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Exhibit 10.2
CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the
28th day of September, 2007 (this “ Agreement
”), by and between Time Warner Telecom Inc., a Delaware
corporation (the “ Company ”), and Mark Peters
(the “ Executive ”).
WHEREAS, the Board of
Directors of the Company (the “ Board ”), has
determined that it is in the best interests of the Company and its
stockholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined in
Section 1(d)). The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened
Change of Control and to encourage the Executive’s full
attention and dedication to the Company in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control that ensure that the compensation and benefits
expectations of the Executive will be satisfied and that provide
the Executive with compensation and benefits arrangements that are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY
AGREED AS FOLLOWS:
Section 1 .
Certain Definitions . (a) “ Effective
Date ” means the first date during the Change of Control
Period (as defined in Section 1(b)) on which a Change of
Control occurs. Notwithstanding anything in this Agreement to the
contrary, if the Executive’s employment with the Company is
terminated during the period commencing on the date of public
announcement of a transaction or event involving the Company which,
if consummated, would constitute a Change of Control, and ending on
the date on which such Change of Control occurs (provided that such
Change of Control occurs within 12 months of the date of such
public announcement), and if it is reasonably demonstrated by the
Executive that such termination of employment was at the specific
request of a third party that has taken steps reasonably calculated
to effect such Change of Control (such a termination of employment,
an “ Anticipatory Termination ”) and if such
Change of Control is consummated, then “Effective Date”
means the date immediately prior to the date of such termination of
employment.
(b) “ Change of
Control Period ” means the period commencing on the date
hereof and ending on the three year anniversary of the date hereof;
provided , however , that, commencing on the date
three (3) years after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary
thereof, the “ Renewal Date ”), unless
previously terminated, the Change of Control Period shall be
automatically extended so as to terminate one year from such
Renewal Date, unless, at least sixty (60) days prior to the
Renewal Date, the Company shall give notice to the Executive that
the Change of Control Period shall not be so extended.
(c) “ Affiliated
Company ” means any company controlled by, controlling or
under common control with the Company.
(d) “ Change of
Control ” means:
(1) Any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “
Exchange Act ”)) (a “ Person ”)
becomes the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of either
(A) the then-outstanding shares of common stock of the Company
(the “ Outstanding Company Common Stock ”) or
(B) the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the “ Outstanding Company Voting
Securities ”); provided , however , that,
for purposes of this Section 1(d), the following acquisitions
shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the
Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
Affiliated Company or (iv) any acquisition pursuant to a
transaction that complies with Sections 1(d)(3)(A), 1(d)(3)(B) and
1(d)(3)(C);
(2) Any time at which
individuals who, as of the date hereof, constitute the Board (the
“ Incumbent Board ”) cease for any reason to
constitute at least a majority of the Board; provided ,
however , that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by
the Company’s stockholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board;
(3) Consummation of a
reorganization, merger, statutory share exchange or consolidation
or similar transaction involving the Company or any of its
subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or
stock of another entity by the Company or any of its subsidiaries
(each, a “ Business Combination ”), in each case
unless, following such Business Combination:
(A) all or substantially all
of the individuals and entities that were the beneficial owners of
the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the
then-outstanding shares of common stock (or, for a non-corporate
entity, equivalent securities) and the combined voting power of the
then-outstanding voting securities entitled to vote generally in
the election of directors (or, for a non-corporate entity,
equivalent governing body), as the case may be, of the entity
resulting from such Business Combination (including, without
limitation, an entity that, as a result of such transaction, owns
the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership immediately
prior to such Business
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Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be,
(B) no Person (excluding any
corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 25% or more of, respectively, the
then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior
to the Business Combination, and
(C) at least a majority of
the members of the board of directors (or, for a non-corporate
entity, equivalent governing body) of the entity resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement or of the action
of the Board providing for such Business Combination; or
(4) Approval by the
stockholders of the Company of a complete liquidation or
dissolution of the Company.
Section 2 .
Employment Period . The Company hereby agrees to
continue the Executive in its employ, subject to the terms and
conditions of this Agreement, for the period commencing on the
Effective Date and ending on the date that is 13 months and 1 day
the Effective Date (the “ Employment Period ”).
The Employment Period shall terminate upon the Executive’s
termination of employment for any reason.
Section 3 .
Terms of Employment . (a) Position and
Duties . (1) During the Employment Period,
(A) the Executive’s position (including status, offices,
titles and reporting requirements), authority, duties and
responsibilities shall be at least commensurate in all material
respects with the most significant of those held, exercised and
assigned at any time during the 120-day period immediately
preceding the Effective Date and (B) the Executive’s
services shall be performed at the office where the Executive was
employed immediately preceding the Effective Date or at any other
location less than 35 miles from such office.
(1) During the Employment
Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder,
to use the Executive’s reasonable best efforts to perform
faithfully and efficiently such responsibilities. During the
Employment Period, it shall not be a violation of this Agreement
for the Executive to (A) serve on corporate, civic or
charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and
(C) manage personal investments, so long as such activities do
not significantly interfere with the performance of the
Executive’s responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly understood and
agreed that, to the extent that any such activities have been
conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto)
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subsequent to the Effective Date shall
not thereafter be deemed to interfere with the performance of the
Executive’s responsibilities to the Company.
(b) Compensation
. (1) Base Salary . During the Employment
Period, the Executive shall receive an annual base salary (the
“ Annual Base Salary ”) at an annual rate at
least equal to 12 times the highest monthly base salary paid or
payable, including any base salary that has been earned but
deferred, to the Executive by the Company and the Affiliated
Companies in respect of the 12-month period immediately preceding
the month in which the Effective Date occurs. The Annual Base
Salary shall be paid at such intervals as the Company pays
executive salaries generally. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually, beginning
no more than twelve (12) months after the last salary increase
awarded to the Executive prior to the Effective Date. Any increase
in the Annual Base Salary shall not serve to limit or reduce any
other obligation to the Executive under this Agreement. The Annual
Base Salary shall not be reduced after any such increase and the
term “Annual Base Salary” shall refer to the Annual
Base Salary as so increased.
(2) Annual Bonus
. In addition to the Annual Base Salary, the Executive shall be
awarded, for each fiscal year ending during the Employment Period,
an annual bonus (the “ Annual Bonus ”) in cash
at least equal to the Executive’s target bonus opportunity
under the Company’s Annual Incentive Plan, or any comparable
bonus under any predecessor or successor plan (the “
Annual Incentive Plan ”) for the fiscal year in which
the Effective Date occurs (or if, prior to the Effective Date, the
target bonus opportunity for such year has not been established,
the target bonus opportunity for the fiscal year ending immediately
prior to the Effective Date), and in each case taking into account
any increases in Annual Base Salary to the extent relevant (the
“ Target Bonus ”). For each fiscal year ending
during the Employment Period, (a) any performance goals or
other criteria used to determine the actual Annual Bonus earned
shall be substantially as favorable to the Executive as the
performance goals or other criteria established with respect to the
Executive’s Annual Bonus opportunity for the year in which
the Effective Date occurs (or if, prior to the Effective Date, the
performance goals or criteria for such year have not been
established, the performance goals or criteria applicable for the
fiscal year ending immediately prior to the Effective Date) and
(b) to the extent permitted under the Annual Incentive Plans,
the exercise of negative discretion under the Annual Incentive Plan
shall be no greater than the exercise of such discretion for the
year immediately preceding the year in which the Effective Date
occurs. Each such Annual Bonus shall be paid no later than two and
a half months after the end of the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus pursuant to an arrangement that meets
the requirements of Section 409A of the Internal Revenue Code
of 1986, as amended (the “ Code ”).
(3) Incentive, Savings
and Retirement Plans . During the Employment Period, the
Executive shall be entitled to participate in all cash incentive,
equity incentive, savings and retirement plans, practices,
policies, and programs applicable generally to other peer
executives of the Company and the Affiliated Companies, but in no
event shall such plans, practices, policies and programs provide
the Executive with incentive opportunities (measured with respect
to both regular and special incentive opportunities, to the extent,
if any, that such distinction is applicable), savings opportunities
and retirement benefit opportunities, in each case, less favorable,
in the aggregate, than the most favorable of those provided by the
Company
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and the Affiliated Companies for the
Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, those
provided generally at any time after the Effective Date to other
peer executives of the Company and the Affiliated
Companies.
(4) Welfare Benefit
Plans . During the Employment Period, the Executive and/or
the Executive’s family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the
Company and the Affiliated Companies (including, without
limitation, medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident insurance
plans and programs) to the extent applicable generally to other
peer executives of the Company and the Affiliated Companies, but in
no event shall such plans, practices, policies and programs provide
the Executive with benefits that are less favorable, in the
aggregate, than the most favorable of such plans, practices,
policies and programs in effect for the Executive at any time
during the 120-day period immediately preceding the Effective Date
or, if more favorable to the Executive, those provided generally at
any time after the Effective Date to other peer executives of the
Company and the Affiliated Companies.
(5) Expenses
. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the Company and the
Affiliated Companies in effect for the Executive at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
the Affiliated Companies.
(6) Fringe Benefits
. During the Employment Period, the Executive shall be entitled
to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, in accordance
with the most favorable plans, practices, programs and policies of
the Company and the Affiliated Companies in effect for the
Executive at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated
Companies.
(7) Office and Support
Staff . During the Employment Period, the Executive shall
be entitled to an office or offices of a size and with furnishings
and other appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and the Affiliated
Companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the
Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and the Affiliated
Companies.
(8) Vacation .
During the Employment Period, the Executive shall be entitled to
paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and the Affiliated
Companies as in effect for the Executive at any time during the
120-day period immediately preceding the Effective Date or, if more
favorable to the Executive,
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as in effect generally at any time
thereafter with respect to other peer executives of the Company and
the Affiliated Companies.
Section 4 .
Termination of Employment . (a) Death or
Disability . The Executive’s employment shall
terminate automatically if the Executive dies during the Employment
Period. If the Company determines in good faith that the Disability
(as defined herein) of the Executive has occurred during the
Employment Period (pursuant to the definition of
“Disability”), it may give to the Executive written
notice in accordance with Section 12(b) of its intention to
terminate the Executive’s employment. In such event, the
Executive’s employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the “ Disability Effective Date ”),
provided that, within the thirty (30) days after such
receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. “
Disability ” means the absence of the Executive from
the Executive’s duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to
mental or physical illness that is determined to be total and
permanent by a physician selected by the Company or its insurers
and acceptable to the Executive or the Executive’s legal
representative.
(b) Cause . The
Company may terminate the Executive’s employment during the
Employment Period with or without Cause. “ Cause
” means:
(1) being convicted of, or
pleading guilty or nolo contendere to, a charge of
commission of a felony or a misdemeanor involving moral
turpitude;
(2) engaging in any theft,
misappropriation, embezzlement or financial fraud relating to the
Company, or reckless or willful destruction of the Company’s
property, in any case that is materially and demonstrably injurious
to the Company’s business, financial condition or
reputation;
(3) the willful and continued
failure of the Executive to perform substantially the
Executive’s duties (as contemplated by
Section 3(a)(1)(A)) with the Company or any Affiliated Company
(other than any such failure resulting from incapacity due to
physical or mental illness or following the Executive’s
delivery of a Notice of Termination for Good Reason), after a
written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the
Company that specifically identifies the manner in which the Board
or the Chief Executive Officer of the Company believes that the
Executive has not substantially performed the Executive’s
duties;
(4) the willful or reckless
engaging by the Executive in illegal conduct or gross misconduct
that is materially and demonstrably injurious to the
Company’s business, financial condition or
reputation;
(5) any willful or reckless
material breach of a statutory or common law duty of loyalty to the
Company that is materially and demonstrably injurious to the
Company’s business, financial condition or
reputation;
(6) any material breach of
the Executive’s obligations under this Agreement, including
Section 9 and Section 10; or
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(7) any material and willful
breach of the provisions of the Company’s Code of Conduct
covering the following matters (provided that the provision
breached is no more restrictive than the comparable provision of
the Company’s Code of Conduct as in effect at any time during
the 120-day period immediately preceding the Effective Date):
Drug-Free Workplace; Bribery and Fraud; False or Artificial Entries
in Books and Records; or Insider Trading (other than failing to
observe administrative requirements and blackout periods if no
actual insider trading or tipping occurred), in each case, if such
breach is materially and demonstrably injurious to the
Company’s business, financial condition or
reputation.
For purposes of this Section 4(b),
no act, or failure to act, on the part of the Executive shall be
considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority (A) given pursuant to a resolution duly adopted by
the Board, or if the Company is not the ultimate parent corporation
of the Affiliated Companies and is not publicly-traded, the board
of directors of the ultimate parent of the Company (the “
Applicable Board ”), (B) upon the instructions of
the Chief Executive Officer of the Company, or (C) based upon
the advice of counsel for the Company shall be conclusively
presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. With respect
to the conduct described in Sections 4(b)(2) through 4(b)(7), the
Company shall provide the Executive with written notice setting
forth the details of any claimed breach and the Executive shall
have a reasonable period of time (not less than thirty
(30) days) to cure such claimed breach if the breach is
curable. The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters of the entire
membership of the Applicable Board (excluding the Executive, if the
Executive is a member of the Applicable Board) at a meeting of the
Applicable Board called and held for such purpose (after reasonable
notice is provided to the Executive and the Executive is given an
opportunity, together with counsel for the Executive, to be heard
before the Applicable Board), finding that, in the good faith
opinion of the board, the Executive is guilty of the conduct
described in Section 4(b)(2) through 4(b)(7), and specifying
the particulars thereof in detail.
(c) Good Reason
. The Executive’s employment may be terminated by the
Executive for Good Reason or by the Executive voluntarily without
Good Reason. “ Good Reason ” means:
(1) the assignment to the
Executive of any duties substantively inconsistent (and excluding
the assignment of insubstantial and isolated additional duties that
are not substantively inconsistent) with the Executive’s
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 3(a), or any other diminution in such
position, authority, duties or responsibilities (whether or not
occurring solely as a result of the Company’s ceasing to be a
publicly traded entity) excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
that is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
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(2) any failure by the
Company to comply with
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