EXHIBIT 10.1
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT to that certain Employment Agreement ("ORIGINAL
AGREEMENT") dated as of December 11, 2000 by and among CTN Media Group, Inc., a
Delaware corporation (the "COMPANY"), and Xxxxxx X. Xxxxx ("EXECUTIVE"); is made
as of the 10th day of January, 2001 (the "EFFECTIVE DATE") between the Company,
Executive and U-C Holdings, LLC ("HOLDINGS").
W I T N E S S E T H:
WHEREAS, the Company desires to change the title and duties of
Executive and Executive is willing to make such change, in accordance with the
terms and conditions set forth herein.
NOW THEREFORE, in consideration for ten dollars ($10.00) in hand paid
by the Company to Executive and for other good and valuable consideration, the
receipt and sufficiency which are hereby acknowledged, the parties hereto hereby
agrees as follows:
1. All defined terms in the Original Agreement shall have the same
meaning herein unless the context requires otherwise or unless redefined herein.
2. Section 2(a) of the Original Agreement is amended by deleting the
section in its entirety and replacing it with the following:
"2. POSITION AND DUTIES.
"(a) During the Employment Period, Executive shall
serve as the President of the Company and shall have such
duties, responsibilities and authority of such position
subject to the direction of the Company's Chairman of the
Board, Executive Officers of the Company, and board of
directors (the "BOARD")."
3. In addition to the compensation paid to Employee pursuant to Section
3 of the Original Agreement, on the Effective Date of this Amendment Executive
will be granted options to purchase 50,000 shares of common stock of the
Company. The options will vest over three years, with immediate vesting upon a
Change of Control of the Company. The grant of such options is subject to the
approval of the Board.
4. The Original Agreement is hereby amended by adding the following
Sections 4.A, 4.B and 4.C after the end of Section 4:
"4.A. VESTING OF EXECUTIVE SECURITIES.
"(a) In addition to all sums payable to Executive
pursuant to paragraph 3 above, Executive shall receive from
Holdings, as of January 10, 2001 (the "EFFECTIVE DATE"), Two
Hundred (200) Class A Management Units at purchase price of
$200.00. In the event that the
Company achieves the sales revenue goals for Network Revenue
and Magazine Revenue for Fiscal 2001 set forth on EXHIBIT A
attached hereto, Executive shall receive from Xxxxx Xxxxx an
additional fifty (50) Class A Management Units at a purchase
price of $50.00.
(b) Notwithstanding anything herein to the contrary,
the purchase of the Management Units by Executive and the
issuance of the Management Units by Holdings shall be subject
to the repurchase of 334 Class A Management Units by Holdings
from Xxxxxx Xxxxx. Vesting of the Management Units shall
commence as of the date hereof.
(c) Except as otherwise provided in paragraph 4.B(c)
below, the Management Units will become vested, over the 24
month period after the date hereof, in equal proportions on
each anniversary date of the Effective Date if, as of such
anniversary date, Executive is employed by Company (I.E. 50%
upon the completion of each 12 month period following the
Effective Date).
(d) Upon a Sale of the Company or a Sale of Holdings,
all of the Management Units, which have not yet become vested
shall become vested at the time of such event. All of the
Management Units which have become vested pursuant to this
paragraph 4.A are referred to herein as "Vested Executive
Securities," and all unvested Management Units are referred to
herein as "Unvested Executive Securities."
4.B. REPURCHASE OPTION.
(a) GENERAL REPURCHASE OPTION. Upon the occurrence of
the Termination Date the Executive Securities (whether held by
Executive or one or more of Executive's Permitted Transferees)
shall be subject to repurchase by Holdings pursuant to the
terms and conditions set forth in this paragraph 6 (the
"REPURCHASE OPTION"). The date on which Executive ceases to be
employed by the Company for any reason, is referred to herein
as the "Termination Date."
(b) TERMINATION FOR DEATH OR DISABILITY. Subject to
paragraph 4.B(h) below, the purchase price for the Unvested
Executive Securities on the Termination Date if Executive is
terminated for death, permanent disability or without Cause
will be the Executive's Original Cost; and the purchase price
for the Vested Executive Securities shall be the Fair Market
Value for such Vested Executive Securities, as of the date of
termination.
(c) TERMINATION FOR CAUSE OR RESIGNATION. Subject to
paragraph 4.B(h) below, the purchase price for all Executive
Securities if Executive is terminated for Cause or he resigns
shall be the Executive's Original Cost.
(d) REPURCHASE OPTION. As set forth above, Holdings
may elect to purchase the applicable Executive Securities by
delivering written
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notice (the "HOLDINGS REPURCHASE NOTICE") to the holder or
holders of such Executive Securities within 90 days after the
Termination Date. The Repurchase Notice will set forth the
number of such Executive Securities to be acquired from each
holder, the aggregate consideration to be paid for such
Executive Securities and the time and place for the closing of
the transaction. The number of such Executive Securities to be
repurchased by Holdings shall first be satisfied to the extent
possible from the Unvested Executive Securities held by
Executive at the time of delivery of the Repurchase Notice. If
the number of such Executive Securities then held by Executive
is less than the total number of Executive Securities Holdings
has elected to purchase, Holdings shall purchase the remaining
Executive Securities elected to be purchased from the other
holder(s) of such Executive Securities under this paragraph
4.B, pro rata according to the number of such Executive
Securities held by such other holder(s), respectively, at the
time of delivery of the Repurchase Notice (determined as
nearly as practicable to the nearest unit or other applicable
denomination).
(e) CLOSING. Subject to paragraph 4.B(g) below, the
closing of the purchase of the applicable Executive Securities
pursuant to the Repurchase Option shall take place on the date
designated by Holdings in the Repurchase Notice, which date
shall not be more than 60 days nor less than five days after
the later of (i) the delivery of such notice(s) or (ii) the
Fair Market Valuation Date. Payment for such Executive
Securities to be purchased pursuant to the Repurchase Option
shall be made by Holdings in four (4) equal installments, the
first installment payable on the closing of such purchase, the
second payable four (4) months after the closing, the third
payable eight (8) months after the closing and the fourth
payable twelve (12) months after the closing, each such
payment made by check or wire transfer of funds, at the option
of Holdings. Notwithstanding anything to the contrary
contained in this Agreement, Holdings may withdraw their
Repurchase Notice at any time prior to the closing of a
purchase of such Executive Securities pursuant to the
Repurchase Option.
(f) TERMINATION OF REPURCHASE OPTION. The right of
Holdings to repurchase Executive Securities pursuant to this
paragraph 4.B shall terminate upon the first to occur of (i)
the Sale of Holdings, or (ii) the Sale of the Company. The
Repurchase Option set forth in this paragraph 4.B will
continue with respect to such Executive Securities following
any transfer thereof other than a transfer to Holdings.
(g) REPURCHASE RESTRICTIONS. Notwithstanding anything
to the contrary contained in this Agreement, all repurchases
of Executive Securities by Holdings shall be subject to
applicable restrictions contained in the General Corporate Law
of the State of Delaware. If any such restrictions prohibit
the repurchase of the Executive Securities hereunder which
Holdings is otherwise entitled or required to make, Holdings
may
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make such repurchases as soon as it is permitted to do so
under such restrictions.
(h) SECTION 83(B) ELECTION. Within 30 days after
Executive purchases any Executive Securities from Holdings,
Executive shall make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue
Code and the regulations promulgated thereunder.
(i) REPRESENTATIONS AND WARRANTIES. Executive hereby
represents, warrants, covenants and agrees that:
(i) Executive has acquired the
Management Units and the Holdings Warrant
for investment for an indefinite period, not
with a view to the sale or distribution of
any part of all thereof by public or private
sale or disposition.
(ii) Executive has been advised that
the Management Units, and the Holdings
Warrant issuable hereunder have not been
registered under the Securities Act or
registered or qualified under any other
securities law, on the ground, among others,
that no distribution or public offering of
the Management Units is to be effected and
the Management Units and the Holdings
Warrant issuable hereunder will be issued in
connection with a transaction that does not
involve any public offering within the
meaning of Section 4(2) of the Securities
Act, or the rules and regulations of the
Securities and Exchange Commission and under
comparable exemption provisions of the
securities laws, rules and regulations of
other jurisdictions. Executive understands
that the Company and Holdings are relying in
part on the Executive's representations as
set forth herein for purposes of claiming
such exemptions and that the basis for such
exemptions may not be present if,
notwithstanding Executive's representations,
Executive has in mind merely acquiring
Management Units and the Holdings Warrant
issuable hereunder for resale on the
occurrence or non-occurrence of some
predetermined event. Executive has no such
intention.
(iii) Executive has such knowledge
and experience in financial and business
matters that Executive is capable of
evaluating the merits and risks of an
investment in the Management Units and the
Holdings Warrant issuable hereunder and has
the capacity to protect Executive's own
interest in connection with Executive's
proposed acquisition of the Management
Units. Executive is an "Accredited Investor"
as defined in Regulation D promulgated under
the Securities Act.
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(iv) Executive acknowledges that
Executive has been furnished with such
financial and other information concerning
the Company and Holdings as Executive
considers necessary in connection with
Executive's acquisition of the Management
Units. Executive has carefully reviewed such
information and is thoroughly familiar with
the proposed business, operations,
properties and financial condition of the
Company and Holdings and has discussed with
representatives of the Company and Holdings
any questions the acquisition may have with
respect thereto. Executive understands: (i)
the risks involved in this offering,
including the speculative nature of the
investment; (ii) the financial hazards
involved in this offering, including the
risk of losing such Executive's entire
investment; (iii) the lack of liquidity and
restrictions on transfers of the Management
Units and the Holdings Warrant; and (iv) the
tax consequences of this investment.
Executive has consulted with his own legal,
accounting, tax, investment and other
advisers with respect to the tax treatment
of an investment by Executive in the
Management Units and the merits and risks of
an investment in the Management Units.
(v) The execution, delivery and
performance by Executive of this Agreement
have been duly authorized by Executive. This
Agreement constitutes a valid and binding
obligation of Executive, enforceable in
accordance with its terms, subject to
applicable bankruptcy, insolvency and
similar laws affecting creditors' rights and
subject, as to enforceability, to general
principles of equity (regardless of whether
enforcement is sought in a proceeding in
equity or at law).
(vi) Executive understands that the
Management Units and the Holdings Warrant
will be "restricted securities" as the term
is defined in Rule 144 under the Securities
Act, that the Management Units and the
Holdings Warrant must be held indefinitely
unless they are subsequently registered
under the Securities Act and qualified under
any other applicable securities law or
exemption from such registration and
qualification are available. Executive
understands that Holdings is under no
obligation to register or qualify the
Management Units or the Holdings Warrant
under the Securities Act, or any other
securities law.
(vii) Executive agrees to be bound
by the terms, conditions, obligations,
covenants and restrictions of the LLC
Agreement and by the execution of this
Agreement Executive shall become, and the
Managing Member of the LLC does hereby admit
Executive as, a "Member" and "Management
Holder" of Holdings.
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4.C. DEFINITIONS.
""EXECUTIVE SECURITIES" mean: (i) any Management
Units acquired by Executive whether vested or unvested, and
(ii) any equity or debt securities issued or issuable directly
or indirectly with respect to the Executive Securities
referred to in clauses (i) above by any of a conversion,
split, distribution or dividend or in connection with a
combination of securities, recapitalization, merger,
consolidation or other reorganization. Executive Securities
shall continue to be Executive Securities in the hands of any
holder thereof (other than Holdings or any of its members).
""FAIR MARKET VALUATION DATE" with respect to any
Executive Securities means the date on which its Fair Market
Value is finally determined pursuant to the definition of
"Fair Market Value.
""FAIR MARKET VALUE" of the Management Units means
the Fair Market Value as shall be determined jointly in good
faith by Holdings and Executive; provided that if Holdings and
Executive cannot so agree, then such value shall be determined
by an independent investment banking firm of national or
regional reputation utilizing valuation techniques then
commonly used for the valuation of such investment interests,
which investment banking firm will be jointly selected by
Holdings and Executive in good faith, or if such parties
cannot agree on an investment banking firm, then such value
shall be determined by an investment banking firm selected by
a lot from a group of six firms possessing the above described
qualifications (three of whom shall be selected by Holdings
and three of whom shall be selected by Executive) from which
one firm designated as objectionable by each of Holdings and
Executive shall be eliminated (in either case, the investment
banking firm's determination shall be conclusive). The expense
of any such appraisal shall be borne equally by the parties.
In determining the Fair Market Value of the Management Units
to be purchased pursuant to he exercise of the Repurchase
Option, the parties or the investment bank, as the case may
be, shall use the average of the thirty (30) day trading price
of Common Stock of the Company as a partial determining
factor, taking into account the limitations, restrictions and
payment preferences of the Management Units. References in
this definition to Executive shall mean Executive's personal
representative if he is deceased or incapacitated.
""INVESTOR UNITS" shall have the meaning ascribed in
the LLC Agreement.
""LLC AGREEMENT" shall mean the Fourth Amended and
Restated Limited Liability Company Agreement of U-C Holdings,
L.L.C. dated August 31, 1999, as amended from time to time.
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""MANAGEMENT UNITS" shall have the meaning ascribed
to it in the LLC Agreement.
""ORIGINAL COST" of the Executive Securities will be
the price per such security paid by Executive pursuant to this
Agreement or otherwise (in each case, as proportionately
adjusted for all subsequent security splits, security
dividends, security distributions and other recapitalizations
affecting the Executive Securities). The initial Original Cost
of the Executive Securities issuable to Executive pursuant to
paragraph 4.A(a) herein shall be $1.00 per Management Unit.
""SALE OF COMPANY" shall mean the sale of
substantially all of the stock of Company held by Holdings or
the sale of all or substantially all of the assets of Company.
""SALE OF HOLDINGS" shall mean the sale of
substantially all of the equity interest of Holdings or the
sale of all or substantially all the assets of Holdings in
Company.
""SECURITIES ACT" means the Securities Act of 1933,
as amended from time to time."
5. Except as specifically amended by this Amendment, the Original
Agreement shall remain in full force and effect as prior to this Amendment.
6. This Agreement will be governed by the internal law, and not
the laws of conflicts, of the State of Georgia.
7. This Agreement may be executed in separate counterparts, each
of which to be an original and all of which taken together constitute one and
the same agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE.]
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IN WITNESS WHEREAS, the parties have executed this Agreement as of the date
first above written.
CTN MEDIA GROUP, INC.
By: /s/
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Its:
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U-C HOLDINGS, L.L.C.
By: XXXXXX XXXXX & PARTNERS, L.P.
Its: Managing Member
By: Xxxxxx Xxxxx & Partners, L.L.C.
Its: General Partner
By: /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
Its: Managing Director
/s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX
AGREED AND CONSENTED
AS TO PARAGRAPH 4.A(a) BY:
/s/ XXXXX XXXXX
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Xxxxx Xxxxx, Individually
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