EMPLOYMENT AGREEMENT dated April 9, 1998 between Renaissance Media LLC, a
Delaware limited liability company (the "Company"), and Fred Schulte
WHEREAS the Company desires to employ Executive and to enter into an agreement
embodying the terms of such employment (the "Agreement"); and
WHEREAS Executive desires to accept such employment and enter into such an
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
and for other good and valuable consideration, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated.
"Asset Purchase Agreement" means the Asset Purchase Agreement dated November
14, 1997 between Holdings and TWI Cable Inc., as amended or modified from time
"Benchmarks" shall be deemed satisfied as of any given date if on such date
the cumulative EBITDA of the Renaissance Group for the period commencing on the
date hereof and ending at the end of the fiscal month most recently completed
prior to such date is at least 95% of the cumulative EBITDA reflected in the
Business Plan (it being understood that the cumulative EBITDA reflected
Business Plan shall be pro rated for the portion of any fiscal year elapsed as
of a given measurement date). The Benchmarks will be adjusted appropriately to
the extent that the strategic plan of the Renaissance Group materially changes
from the strategic plan in effect on the date hereof.
"Board" means the Board of Representatives of the Company.
"Business Plan" means the Renaissance Group's business plan attached hereto,
as such business plan may be amended, supplemented or updated by the Renaissance
Group from time to time (including without limitation any such amendment,
supplement or update to reflect an acquisition of a Designated Cable System
described in the definition of "Renaissance Group" below).
"Cause" means (i) Executive's willful and continued failure substantially to
perform his duties under this Agreement (other than as a result of total or
partial incapacity due to physical or mental illness or as a result of
termination by Executive for Good Reason) which failure (if susceptible to cure)
is not cured after reasonable notice, (ii) any willful act or omission by
Executive constituting dishonesty, fraud or other malfeasance against the
Company, (iii) Executive's conviction of a felony under the laws of the United
States or any state thereof or any other jurisdiction in which the Company
conducts business or (iv) breach by Executive of the restrictive covenants
contained in Sections 9 and 10 of this Agreement.
"Designated Cable System" means any cable television system located in the
United States or any business or person whose assets consist (either directly or
through its subsidiaries) of any such cable television system.
"Designated Executives" means Fred Schulte, Michael J. Egan, Darlene Fedun,
Mark Halpin, David L. Testa and Rodney Cornelius, collectively, and "Designated
Executive" shall mean any of the foregoing.
"Disability" means either (i) disability as defined for purposes of the
Company's disability benefit plan or (ii) Executive's inability, as result of
physical or mental incapacity, to perform the duties of the position specified
in Section 3 hereof for a period of six (6) consecutive months or for an
aggregate of six months (6) in any twelve (12) consecutive month period.
"EBITDA" means, for any period, the net income of the Renaissance Group for
such period, adjusted to exclude the effect of any extraordinary or other non-
recurring gain or loss for such period plus, to the extent deducted in
determining the net income of the Renaissance Group for such period, (i) the
aggregate amount of interest expense for such period, (ii) the aggregate amount
of income tax for such period and (iii) the aggregate amount of depreciation,
amortization (including amortization of goodwill and other intangibles) and
other similar non-cash charges for such period.
"Exclusivity Agreement" means the Exclusivity Agreement dated as of the date
hereof among the MSCP Funds and the Designated Executives, as amended or
modified from time to time.
"Good Reason" means:
(i) Removal from, or failure to be reappointed or reelected to, the
position specified in Section 3 hereof (other than as a result of a
promotion); provided that mere change of title shall not constitute
removal from or non-reappointment to such position as long as the new title
is substantially equivalent and the position is otherwise not adversely
(ii) Material diminution in Executive's title, position, duties or
responsibilities, or the assignment to Executive of duties that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with the position specified in Section 3
(iii) Termination by the Company, other than for Cause, of any other
Designated Executive of the Company (provided that this clause (iii) shall
not constitute an event of Good Reason if either (x) at any time following
the second anniversary of the date hereof, the Company has failed to
achieve the Benchmarks at the time of such termination or (y) the Chief
Executive Officer of the Company approves the termination of such other
(iv) Reduction in Base Salary (as defined in Section 4 hereof) or
"Holdings" means Renaissance Media Holdings LLC.
"Holdings LLC Agreement" means the Amended and Restated Limited Liability
Company Agreement of Holdings dated as of the date hereof by and among Holdings,
the MSCP Funds, TWI Cable Inc., Executive and the other investors signatory
thereto, as contemplated to be further amended and restated effective as of
April 17, 1998 as the Second Amended Restated Limited Liability Company
Agreement of Holdings by and among Holdings, MSCP Carry LLC, TWI Cable Carry
LLC, Executive and the other investors signatory thereto, and as further amended
or modified from time to time.
"MSCP Carry LLC Agreement" means the Limited Liability Company Agreement of
MSCP Carry LLC dated as of the date hereof by and among the MSCP Funds, the
individuals named therein and MSCP Carry LLC, as amended or modified from time
"MSCP Funds" means Morgan Stanley Capital Partners III, L.P., MSCP III 892
Investors, L.P. and Morgan Stanley Capital Investors, L.P.
"Renaissance Group" means the Company and any Designated Cable System acquired
by the MSCP Funds and the Designated Executives through an entity other than the
Company or any of its subsidiaries.
"Severance Period" means any period of continued salary payments by the
Company to Executive following the Date of Termination (as defined in Section
"Systems" shall have the meaning set forth in the Asset Purchase Agreement.
"TWI Carry LLC Agreement" means the Limited Liability Company Agreement of TWI
Cable Carry LLC dated as of the date hereof by and among TWI Cable Inc., the
individuals named therein and TWI Cable Carry LLC, as amended or modified from
time to time.
2. Term of Employment. (a) Subject to the provisions of Section 8 of this
Agreement, Executive shall be employed by the Company for a period commencing on
the date hereof and ending on the fifth anniversary thereof or any extension
thereof (such term of employment as it may be extended, the "Employment Term").
(b) Executive will agree, upon the request of the Company, to extend the term
of employment hereunder for up to eighteen (18) months on the terms set forth
herein during the period between the signing of definitive documentation
relating to and closing of, and during any transition period related to, a sale
of all or substantially all of the assets of (or equity interests in) the
Company that is in process on last day of the Employment Term (the "Termination
(c) Other than pursuant to Section 2(b) hereof, in which case no notice shall
be required, the Company will notify Executive no later than one year prior to
the Termination Date as to whether the Company desires to renew or extend the
term of Executive's employment.
3. Position. (a) Executive shall serve as Chairman and Chief Executive
Officer of the Company. In such position, Executive shall have the duties set
forth in Appendix A and such additional duties and authority commensurate with
such position as shall be determined from time to time by the Board consistent
with the Company's objective as set forth in Section 2.03(b) of the Holdings LLC
(b) During the Employment Term, Executive will devote substantially all of his
business time and skill and knowledge to the performance of his duties
hereunder, consistent with the Company's business plan and its strategic
objectives, and subject to Section 3(c) hereof, will not engage in any other
business, profession or occupation for compensation or otherwise which would
conflict with the rendition of such services either directly or indirectly;
that Executive may participate in civic, charitable and other outside activities
permitted with the consent of the Board, which consent shall not be unreasonably
(c) The Company acknowledges that, subject to the restrictions set forth in
the Exclusivity Agreement, prior to the date of termination of employment with
the Company, Executive may seek to manage or invest in cable television systems
not owned by the Company. Executive may engage in such other transactions,
subject always to a minimum commitment to the Company consistent with reasonable
commercial efforts to perform the duties hereunder.
4. Base Salary. During the term of Executive's employment hereunder, the
Company shall pay Executive an annual base salary (the "Base Salary") at the
initial annual rate of $225,000, payable in regular installments in accordance
with the Company's usual payment practices but no less frequently than monthly
during the Employment Term. Executive's Base Salary shall be reviewed at least
annually for increase in the reasonable discretion of the Board.
5. Bonus. Executive shall participate in the Renaissance Media LLC Annual
Executive Bonus Plan attached as Exhibit A hereto (as such plan may be amended
from time to time after the date hereof), and pursuant to such plan, will be
eligible to receive a bonus on an annual basis (the "Bonus") for services
rendered during each fiscal year within the Employment Term.
6. Employee Benefits. Executive shall participate in all employee benefits
plans of the Company on the same basis as those benefits are generally made
available from time to time to senior executives of the Company on a basis
commensurate with Executive's position.
7. Business Expenses and Perquisites. Travel and other business expenses
reasonably incurred by Executive in the performance of his or her duties
hereunder shall be reimbursed by the Company in accordance with Company
(a) For Cause by the Company. Executive's employment hereunder may be
terminated by the Company for Cause in accordance with the provisions of this
Section 8(a). If Executive is terminated for Cause, (i) Executive shall be
entitled to receive (A) Base Salary through the date of termination of
Executive's employment ("Date of Termination") and (B) any prior year Bonus
not paid, and (ii) the Company and its affiliates will have no further
obligations with respect to Executive hereunder, it being understood, however,
that nothing contained in this Agreement shall in any manner affect the
obligations of Holdings to Executive under the Holdings LLC Agreement or the
rights of Executive under the MSCP Carry LLC Agreement or the TWI Carry LLC
(b) Disability or Death. Executive's employment hereunder shall terminate
upon his death, and the Company shall have the right to terminate Executive's
employment if Executive incurs a Disability.
Upon termination of Executive's employment hereunder by reason of either
Disability or death, (i) Executive or his estate (as the case may be) shall be
entitled to receive (A) Base Salary through the Date of Termination, (B) any
prior year Bonus earned but not paid and (C) pro rata Bonus for the year in
which the termination occurs (to be determined in the same manner and paid at
the same time as bonuses for other senior executives), and (ii) the Company and
its affiliates will have no further obligations with respect to Executive
hereunder, it being understood, however, that nothing contained in this
Agreement shall in any manner affect the obligations of Holdings to Executive
under the Holdings LLC Agreement or the rights of Executive under the MSCP Carry
LLC Agreement or the TWI Carry LLC Agreement.
(c) Without Cause by the Company; by Executive for Good Reason. If
Executive's employment is terminated, (x) by the Company without Cause (other
than by reason of Disability or death) or (y) by Executive for Good Reason (as
defined below), Executive shall be entitled to the following benefits:
(i) The Company shall pay Executive (A) accrued unpaid Base Salary
through the Date of Termination, (B) any prior year Bonus earned but not
paid and (C) pro rata Bonus for the year in which the termination occurs
(to be determined in the same manner and paid at the same time as bonuses
for other senior executives).
(ii) Executive shall continue to receive as severance ("Severance") for
the remainder of the Employment Term (A) Base Salary at Executive's salary
rate as of the Date of Termination, (B) Bonus in the same amount as paid
for the year prior to the year in which the termination occurs and (C)
welfare benefit continuation subject to mitigation if Executive is
subsequently employed by another employer. Base Salary and Bonus will be
payable in continued equal payments at least monthly for the remainder of
the Employment Term. Notwithstanding the foregoing, other than for a
termination by Executive on the grounds set forth in the definition of
Reason", in lieu of the Severance described in the two preceding sentences,
if either (i) at any time following the second anniversary of the date of
this Agreement, the Company has failed to achieve the Benchmarks as of the
Date of Termination or (ii) a majority of the Designated Executives who are
employed by the Company at the Date of Termination approves the
termination, Executive shall continue to receive Base Salary, Bonus and
welfare benefit continuation on the same terms as described in the two
preceding sentences for the lesser of (A) the remainder of the Employment
Term and (B) two years following the Date of Termination.
(iii) Other than the benefits set forth in paragraphs (i) and (ii) of
this Section 8(c), the Company and its affiliates will have no further
obligations hereunder with respect to Executive following the Date of
Termination, it being understood, however, that nothing contained in this
Agreement shall in any manner affect the obligations of Holdings to
Executive under the Holdings LLC Agreement or the rights of Executive under
the MSCP Carry LLC Agreement or the TWI Carry LLC Agreement.
(d) Termination by Executive other than with Good Reason. If Executive
terminates his employment with the Company other than with Good Reason,
Executive shall be entitled to the same payments he would have received if his
employment had been terminated by the Company for Cause.
(e) Notice of Termination. Any purported termination of employment by the
Company or by Executive shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 13(g) hereof. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.
9. Non-Competition. (a) Executive acknowledges and recognizes the highly
competitive nature of the business of the Company and its affiliates and
accordingly agrees that, in consideration of this Agreement, the rights
hereunder, and any payments hereunder, from the date hereof until the earlier of
(i) the last day of the Employment Term, (ii) the last day of any Severance
Period and (iii) two years following Executive's Date of Termination (the "Non-
Compete Term"), Executive will not, subject to Section 3(c) hereof, directly or
indirectly engage in the operation of any cable television system or any other
line of business in place at the Systems as of the Date of Termination within
one hundred miles of any geographic area where the Company or its affiliates
operate a cable system as of the Date of Termination during the Non-Compete
Term, whether such engagement is as an officer, director, proprietor, employee,
(other than as a holder of less than 1% of the outstanding capital stock of a
publicly traded corporation), consultant, advisor, agent, sales representative
or other participant; provided, however, that, during the Non-Compete Term,
Executive will not be prohibited from engaging in any activity in which
Executive may engage while employed by the Company pursuant to the terms of the
Notwithstanding any provision of this Agreement to the contrary, from and
after any breach by Executive of the provisions of this Section 9(a), the
Company shall cease to have any obligations to make payments to Executive under
this Agreement, it being understood, however, that nothing contained in this
Agreement shall in any manner affect the obligations of Holdings to Executive
under the Holdings LLC Agreement or the rights of Executive under the MSCP Carry
LLC Agreement and the TWI Carry LLC Agreement.
(b) For a period of two years following the Date of Termination, Executive
will not directly or indirectly induce any employee or client of the Company or
any of its affiliates to engage in any activity in which Executive is prohibited
from engaging by Section 9(a) hereof or to terminate his or her client or
employment relationship, as applicable, with the Company or any of its
affiliates, and will not directly or indirectly solicit the performance of
services for any person who is a customer or client or former customer or client
of the Company or any of its affiliates unless such person shall have ceased to
have been a customer or client of the Company or any of its affiliates for a
period of at least six (6) months.
(c) It is expressly understood and agreed that although Executive and the
Company consider the restrictions contained in this Section 9 to be reasonable,
if a final judicial determination is made by a court of competent jurisdiction
that the time or territory or any other restriction contained in this Agreement
is an unenforceable restriction against Executive, the provisions of this
Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
10. Confidentiality. Executive will not at any time (whether during or after
his employment with the Company) disclose or use for his own benefit or purposes
or the benefit or purposes of any other person, firm, partnership, joint
venture, association, corporation or other business organization, entity or
enterprise other than the Company and any of its subsidiaries or affiliates, any
trade secrets, information, data, or other confidential information relating to
customers, development programs, costs, marketing, trading, investment, sales
activities, promotion, credit and financial data, financing methods, plans, or
the business and affairs of the Company generally, or of any subsidiary or
affiliate of the Company, unless required to do so by applicable law or court
order, subpoena or decree or otherwise required by law, with reasonable evidence
of such determination promptly provided to the Company. The preceding sentence
of this Section 10 shall not apply to information which is not unique to the
Company or which is generally known to the industry or the public other than as
a result of Executive's breach of this covenant. Executive agrees that upon
termination of his employment with the Company for any reason, he will return to
the Company immediately all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating
to the business of the Company and its affiliates, except that he may retain
personal notes, notebooks and diaries. Executive further agrees that he will
not retain or use for his account at any time any trade names, trademark or
other proprietary business designation used or owned in connection with the
business of the Company or its affiliates.
11. Specific Performance. Executive acknowledges and agrees that the
Company's remedies at law for a breach or threatened breach of any of the
provisions of Sections 9 and 10 hereof would be inadequate and, in recognition
of this fact, Executive agrees that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the Company, without posting any
bond, shall be entitled to seek equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
12. Continuation of Employment. Unless the parties otherwise agree in
writing or the Agreement is extended pursuant to Section 2 hereof, continuation
of Executive's employment with the Company after the expiration of the
Employment Term shall be deemed an employment at will and shall not be deemed to
extend any of the provisions of this Agreement, and Executive's employment may
thereafter be terminated at will by Executive or the Company.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of New York.
(b) Entire Agreement/Amendments. This Agreement, the Holdings LLC Agreement
and the Exclusivity Agreement contain the entire understanding of the parties
with respect to the employment of Executive by the Company. There are
no restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein or therein. This Agreement may not be altered,
modified, or amended except by written instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of such
party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(d) Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive and shall
be assignable by the Company only with the consent of Executive.
(f) Successors; Binding Agreement. This Agreement shall inure to the benefit
of and be binding upon personal or legal representatives, executors,
administrators, successors, including successors to all or substantially all of
the business and/or assets of the Company, heirs, distributees, devisees and
(g) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the execution page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith, except
that notice of change of address shall be effective only upon receipt.
(h) Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state and local taxes as may be required to
be withheld pursuant to any applicable law or regulation.
(i) Counterparts. This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
/s/ Fred Schulte
Address: One Cablevision Center
Ferndale, NY 12734
RENAISSANCE MEDIA LLC
By: /s/ Mark W. Halpin
Title: Executive Vice President
Address: One Cablevision Center
Ferndale, NY 12734
Duties and Responsibilities of Executive
. Chairman and Chief Executive Officer
. Member, Board of Representatives of the Company
. Overall management of day-to-day operations of the Company and
. Participation in strategic planning