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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of the 28th day of August, 1998 by
and between Xxxxxx X. Xxxx, an individual residing in the State of Missouri (the
"EXECUTIVE"), and Xxxx X. Xxxxx, an individual residing in the State of
Washington ("XXXXX").
W I T N E S S E T H:
WHEREAS, Xxxxx, Charter Communications, Inc., a Delaware corporation
("CCI"), and certain other parties are entering into a Purchase Agreement (the
"CHARTER PURCHASE AGREEMENT") dated the date hereof providing for the sale (the
"SALE TRANSACTION") to Xxxxx by CCI and certain other parties of their
respective equity interests in CCI and certain subsidiaries and affiliates of
CCI which, directly and indirectly through their respective subsidiaries, own
and operate cable television systems and businesses in respect thereof in
various areas of the United States (the "CHARTER SYSTEMS");
WHEREAS, Xxxxx is the owner, indirectly, through corporations,
partnerships and other entities controlled by him, of the cable television
systems and businesses in respect thereof purchased pursuant to that certain
Purchase Agreement dated as of April 3, 1998 by and among Vulcan Cable, Inc.,
Marcus Cable Properties, Inc. ("MARCUS CABLE") and certain other parties (the
"MARCUS SYSTEMS");
WHEREAS, it is the intention of Xxxxx to operate the Charter Systems
and the Marcus Systems under the management and supervision of the Executive and
potentially to combine such systems either prior to or following the closing of
the Sale Transaction (the "CLOSING");
WHEREAS, the Executive currently serves as President, Chief Executive
Officer and a member of the Board of Directors of CCI and, as of the
Effectiveness Date, as President and Chief Executive Officer of Marcus Cable;
WHEREAS, the Employer (as defined below) desires to have the benefits
of the Executive's knowledge and experience in the cable television industry by
having the Executive serve as President and Chief Executive Officer of the
Employer from the Effectiveness Date (as defined below) until the Closing and
President, Chief Executive Officer and a member of the Board of Directors of the
Employer on and after the Closing on the terms and conditions set forth herein;
WHEREAS, the Executive desires to serve as President and Chief
Executive Officer of the Employer from the Effectiveness Date until the Closing
and President, Chief Executive Officer and a member of the Board of Directors of
the Employer on and after the Closing on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties hereto hereby agree as follows:
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1. Interpretation.
1.1 Defined Terms.
"AFFILIATE" shall mean with respect to any person or entity, any other
person or entity who controls, is controlled by or is under common control with
such person or entity.
"CHANGE OF CONTROL" means a sale of more than 49.9% of the outstanding
capital stock of the Employer, except where Xxxxx and his Affiliates retain
effective voting control of the Employer, the merger or consolidation of the
Employer, with or into any other corporation or entity, other than a
wholly-owned subsidiary of the Employer, except where Xxxxx and his Affiliates
have effective voting control of the surviving entity, or any other transaction,
or event, a result of which is that Xxxxx holds less than 50.1% of the voting
power of the surviving entity, except where Xxxxx and his Affiliates retain
effective voting control of the Employer, or a sale of all or substantially all
of the assets of the Employer (other than to an entity majority-owned or
controlled by Xxxxx and his Affiliates).
"EFFECTIVENESS DATE" means August 28, 1998.
"EMPLOYER" shall mean CCI, and upon the acquisition by Xxxxx of control
over Marcus Cable, the term "Employer" shall also include Marcus Cable. Upon the
creation of an entity that results from the combination of the Marcus Systems
and the Charter Systems, the term "Employer" shall thereafter mean such entity.
"FAIR MARKET VALUE" shall mean for all purposes under this Agreement,
(i) if the Employer is privately held at the occurrence of an event triggering a
Fair Market Value calculation hereunder (a "TRIGGER EVENT"), 13.7 times the
projected cash flow of the Employer (as established in the budget for such
entity approved by its Board of Directors or, in the event no such budget has as
of the date of the Trigger Event been approved by the Board, as established by
the Board of Directors within thirty days of any such Trigger Event taking into
account the most recent forecasts for such entity presented to its Board of
Directors) including all future acquisitions by the Employer to the extent of
its interest for its fiscal year following its fiscal year in which the Trigger
Event occurs, and (ii) if the applicable entity is a public company at the time
of a Trigger Event, then a price per share equal to an average of the closing
price of such entity's publicly traded stock on the 20 trading days immediately
prior to the Trigger Event.
"INITIAL PUBLIC OFFERING" means the consummation of a firm commitment
underwritten initial public offering pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended, covering the offer
and sale of shares of Common Stock of the Employer (the "COMMON STOCK").
"OPTION SPREAD" shall mean an amount equal to (i) the difference
between the exercise price of an option and the Fair Market Value per share of
stock or other underlying equity unit with respect to such option, times (ii)
the number of shares or equity units covered by such option at the time of the
exercise.
"TOTAL ACQUISITION COST" shall mean the sum of the amounts equal to (i)
13.7 times the projected Operating Cash Flow of the Marcus Systems for the 1999
fiscal year, but in no
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event less than Xxxxx'x actual acquisition cost for Marcus Cable and its
affiliates (provided that the projected Operating Cash Flow for the Marcus
Systems will be the 1999 Marcus Cable budgeted operating cash flow approved by
the Board of the Employer, and (ii) 13.7 times the projected Operating Cash Flow
of the Charter Systems for the 1999 fiscal year.
2. Employment, Duties and Authority. The Employer hereby agrees to employ the
Executive, and the Executive agrees to be employed, as President and Chief
Executive Officer of the Employer. As President and Chief Executive Officer, the
Executive shall report directly to the Board of Directors of the Employer (the
"BOARD") and shall be responsible for the nationwide general management,
administration and operation of all present and future business of the Employer
and its subsidiaries. The Executive shall be responsible for and shall have the
authority to select the management team of the Employer from time to time,
subject to prior consultation with the Board. The Executive shall devote
substantially all of his business time, attention, energies, best efforts and
skills to the diligent performance of his duties hereunder. Notwithstanding the
foregoing, it is understood that the Executive may expend a reasonable amount of
time for personal, charitable, investment and other activities so long as such
activities shall not interfere in any material respect with the performance by
the Executive of his duties and responsibilities hereunder.
The Employer also agrees to elect, or cause to be elected, the
Executive as a member of, and the Executive agrees to serve on, the Board
without any additional compensation. Prior to an Initial Public Offering by the
Employer, the Board shall consist of three Directors which shall be comprised of
the Executive, Xxxxx and Xxxxxxx Xxxxx ("XXXXX"). If either Xxxxx or Savoy
should die or become disabled, the survivor of them shall designate a successor.
Prior to an Initial Public Offering, the size of the Board may be increased,
provided that any such increase shall have been approved by the Board, including
the Executive, Xxxxx and Xxxxx, it being understood that the Executive will not
unreasonably withhold such approval if in contemplation of an Initial Public
Offering. After an Initial Public Offering, the Board shall consist of such
number of Directors as is customary for a publicly traded company with market
value similar to that of the Employer.
3. Term. The term of this Agreement shall commence on the Closing Date and shall
terminate on the third anniversary of the Closing (the "INITIAL TERM");
provided, however, that the Initial Term shall be extended and this Agreement
shall automatically be renewed for successive one-year periods ("RENEWAL Terms")
unless (i) this Agreement is terminated in accordance with the provisions of
Section 10 hereof, or (ii) the Executive or the Employer provides written notice
to the other of such party's desire not to extend this Agreement at least sixty
(60) days prior to the expiration of the Initial Term, or any Renewal Term, as
the case may be, of this Agreement under this Section 3. If the Closing does not
occur, for any reason, this Agreement shall be of no force or effect and neither
the Executive nor Xxxxx shall have any rights, obligations or liabilities under
or arising out of this Agreement or the failure to consummate the Sale
Transaction (except as provided in the Charter Purchase Agreement).
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4. Compensation and Benefits.
4.1 Cash Compensation.
(a) Base Salary. During the Initial Term of this Agreement,
the Employer shall pay the Executive an annual base salary at the rate of One
Million Two Hundred Fifty Thousand Dollars ($1,250,000) or such higher rate as
may from time to time be determined by the Board in its discretion, which shall
be payable consistent with the Employer's payroll practices.
(b) Bonus. The Executive shall be eligible to receive an
annual bonus in an aggregate amount not to exceed Six Hundred Twenty-Five
Thousand Dollars ($625,000) consisting of (i) an amount not to exceed Three
Hundred Twelve Thousand Five Hundred Dollars ($312,500) (the "MERIT BONUS"), to
be determined by the Board based upon the Board's assessment in its discretion,
of the performance by the Executive of his duties as President and Chief
Executive Officer during the applicable period, and (ii) an amount not to exceed
Three Hundred Twelve Thousand Five Hundred Dollars ($312,500) (the "FORMULA
BONUS") determined by application of a formula to be agreed upon by the Board
with respect to each year, based upon the achievement of budgeted cash flow and
such other targets of the Employer as the Board and the Executive shall mutually
agree. The Merit Bonus and the Formula Bonus shall be paid to the Executive in
cash within sixty (60) days following the Employer's determination of cash flow
or such other targets for the applicable period.
(c) Interim Period Compensation. In recognition of Executive's
increased responsibilities relative to Marcus Cable after the Effectiveness
Date, Executive shall be entitled to a payment equal to the difference between
the base salary provided in Section 4.1(a) and the actual base salary received
by Executive from August 28, 1998 through the Closing which amount shall be paid
on a current basis. In addition, Executive shall be eligible to receive a
prorated bonus referable to such period consistent with the provisions of
Section 4.1(b), which bonus shall be paid on January 4, 1999.
4.2 Benefit Plans.
The Executive shall be entitled to participate in any disability
insurance, pension, or other benefit plan of the Employer now existing or
hereafter adopted for the benefit of the employees generally or of the
executives of the Employer, which benefits shall be no less generous than those
currently enjoyed by the Executive.
4.3 Vacation. The Executive shall be entitled to not less than one (1)
month of compensated vacation in each fiscal year, to be taken at times which do
not unreasonably interfere with the performance of the Executive's duties
hereunder. Unused vacation time shall not be carried over nor paid in cash in
lieu thereof except with the Board's prior approval.
4.4 Life Insurance. The Employer shall, promptly upon receipt of
written request therefor from the Executive, reimburse the Executive for life
insurance premiums paid by the Executive, such reimbursement not to exceed
thirty thousand dollars ($30,000) per year.
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Any amount over and above $30,000 for premiums due for any insurance policy
contemplated by this paragraph shall be the sole responsibility of the
Executive.
4.5 Expenses. The Executive shall be entitled to receive reimbursement
for all reasonable out-of-pocket expenses incurred by the Executive in the
performance of his duties hereunder, provided that such expenses are incurred
and accounted for in accordance with the policies and procedures established by
the Employer.
4.6 Other Benefits. The Employer agrees to make available to the
Executive the airplane currently owned by CCI for personal use by the Executive,
the costs of any such use by the Executive to be in compliance with the rules
and regulations of the Internal Revenue Service. In addition, the Employer shall
provide a car valued at up to $100,000 for the Executive's use and shall pay all
business expenses associated with the use of such car by the Executive. The
Employer shall pay periodic fees and dues for the Executive's membership in a
country club selected by the Executive.
5. Options. As a matter of separate inducement and agreement in connection with
his employment hereunder and not in lieu of any salary or other compensation
upon the Closing, the Employer shall grant to the Executive options (the
"EXECUTIVE OPTIONS") to purchase three percent (3%) of the net equity value of
the Employer. The exercise price for such interest shall be equal to three
percent (3%) of the Total Acquisition Cost. Subject to the rights of Xxxxx and
the Employer under Section 10.3 hereof, the Executive Options shall have a term
of ten years and shall vest twenty-five percent (25%) on the Closing Date and
the remaining seventy-five percent (75%) shall vest 1/36 on the first day of
each of 36 months commencing on the first day of the thirteenth month following
the Closing Date; provided, that the Executive is employed by the Employer or
any of its Affiliates, or by Marcus Cable and CCI, as the case may be, on the
applicable vesting date. Executive understands that in connection with the
restructuring of CCI, Marcus Cable, Vulcan Cable, Inc. and Vulcan Cable II,
Inc., the options contemplated by this Section 5 of this Agreement may be
granted as options, equity interests or profit participations by parent or
subsidiary entities of the Employer as determined by the Board of Directors of
CCI, it being understood that in making such determination the Board will use
good faith efforts to structure such options, interests or profit participations
so that they provide at least as favorable economic consequences (including
without limitation tax consequences) for Executive as would a grant at the
Employer level. Notwithstanding the foregoing sentence, the Executive Options
shall immediately vest if the Executive's employment is terminated (i) by the
Executive for Good Reason (as defined in Section 10.1 hereof) or (ii) by the
Employer without Cause (as defined in Section 10.2 hereof).
The Employer agrees to consider the granting of additional options to
the Executive (y) after future acquisitions, if any, by the Employer, and (z) on
or about the third anniversary of the Closing.
6. Stay Bonuses. The Employer shall pay at the Closing an aggregate of
Twenty-Five Million Dollars ($25,000,000), which amount shall have been
deducted, pursuant to Section 2.2 of the Charter Purchase Agreement, from the
Purchase Price payable thereunder, in stay bonuses (each a "MANAGER STAY
BONUS"), to those managers (the "STAY MANAGERS") of CCI and its Affiliates
designated by the Executive in his sole discretion but with prior
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consultation with Savoy or Xxxxx, allocated among such individuals pursuant to
the written instructions of the Executive provided to the Employer at least five
(5) days prior to the Closing. Neither the Executive, Xxxxx X. Xxxxxxx
("XXXXXXX") nor Xxxxxx X. Xxxx ("XXXX") shall be eligible to receive a Manager
Stay Bonus.
The Manager Stay Bonuses shall each be granted in the form of a loan
from the Employer to each of the Stay Managers. Subject to the provisions of
Section 8 hereof and except as provided in Section 9.2 (b) hereof, one-third of
the principal amount outstanding on each such loan shall be forgiven on each of
the first three anniversaries of the grants thereof; provided, that the Stay
Manager is employed by the Employer or any of its Affiliates on the applicable
anniversary date. The Manager Stay Bonuses shall be paid to the Stay Managers at
the Closing conditioned upon delivery to the Employer of a promissory note
issued by the Stay Manager in favor of the Employer to contain the terms set
forth herein and other reasonable terms as determined by the Employer in
consultation with the Executive prior to the Closing. Upon voluntary termination
by a Stay Manager of his employment with the Employer, all of the principal
amount outstanding under the promissory note issued to such Stay Manager,
together with interest, shall become immediately due and payable from the Stay
Manager to the Employer. The failure of any of the designated Stay Managers to
execute a promissory note shall not interfere with the payment of Manager Stay
Bonuses to the other individuals designated to receive such bonuses.
7. Employee Option Plan.
7.1 General Provisions. The Employer covenants and agrees that it will
adopt an option plan (the "OPTION PLAN") within ninety (90) days after the
Closing, providing inter alia, for the issuance of options (the "EMPLOYEE
OPTIONS") to purchase an aggregate of ten percent (10%) of the capital stock or
other equity interests of the Employer outstanding on the date thereof.
Executive understands that in connection with the restructuring of CCI, Marcus
Cable, Vulcan Cable, Inc. and Vulcan Cable II, Inc., the options contemplated by
this Section 7 of this Agreement may be granted as options, equity interests or
profit participations by parent or subsidiary entities of the Employer as
determined by the Board of Directors of CCI. Forty percent (40%) of the Employee
Options shall be issued within three months of the Closing. All Employee Options
granted within such three-month period shall specify an exercise price equal to
the Total Acquisition Cost divided by the percentage interest of the recipient
therein. The Employee Options shall be issued to such members of the management
team (each an "OPTIONEE") and in such allocations as shall be designated by the
Board based on the recommendation of Executive. The Employee Options shall have
a ten-year term, subject to earlier termination as herein provided, and shall
vest 20% on the first anniversary of the Closing and 1/48th of the remaining
grant on each of the 48 months following such first anniversary, subject to
continued employment by the Employer or its Affiliates as of the applicable
vesting date. Terms and conditions of the Option Plan in addition to those set
forth in this Agreement shall be subject to approval by the Executive and the
Board.
7.2 Effect of Change of Control. Notwithstanding any other provision of
this Agreement, upon a Change of Control, any unvested Employee Options shall
immediately vest.
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7.3 Effect of Breach of Relocation Covenant. Upon a breach of the
covenant set forth in Section 8 of this Agreement, the holders of Employee
Options shall be entitled to the amounts as provided herein. Appropriate
agreements reflecting the same shall be entered into concurrently with the
option grants.
7.4 Effect of Termination of Employment.
(a) Upon termination of an Optionee by the Employer prior to
an Initial Public Offering for any reason other than for cause, Xxxxx or, at his
option, the Employer, shall have the right exercisable for ninety days after any
such termination (but not the obligation except as herein provided), to pay to
the Optionee with respect to all vested Employee Options (or underlying stock or
other equity interest if such Employee Options have been exercised) held by such
individual, the Option Spread as of the date of termination (or the Fair Market
Value if equity interests are purchased), such payment to be made at the option
of Xxxxx or the Employer, in cash or in stock. Concurrent with any such payment,
the options shall be cancelled and the stock or equity interests transferred to
Xxxxx or the Employer, as the case may be.
(b) Subsequent to an Initial Public Offering, upon termination
of an Optionee by the Employer for any reason other than for cause, such
Optionee shall have the right to exercise any vested Employee Options within
sixty (60) days of the termination of employment. After such sixty-day period,
all unexercised Employee Options held by such individual shall automatically be
cancelled.
(c) If within four (4) years after the Closing, the Optionee
voluntarily terminates his employment with the Employer, such Optionee shall
have the right to exercise all of his vested Employee Options within thirty days
after such termination of employment, after which all unexercised options lapse.
For a period of ninety days following such exercise, Xxxxx or, at his option,
the Employer shall have the right, but not the obligation, to purchase the
shares or other equity interests received on exercise of the Employee Options
pursuant to the preceding sentence and any other shares or other equity
interests theretofore acquired on the exercise of Employee Options at the option
exercise price.
If at any time after the fourth anniversary of the
Closing an Optionee voluntarily terminates his employment with the Employer,
such Optionee shall, within ninety days after the termination of his employment,
offer for purchase and Xxxxx or, at his option, the Employer shall have the
right, but not the obligation, to purchase all of such Optionee's vested
Employee Options (or underlying stock or equity interests) for an amount equal
to the Option Spread (or Fair Market Value if equity interests are purchased),
such amount to be paid in cash or stock at the option of Xxxxx or the Employer,
as the case may be.
(d) Upon termination of an Optionee for cause, all Employee
Options shall automatically be canceled.
(e) Upon termination of an Optionee for any reason, all
unvested options shall immediately be cancelled and the Optionee shall not be
entitled to any payment
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therefor except as expressly provided for herein. Except as otherwise expressly
provided herein, all vested options shall be automatically cancelled if not
exercised within ninety (90) days after termination.
8. Location of the Executive Offices of the Charter Entities Subsequent to
Closing.
8.1 Covenant Regarding Relocation of Headquarters. Effective upon the
Closing and for a period of three (3) years immediately following the
Closing, the Employer shall not relocate the existing Headquarters (as
hereinafter defined) of the Employer outside the greater St. Louis,
Missouri area without the prior written consent of the Executive, or
Xxxxxxx and Xxxx if the Executive is not surviving at the time such
consent is sought. The term "HEADQUARTERS" shall mean (i) the principal
offices of the Employer, (ii) the location of all material managerial
functions currently maintained by CCI at its existing headquarters,
including, without limitation all corporate, finance, accounting,
legal, engineering, marketing, regulatory and administrative functions
and (iii) all material employees of CCI performing such functions.
8.2 Effect of Breach. In the event of the breach by the Employer of the
covenant set forth in Section
8.1 hereof, then:
(a) with respect to the Executive, any Executive Options not
yet vested shall immediately vest;
(b) with respect to any employee to whom Employee Options have
been granted and who do not relocate, if less than 40% of the Employee
Options held by such employee have vested, then for purposes of this
paragraph (b) 40% of all Employee Options held by such individual will
be deemed to have vested. With respect to such employee's Employee
Options which have vested or are deemed to have vested pursuant to this
paragraph (b), the Employer shall pay, to each such individual an
amount equal to the greater of (i) the Option Spread or (ii) (A) if the
breach occurs within one (1) year of the Closing, an amount equal to
three (3) times the annual base salary of such individual, or (B) if
the breach occurs thereafter but within two (2) years of the Closing,
an amount equal to two (2) times the annual base salary of such
individual, or (C) if the breach occurs thereafter but within three (3)
years of the Closing, an amount equal to the annual base salary of such
individual.
(c) If any payment is made to any individual pursuant to
Section 8.2(b) hereof, then all options granted to such individual
shall be automatically cancelled; and
(d) the Employer shall, within 30 days of the relocation of
the Headquarters, pay the aggregate amount of $5,000,000 in cash to
such employees of the Employer who do not relocate, to be allocated
among such employees, as shall be designated by the Executive in his
sole discretion; provided, however, that individuals who receive
Manager Stay Bonuses shall not be entitled to any cash payment pursuant
to this paragraph.
8.3 Successors. In the event of the Executive's death, mental
incapacity or other failure to continue as President and Chief
Executive Officer of the Employer during the term
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of this Agreement following the Closing Date, then the rights to be exercised by
him under this Section 8 shall be exercised jointly by Xxxxxxx and Wood.
Amounts payable pursuant to this Section 8 shall be in addition to all other
amounts accrued for the benefit of any individuals covered by this Section 8
through the date of termination of their employment with the Employer, but shall
otherwise be in full satisfaction of any other rights of such employees with
respect to their employment by the Employer.
9. Indemnification. The Employer agrees to indemnify and hold harmless to the
maximum extent permitted by law the Executive from and against any claims,
damages, liabilities, losses, costs or expenses in connection with or arising
out of the performance by the Executive of his duties as an officer, director or
President and Chief Executive Officer of CCI, Marcus Cable, or any of their
respective Subsidiaries or Affiliates and any activities engaged in by the
Executive on behalf of CCI, Marcus Cable or any of their respective Subsidiaries
or Affiliates or as an officer, director or employee of the Employer or any of
the foregoing which the Executive believed in good faith to be within the scope
of such duties prior to and after the Closing.
10. Termination. This Agreement may be terminated as follows:
10.1 By the Executive for Good Reason. The Executive may terminate this
Agreement for Good Reason (as defined below) upon thirty (30) days' advance
written notice to the Employer. "GOOD REASON" shall exist if: (a) there is an
assignment to the Executive of any duties materially inconsistent with, or which
constitutes a material reduction of the Employee's position, duties,
responsibilities, status or authority with the Employer and Employer shall not
have rectified same within twenty (20) days of written notice from Executive,
or, the Executive is required to report, directly or indirectly, to persons
other than the Board of Directors of the Employer; or removal of the Executive
from, or failure to re-elect the Executive to any of the positions he holds
pursuant hereto, except in connection with the termination of the Executive for
Cause (as defined below); (b) the aggregate benefits enjoyed by Executive shall
be materially diminished and Employer shall not have rectified same within
thirty (30) days of written notice; (c) within three (3) years of the Closing,
any material function of the Headquarters or a material number of personnel of
the Employer and its subsidiaries is relocated outside the greater St. Louis,
Missouri area, provided such relocation has not been instigated by the
Executive; or (d) there is a Change of Control.
10.2 By the Employer for Cause. The Employer may terminate this
Agreement for Cause upon thirty (30) days' advance written notice to the
Executive. "CAUSE" shall mean (i) commission of a felony offense, (ii) the
refusal to comply with the lawful directives of the Board, within ten (10) days
after written notice thereof from the Board or (iii) conduct on the part of the
Executive which constitutes gross negligence or willful misconduct which conduct
is not cured within ten (10) days after written notice thereof from the Board.
The Employer agrees that if the Executive has been terminated for Cause pursuant
to clause (i) above and it is subsequently reasonably demonstrated that there
was no commission of a felony offense, then upon the Executive's written
request, Employer shall immediately reinstate the Executive who shall resume his
duties hereunder with no change in the respective rights and obligations of the
parties set forth herein and with full reinstatement of
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economic benefits to the Executive which existed prior to termination as if the
Executive had not been terminated.
10.3 Effect of Termination. In the event of the expiration of this
Agreement in accordance with its terms as a result of the Employer giving the
Executive notice of its intention not to extend the Initial Term for an
additional year as contemplated by Section 3 hereof or a termination of this
Agreement by the Executive pursuant to Section 10.1 hereof or by the Employer
without Cause, (a) the Employer shall pay to the Executive an amount equal to
the aggregate base salary due the Executive during the remainder of the Initial
Term or Renewal Term, as the case may be, of this Agreement and the Board shall,
in its sole discretion, consider additional amounts, if any, to be paid to the
Executive to compensate the Executive for lost opportunities to receive bonus
amounts as provided in Section 4.1(b) hereof; and (b) any unvested Executive
Options shall immediately vest. Upon expiration of this Agreement in accordance
with its terms due to the Executive giving notice of his intention not to renew
or otherwise failing to perform this Agreement, all unvested Executive Options
shall immediately be cancelled. In the event this Agreement is terminated other
than by the Employer for Cause (including any expiration of this Agreement in
accordance with its terms), Xxxxx or, if he does not exercise such right, the
Employer, at its option, shall within sixty (60) days after such termination (or
within sixty (60) days after the end of the Initial Term if such termination
occurs prior to such time) purchase or redeem the Executive's options (or
underlying common stock or other equity interests obtained upon the exercise
thereof) for a cash payment equal to the Option Spread (or the Fair Market
Value, in the case of equity interests). In the event of a termination of this
Agreement, by the Employer pursuant to Section 10.2 hereof, (a) all unvested
Executive Options shall automatically be cancelled and (b) Xxxxx or the Employer
shall for a period of three (3) years from the date of termination, have the
right, but not the obligation, to purchase or redeem all of the vested Executive
Options (or underlying common stock or equity interests obtained upon the
exercise thereof) for an amount equal to the Option Spread (or the Fair Market
Value, in the case of equity interest), such amount to be paid in cash.
11. Covenant Not to Compete; Confidentiality.
11.1 Covenant Not to Compete. The Executive recognizes and acknowledges
that the Employer is placing its confidence and trust in the Executive. The
Executive, therefore, covenants and agrees that during the Applicable
Non-Compete Period (as defined below) the Executive shall not, either directly
or indirectly, without the prior written consent of the Board:
(a) Engage in or carry on any business or in any way become
associated with any business which is similar to or is in competition with the
Business of the Employer. As used in this Section 11, the term "BUSINESS OF THE
EMPLOYER" shall mean the business of owning or operating cable television
systems;
(b) Solicit the business of any person or entity, on behalf of
himself or any other person or entity, which is or has been at any time during
the term of this Agreement a customer or supplier of the Employer including, but
not limited to, former or
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present customers or suppliers with whom the Executive has had personal contact
during, or by reason of, his relationship with the Employer;
(c) Be or become an employee, agent, consultant,
representative, director or officer of, or be otherwise in any manner associated
with, any person, firm, corporation, association or other entity which is
engaged in or is carrying on any business which is in competition with the
Business of the Employer;
(d) For a period of twenty-four (24) months after termination
by the Executive without Good Reason or by the Employer for Cause, solicit for
employment or employ any person employed by the Employer or any of its
subsidiaries at the time of such termination; or
(e) Be or become a shareholder, joint venturer, owner (in
whole or in part), or partner, or be or become associated with or have any
proprietary or financial interest in or of any firm, corporation, association or
other entity which is engaged in or is carrying on any business which is similar
to or in competition with the Business of the Employer, provided, however, that
nothing contained in this Section 11 shall prohibit the Executive from owning
less than 2% of the shares of a publicly held corporation engaged in the
Business of the Employer.
The Executive hereby recognizes and acknowledges that the existing
Business of the Employer extends throughout the United States of America and
therefore agrees that the covenants not to compete contained in this Section 11
shall be applicable nationally. In the event that a court of competent
jurisdiction determines that the scope of the non-compete provisions set forth
in this Section 11 are unenforceable in any respect, then these provisions shall
be deemed to be modified as necessary so that the scope of the non-compete
provisions contained herein are nonetheless as broad as possible and yet
enforceable under applicable law in accordance with their terms.
As used in this Section 11, "APPLICABLE NON-COMPETE PERIOD" shall mean
(i) the Initial Term of this Agreement for so long as the Executive is employed
hereunder, or (ii) if the Executive's employment was terminated for Cause or by
him voluntarily without Good Reason, then any unexpired portion of the Initial
Term. The covenant contained in this Section 11 shall not apply if the
Executive's employment under this Agreement is terminated without Cause or by
him for Good Reason.
11.2 Confidentiality. The Executive will not divulge, and will not
permit or suffer the divulgence of, any confidential knowledge or confidential
information with respect to the operations or finances of the Employer or any of
its Affiliates or with respect to confidential or secret customer lists,
processes, machinery, plans, devices or products licensed, manufactured or sold,
or services rendered, by the Employer or any of its Affiliates other than in the
regular course of business of the Employer or as required by law; provided,
however, that the Executive has no obligation, express or implied, to refrain
from using or disclosing to others any such knowledge or information which is or
hereafter shall become available to the public otherwise than by disclosure by
the Executive in breach of this Agreement.
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12
12. Assignment of this Agreement. The parties agree that at the Closing, Xxxxx
will (i) assign all of his rights hereunder to the Employer if a restructuring
has occurred or to one or more of the parent entities of the Marcus Systems and
the Charter Systems which in the aggregate shall have the financial resources to
fulfill the Employer's obligations hereunder and (ii) cause the Employer to
assume all of the rights and obligations of the Employer hereunder. Furthermore
the parties acknowledge that this Agreement is being entered into in reliance on
such assignment in order to afford sufficient time to determine the structure
for the functional combination of the Marcus Entities and the Charter Entities
prior to the Closing. It is the intention of the parties that this Agreement
become effective only upon the Closing. In no event shall Xxxxx have any
personal obligations or liabilities hereunder regardless of whether the Closing
occurs.
13. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be sufficiently given if delivered in
person or transmitted by telecopy or similar means of recorded electronic
communication to the relevant party as follows:
(a) in the case of the Executive, to the address set forth
opposite his name on the signature page hereto, with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000;
(b) in the case of the Employer, to:
000 000xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Irell & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
Any such notice or other communication shall be deemed to have been
given and received on the day on which it is delivered or telecopied (or, if
such day is not a business day or if the notice or other communication is not
telecopied during business hours, at the place of receipt, on the next following
business day). Any party may change its address for the purposes of this Section
by giving notice to the other parties in accordance with the foregoing.
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14. Assignability and Enforceability. This Agreement shall be binding on and
enforceable by the parties and their respective successors and permitted
assigns. Except as provided in Section 12 hereof, no party may assign any of its
rights or benefits under this Agreement to any person without the prior written
consent of the other party.
15. Expenses of this Agreement. All costs and expenses of the Employer
(including, without limitation, legal, accounting and other professional fees)
incurred in connection with this Agreement or the transactions contemplated
hereby shall be paid by the Employer. All costs and expenses (including, without
limitation, legal, accounting and other professional fees) of the Executive
incurred in connection with this Agreement or the transactions contemplated
hereby shall be paid by CCI, but shall be included within the aggregate $10
million cap on such expenses as provided in the Charter Purchase Agreement.
16. Consultation. The parties shall consult with each other before issuing any
press release or making any other public announcement with respect to this
Agreement or the transactions contemplated hereby and, except as required by any
applicable law or regulatory or stock exchange requirement, neither of them
shall issue any such press release or make any such public announcement without
the prior written consent of the other, which consent shall not be unreasonably
withheld or delayed.
17. Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the State of New York, without giving effect to the principles
of conflicts of laws thereof.
18. Third Party Beneficiaries. Except for the purposes of Section 6 hereof (with
respect to the Stay Managers), Section 7 hereof (with respect to the recipients
of options described therein) and Section 8 hereof (with respect to the holders
of any options or the recipients of any payments described therein), no person
other than the parties hereto shall have any rights under this Agreement. No
individual (other than Xxxxxxx or Wood to the extent specifically provided
herein) shall have any rights for purposes of Sections 6, 7 or 8 unless and
until such individual has been designated a Stay Manager or been granted an
option or been designated as a recipient of a payment under Section 8 and then
only to the extent of and as expressly provided in such Stay Manager award,
option grant or other payment.
19. Counterparts. This Agreement may be executed in counterparts, each of which
shall constitute an original and all of which taken together shall constitute
one and the same instrument.
20. Currency. Unless otherwise indicated, all dollar amounts in this Agreement
are expressed in United States dollars.
21. Sections and Headings. The division of this Agreement into Sections and the
insertion of headings are for reference purposes only and shall not affect the
interpretation of this Agreement.
22. Number and Gender. In this Agreement, words importing the singular number
only shall include the plural and vice versa and words importing gender shall
include all genders.
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23. Entire Agreement. This Agreement and any agreements or documents referred to
herein or executed contemporaneously herewith, constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether written
or oral. There are no conditions, covenants, agreements, representations,
warranties or other provisions, express or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein provided.
24. Severability. If any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
25. Amendments and Waivers. No amendment or waiver of any provision of this
Agreement shall be binding on any party unless consented to in writing by such
party. No waiver of any provision of this Agreement shall be construed as a
waiver of any other provision nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided. No provision of this Agreement shall
be deemed waived by a course of conduct unless such waiver is in writing signed
by all parties and stating specifically that it was intended to modify this
Agreement.
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26. Survival. The provisions of Sections 9 and 11 shall survive the termination
of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement.
XXXX X. XXXXX
By: /s/ Xxxx X. Xxxxx by Xxxxxxx X. Xxxxx
_____________________________________
Xxxxxxx X. Xxxxx,
Attorney-In-Fact
XXXXXX X. XXXX
00000 Xxxxxxxx Xxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
/s/ Xxxxxx X. Xxxx
___________________________
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