursuant to this Agreement, there
shall be deemed to have been awarded to President, on the date on which such
sale is consummated, all Phantom Stock Interests which have not been theretofore
awarded to President and are to be awarded pursuant to this Section 2.1.
Section 2.2. PAYMENT OF PHANTOM STOCK INTEREST. The Company shall pay, and
President shall be entitled to receive, the cash value of Awarded Phantom Stock
Interests, which shall be paid as follows:
(i) one-third thereof within 120 days of the Determination Date.
(ii) one-third thereof on the first anniversary of the First Payment
Date, and
(iii) one-third thereof on the second anniversary of the First Payment
Date.
Section 2.3. BENEFICIARY. President may designate (by filing with the Company
a written beneficiary designation form in form reasonably acceptable to the
Company) one or more
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EXHIBIT 10.7
primary beneficiaries or contingent beneficiaries to receive all or a specified
part of the cash value of Awarded Phantom Stock Interests which, at the time of
President's death, may remain unpaid under this Agreement and President may
change or revoke any such designation from time to time. No such designation,
change or revocation shall be effective unless executed by President and
accepted by the Company during President's lifetime. Each such designation,
change or revocation shall be effective under this Agreement until changed or
revoked in the manner specified herein. No such change or revocation shall
require the consent of any beneficiary theretofore designated by President. If
President fails to designate a beneficiary, or designates a beneficiary and
thereafter revokes such designation without naming another beneficiary, or
designates one or more beneficiaries and all such beneficiaries so designated
fail to survive President, then the beneficiary of such Awarded Phantom Stock
Interests, or the part thereof as to which President's designation fails, as the
case may be, shall be the representative of President's estate. Unless President
has otherwise specified in the beneficiary designation, the beneficiary or
beneficiaries designated by President shall become fixed as of President's death
so that, if a beneficiary survives President but dies before the receipt of all
payments due such beneficiary, such remaining payments shall be payable to the
representative of such beneficiary's estate.
Section 2.4. BENEFITS NOT TRANSFERABLE. Neither President nor any beneficiary
hereunder shall have any transferable interest in the payments due hereunder nor
any right to anticipate, alienate, dispose of, pledge or encumber the same prior
to actual receipt thereof, nor shall the same be subject to attachment,
garnishment, execution following judgment or other legal process instituted by
creditors of President or any such beneficiary provided that the unpaid cash
value of President's Phantom Stock Interests and any payments due hereunder
shall at all times be subject to set-off for debts owed by President to the
Company or any of its affiliates.
Section 2.5. NATURE OF THE COMPANY'S OBLIGATION. The Company shall maintain a
record of the total number of Awarded Phantom Stock Interests but the Company
shall not be required to segregate any funds or other assets to be used for the
payment of benefits under this Agreement and no such record shall be considered
as evidence of the creation of a trust fund, an escrow or any other segregation
of assets for the benefit of President or any beneficiary of President. The
obligation of the Company to make the payments described in this Agreement is an
unsecured contractual obligation only, and neither President nor any beneficiary
of President shall have any beneficial or preferred interest by way of trust,
escrow, lien or otherwise in and to any specific assets or funds. President
specifically acknowledges that the Phantom Stock Interests to be awarded
pursuant to the terms of this Agreement are not securities in the Company and do
not create any right in the equity or capital of the company or any of its
affiliates. President and each beneficiary of President shall look solely to the
general credit of the Company for satisfaction of any obligations due or to
become due under this Agreement, it being expressly acknowledged by the
President that the obligations of the Company hereunder are junior and
subordinate in right of payment to the obligations of the Company to its
lenders. If the Company should, in its sole discretion, earmark or set aside any
funds or other assets to pay benefits hereunder, the same shall, nevertheless,
remain and be regarded as part of the general assets of the Company subject to
the claims of its general creditors (and shall not be considered to be held in a
fiduciary
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EXHIBIT 10.7
capacity for the benefit of President or any beneficiary hereunder), and neither
President nor any beneficiary of President shall have any legal, beneficial,
security or other property interest therein. Upon delivery by the Company to
Manger of the consideration as provided in Section 2.2, the rights and
obligations of the Company and President under this Article II shall terminate
and President shall have no other or further rights under this Article or in
respect hereof.
ARTICLE III
COVENANT NOT TO COMPETE
Section 3.1. COVENANT NOT TO COMPETE. President hereby covenants that, for a
period of three years next following the Determination Date (or such shorter
period for which the Company continues to be owned or operated by the Company,
Xxxxxxx Xxxxx or their respective affiliates), President shall not be engaged or
interested in any business which competes, directly or indirectly, with the
business of the Company (whether as a proprietor, partner with another,
shareholder, agent or consultant of, employee of or lender to, another) in the
markets then served by the Company, except as a proprietor, partner,
shareholder, employee or consultant in or to the Company or any entity
controlled by, controlling or under common control with the Company, provided
that if the employment of President is terminated by the Company without cause
and without an offer of comparable employment by an affiliate of the Company,
Xxxxxxx Xxxxx or their respective affiliates, the foregoing covenant shall not
apply (without affecting the obligations hereinafter contained in this Section
3.1 in respect of disclosures by President). President agrees that he will not
at any time disclose to any person or other entity who or which is, or
reasonably may be expected to be, in competition with the Company in the outdoor
advertising business, any confidential information or trade secrets of the
Company or any of its affiliates, the contents of any customer lists of the
Company or any of its affiliates or the general needs of the customers or other
contracting parties with the Company, the Company or any of its affiliates,
provided, however, the foregoing shall not prevent President from responding to
the request of a governmental agency or pursuant to court order or as otherwise
required by law. For a period of one year following the Determination Date,
President agrees not to offer employment to, not to discuss the nature of any
prospective employment opportunities with, and not to otherwise solicit any
employee of the Company (or any person who was an employee the Company within
180 days of the Determination Date) on his own behalf, on behalf of any employer
of the President, on behalf of any entity with which the President is acting as
a consultant or with which the President is then otherwise affiliated.
Section 3.2. REMEDIES. Recognizing that a breach of the covenant contained in
Section 3.1 would cause the Company irreparable injury and the damages at law
would be difficult to ascertain, President consents to the granting of equitable
relief by way of a restraining order or temporary or permanent injunction by any
court of competent jurisdiction to prohibit the breach or enforce the
performance of the covenants contained in Section 3.1. The invalidity or
unenforceability of any provision of this Article or the application thereof to
any person or
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EXHIBIT 10.7
circumstance shall not affect or impair the validity or enforceability of any
other provision or the application of the first provision to any other person or
circumstance. Any provision of this Article that might otherwise be invalid or
unenforceable because of contravention of any applicable law, statute or
governmental regulation shall be deemed to be amended to the extent necessary to
remove the cause of such invalidation or unenforceability and such provision as
so amended shall remain in full force and effect as a part hereof.
ARTICLE IV
DEFINITIONS AND GENERAL PROVISIONS
Section 4.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the respective meanings set forth below:
ACQUISITIONS: The purchase by the Company of any group of advertising
structures operated as a going concern the time of such acquisition but not the
acquisition of a single outdoor advertising structure or a single lease site as
part of the normal capital expenditures made by the Company not involving the
acquisition of an existing business operation.
AWARDED PHANTOM STOCK INTERESTS: The number of Phantom Stock Interest (not
to exceed 5 such Phantom Stock Interests) awarded by the Company pursuant to
Section 2.1.
BASE COST: $213,763,000 plus (i) the purchase price (or other consideration
therefore determined in accordance with generally accepted accounting
principles) for any Acquisition made after the date hereof less (ii) the sales
price (or other consideration therefor determined in accordance with generally
accepted accounting principles) any Disposition made after the date hereof.
DETERMINATION DATE: The date of any of the following events: (i)
termination of the President's employment, whether by death or otherwise, (ii)
the sale of the Company, the sale of substantially all of the assets thereof or
the sale of substantially all of the equity interests therein, or (iii) the
fifth anniversary of the date of this Agreement.
DISPOSITION. The sale by the Company in one transaction of any group of
advertising structures but not any loss of an outdoor advertising structure or a
site lease as part of the normal attrition in the operation of the Company.
FISCAL YEAR: The fiscal year of the Company ending on the last day of the
calendar year.
OPERATING PROFIT: With respect to any Fiscal Year (i) the gross revenues of
the Company derived from the ongoing business operations of the Company for such
period less (ii) direct operating expenses (excluding interest, federal and
state income taxes (or any provision or such
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EXHIBIT 10.7
taxes), depreciation and amortization). Operating Profit shall be determined on
the accrual method of accounting and in accordance with generally accepted
accounting principles customarily used in the outdoor advertising industry and
consistently applied, provided that in no event shall tradeout or barter
transactions or extraordinary items of revenue or expense (including revenue
from non-operating investments and revenue from the sale of operating assets or
properties) or revenue not derived from business operations be reflected in (or
give rise to) revenues or expenses.
OPERATING VALUE: The excess, if any, of (x) the product of eight and
Operating Profit for the Fiscal Year ending immediately prior to the date on
which the Determination Date occurs over (y) the Base Cost.
PHANTOM STOCK INTEREST: The cash equivalent of one percent (1%) of
Operating Value.
Section 4.2 WITHHOLDING TAXES. The Company may withhold from any payment to
be made under this Agreement (and transmit to the proper taxing authority) such
amount as it may be required to withhold under any federal, state or other law.
Section 4.3 ADMINISTRATION. The Company and its executive officers shall have
full power to interpret, construe and administer this Agreement, including
authority to determine any dispute or claim with respect thereto. The
determination of the Company in any matter, made in good faith, shall be binding
and conclusive upon President and all other persons having any right or benefit
hereunder. Unless President shall give notice to the Company objecting to the
Company's calculation of the cash value of the Awarded Phantom Stock Interests
within thirty days after notice of the determination thereof by the Company,
such calculation shall conclusively be deemed to have been accepted by the
parties hereto. As used herein, the expression "Operating Profit" means
operating profit for the Company as determined by the chief financial officer of
the Company consistent with prior practice, it being understood that the
financial statements for the Company may not separately segregate all expenses
with respect to the Company and that the allocation of expenses of the Company
related to the Company as made by such chief financial officer shall be deemed
to be conclusive and binding on all parties hereto. Any of the obligations of
the Company hereunder may be performed by an affiliate of the Company and such
performance by an affiliate shall be deemed to satisfy any such obligation of
the Company hereunder.
Section 4.4. NOTICES. All notices given under any of the provisions of this
Agreement shall be deemed to have been duly given when made in writing and
either delivered personally to the party to whom notice is to be given or on the
date deposited in the United States mail by registered or certified mail, return
receipt requested, addressed as follows:
(i) If to the Company to:
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EXHIBIT 10.7
Xxxxx Outdoor Advertising L.P.
0000 X. Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxx Xxxxxx
(ii) If to President to:
Xxxxx Outdoor Advertising
0000 X. Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
or to such other address as such party shall specify in writing to the other
party hereto. Any notice delivered personally to the Company shall be delivered
to a senior corporate officer of the Company.
Section 4.5. BINDING EFFECT. The provisions of this Agreement shall not give
President any rights to continue to be employed or otherwise retained by the
Company or any affiliate thereof. Except as so provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, the successors and
assigns of the Company and the beneficiaries, personal representatives and heirs
of President. It is expressly acknowledged by the President that no general
partner of the Company shall have any personal liability hereunder, the
liability of the Company being limited to the assets of the Company.
Section 4.6. CONTROLLING LAW. This Agreement shall be construed, and the
legal relations between the parties determined, in accordance with the laws of
the state of Minnesota.
Section 4.7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original without the
production of the others, but all of which together shall constitute one and the
same instrument.
Section 4.8. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and may
not be varied, modified or amended except by a writing signed by the parties to
be charged. The making, execution and delivery of this Agreement by the parties
hereto have been induced by no representations, statements, warranties or
agreements of the other except those herein expressed.
Section 4.9. HEADINGS. The Company of this Agreement into sections and
paragraphs and the titles assigned thereto is only a matter of convenience for
reference and shall not define or limit any of the terms or provisions thereof.
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EXHIBIT 10.7
IN WITNESS WHEREOF, the individual party has hereunto set his hand and the
corporate party has caused these presents to be executed by a proper officer
thereunto duly authorized all as of the day and year first above written.
XXXXX OUTDOOR ADVERTISING
LIMITED PARTNERSHIP
By Xxxxx Outdoor Advertising, Inc.
Its Managing General Partner
By _______________________________
Xxx Xxxxxx
Its Chief Financial Officer
______________________________ ----------------------------------
Xxxxx Xxxxxxx, President/CEO Xxxxx Xxxxx, Chairman of the Board
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