RENAISSANCE MEDIA LLC
ANNUAL EXECUTIVE BONUS INCENTIVE PLAN
1. Purpose. The purpose of the Renaissance Media LLC Annual Executive
Bonus Incentive Plan (the "Plan") is to promote the profitability of Renaissance
Media LLC (the "Company") by providing executive officers and other key
employees of the Company with bonuses based upon the achievement of annual
performance goals of the Company.
2. Definitions. For the purposes of the Plan, the following terms shall
have the meanings indicated:
"Award Year" shall mean any fiscal year of the Company with respect to the
Company's performance for which a Bonus may be granted.
"Base Salary" shall mean as to any Award Year, a Participant's annual
"Board" shall mean the Board of Representatives of the Company.
"Bonus" shall mean the grant of a bonus to a Participant pursuant to the
"Budget" shall mean the annual budget of the Company for each Award Year,
which shall be approved by the Board prior to the beginning of such Award Year.
"Chairman" shall mean the Chairman of the Committee.
"Committee" shall mean the Compensation Committee of the Board, which shall
be composed of not less than three persons, and the Chairman of which shall be
of the Board, or if no such Compensation Committee shall have been
established, the Board.
"Disability" shall mean, except as otherwise defined in a Participant's
Employment Agreement, a Participant's becoming physically or mentally
incapacitated and therefore unable for a period of six (6) consecutive months or
for an aggregate of six (6) months in any twelve (12) consecutive month period
to perform his or her duties to the Company.
"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, (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.
"Employment Agreement" shall mean any employment agreement entered into
between the Company and any Participant, as amended or modified from time to
"Holdings" shall mean Renaissance Media Holdings LLC.
"Holdings LLC Agreement" shall mean 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. and the other investors signatory
thereto, as contemplated to be further amended and restated effective April 17,
1998 as the Second Amended and Restated Limited Liability Company Agreement of
Holdings by and among Holdings, MSCP Carry LLC, TWI Cable Carry LLC and the
other investors signatory thereto, as further amended or modified from time to
"Individual Performance" shall mean the performance of any Participant in
any Award Year based upon reasonable criteria determined in the discretion of
"Management Investors" shall have the meaning set forth in the Holdings LLC
"Maximum Bonus Pool" shall mean an amount equal to forty percent (40%) of
the aggregate amount of the Base Salaries of all Participants for such Award
"MSCP Funds" shall mean Morgan Stanley Capital Partners III, L.P., MSCP III
892 Investors, L.P. and Morgan Stanley Capital Investors, L.P.
"Participant" shall mean a senior executive or other key employee of the
Company selected by the Committee to participate in the Plan.
"Performance Goals" shall mean the levels of financial performance required
to be achieved by the Company in an Award Year in order for Participants to earn
a Bonus as determined by the Committee in accordance with Section 4 hereof.
Such levels shall be determined based upon EBITDA calculated based on the Budget
on a pro forma basis taking into account the payment of Bonuses in such Award
Year. Notwithstanding anything in the Plan to the contrary, no Performance Goal
shall be deemed achieved if its effect would be to compromise the quality of
service provided by the Company or if it is accomplished in a manner which
violates any policy of the Company, including without limitation, any legal or
ethical compliance policy.
"Renaissance Group" means the Company and 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, in each case acquired by the MSCP Funds and the Management Investors
through an entity other than the Company or any of its subsidiaries.
"Target Bonus Pool" shall mean an amount equal to twenty-five percent (25%)
(or such greater percentage as the Committee may determine in its sole
discretion) of the aggregate amount of the Base Salaries of all Participants for
such Award Year.
"Units" shall have the meaning set forth in the Holdings LLC Agreement.
3. Administration. The Plan shall be administered by the Committee.
4. Eligibility for and Payment of Bonuses. (a) Subject to the provisions
of the Plan and any Employment Agreement, in each Award Year the Committee may
select the Participants with respect to such Award Year, and determine the
Bonuses and the conditions under which such Bonuses may be earned.
(b) Bonuses that are earned with respect to each Award Year shall be paid
to Participants in such amounts as are determined by the Committee, upon the
recommendation of the Chairman, in accordance with Section 6 hereof and shall be
paid by the end of February following such Award Year. Bonuses will be paid in
cash or, at the option of the Participant subject to the consent of the
Committee, in Units.
(c) Except as otherwise determined by the Committee or as provided for in
any Employment Agreement, no portion of any Bonus may be earned unless a
Participant is employed by the Company at the time of payment. In the event the
employment of a Participant is terminated by reason of death, Disability or
retirement prior to the payment of any Bonus, and subject to the terms of any
Employment Agreement, the Committee may provide in the exercise of its
discretion that such Participant shall receive a prorated payout of the Bonus,
payable at the time such payment would have been made in the absence of a
termination of employment.
5. Annual Budget and Performance Goals. Prior to the beginning of each
Award Year, the Company shall approve the Budget and the Committee shall
establish Performance Goals with respect to such Award Year.
6. Amount of Awards. (a) If the Company attains the Performance Goals
established by the Committee with respect to a given Award Year, subject to
Individual Performance and in the discretion of the Committee, each Participant
may receive a Bonus for such Award Year; provided that the Committee shall award
Bonuses to the Participants in respect of such Award Year in an aggregate amount
equal to (i) not less than 80% of the Target Bonus Pool for such Award Year and
(ii) not more than such Target Bonus Pool, it being understood that (x) the
Committee shall determine in its sole discretion the manner in which the Target
Bonus Pool shall be allocated among such Participants and shall have no
obligation to award a Bonus to any single Participant in respect of such Award
Year and (y) assuming satisfactory Individual Performance, it is the expectation
of the parties that 100% of the Target Bonus Pool will be allocated during such
Award Year. Notwithstanding the foregoing, if the Company attains ninety-five
percent (95%) of such Performance Goals, subject to Individual Performance and
in the discretion of the Committee, each Participant may receive a Bonus of
between 10% and 25% of the Base Salary of such Participant for such Award Year,
in the discretion of the Committee.
(b) If the Company exceeds the Performance Goals established by the
Committee with respect to a given Award Year, subject to Individual Performance
and in the discretion of the Committee, in lieu of any Bonus awarded pursuant to
Section 6(a), each Participant may receive a Bonus for such Award Year; provided
that the Committee shall award Bonuses to the Participants in respect of such
Award Year in an aggregate amount equal to (i) not less than 80% of the Target
Bonus Pool for such Award Year and (ii) not more than such Maximum Bonus Pool,
it being understood that (x) the Committee shall determine in its sole
discretion the manner in which the Maximum Bonus Pool shall be allocated among
such Participants and shall have no obligation to award a Bonus to any single
Participant in respect of such Award Year and (y) assuming satisfactory
Individual Performance, it is the expectation of the parties that 100% of the
Maximum Bonus Pool will be allocated during such Award Year.
7. Adjustments. Neither the existence of the Plan nor any designations or
Bonuses made under the Plan shall impair the right of the Company to, among
other things, conduct, make or effect any change in the Company's business,
including any reorganization or other change in the structure of the Company's
operations. In the event of such a change, the Committee shall make such
adjustments, if any, as it deems reasonably appropriate and equitable in the
Performance Goals relating to any Award Year then in progress; provided,
however, that the Committee in no event may change the criteria upon which the
Performance Goals are based to criteria which are not measures of the financial
performance of the Company.
8. Amendment and Termination. The Company may terminate, amend or modify
the Plan at any time in any respect it deems advisable; provided, however, that
for a period of five years following the effective date of the Plan, the Company
will not terminate, amend or modify the Plan without the consent of at least
two-thirds of the Management Investors, which consent shall not be unreasonably
9. Payment of Withholding Tax. The Company may withhold from any payment
to be made under the Plan any amount required, in the discretion of the
Committee, to be withheld pursuant to any applicable law or regulation.
10. Right to Terminate Employment. Nothing contained in the Plan shall
confer upon any person a right to be employed by or to continue in the employ of
the Company, or interfere in any way with the right of the Company to terminate
or modify the terms of the employment of a Participant in the Plan at any time,
with or without cause.
11. Interpretation; Finality of Determinations. The Committee shall have
full and complete authority to interpret and administer the Plan, and to adopt
such rules and regulations and make all other determinations deemed necessary or
desirable for the administration of the Plan in accordance with this document.
Each determination, interpretation or other action made or taken pursuant to the
provisions of the Plan by the Committee shall be binding and conclusive.
12. Headings. Section headings are used herein for convenience of
reference only and shall not affect the meaning of any provision of the Plan.
13. Governing Law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of New York.
14. Effective Date. The Plan shall be effective commencing with the 1998
fiscal year of the Company.