Exhibit 10.2
CHANGE OF CONTROL EMPLOYMENT
AGREEMENT
AGREEMENT, dated as of the 29th day
of October, 2008 (this “ Agreement ”), by and
between tw telecom holdings inc ., a Delaware corporation
(the “ Company ”), and John Blount (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 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 Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the
case may be,
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(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
first anniversary of 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.
(2) 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) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the
Company.
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(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 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
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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, as in effect generally at any time
thereafter with respect to other peer executives of the Company and
the Affiliated Companies.
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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
(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
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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;
(2) any failure by
