Employment Agreement – Continued Employment – Cablevision Systems Corp.
February 1, 2012
Mr. David G. Ellen
Cablevision Systems Corporation
1111 Stewart Avenue
Bethpage, NY 11714
Dear David:
This letter agreement (the “Agreement”), effective on the date hereof, will
confirm the terms of your continued employment by Cablevision Systems
Corporation (the “Company”).
1. Your title continues to be Executive Vice President and General Counsel
and you will continue to report to the Chief Executive Officer of the Company.
You agree to continue to devote your business time and attention to the business
and affairs of the Company and to perform your duties in a diligent, competent,
professional and skillful manner and in accordance with applicable law.
2. Your current base salary is $850,000 annually, paid bi-weekly, subject to
annual review and potential increase by the Compensation Committee of the Board
of Directors of the Company (the “Compensation Committee”) in its discretion.
With respect to the annual review for 2012 anticipated to be conducted by the
Compensation Committee in February or March of 2012, the expectation is that you
will receive the same percentage increase, if any, in base salary, annual target
bonus opportunity and/or aggregate LTIP target value that is granted by the
Compensation Committee other similarly situated executives (such as the CFO)
receive.
3. You will also continue to participate in our discretionary annual bonus
program with an annual target bonus opportunity equal to not less than 95% of
your annual base salary. Bonus payments are based on actual salary dollars paid
during the year and depend on a number of factors including Company, unit and
individual performance. However, the decision of whether or not to pay a bonus,
and the amount of that bonus, if any, is made by the Compensation Committee in
its sole discretion. Bonuses are typically paid early in the subsequent calendar
year. Except as otherwise provided herein, in order to receive a bonus, you must
be employed by the Company at the time bonuses are being paid.
4. You will also continue to be eligible, subject to your continued
employment by the Company and actual grant by the Compensation Committee, to
participate in such equity and other long-term incentive programs that are made
available in the future to similarly situated executives at the Company. In
calendar year 2012, for example, you will be entitled to receive one or more
long-term cash and/or equity awards with an aggregate target value of not less
than $2,200,000, all as determined by the Compensation Committee in its
discretion. Both types of awards are expected to be subject to three year cliff
vesting. Any such awards, in addition to being subject to actual grant by the
Compensation Committee, would be pursuant to the applicable plan document and
would be subject to any terms and conditions established by the Compensation
Committee in its sole discretion that would be detailed in separate agreements
you would receive after any award is actually made.
Mr. David G. Ellen
Page 2
5. You will also continue to be eligible to participate in our standard
benefits program, subject to meeting the relevant eligibility requirements,
payment of the required premiums, and the terms of the plans themselves. We
currently offer medical, dental, vision, life, and accidental death and
dismemberment insurance; short- and long-term disability insurance; a savings
and retirement program; and ten paid holidays. You will also continue to be
eligible for four (4) weeks of vacation to be accrued and used in accordance
with Company policy.
6. If your employment with the Company is terminated prior to December 31,
2016 (the “Scheduled Expiration Date”) (i) by the Company (other than for
“Cause”); or (ii) by you for “Good Reason” (other than if “Cause” then exists);
then, subject to your execution and delivery, within 60 days after the date of
termination of your employment, and non-revocation (within any applicable
revocation period) of the Separation Agreement (as defined below), the Company
will provide you with the following:
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(a) |
Severance in an amount (the “Severance Amount”) equal to two (2) times the |
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(b) |
Any unpaid annual bonus for the calendar year prior to the calendar year |
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(c) |
Each of your outstanding long-term cash awards granted under the plans of the |
Mr. David G. Ellen
Page 3
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(d) |
Each of your outstanding restricted stock or restricted stock unit awards |
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(e) |
Each of your outstanding stock options and stock appreciation awards under |
If you die after a termination of your employment that is subject to this
Paragraph 6, your estate or beneficiaries will be provided with any remaining
benefits and rights under this Paragraph 6.
7. If you cease to be an employee of the Company prior to the Scheduled
Expiration Date as a result of your death or your physical or mental disability,
and at such time Cause does not exist then, subject (other than in the case of
death) to your execution and delivery, within 60 days after the date of
termination of your employment, and non-revocation (within any applicable
revocation period) of the Separation Agreement, you or your estate or
beneficiary shall be provided with the benefits and rights set forth in
Paragraphs 6(b), (d) and (e) above, and each of your outstanding long-term cash
awards granted under the plans of the Company shall immediately vest in full,
whether or not subject to performance criteria and shall be payable on the 90th
day after the termination of your employment; provided, that if any such award
is subject to any performance criteria, then (i) if the measurement period for
such performance criteria has not yet been fully completed, then the payment
amount shall be at the target amount for such award and (ii) if the measurement
period for such performance criteria has already been fully completed, then the
payment of such award shall be at the same time and to the extent that other
similarly situated executives receive payment as determined by the Compensation
Committee (subject to satisfaction of the applicable performance criteria).
Mr. David G. Ellen
Page 4
8. For purposes hereof, “Separation Agreement” shall mean the Company153s
standard severance agreement (modified to reflect the terms of this Agreement)
which will include, without limitation, the provisions set forth in Annex A
hereto regarding non-compete (limited to one year), non-disparagement,
non-solicitation, confidentiality and further cooperation obligations and
restrictions on you (with Company reimbursement of your associated expenses in
connection with any required post-employment cooperation) as well as a general
release by you of the Company and its affiliates (and their respective directors
and officers).
9. Except as otherwise set forth in Paragraphs 6, and 7 hereof, in connection
with any termination of your employment, your then outstanding equity and cash
incentive awards shall be treated in accordance with their terms and, other than
as provided in this Agreement, you shall not be eligible for severance benefits
under any other plan, program or policy of the Company.
10. For purposes of this Agreement, “Cause” means your (i)
commission of an act of fraud, embezzlement, misappropriation, willful
misconduct, gross negligence or breach of fiduciary duty against the Company or
an affiliate thereof, or (ii) commission of any act or omission that results in
a conviction, plea of no contest, plea of nolo contendere, or
imposition of unadjudicated probation for any crime involving moral turpitude or
any felony.
For purposes of this Agreement, “Good Reason” means that (1) without
your written consent, (A) your base salary or annual target bonus (as each may
be increased from time to time in the Company153s sole discretion) is reduced, (B)
your title (as in effect from time to time) is diminished, (C) you report
directly to someone other than the Chief Executive Officer of the Company, (D)
the Company requires that your principal office be located outside of Nassau
County or the Borough of Manhattan, (E) the Company materially breaches its
obligations to you under this Agreement; or (F) your responsibilities as in
effect immediately after the date hereof are thereafter materially diminished,
(2) you have given the Company written notice, referring specifically to this
Agreement and definition, that you do not consent to such action, (3) the
Company has not corrected such action within 15 days of receiving such notice,
and (4) you voluntarily terminate your employment with the Company within
90 days following the happening of the action described in subsection (1) above.
11. This Agreement does not constitute a guarantee of employment for any
definite period. Your employment is at will and may be terminated by you or the
Company at any time, with or without notice or reason.
12. The Company may withhold from any payment due to you any taxes required
to be withheld under any law, rule or regulation. If any payment otherwise due
to you hereunder would result in the imposition of the excise tax imposed by
Section 4999 of the Internal Revenue Code, the Company will instead pay you
either (i) such amount or (ii) the maximum amount that could be paid to you
without the imposition of the excise tax, depending on whichever amount results
in your receiving the greater amount of after-tax proceeds. In the event that
the payments and benefits payable to you would be reduced as provided in the
previous sentence, then such reduction will be determined in a manner which has
the least economic cost to you and, to the extent the economic cost is
equivalent, such payments or benefits will be reduced in the inverse order of
when the payments or benefits would have been made to you (i.e. later
payments will be reduced first) until the reduction specified is achieved.
Mr. David G. Ellen
Page 5
13. It is intended that this Agreement will comply with Section 409A of the
Code and Section 409A to the extent the Agreement is subject thereto, and the
Agreement shall be interpreted on a basis consistent with such intent. If and to
the extent that any payment or benefit under this Agreement, or any plan, award
or arrangement of the Company or its affiliates, constitutes “non-qualified
deferred compensation” subject to Section 409A and is payable to you by reason
of your termination of employment, then (a) such payment or benefit shall be
made or provided to you only upon a “separation from service” as defined for
purposes of Section 409A under applicable regulations and (b) if you are a
“specified employee” (within the meaning of Section 409A as determined by the
Company), such payment or benefit shall not be made or provided before the date
that is six months after the date of your separation from service (or your
earlier death). Any amount not paid or benefit not provided in respect of the
six month period specified in the preceding sentence will be paid to you,
together with interest on such delayed amount at a rate equal to the average of
the one-year LIBOR fixed rate equivalent for the ten business days prior to the
date of your employment termination, in a lump sum or provided to you as soon as
practicable after the expiration of such six month period. Any such payment or
benefit shall be treated as a separate payment for purposes of Section 409A to
the extent Section 409A applies to such payments.
14. To the extent you are entitled to any expense reimbursement from the
Company that is subject to Section 409A, (i) the amount of any such expenses
eligible for reimbursement in one calendar year shall not affect the expenses
eligible for reimbursement in any other taxable year (except under any lifetime
limit applicable to expenses for medical care), (ii) in no event shall any such
expense be reimbursed after the last day of the calendar year following the
calendar year in which you incurred such expense, and (iii) in no event shall
any right to reimbursement be subject to liquidation or exchange for another
benefit.
15. The Company will not take any action, or omit to take any action, that
would expose any payment or benefit to you to the additional tax of Section
409A, unless (i) the Company is obligated to take the action under an agreement,
plan or arrangement to which you are a party, (ii) you request the action, (iii)
the Company advises you in writing that the action may result in the imposition
of the additional tax and (iv) you subsequently request the action in a writing
that acknowledges you will be responsible for any effect of the action under
Section 409A. The Company will hold you harmless for any action it may take or
omission in violation of this Paragraph 15, including any attorney153s fees you
may incur in enforcing your rights.
16. It is our intention that the benefits and rights to which you could
become entitled in connection with termination of employment comply with Section
409A. If you or the Company believes, at any time, that any of such benefit or
right does not comply, it will promptly advise the other and will negotiate
reasonably and in good faith to amend the terms of such arrangement such that it
complies (with the most limited possible economic effect on you and on the
Company).
Mr. David G. Ellen
Page 6
17. This Agreement is personal to you and without the prior written consent
of the Company shall not be assignable by you. This Agreement shall inure to the
benefit of and be enforceable by your legal representatives. This Agreement
shall inure to the benefit of and be binding upon the Company and its successors
and assigns.
18. To the extent permitted by law, you and the Company waive any and
all rights to a jury trial with respect to any matter relating to this Agreement
(including the covenants set forth in Annex A hereof). This Agreement will be
governed by and construed in accordance with the law of the State of New York
applicable to contracts made and to be performed entirely within that
State.
19. Both the Company and you hereby irrevocably submit to the jurisdiction of
the courts of the State of New York and the federal courts of the United States
of America in each case located in the City of New York , Borough of Manhattan,
solely in respect of the interpretation and enforcement of the provisions of
this Agreement, and each party hereby waives, and agrees not to assert, as a
defense that either party, as appropriate, is not subject thereto or that the
venue thereof may not be appropriate. You and the Company each agree that
mailing of process or other papers in connection with any such action or
proceeding in any manner as may be permitted by law shall be valid and
sufficient service thereof.
20. This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement. It is the parties153 intention that this Agreement
not be construed more strictly with regard to you or the Company.
21. You agree to keep this Agreement and its terms strictly confidential
(unless it is made public by the Company); provided that (1) you are
authorized to make any disclosure required of you by any federal, state or local
laws or judicial proceedings, after providing the Company with prior written
notice and an opportunity to respond to such disclosure (unless such notice is
prohibited by law) and (2) you are authorized to disclose this Agreement and its
terms to your legal, financial and tax advisors so long as such advisors agree
to maintain the confidentiality of this Agreement.
22. This Agreement reflects the entire under -standing and agreement of you
and the Company with respect to the subject matter hereof and supersedes all
prior understandings or agreements relating thereto, including the prior
employment agreement between you and the Company (the “Original Agreement”)
which shall automatically terminate and be of no further force and effect upon
the execution hereof: provided, however, that you shall continue to be entitled
to any compensation, payments or other benefits to which you became entitled
prior to the date hereof pursuant to the Original Agreement which have not been
paid or delivered to you as of the date hereof (without duplication of any
compensation, payment or other benefit payable to you pursuant to this
Agreement).
Mr. David G. Ellen
Page 7
23. This Agreement will automatically terminate, and be of no further force
or effect, on December 31, 2016; provided, however, that the provisions of
Paragraphs 6 through 9, 12 through 23 and Annex A shall survive the termination
of the Agreement and remain binding on you and the Company in accordance with
their terms.
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Sincerely, |
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CABLEVISION SYSTEMS CORPORATION |
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/s/ James L. Dolan |
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By: James L. Dolan |
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Title: Chief Executive Officer |
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Accepted and Agreed: |
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/s/ David G. Ellen |
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David G. Ellen |
Mr. David G. Ellen
Page 9
ANNEX A
ADDITIONAL COVENANTS
(This Annex constitutes part of the Agreement)
You agree to comply with the following covenants in addition to those set
forth in the Agreement.
1. CONFIDENTIALITY
You agree to retain in strict confidence and not divulge, disseminate, copy
or disclose to any third party any Confidential Information, other than for
legitimate business purposes of the Company and its subsidiaries. As used
herein, “Confidential Information” means any non-public information that is
material or of a confidential, proprietary, commercially sensitive or personal
nature of, or regarding, the Company or any of its subsidiaries or any current
or former director, officer or member of senior management of any of the
foregoing (collectively “Covered Parties”). The term Confidential Information
includes information in written, digital, oral or any other format and includes,
but is not limited to (i) information designated or treated as confidential;
(ii) budgets, plans, forecasts or other financial or accounting data; (iii)
subscriber, customer, fan, vendor or shareholder lists or data; (iv) technical
or strategic information regarding the Covered Parties153, cable, data, telephone,
programming, advertising, film production, motion picture exhibition, newspaper,
multichannel video data and distribution services or other businesses; (v)
advertising, business, sales or marketing tactics and strategies; (vi) policies,
practices, procedures or techniques; (vii) trade secrets or other intellectual
property; (viii) information, theories or strategies relating to litigation,
arbitration, mediation, investigations or matters relating to governmental
authorities; (ix) terms of agreements with third parties and third party trade
secrets; (x) information regarding employees, agents, consultants, advisors or
representatives, including their compensation or other human resources policies
and procedures; and (xi) any other information the disclosure of which may have
an adverse effect on the Covered Parties153 business reputation, operations or
competitive position, reputation or standing in the community.
If disclosed, Confidential Information or Other Information could have an
adverse effect on the Company153s standing in the community, its business
reputation, operations or competitive position or the standing, reputation,
operations or competitive position of any of its affiliates subsidiaries,
officers, directors, employees, consultants or agents.
Notwithstanding the foregoing, the obligations of this section, other than
with respect to subscriber information, shall not apply to Confidential
Information which is:
a) already in the public domain;
b) disclosed to you by a third party with the right to disclose it in good
faith; or
Mr. David G. Ellen
Page 10
c) specifically exempted in writing by the Company from the applicability of
this Agreement.
Notwithstanding anything elsewhere in this Agreement, you are authorized to
make any disclosure required of you by any federal, state and local laws or
judicial, arbitral or governmental agency proceedings, after providing the
Company with prior written notice and an opportunity to respond prior to such
disclosure. In addition, this Agreement in no way restricts or prevents you from
providing truthful testimony concerning the Company to judicial, administrative,
regulatory or other governmental authorities.
2. NON-COMPETE
You acknowledge that due to your executive position in the Company and your
knowledge of the Company153s confidential and proprietary information, your
employment or affiliation with certain entities would be detrimental to the
Company. You agree that, without the prior written consent of the Company and to
the extent permissible under applicable rules of professional responsibility,
you will not represent, become employed by, consult to, advise in any manner or
have any material interest in any business directly or indirectly in any
Competitive Entity (as defined below). A “Competitive Entity” shall mean (1) any
person or entity that competes with any of the Company153s or its affiliates153
cable television, telephone, on-line data, on-line content, or newspaper
businesses or that competes with any of the Company153s or its affiliates153
programming businesses, nationally or regionally or that competes with any other
business of the Company or its affiliates that produced greater than 10% of the
Company153s revenues in the calendar year immediately preceding the year in which
the determination is made; or (2) any trade or professional association
representing any of the companies covered by this paragraph, other than the
National Cable Television Association and any state cable television
association. For purposes of this Agreement, an affiliate of the Company shall
mean an entity that directly or indirectly controls or is controlled by the
Company. An entity shall be deemed to compete with the on-line content business
of the Company, or any of its affiliates only if the entity directly competes
against the on-line content business of the Company, or its affiliate; provided,
however, that an entity153s business shall not be deemed to directly compete
merely by the fact that the business sells ads on-line, unless the business
specifically targets such ads to the same customers or potential customers as
being targeted by the on-line content business of the Company, its subsidiary or
affiliate. Ownership of not more than 1% of the outstanding stock of any
publicly traded company shall not be a violation of this paragraph. This
agreement not to compete will expire upon the one year anniversary of the date
of your termination of employment with the Company.
3. ADDITIONAL UNDERSTANDINGS
You agree, for yourself and others acting on your behalf, that you (and they)
have not disparaged and will not disparage, make negative statements about or
act in any manner which is intended to or does damage to the good will of, or
the business or personal reputations of the Company or any of its incumbent or
former officers, directors, agents, consultants, employees, or successors and
assigns.
Mr. David G. Ellen
Page 11
Unless the Company determines in good faith that you have committed any
malfeasance during your employment by the Company, the Company agrees that its
corporate officers and directors, employees in its public relations department
or third party public relations representatives retained by the Company will not
disparage you or make negative statements in the press or other media which are
damaging to your business or personal reputation. In the event that the Company
so disparages you or makes such negative statements, then notwithstanding the
“Additional Understandings” provision to the contrary, you may make a
proportional response thereto.
In addition, you agree that the Company is the owner of all rights, title and
interest in and to all documents, tapes, videos, designs, plans, formulas,
models, processes, computer programs, inventions (whether patentable or not),
schematics, music, lyrics and other technical, business, financial, advertising,
sales, marketing, customer or product development plans, forecasts, strategies,
information and materials (in any medium whatsoever) developed or prepared by
you or with your cooperation during the course of your employment by the Company
(the “Materials”). The Company will have the sole and exclusive authority to use
the Materials in any manner that it deems appropriate, in perpetuity, without
additional payment to you.
4. FURTHER COOPERATION
Following the date of termination of your employment with the Company (the
“Expiration Date”), you will no longer provide any regular services to the
Company or represent yourself as a Company agent. If, however, the Company so
requests, you agree to cooperate fully with the Company in connection with any
matter with which you were involved prior to the Expiration Date, or in any
litigation or administrative proceedings or appeals (including any preparation
therefore) where the Company believes that your personal knowledge, attendance
and participation could be beneficial to the Company. This cooperation includes,
without limitation, participation on behalf of the Company in any litigation or
administrative proceeding brought by any former or existing Company employees,
representatives, agents or vendors. The Company will pay you for your services
rendered under this provision at the rate of $6,800 per day for each day or part
thereof, within 30 days of approved invoice therefor.
The Company will provide you with reasonable notice in connection with any
cooperation it requires in accordance with this section and will take reasonable
steps to schedule your cooperation in any such matters so as not to materially
interfere with your other professional and personal commitments. The Company
will reimburse you for any reasonable out-of-pocket expenses you reasonably
incur in connection with the cooperation you provide hereunder as soon as
practicable after you present appropriate documentation evidencing such
expenses. You agree to provide the Company with an estimate of such expense
before you incur the same.
5. NON-HIRE OR SOLICIT
You agree not to hire, seek to hire, or cause any person or entity to hire or
seek to hire (without the prior written consent of the Company), directly or
indirectly (whether for your own interest or any other person or entity153s
interest) any then current employee of the Company, or any of its subsidiaries
or affiliates (other than The Madison SquareGarden Company and its subsidiaries
or AMC Networks, Inc. or its subsidiaries), until the first anniversary of the
date of your termination of employment with the Company. This restriction does
not apply to
any employee who was discharged by the Company. In addition, this restriction
will not prevent you from providing references.
Mr. David G. Ellen
Page 12
6. ACKNOWLEDGMENTS
You acknowledge that the restrictions contained in this Annex A, in light of
the nature of the Company153s business and your position and responsibilities, are
reasonable and necessary to protect the legitimate interests of the Company. You
acknowledge that the Company has no adequate remedy at law and would be
irreparably harmed if you breach or threaten to breach the provisions of this
Annex A, and therefore agree that the Company shall be entitled to injunctive
relief, to prevent any breach or threatened breach of any of those provisions
and to specific performance of the terms of each of such provisions in addition
to any other legal or equitable remedy it may have. You further agree that you
will not, in any equity proceeding relating to the enforcement of the provisions
of this Annex A, raise the defense that the Company has an adequate remedy at
law. Nothing in this Annex A shall be construed as prohibiting the Company from
pursuing any other remedies at law or in equity that it may have or any other
rights that it may have under any other agreement. If it is determined that any
of the provisions of this Annex A or any part thereof, is unenforceable because
of the duration or scope (geographic or otherwise) of such provision or because
of applicable rules of professional responsibility, it is the intention of the
parties that the duration or scope of such provision, as the case may be, shall
be reduced so that such provision becomes enforceable and, in its reduced form,
such provision shall then be enforceable and shall be enforced.
7. SURVIVAL
The provisions of this Annex A shall survive any termination of your
employment by the Company or the expiration of the Agreement.
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