1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into by and
between TCA Cable TV, Inc., a Texas corporation ("TCA") and Xxxxxxx X.
Xxxxxxxx, a resident of the State of Texas ("Employee"), dated as of November
1, 1994.
WITNESSETH:
WHEREAS, TCA, either itself or through one of its wholly-owned
subsidiaries, desires to employ Employee as provided herein, and Employee
desires to accept such employment; and
WHEREAS, Employee shall, as an employee of TCA or one of its
wholly-owned subsidiaries, have access to confidential information with respect
to TCA and its affiliates;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment.
(a) TCA may assign its obligations hereunder to
one of its wholly-owned subsidiaries. Except as used in
Section 3.4(c), the term "Employer" shall mean TCA or the
wholly-owned subsidiary to which TCA has assigned its
obligations hereunder. As used in Section 3.4(c), the term
"Employer" shall mean TCA.
(b) Employer hereby employs Employee and Employee
hereby accepts employment with Employer upon the terms and
conditions hereinafter set forth.
2. Duties. Subject to the power of the Board of Directors of
Employer to elect and remove officers, Employee shall serve Employer as
President of VPI Communications, Inc. ("VPI") (or in such other executive
office as Employer or the Board of Directors of Employer may determine) and
shall perform, faithfully and diligently, the services and functions relating
to such office or otherwise reasonably incident to such office as may be
designated from time to time by the Board of Directors of Employer. Employee
shall, during the term of this Agreement (or any extension thereof), devote
such of his time, attention, energies and business efforts to his duties as an
executive of Employer as are reasonably necessary to carry out his duties
specified in this Section 2.
3. Term and Termination.
3.1. Term. The term of this Agreement shall be for a
period of ten (10) years, commencing on the date of this Agreement, and
terminating on October 31, 2004 unless sooner terminated in accordance with the
provisions hereof (the "Term").
3.2. Termination.
2
(a) Employer shall have the right to terminate
this Agreement, in its discretion, upon "just cause," which
shall include the following ("Cause"):
(i) The failure or inability for any
reason of Employee to devote such of his time to
Employer's business as required hereunder (reasonable
vacation time and absence due to sickness and
disability being excepted herefrom);
(ii) The commission by Employee of any
act which affects Employer's business reputation in
an adverse manner;
(iii) The adjudication of Employee as a
bankrupt or insolvent or Employee filing a petition
in bankruptcy, reorganization, insolvency,
readjustment of debt or arrangement under any
bankruptcy, insolvency, dissolution or liquidation
law or filing an answer admitting the material
allegations of a petition filed against him in any
proceeding under such law or taking any action for the
purpose of effecting any of the foregoing;
(iv) Dishonest conduct by Employee
including, but not limited to, theft, embezzlement,
misappropriation of funds or property, fraud or
falsification of company records, correspondence or
other documents; or
(v) The intentional violation or
repeated disregard or failure to carry out by
Employee of reasonable instructions or policies
established by the Board of Directors of Employer
with respect to the operation of its business and
affairs.
(b) This Agreement shall terminate upon the death
of Employee or upon the sickness or disability of Employee that
renders Employee incapable of performing his duties under this
Agreement for a period in excess of six (6) months.
(c) Employee's employment hereunder may be
terminated either by Employer or by Employee at any time
without Cause and without prejudice to Employee. In the event
Employee decides to terminate employment, Employee shall give
written notice of resignation to Employer and Employee's
resignation will be effective ninety (90) days after receipt
of such written notice, unless a shorter period shall be
agreed upon by the parties hereto. In the event Employer
decides to terminate employment, the termination may be made
effective immediately.
(d) Employee's employment hereunder may be
terminated by Employee (a "Constructive Termination") if
Employer (i) demotes Employee to a lesser position than as
provided in Section 2, or (ii) decreases Employee's Salary (as
defined below) below the level provided in Section 5.1 or
reduces the employee
2
3
benefits and perquisites below the levels provided in Section
5.2 or 5.3 (other than as a result of any amendment or
termination of any employee and/or group or senior executive
benefit plan, which amendment or termination is applicable to
all executives of Employer).
3.3. Effect of Termination. Except as provided in Section
3.4 below, the following shall apply following a termination of this Agreement:
(a) In the event of the termination of Employee's
employment under this Agreement by Employer for Cause, or by
Employee otherwise than pursuant to a Constructive
Termination, Employee shall be entitled to receive his base
salary at the rate then in effect, and fringe benefits earned
by him or accrued for his account, through the termination
date of Employee's employment, but Employee shall not be
entitled to receive any separation payment in connection with
the termination of Employee's employment.
(b) In the event of the termination of Employee's
employment under this Agreement without Cause, Employee shall
be entitled to receive (i) an amount equal to Employee's base
salary at the rate then in effect for a period of 90 days,
(ii) any bonus payable hereunder that accrued through the date
of termination and (iii) following the fiscal year in which
termination occurs, any TCA Common Stock that would have been
granted to Employee attributable to such fiscal year had
termination not occurred.
(c) In the event of the termination of Employee's
employment under this Agreement upon the disability of
Employee, Employee shall be entitled to receive (i) an amount
equal to Employee's base salary at the rate then in effect for
a period of 180 days, (ii) any bonus payable hereunder that
accrued through the date of termination and (iii) following
the fiscal year in which termination occurs, any TCA Common
Stock that would have been granted to Employee attributable to
such fiscal year had termination not occurred.
(d) In the event of the termination of Employee's
employment under this Agreement due to a Constructive
Termination (other than a Constructive Termination following a
Change in Control), Employee shall be entitled to receive (i)
an amount equal to Employee's base salary at the rate then in
effect for a period of 90 days, (ii) any bonus payable
hereunder that accrued through the date of termination and
(iii) following the fiscal year in which termination occurs,
any TCA Common Stock that would have been granted to Employee
attributable to such fiscal year had termination not occurred.
3.4 Change in Control.
(a) Notwithstanding Section 3.3, following the
occurrence of a Change in Control of Employer, in the event
Employee's employment is terminated by
3
4
Employer for any reason, or by Employee due to a Constructive
Termination, Employee shall be entitled to receive the
following:
(i) an amount in cash equal to 2.99
times Employee's average annual compensation (salary
and bonus) from Employer during the period consisting
of five full taxable years of Employee ending
immediately prior to the year in which the
termination occurred (or such portion of such lesser
period during which Employee was employed by
Employer); and
(ii) all stock grants described in 5.1
below will be paid to Employee; and
(iii) life, medical, dental, health,
accident and disability insurance benefits for
Employee and his immediate family for the three years
substantially similar to those that Employee is
receiving or is entitled to receive immediately prior
to the termination of employment, which benefits
shall in no event be less than those benefits in
effect immediately prior to the consummation of the
Change in Control.
(b) In the event of any termination described in
paragraph (a) above, Employer shall be obligated to pay
Employee all legal fees and expenses incurred by Employee
incurred in enforcing or interpreting of his rights hereunder
or contesting or disputing any such termination.
(c) For purposes of this Agreement, the term
"Change in Control" shall be deemed to have occurred if (i)
any "person", or persons acting as a "group" (as such terms
are used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended, but excluding any Employer
employee stock ownership plan and any person that was a holder
of more than 20% of the outstanding Common Stock of Employer
as of the date of this Agreement), (a) becomes the beneficial
owner, directly or indirectly, of securities of Employer
representing 50% or more of the combined voting power of
Employer's then outstanding securities, or (b) acquires or
obtains the power, whether through share ownership, contract,
proxy, voting agreement or otherwise, to manage or direct the
operations of Employer, (ii) Employer or its stockholders
enter into an agreement to dispose of all or substantially all
of the assets of Employer, or (iii) the Board of Directors of
Employer ceases to consist of a majority of Continuing
Directors. For purposes hereof, "Continuing Director" shall
mean a member of the Board of Directors of Employer who either
(I) was a member of the Board of Directors as of the date of
this Agreement or (ii) was nominated or appointed (before
Initial election as a director) to serve as a director by a
majority of the then Continuing Directors.
4. Termination of Prior Employment Arrangement. By the execution
of this Agreement, Employee and Employer hereby agree that the present
employment arrangement
4
5
between Employer and Employee, if any, shall end and shall be replaced and
superseded by this Agreement.
5. Compensation. As compensation for the services rendered under
this Agreement, Employee shall be entitled to receive the following:
5.1. Salary During the Term, Employee shall be paid
an annual base salary of $60,000, payable in accordance with the then current
payroll policies of Employer, or as otherwise agreed to by the parties (the
"Salary"). At any time and from time to time the Salary may be increased for
the remaining term of the Agreement if so determined by the Board of Directors
of Employer after a review of Employee's performance of his duties hereunder.
In addition, Employee will receive an annual bonus of 1% of the Earnings before
Income Taxes, Depreciation and Amortization ("EBITDA") of VPI; plus, if VPI's
EBITDA increases 10% over the previous year's EBITDA, Employer will grant to
Employee 5,000 shares of TCA Common Stock, $0.10 par value. If VPI's EBITDA
does not increase 10% in one year and the combined increase in the next year is
20% compared to the 2 year previous EBITDA, then the 5,000 shares for the
missed year will be granted to Employee by TCA, in addition to the 5,000 shares
earned in the current year. In addition, at any time and from time to time,
Employee may be eligible for bonus or other incentive compensation programs, if
so determined by the Board of Directors of Employer in the sole discretion of
the Board of Directors. TCA will file a Registration Statement on Form X-0,
Xxxx X-0 or other appropriate form registering the issuance or, alternatively,
the resale by Employee, of the first shares of TCA Common Stock granted to
Employee pursuant to this Section 5.1 and will use its best efforts to include
subsequent issuances or, alternatively, the resale by Employee, of shares of
TCA Common Stock subsequently granted to Employee pursuant to this Section 5.1
in other registration statements filed by TCA with the Securities and Exchange
Commission that relate to TCA's employee benefit plans.
5.2. Benefits. During the Term, Employee shall be entitled
to receive such group benefits as Employer may provide to its other employees
at comparable salaries and responsibilities to those of Employee from time to
time and at any time during the term hereof, and Employer reserves the right to
amend, modify or otherwise change the terms and conditions of such fringe
benefits, which changes shall be effective in the future upon actual notice to
Employee or upon notice by posting at Employer's premises. Employee shall not
be entitled to receive payments in lieu of any such fringe benefit upon
termination of this Agreement for any reason.
5.3. Expenses. Employer shall reimburse Employee for all
reasonable and necessary out-of-pocket travel and other expenses incurred by
Employee in rendering services required under this Agreement, on a monthly
basis upon submission of a detailed monthly statement and reasonable
documentation.
6. Confidentiality.
6.1. Acknowledgment of Proprietary Interest. Employee
recognizes the proprietary interest of Employer and its affiliates in any
Confidential Information (as hereinafter
5
6
defined) of Employer and its affiliates. Employee acknowledges and agrees that
any and all Confidential Information learned by Employee during the course of
his engagement by Employer or otherwise, whether developed by Employee alone or
in conjunction with others or otherwise, shall be and is the property of
Employer and its affiliates. Employee further acknowledges and understands that
his disclosure of any Confidential Information and/or proprietary information
will result in irreparable injury and damage to Employer and its affiliates. As
used herein, "Confidential Information" means all confidential and proprietary
information of Employer and its affiliates, including, without limitation,
information derived from reports, investigations, experiments, research, work
in progress, drawings, designs, plans, proposals, codes, marketing and sales
programs, client lists, client mailing lists, financial projections, cost
summaries, pricing formula, and all other concepts, ideas, materials, or
information prepared or performed for or by Employer or its affiliates.
"Confidential Information" also includes information related to the business,
products or sales of Employer or its affiliates, or any of their respective
customers, other than information which is otherwise publicly available.
6.2. Covenant Not-to-Divulge Confidential Information.
Employee acknowledges and agrees that Employer and its affiliates are entitled
to prevent the disclosure of Confidential Information. As a portion of the
consideration for the employment of Employee and for the compensation being
paid to Employee by Employer, Employee agrees at all times during the Term and
thereafter to hold in strict confidence and not to disclose or allow to be
disclosed to any person, firm or corporation, other than to persons engaged by
Employer and its affiliates to further the business of Employer and its
affiliates, and not to use except in the pursuit of the business of Employer
and its affiliates, the Confidential Information, without the prior written
consent of Employer, including Confidential Information developed by Employee.
Notwithstanding the foregoing, nothing in this Section 6.2 shall restrict or
impair Employee from performing his duties as an employee of Employer or its
affiliates.
6.3. Return of Materials at Termination. In the event of
any termination or cessation of his employment with Employer for any reason
whatsoever, Employee will promptly deliver to Employer all documents, data and
other information pertaining to Confidential Information. Employee shall not
take any documents or other information, or any reproduction or excerpt
thereof, containing or pertaining to any Confidential Information.
7. Covenants Not to Compete.
7.1. Competition During Employment. Employee agrees that
during his employment, neither he nor his affiliates will directly or
indirectly compete with Employer or its affiliates in any way, and that he will
not act as an officer, director, employee, consultant, shareholder, lender, or
agent of any entity which is engaged in any business of the same nature as, or
in competition with the business in which Employer is now engaged or in which
Employer becomes engaged during the term of his employment; provided, however,
this Section 7.1 shall not prohibit Employee or any of his affiliates from
purchasing or holding an aggregate equity interest of up to 1%, so long as
Employee and his affiliates combined do not purchase or hold an aggregate
equity interest of more than 5%, in any business engaged in the direct or
indirect competition with Employer and its affiliates. Furthermore, Employee
agrees that during his
6
7
employment, he will undertake no planning for an organization of any business
activity competitive with the work he performs, or with the profit unit he
works in, as an Employee of Employer, and Employee will not combine or conspire
with any other employees of Employer for the purpose of organization of any
such competitive business activity.
7.2. Competition Following Employment. Employee agrees
that for one (1) year following the termination of his employment by Employer
or by Employee, he will not, for himself or on behalf of any corporation,
person, firm, partnership, association, or any other entity, engage in or
participate in any business which engaged in competition with the business
conducted by Employer at the date Employee's employment terminates anywhere in
Texas, Arkansas and Louisiana and use any Confidential Information to which he
had enjoyed access while working for Employer; provided, however, this Section
7.2 shall not prohibit Employee or any of his affiliates from purchasing or
holding an aggregate equity interest of up to 1%, so long as Employee and his
affiliates combined do not purchase or hold an aggregate equity interest of
more than 5%, in any business engaged in the direct or indirect competition
with Employer and its affiliates.
Employee further agrees that for a period of one (1) year from
the date of termination of employment, he will not, by influencing or
attempting to influence previously existing customers, or otherwise either
directly or indirectly, divert or attempt to divert from Employer, any business
Employer has enjoyed or solicited, and in connection with which Employee worked
during the last year of his employment.
7.3. Associations with Co-Workers. Employee further agrees
that during his employment and for the one (1) year next following termination
of his employment with Employer, he will not, by act in concert with others,
employ or attempt to employ or solicit for any employment competitive with
Employer, any of Employer's employees who work in any area wherein Employee has
himself been significantly engaged on behalf of Employer. Employee will not,
either directly or indirectly or by act in concert with others, seek to induce
or influence any employee to leave Employer's employment.
8. Miscellaneous.
8.1. Remedies Upon Breach By Employee. In the event of any
breach of this Agreement by Employee, Employer shall be entitled, if it so
elects, to institute and prosecute proceeding in any court of competition
jurisdiction, either in law or in equity, to enjoin Employee from violating any
of the terms of this Agreement, to enforce the specific performance by Employee
of any of the terms of this Agreement, and to obtain damages, or any of them,
but nothing herein contained shall be construed to prevent such remedy or
combination of remedies as Employer may elect to invoke. The failure of
Employer to promptly institute legal action upon any breach of this Agreement
shall not constitute a waiver of that or any other breach hereof. Employee
acknowledges and recognizes that the enforcement of the provisions set forth in
Sections 6 and 7 above by Employer will not interfere with Employee's ability
to pursue a proper livelihood. Employee recognizes and agrees that the
enforcement of this Agreement is necessary to ensure the preservation and
continuity of the business and goodwill of Employer and its affiliates.
7
8
8.2. Remedies Upon Breach by Employer. In the event of any
breach of this Agreement by Employer, Employee shall be entitled, if he so
elects, to institute and prosecute proceedings in any court of competent
jurisdiction, either in law or in equity, to enjoin Employer from violating any
of the terms of this Agreement, and to obtain damages, or any of them, but
nothing herein contained shall be construed to prevent such remedy or
combination of remedies as Employee may elect to invoke. The failure of
Employee to promptly institute legal action upon any breach of this Agreement
shall not constitute a waiver of that or any other breach hereof.
8.3. Attorneys' Fees. In the event of any litigation
concerning, any controversy, claim or dispute between the parties hereto,
arising out of or relating to this Agreement or the breach hereof, or the
interpretation hereof, the prevailing party shall be entitled to recover from
the losing party reasonable expenses, attorneys' fees, and costs incurred
therein or in the enforcement or collection of any judgment or award rendered
therein. The "prevailing party" means the party determined by the court to have
most nearly prevailed, even, if such party did not prevail in all matters, not
necessarily the one in whose favor a judgment is rendered. Further, in the
event of any default by a party under this Agreement, such defaulting party
shall pay all the expenses and attorneys' fees incurred by the other party in
connection with such default, whether or not any litigation is commenced.
8.4. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.5. Severability In the event that any of the terms,
conditions or provisions of this Agreement are held to be illegal, invalid or
unenforceable by any court of competent jurisdiction, the legality, validity
and enforceability of the remaining terms, conditions or provisions shall not
be affected thereby. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of this
Agreement, a provision as similar in its terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and
enforceable.
8.6. Amendments. No amendment or modification of the terms
or conditions of this Agreement shall be valid unless in writing and signed by
the parties hereto.
8.7. Entire Agreement. This Agreement constitutes the
entire agreement between the parties with respect to the employment of
Employee.
8.8. Notices. Any notices, consents, demands, requests,
approvals and other communications to be given under this Agreement by either
party to the other shall be deemed to have been duly given if given in writing
and personally delivered or sent by mail, registered or certified, postage
prepaid with return receipt requested, as follows:
If to Employer: TCA Cable TV, Inc.
X.X. Xxx 000000
Xxxxx, Xxxxx 00000-0000 or
8
9
TCA Cable TV, Inc.
0000 XXX Xxxx 000
Xxxxx, Xxxxx 00000
If to Employee: Xxxxxxx X. Xxxxxxxx
0000 X. Xxxxx Xxxxx Xx.
Xxxxx, Xxxxx 00000
Notices delivered personally shall be deemed communicated as of actual receipt;
mailed notices shall be deemed communicated as of three days after mailing.
8.9. GOVERNING LAWS AND VENUE. THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL BE INTERPRETED, CONSTRUED, AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CHOICE OF
LAW PRINCIPLES. ALL MATTERS LITIGATED BY, AMONG, OR BETWEEN ANY OF THE PARTIES
THAT INVOLVE THIS AGREEMENT OR ANY RELATED MATTER HEREUNDER SHALL BE BROUGHT
ONLY IN A COURT OF COMPETENT JURISDICTION IN DALLAS COUNTY, TEXAS.
8.10. Parties Bound. This Agreement and the rights and
obligations hereunder shall be binding upon and inure to the benefit of
Employer and Employee, and their respective heirs, personal representatives,
successors and assigns. Employer shall have the right to assign this Agreement
to any affiliate or to its successors or assigns. The terms "successors" and
"assigns" shall include any person, corporation, partnership or other entity
that buys all or substantially all of Employer's assets or all of its stock, or
with which Employer merges or consolidates. The rights, duties or benefits to
Employee hereunder are personal to him, and no such right or benefit may be
assigned by him. The parties hereto acknowledge and agree that Employer's
affiliates are third-party beneficiaries of the covenants and agreements of
Employee set forth in Sections 6 and 7 above.
8.11. Waiver of Breach. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach by any party.
9. Representations and Warranties. To induce TCA to award
Employee shares of TCA Common Stock as set forth in Section 5.1 of this
Agreement, Employee hereby represents and warrants as follows:
(a) Employee has had adequate opportunity to
review TCA's most recent annual report on Form 10-K and all
interim reports on Form 10-Q and 8-K. Employee has such
knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an
investment in TCA Common Stock and understands the risks of,
and other considerations relating to, an investment in TCA
Common Stock.
9
10
(b) Any TCA Common Stock issued pursuant to this
Agreement will be acquired by Employee for Employee's own
account for investment purposes only and not with a view to
resale or distribution.
(c) Employee understands that, subject to the
provisions of Section 5.1 hereof, any TCA Common Stock issued
pursuant to this Agreement may not be registered under the
Securities Act of 1933, as amended (the "Securities Act") or
the securities laws of any state. Employee understands and
agrees further that TCA Common Stock must be held indefinitely
unless they are subsequently registered under the Securities
Act and such state securities laws or an exemption from
registration under the Securities Act and such state
securities laws is available. Employee understands that
legends, as applicable, will be placed on the certificates
representing TCA Common Stock issued pursuant to this
Agreement (i) stating that the TCA Common Stock has not been
registered under the Securities Act and such state securities
laws and (ii) setting out or referring to the restrictions on
the transferability and resale of the TCA Common Stock.
(d) Employee is not relying upon any information,
representation or warranty by TCA, or any of its affiliates or
their respective agents in evaluating an investment in TCA
Common Stock under this Agreement.
(e) Employee is an "accredited investor" within
the meaning of Rule 501 of Regulation D under the Securities
Act, such that one of the following qualifications applies:
(1) Employee is a natural person with
individual net worth (or joint net worth with spouse)
in excess of $1 million. For purposes of this item,
"net worth" means the excess of total assets at fair
market value, including home, home furnishings and
automobile (and including property owned by a
spouse), over total liabilities;
(2) Employee is a natural person with
individual income (without including any income of
Employee's spouse) in excess of $200,000, or joint
income with spouse of $300,000, in each of the two
most recent years and who reasonably expects to reach
the same income level in the current year; or
(3) Employee is an executive officer of
TCA. For the purposes of this item, "executive
officer" means the president, any vice president in
charge of a principal business unit, division or
function (such as sales, administration or finance),
any other officer who performs a policy making
function, or any other person who performs similar
policy making functions for TCA.
10
11
9.12. Captions. The captions in this Agreement are for
convenience of reference only and shall not limit or otherwise affect any of
the terms or provisions hereof.
9.13. Other Obligations. Employee represents and warrants
that he has not as of the execution of this Agreement assumed any obligations
inconsistent with those contained herein.
9.14. Affiliate. An "affiliate" of any party hereto shall
mean any person controlling, controlled by or under common control with such
party.
IN WITNESS WHEREOF, the parties hereto have duty executed this
Agreement as of the day and year first above written.
EMPLOYER:
By: /s/ XXXXXX XXXXXX
----------------------------
Its: Chairman & CEO
----------------------------
EMPLOYEE:
/s/ XXXXXX X. XXXXXXXX
---------------------------------
11
