EXHIBIT 10.17
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT, DATED AS OF SEPTEMBER 17, 1999,
BETWEEN TELEMUNDO NETWORK GROUP LLC AND XXXX XXXXX
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT (this "Amendment"), dated as of
September __, 1999, between TELEMUNDO NETWORK GROUP LLC, a Delaware limited
liability company (the "Company"), and XXXX XXXXX ("Employee").
WHEREAS, Company and Employee are parties to that certain Employment
Agreement dated as of August 12, 1998 (the "Agreement").
WHEREAS, Company and Employee wish to amend the Agreement by this
Amendment.
NOW, THEREFORE, the parties hereto agree as follows:
1. All terms used herein but not defined shall have the meanings given in
the Agreement.
2. Paragraph 3(c) of the Agreement is hereby amended and restated to read
in full as follows:
(c) Employee shall be entitled to a one-time payment (the "Bonus
Payment") determined as set forth in this Section 3(c) (subject to the
limitations set forth in Section 3(c)(iv) below). The Bonus Payment shall be
payable on the 90th day following the seventh anniversary of the Acquisition
Date (the "Payment Date"). At the time the Bonus Payment is paid to Employee,
the Company shall also pay to Employee an amount in the nature of interest on
the amount of the Bonus Payment accrued from the 90th day following the
Expiration Date until the date the Bonus Payment is actually paid at the then
current prime rate charged by Bank of America.
(i) Definitions. Capitalized terms used in this
Section 3(c) shall be defined as set forth below, unless otherwise expressly
defined elsewhere:
(A) "Average IAV" shall mean an amount determined by
dividing (i) the sum of each of the IAVs for the three Measurement Years
included in the Measurement Period, by (ii) the number 3.
(B) A "Change In Control" shall be deemed to occur if
at any time, as a result of a transfer of Membership Interests in the Company,
Liberty and SPE (and their respective Permitted Transferees) shall own,
collectively, Membership Interests representing less than one-half of the
Membership Interests purchased by them on the Acquisition Date.
(C) "Consolidated Indebtedness" means, with respect
to the Company and the Station Group, Indebtedness actually incurred by the
Company or the Station Group, as the case may be, determined on a consolidated
basis in accordance with GAAP, that by its terms matures more than one year
after any date of determination or matures less than one year from such date but
is renewable or extendible, at the option of the Company or Station Group, as
applicable, to a date more than one year after such date or arises under a
revolving credit or similar agreement that obligates the lender or lenders to
extend credit during a period of more than one year after such date, in each
case determined on a consolidated basis in accordance with GAAP.
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(D) "Enterprise EBITDA" means, with respect to each
Measurement Year, the sum of (i) 100% of the Network EBITDA, plus (ii) 50% of
the Station Group EBITDA, for such Measurement Year.
(E) "IAV" for any Measurement Year shall be an amount
equal to (i) that amount which is eleven times the Enterprise EBITDA for such
Measurement Year, minus (ii) 100% of the Consolidated Indebtedness of the
Company on the last day of such Measurement Year (net of cash and cash
equivalents owned by the Company as of such date), minus (iii) 50% of the
Consolidated Indebtedness of Station Group on the last day of such Measurement
Year (net of 50% of the cash and cash equivalents owned by Station Group as of
such date), minus (iv) 100% of the Network Group Contributed Capital Amount as
of the last day of such Measurement Year, and minus (v) 50% of the Station Group
Contributed Capital Amount as of the last day of such Measurement Year.
(F) "Indebtedness" means:
(a) All indebtedness for borrowed money;
(b) All obligations for the deferred
purchase price of property and assets or services (other than trade payables or
other accounts payable incurred in the ordinary course of business and not past
due for more than 90 days after the date on which such trade payable or account
payable is created);
(c) All obligations evidenced by notes,
bonds, debentures or other similar instruments, or upon which interest payments
are customarily made;
(d) All obligations created or arising under
any conditional sales or other title retention agreement with respect to
property or assets acquired (even though the rights and remedies of the seller
or the lender under such agreement in the event of default are limited to
repossession or sale of such property or assets);
(e) All obligations of such person as lessee
under any capitalized lease;
(f) All obligations, contingent or
otherwise, under acceptance, letter of credit or similar facilities (other than
letters of credit given in support of trade payables incurred in the ordinary
course of such business and with an expiration date of not more than 90 days
after the date on which such letter of credit was issued); and
(g) All obligations under any synthetic
lease, tax retention operating lease, off balance sheet loan or similar off
balance sheet financing if the transaction giving effect to such obligation is
considered indebtedness for borrowed money for tax purposes but is classified as
an operating lease in accordance with GAAP.
Notwithstanding the foregoing, no amounts shall be included as Indebtedness
hereunder unless such amounts are actually paid to the Company or Station Group,
as the case may be, or to a third party (other than the Affiliates of Station
Group or the Company, as the case may be) on behalf of the Company or Station
Group, as the case may be.
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(G) "Liberty" means Liberty Media Corporation or its
subsidiary that is a member of the Company.
(H) "Measurement Period" means the three Measurement
Years commencing on July 1, 2002 and ending on June 30, 2005.
(I) "Measurement Year" means a twelve consecutive
month period, commencing on each July 1 during the Measurement Period.
(J) "Members" means those persons holding membership
interests in the Company. The initial Members of the Company are Liberty and
Sony.
(K) "Network Group Contributed Capital Amount" means
the aggregate amount of net equity capital contributions of the Members to the
Company made on or after July 1, 1999.
(L) "Network EBITDA" means, with respect to a
particular Measurement Year, (a) the net income (or net loss) of the Company and
its subsidiaries for such Measurement Year, determined after giving effect to
the provisions of the Affiliate Agreement between Station Group and Network
Group regarding pooling and sharing of Network and national spot ad revenues on
a consolidated basis in accordance with GAAP for such period ("Consolidated Net
Income"), plus (b) the sum of each of the following expenses that have been
deducted from the determination of Consolidated Net Income: (i) all interest
expense of the Company and its subsidiaries, (ii) all income tax expense
(whether federal, state, local, foreign or otherwise), (iii) all depreciation
expense, (iv) all amortization expense (other than any such amortization expense
attributable to programming costs, third-party participations and residuals
computed in accordance with GAAP consistently applied during the Measurement
Period) and (v) all extraordinary losses deducted in determining Consolidated
Net Income less all extraordinary gains added in determining Consolidated Net
Income, in each case determined on a consolidated basis in accordance with GAAP
for such period.
(M) "Permitted Transferees" means any Person who
acquires any of the Membership Interests originally issued to SPE or Liberty or
any of their respective Permitted Transferees in any of the following
transactions:
(i) Transfers to Controlled Affiliates. A
transfer by SPE or Liberty or any of their respective Permitted Transferees, of
all or part of its Membership Interests directly or indirectly through a
transfer of equity ownership interests in such Person, to a Controlled Affiliate
of such Person.
(ii) Corporate Reorganizations, Sale of
Assets, Spin-Offs. A transfer by any of SPE, Liberty or their respective
Permitted Transferees of all or part of its Membership Interests as part of a
transfer of a larger group of assets (the "Transferred Assets"), which transfer
may be effected by a corporate reorganization, a sale of assets, distribution of
equity interests or otherwise (a) if the Transferred Assets constitute a
business which is engaged principally in the media, entertainment, cable or
telecommunications business, and (b) the value of the Transferred Assets other
than the Membership Interests at the time of Transfer comprise at least 85
percent of
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the value of the Transferred Assets (including the Membership Interests). The
value of the Transferred Assets and Membership Interests shall be determined by
reference to the public trading price or, if none, shall be determined in good
faith by the Membership Committee of the Company.
(iii) Transfers in Consideration for Receipt
of Equity Interests. A transfer by any of SPE, Liberty or their respective
Permitted Transferees, of all or any part of its Membership Interests if such
Transfer is solely in consideration for Equity Interests in such Person. For
these purposes, "Equity Interests" shall mean (a) with respect to a corporation,
shares of the capital stock of such corporation and (b) with respect to a
partnership, limited liability company or other person, partnership, limited
liability or other equity interests in such person.
(P) "Station Group EBITDA" means, with respect to a
particular Measurement Year, (a) the net income (or net loss) of the Station
Group and its subsidiaries (after deduction for minority interest) for such
period ("Consolidated Station Group Net Income"), determined after giving effect
to the provisions of the Affiliate Agreement between Station Group and Network
Group regarding pooling and sharing of Network and national spot ad revenues on
a consolidated basis in accordance with GAAP for such period, plus (b) the sum
of each of the following expenses that have been deducted from the determination
of Consolidated Station Group Net Income: (i) all interest expense of the
Station Group and its subsidiaries, (ii) all income tax expense (whether
federal, state, local, foreign or otherwise), (iii) all depreciation expense,
(iv) all amortization expense (other than any such amortization expense
attributable to programming costs, participation and residuals) and (v) all
extraordinary losses deducted in determining Consolidated Station Group Net
Income less all extraordinary gains added in determining Consolidated Station
Group Net Income, in each case determined on a consolidated basis in accordance
with GAAP for such period.
(Q) "Sony" means Sony Pictures Entertainment Inc. or
its subsidiary that is a member of the Company.
(R) "Station Group Contributed Capital" means the
aggregate amount of net equity capital contributions of the Members to Station
Group made on or after July 1, 1999.
(ii) Amount of Bonus Payment. The Bonus
Payment shall be equal to ninety-nine one hundredths of one percent (.99%) of
Average IAV.
(iii) Adjustments. In the event that the
Company or the Station Group makes any corporate acquisition and/or divestiture
of a material portion of its assets (which for these purposes shall include any
acquisition or disposition of assets with a fair market value of $25 million or
more or any disposition of assets during the Measurement Period, the parties
agree that an equitable adjustment to the formula for determining IAV's will be
negotiated in good faith at the time of such acquisition or divestiture. In the
event that, during the Measurement Period, the Company makes an equity offering
to the public, the parties agree to convert the Bonus Payment into stock, stock
options, warrants or other forms of equity in the Company, as applicable, and to
negotiate in good faith the appropriate nature and formula for such conversion.
(iv) Early Termination. Notwithstanding
anything to the contrary contained in this Section 3(c), if Employee's
employment is terminated on or prior to the Expiration Date for any reason other
than pursuant to Section 4(d) below, then the amount of the Bonus Payment
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payable to the Employee on the Payment Date shall be reduced to Employee's
vested portion of such Bonus Payment at the date of such termination. During
each Measurement Year, Employee shall vest in the Bonus Payment as follows:
Measurement Year Percentage To Be Vested
---------------- -----------------------
First year 5%
Second year 10%
Third year 25%
Fourth year 30%
Fifth year 30%
Employee shall become vested in the Percentage To Be Vested during each
Measurement Year in four equal installments on September 30, December 31, March
30, and June 30 (each a "Vesting Date") during such year. Employee's vested
portion of the Bonus Payment at any given date shall be the aggregate percentage
vested as of the Vesting Date immediately preceding the date such vested portion
is being determined. In the event that this Agreement is terminated by the
Company prior to the Expiration Date pursuant to Section 4(d) hereof, Employee
shall not be deemed to have vested in any portion of the Bonus Payment and no
payment shall be due and owing to Employee pursuant to this Section 3(c).
Notwithstanding the foregoing (i), if the Company determines not to exercise its
option to extend the Term of Executive's employment for the Extension Period,
upon the expiration of the Term and thereafter the vested portion of the Bonus
Payment shall be deemed to be 60%, and (ii) if Employee's employment by the
Company is terminated pursuant to Section 4(f) or 4(h) below, in lieu of the
schedule set forth above, Employee shall be deemed vested in the Bonus Payments
at the rate of 20% each Measurement Year (vesting in four equal installments
during each such year on each September 30, December 31, March 30 and June 30
during such year).
(v) Computation of Bonus Payment. The Bonus
Payment payable hereunder shall be computed by the Company's independent
certified public accountants during the 90 day period following the end of the
Measurement Period in accordance with the terms and conditions of this Section
3(c). The amount of the Bonus Payment as so computed shall be final and binding
on the parties and neither shall have any right to contest such computation in
any form whatsoever.
3. Effect of Amendment. Except as expressly modified herein, all of the
terms of the Agreement remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused it to be executed on their behalf as of the date first above written.
TELEMUNDO NETWORK GROUP LLC
By: /s/ Xxxxx X. XxXxxxxx
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Xxxxx X. XxXxxxxx
President and Chief Executive Officer
/s/ Xxxx Xxxxx
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Xxxx Xxxxx
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