EXHIBIT 10.5
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PAYMENT AGREEMENT AND GENERAL RELEASE
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1. General Release. I, Xxxx X. Xxxxxx, III ("Employee"), release,
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dismiss, covenant not to xxx and forever discharge College Television Network,
Inc., a Delaware corporation ("CTN") and its majority shareholder, U-C Holdings,
L.L.C. ("Holdings"), a Delaware limited liability company (collectively, all of
the foregoing are referred to as the "Company") and all affiliated corporations,
limited liability companies or partnerships and stockholders, members, managers,
officers, directors, employees, agents, predecessors, successors, transferees
and assigns from any and all actions, causes of action, suits, damages, debts,
claims, counterclaims, obligations and liabilities of whatever nature, known or
unknown, including, but not limited to those actions, causes of action, suits,
damages, debts, claims, counterclaims, obligations and liabilities, resulting or
arising out of, directly or indirectly, the employment relationship between
Employee and the Company (including, but not limited to, claims for
compensation, salary, bonuses, severance pay or other benefits), the termination
of the employment relationship, any promises made to or agreements with Employee
while he was employed at the Company, Employee's ownership, directly or
indirectly, of capital stock in the Company, Employee's ownership or right to
receive equity in Holdings, or the failure to offer employment with the Company,
including, without limitation, by reason of specification, any claims for breach
of contract, failure to hire, wrongful discharge of any kind, and any claims
arising under any federal, state, or local laws or ordinances, including,
without limitation, by reason of specification, the Federal Securities Act of
1933, as amended, the Federal Securities Exchange Act of 1934, as amended, the
Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights Act
of 1964, the Older Workers Benefits Protection Act, and any common law claims
now or hereafter recognized. Employee does hereby agree and acknowledge that
except for the payments pursuant to Paragraph 3 below, Employee is entitled to
no compensation, benefits or other rights or privileges from the Company.
2. No Admission. Employee agrees and acknowledges that neither this
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Agreement nor the Company's offer to enter into this Agreement should be
construed as an admission by the Company that it has acted wrongfully toward the
Employee or any other employee, and that the Company expressly denies any
liability to, or wrongful acts against the Employee on the part of itself, its
employees or its agents.
3. Consideration.
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a. In full consideration and as material inducement for signing this
Agreement, CTN will, upon the expiration of the revocation period set forth in
Paragraph 5(d) herein, pay or provide to Employee the following: (i) $22,917 per
month to be paid at the same time as the other employees of CTN commencing for
the pay period March 7, 1998 ending March 20, 1998 and normally due to be paid
on March 26, 1998 and ending April 25, 2001 (with final payment on April 25,
2001 to be for a pro rata portion of the month up to April 25th); and (ii) CTN
shall permit Employee to continue to receive benefits under CTN's health
insurance policies to the extent permitted by such policies and applicable law,
provided that such insurance
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coverage can be maintained at a reasonable costs to CTN; and provided further,
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that CTN shall only maintain such insurance coverage until the earlier of (y)
the end of the period for which Employee is receiving severance payments
pursuant to subparagraph 3(a)(i) above and (z) the date Employee accepts other
employment. Employee agrees that at any time Company may, in its sole
discretion, prepay the amount owed pursuant to subparagraph 3(a)(i) above and
pay the net present value of such amount based upon a 8.5% annual rate of
return. Such payments shall be subject to normal withholdings required by law
and are subject to Employee's continued compliance with this Agreement.
Notwithstanding the foregoing, as an accommodation to Employee, CTN will pay
Employee two months of pay on April 10, 1998 and will not make any payments to
Employee again until June 5, 1998, which shall be a normal two week payment and
thereafter all payments will be made with normal payroll for other employees of
CTN.
b. Further, in accordance with Employee's Employment Agreement dated
April 29, 1997 (the "Employment Agreement"), Holding's does hereby repurchase
all of the Class A and B Management Units (collectively, the "Units"), as
defined in the Second Amended and Restated Limited Liability Company Agreement
of Holdings dated as of May 15, 1997, as amended (the "LLC Agreement"), held by
Employee and Employee does hereby transfer, assign and sell the Units to
Holdings, free and clear of all liens, encumbrances, options or warrants. The
consideration paid to Employee hereunder for the Units is $500, and Employee
does hereby acknowledge receipt of said $500. Employee represents and warrants
that he does not, directly or indirectly, hold, own or have a beneficial
interest in any equity or securities of the Company, other than as set forth in
Paragraph 3(c) below or common stock of the Company purchased by Employee on the
NASDAQ Exchange.
c. Employee acknowledges that the 333,333 Investor Units, as defined
in the LLC Agreement (the "Investor Units"), held by Employee have not been paid
for by Employee and Employee owes Holdings $333,333.30, plus interest, pursuant
to that certain Promissory Note (the "Note") dated May 12, 1997, which Note is
secured by a pledge of the Investor Units pursuant to that certain Unit Pledge
Agreement between Employee and Holdings dated as of May 12, 1997 (the "Pledge
Agreement"). The parties acknowledge that due to Employee's termination of
employment with the Company, the principal and interest under the Note is now
fully due and payable. Holdings agrees to give Employee until April 6, 1998 to
pay all the principal and interest due under the Note; and, thus, retain the
Investor Units pursuant to and subject to the terms of the LLC Agreement.
Employee and the Company agree that if Employee does not pay the full amount of
the principal and interest due under the Note by April 6, 1998, Employee shall
forfeit the Investor Units, which shall automatically be transferred to
Holdings, free and clear of all liens, claims or encumbrances and the Note and
Pledge Agreement shall be cancelled.
4. Taxes. Employee agrees to pay federal, state or local taxes, if any,
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which are required by law to be paid with respect to this settlement. The
Employee further agrees to indemnify and hold the Company harmless from any
claims, demands, deficiencies, levies, assessments, executions, judgments or
recoveries by any governmental entity against the Company for any amounts
claimed due on account of this Agreement and Release or pursuant to
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claims made under any federal or state tax laws, and any costs, expenses or
damages sustained by the Company by reason of any such claims, including any
amounts paid by the Company as taxes, attorneys' fees, deficiencies, levies,
assessments, fines, penalties, interest or otherwise.
5. Compliance with Law. Employee hereby acknowledges and agrees that this
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Agreement and the termination of his employment or the failure to offer
employment and all actions taken in connection therewith are in compliance with
the Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights
Act of 1964, and the Older Workers Benefits Protection Act, and that the release
set forth in Paragraph 1 hereof shall be applicable, without limitation, to any
claims brought under these Acts. Employee further acknowledges and agrees that:
a. The release given by the Employee in this Agreement is given
solely in exchange for the consideration set forth in Paragraph 3 of this
Agreement and such consideration is in addition to anything of value to which
the Employee received prior to entering into this Agreement;
b. Employee has consulted or has had an opportunity to consult an
attorney prior to entering into this Agreement;
c. Employee has had at least twenty-one (21) days from March 16, 1998
within which to consider this Agreement and Release or has waived such
requirement;
d. For a period of seven (7) days following execution of this
Agreement, the Employee may revoke this Agreement and this Agreement shall not
become effective or enforceable until such seven (7) day period has expired.
6. Confidentiality.
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a. Employee agrees to keep confidential the terms of this Agreement
and the transactions or events which led to its execution, and Employee
covenants not to disclose this information to any other person, except that
Employee may disclose the terms of this Agreement to the Internal Revenue
Service, his attorneys, his financial advisors, and his immediate family
members, who shall be informed of the confidential nature of the information.
If Employee is compelled to disclose this Agreement pursuant to service of a
subpoena on him, Employee shall immediately provide written notice to the
Company and shall not make any such disclosure for ten (10) business days in
order to give the Company an opportunity to seek an appropriate protective
order, unless disclosure is required sooner than ten (10) business days by court
order, rule, or regulation, in which case disclosure will not be made by such
party before the time required by such court order, rule, or regulation.
b. Employee agrees that he will not, without the prior written
consent of the Company, make or cause to be made any oral or written statements
to any person, firm, corporation or governmental or other entity which reflect
negatively on the Company or any of its direct and indirect parents,
subsidiaries, affiliates, related companies, successors and assigns,
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or on its and their directors, officers, members, and employees, or which could
reasonably be understood to be detrimental to the business interests of the
Company or any of its direct and indirect parents, subsidiaries, affiliates,
related companies, successors and assigns, or to its and their directors,
officers, members, and employees.
c. Employee acknowledges that the receipt of the consideration set
forth in Paragraph 3(a) is conditioned on Employee's compliance with this
Paragraph 6 and the other terms and provisions of this Agreement.
7. No Assignment of Claims and No Claim Filed. Employee represents and
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warrants that he has not heretofore assigned or transferred to any person not a
party to this Agreement any claim being released by this Agreement or any part
or portion thereof and that he shall defend, indemnify, and hold harmless the
Company from and against any claim (including the payment of attorneys' fees and
costs actually incurred whether or not litigation is commenced) based on or in
connection with or arising out of any such assignment or transfer. Employee
further represents and warrants that neither he nor his attorneys have made any
allegations to, or have filed any complaints, charges, or lawsuits with any
court or government agency relating to any matters being released by Employee in
this Agreement, including matters arising out of Employee's employment with the
Company or the termination of such employment, and that neither he nor his
attorneys shall file any complaints, charges, or lawsuits, at any time
hereafter, arising out of such released claims.
8. Return of Documents. Contemporaneously with the delivery of the
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executed Agreement, Employee, his attorneys, their agents, and all persons
acting on their behalf, shall deliver to the Company all non-public documents
and materials that relate to the Company, if any.
9. Choice of Law. The rights and obligations of the parties hereunder
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shall be construed and enforced in accordance with, and governed by, the laws of
the State of Georgia, without regard to principles of conflict of laws.
10. Employment Agreement. The parties hereto do hereby agree that the
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provisions in Sections 9, 10, 11, 12 and 13 of the Employment Agreement shall
remain and continue in full force and effect in accordance with their terms.
Employee has been terminated and resigns as an officer and director of the
Company effective as of March 16, 1998.
11. Future Equity. Employee hereby waives, cancels and terminates any
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right to receive any additional equity or securities in the Company or related
entities, including, but not limited to, the rights (if any) pursuant to that
certain Amended and Restated Equity Allocation Agreement dated November 11, 1997
among the Company, Xxxxx Xxxxx, Xxx Xxxxx and Employee and Employee waives the
right to allocate the Class B Management Units set forth in the LLC Agreement.
12. Knowledgeable Decision by Employee. Employee has read all of the
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terms of this Agreement and has had an opportunity to discuss it with
individuals of Employee's own choice
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who are not associated with the Company. Employee understands the terms of this
Agreement and that this Agreement releases forever the Company from any legal
action arising from Employee's employment relationship, any promises or
agreements with Employee while he was employed at the Company, any rights he has
as a shareholder of CTN or equityholder or member of Holdings, the termination
of this employment relationship or the failure to offer employment with the
Company. Employee signs this Agreement of his own free will in exchange for the
consideration to be given to Employee, which Employee acknowledges is adequate
and satisfactory. Neither the Company nor its agents, representatives or
employees have made any representations to Employee concerning the terms or
effects of this Agreement, other than those contained in this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement this 21st
day of March, 1998.
EMPLOYEE:
/s/ Xxxx X. Xxxxxx, III
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XXXX X. XXXXXX, III
COMPANY:
COLLEGE TELEVISION NETWORK, INC.
By: /s/ Xxxxx Xxxxx
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Its: Chief Executive Officer
U-C HOLDINGS, L.L.C.
By: Xxxxxx Xxxxx & Partners, L.P.
Its: Managing Member
By: Xxxxxx Xxxxx & Partners, L.L.C.
Its: General Partner
By: /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
Its: Manager
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