UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
or
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Numbers 33-67390; 33-67390-01; 33-81088;
33-81088-01; 33-81088-02; 33-93808; 33-93808-01
MARCUS CABLE COMPANY, L.P.
MARCUS CABLE OPERATING COMPANY, L.L.C.
MARCUS CABLE CAPITAL CORPORATION
MARCUS CABLE CAPITAL CORPORATION II
MARCUS CABLE CAPITAL CORPORATION III
(Exact name of registrants as specified in their charters)
DELAWARE 75-2337471
DELAWARE 75-2495706
DELAWARE 75-2546077
DELAWARE 75-2546713
DELAWARE 75-2599586
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2911 TURTLE CREEK BOULEVARD, SUITE 1300
DALLAS, TEXAS 75219-6257
(Address of principal executive offices) (Zip Code)
(214) 521-7898
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrants were required to
file such reports), and (2) have been subject to such filing
requirements for the past 90 days. Yes X No
There is no established trading market for any of the registrants'
voting securities. As of the date of this report, there were 1,000
shares of common stock of Marcus Cable Capital Corporation and
1,000 shares of common stock of Marcus Cable Capital Corporation
III outstanding, all of which are owned by Marcus Cable Company,
L.P., and 1,000 shares of common stock of Marcus Cable Capital
Corporation II outstanding, all of which are owned by Marcus Cable
Operating Company, L.L.C.
<PAGE>
MARCUS CABLE COMPANY, L.P.
MARCUS CABLE OPERATING COMPANY, L.L.C.
MARCUS CABLE CAPITAL CORPORATION
MARCUS CABLE CAPITAL CORPORATION II
MARCUS CABLE CAPITAL CORPORATION III
INDEX TO QUARTERLY REPORT FORM 10-Q
MARCH 31, 1998
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
Definitions 3-4
PART I FINANCIAL INFORMATION
Item 1: Financial Statements - Marcus Cable
Company, L.P. and Subsidiaries
Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 5
Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997 6
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1998
and 1997 7
Notes to the Consolidated Financial Statements 8-13
Consolidating Schedules 14-15
</TABLE>
Separate financial statements of Operating as issuer of the 13 1/2%
Notes have not been presented, as the aggregate net assets,
earnings and partners' capital of Operating are substantially
equivalent to the net assets, earnings and partners' capital of the
Company on a consolidated basis. Additionally, separate financial
statements of Capital, Capital II and Capital III have not been
presented because these entities have no operations and
substantially no assets or equity.
The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward looking statements. Certain information
included in this Form 10-Q contains statements that are forward
looking, such as statements relating to the effects of future
regulation, future capital commitments and future acquisitions.
Such forward-looking information involves important risks and
uncertainties that could significantly affect expected results in
the future from those expressed in any forward-looking statements
made by, or on behalf of the Company. These risks and
uncertainties include, but are not limited to, uncertainties
relating to economic conditions, acquisitions and divestitures,
government and regulatory policies, the pricing and availability of
equipment, materials, inventories and programming, technological
developments and changes in the competitive environment in which
the Company operates. Investors are cautioned that all
forward-looking statements involve risks and uncertainties.
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 16-25
PART II OTHER INFORMATION
Item 1: Legal Proceedings 26
Item 2: Changes in Securities 26
Item 3: Defaults Upon Senior Securities 26
Item 4: Submission of Matters to a Vote of
Security Holders 26
Item 5: Other Information 26
Item 6: Exhibits and Reports on Form 8-K 26-27
</TABLE>
2
<PAGE>
<TABLE>
DEFINITIONS
When used herein, the following terms will have the meaning
indicated.
<CAPTION>
Term Definition
<S> <C>
11 7/8% Debentures 11 7/8% Senior Debentures, due
October 1, 2005, which are
obligations of MCC and Capital
13 1/2% Notes 13 1/2% Senior Subordinated
Guaranteed Discount Notes, due
August 1, 2004, which are
obligations of Operating and
Capital II that are guaranteed by
MCC
14 1/4% Notes 14 1/4% Senior Discount Notes, due
December 15, 2005, which are
obligations of MCC and Capital III
1992 Cable Act Cable Television Consumer
Protection and Competition Act of
1992
1996 Telecom Act Telecommunications Act of 1996
Capital Marcus Cable Capital Corporation
Capital II Marcus Cable Capital Corporation II
Capital III Marcus Cable Capital Corporation
III
Company Marcus Cable Company, L.P. and
subsidiaries
CPST Cable Programming Service Tier
EBITDA Earnings Before Interest, Taxes,
Depreciation and Amortization
SFAS Statement of Financial Accounting
Standards
FCC Federal Communications Commission
Harron Harron Communication Corp. and
certain of its subsidiaries
Harron Acquisition Certain cable television systems
purchased from Harron
Harron Systems Certain cable television systems
purchased from Harron
Goldman Sachs Goldman, Sachs & Co.
HBO Home Box Office
HFC Hybrid Fiber Coaxial
LIBOR London InterBank Offered Rate
Maryland Cable Maryland Cable Partners, L.P.
Maryland Cable Agreement The management agreement between
Operating and Maryland Cable
Maryland Cable System Cable system owned by Maryland
Cable
MCC Marcus Cable Company, L.P. and
subsidiaries
MCA Marcus Cable Associates, L.L.C.
MCOA Marcus Cable of Alabama, L.L.C.
MCDM Marcus Cable of Delaware and
Maryland, L.P.
MCP Marcus Cable Partners, L.L.C
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
MCPI Marcus Cable Properties, Inc.
MCPLP Marcus Cable Properties, L.P.
Mountain Brook Acquisition Certain cable system purchased from
Mountain Brook and Shelby Cable on
April 1, 1998
Mountain Brook Mountain Brook Cablevision, Inc.
Mountain Brook and Shelby Cable television system serving the
Cable System Mountain Brook and Shelby County
area in and around Birmingham,
Alabama purchased from Mountain
Brook and Shelby Cable
Operating Marcus Cable Operating Company,
L.L.C.
Operating Subsidiaries MCP, MCDM, MCOA and MCA
PPV Pay-per-view
Senior Credit Facility $1,150,000,000 Credit Agreement
among Operating, MCC, Banque
Paribas, Chase Manhattan Bank,
Citibank, N.A., The First National
Bank of Boston, Goldman Sachs,
Union Bank and certain other
lenders referred to therein, dated
as of August 31, 1995, as amended
on March 14, 1997, March 31, 1998,
April 15, 1998 and April 21, 1998
Shelby Cable Shelby Cable, Inc.
SFAS Statement of Financial Accounting
Standards
Systems Cable television systems owned by
the Company
Time Warner Time Warner Entertainment Company,
L.P. and certain of its
subsidiaries
Time Warner Exchange Exchange of certain cable
television systems with Time Warner
on December 1, 1997
Vulcan Vulcan Cable, Inc.
</TABLE>
4
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
MARCUS CABLE COMPANY, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)
<CAPTION>
March 31, December 31,
Assets 1998 1997
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 100 $ 1,607
Accounts receivable, net of
allowance of $1,861 and
$1,904, respectively 19,669 23,935
Prepaid expenses and other 3,018 2,105
---------- ----------
Total current assets 22,787 27,647
Property and equipment, net (note 3) 724,691 706,626
Other assets, net (note 4) 992,206 1,016,195
---------- ----------
$1,739,684 $1,750,468
========== ==========
Liabilities and Partners' Capital
Current liabilities:
Current maturities of
long-term debt (note 6) $ 70,789 $ 68,288
Accrued liabilities (note 5) 51,850 60,805
Accrued interest 7,706 7,949
---------- ----------
Total current liabilities 130,345 137,042
Long-term debt (note 6) 1,562,431 1,533,645
Subsidiary limited partner interests (246) (246)
Partners' capital 47,154 80,027
Commitments and contingencies --- ---
---------- ----------
$1,739,684 $1,750,468
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
<TABLE>
MARCUS CABLE COMPANY, L.P. AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
(in thousands)
<CAPTION>
Three months ended
March 31,
1998 1997
<S> <C> <C>
Revenues:
Cable services $ 126,495 $ 110,070
Management fees (note 7) 355 4,377
---------- ----------
Total revenues 126,850 114,447
Operating expenses:
Selling, service and
system management 48,553 41,432
General and administrative 19,501 17,498
Depreciation and amortization 51,679 44,146
---------- ----------
Total operating expenses 119,733 103,076
---------- ----------
Operating income 7,117 11,371
---------- ----------
Other expense:
Interest expense, net 39,990 36,548
---------- ----------
Net loss $ (32,873) $ (25,177)
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
6
<PAGE>
<TABLE>
MARCUS CABLE COMPANY, L.P. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
<CAPTION>
Three months ended
March 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (32,873) $ (25,177)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 51,679 44,146
Accretion of discount on notes 18,784 16,512
Other non cash interest 1,032 1,002
Changes in assets and liabilities:
Accounts receivable 4,266 1,603
Prepaid expenses (913) (988)
Other assets (229) ---
Accrued interest (243) (143)
Accrued liabilities (8,955) (4,621)
---------- ----------
Net cash provided by
operating activities 32,548 32,334
---------- ----------
Cash flows from investing activities:
Proceeds from sale of assets 262 ---
Additions to property
and equipment (46,820) (24,905)
---------- ----------
Net cash used in
investing activities (46,558) (24,905)
---------- ----------
Cash flows from financing activities:
Net borrowings under Senior
Credit Facility 12,750 10,000
Repayment of long-term debt (28) (27)
Payment of debt issuance costs --- (1,385)
Payment of capital
lease obligations (219) (146)
---------- ----------
Net cash provided by
financing activities 12,503 8,442
---------- ----------
Net (decrease) increase in cash
and cash equivalents (1,507) 15,871
Cash and cash equivalents at
beginning of period 1,607 6,034
---------- ----------
Cash and cash equivalents
at end of period $ 100 $ 21,905
========== ==========
Supplemental disclosure of cash
flow information:
Interest paid $ 20,511 $ 19,119
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
MARCUS CABLE COMPANY, L.P. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(Unaudited)
(1) Summary of Significant Accounting Policies
(a) General
MCC is a Delaware limited partnership formed on January
17, 1990 for the purpose of acquiring, operating and
developing cable television systems. MCC derives its
primary source of revenues by providing various levels of
cable television programming and services to residential
and business customers. MCC's operations are conducted
through Operating, an operating holding company and a
wholly-owned subsidiary of MCC. Operating, in turn,
conducts its operations through the Operating
Subsidiaries, in which, in the case of MCDM, it, directly
or indirectly, serves as the general partner and owns a
greater than 99.0% interest and in the case of the other
three Operating Subsidiaries, it serves as the sole
member and owns a 100% interest.
(b) Basis of Presentation
The consolidated financial statements include the
accounts of MCC, Capital, Capital II, Capital III,
Operating and the Operating Subsidiaries. All
significant intercompany accounts and transactions have
been eliminated in consolidation. Certain
reclassifications have been made to prior years'
consolidated balances to conform to the current year
presentation.
(c) Interim Financial Information
In the opinion of management, the accompanying unaudited
interim consolidated financial information of the Company
contains all adjustments, consisting only of those of a
recurring nature, necessary to present fairly (i) the
Company's financial position as of March 31, 1998, (ii)
the results of its operations for the three months ended
March 31, 1998 and 1997 and (iii) its cash flows for the
three months ended March 31, 1998 and 1997. These
financial statements are for interim periods and do not
include all of the detail normally provided in annual
financial statements and should be read in conjunction
with the consolidated financial statements of the Company
for the year ended December 31, 1997, included in the
Company's Annual Report on Form 10-K.
(2) Significant Events Subsequent to the Annual Report
General
On April 23, 1998, Vulcan and Paul G. Allen completed the
acquisition of (i) the limited partner interests of MCC, (ii)
8
<PAGE>
the limited partner interests of MCPLP, MCC's sole general
partner, and (iii) the non-voting common stock of MCPI, the
sole general partner of MCPLP (the "Vulcan Acquisition").
In connection with the Vulcan Acquisition, Vulcan, Mr. Allen,
and Jeffrey A. Marcus (in his individual capacity and as
Trustee under a Voting Trust Agreement) and Nancy C. Marcus
(collectively, "Marcus") entered into an Amended Share
Conversion and Put/Call Agreement (the "Put/Call Agreement")
under which (x) Mr. Allen may acquire from Marcus all of the
voting stock of MCPI under certain conditions upon the payment
of a specified purchase price, (y) Mr. Allen may convert his
MCPI non-voting common stock into 80% of the voting common
stock of MCPI and (z) Marcus may cause Mr. Allen to purchase
their MCPI voting common stock under certain conditions for a
specified purchase price. Unless and until any of the rights
provided under the Put/Call Agreement are exercised, Marcus
will continue to hold all of the voting common stock of MCPI.
In addition, in connection with the Vulcan Acquisition, MCPLP
caused the following limited partnerships to be converted into
single-member Delaware limited liability companies: Marcus
Cable Operating Company, L.P., Marcus Cable Partners, L.P.,
Marcus Cable Associates, L.P. and Marcus Cable of Alabama,
L.P.
The Vulcan Acquisition has resulted in the occurrence of a
"change of control" under the indentures (collectively, the
"Indentures") governing the 13 1/2% Notes, the 11 7/8%
Debentures and the 14 1/4% Notes. As a result, MCC and the
issuers will be required to offer to repurchase such notes and
debentures at a redemption price (i) in the case of the 13 1/2%
Notes, of 101% of the Accreted Value (as defined in the
Indenture governing such notes) thereof, (ii) in the case of
the 11 7/8% Debentures, at a redemption price of 101% of the
principal amount thereof plus accrued but unpaid interest to
the date of purchase and (iii) in the case of the 14 1/4% Notes,
at a redemption price of 101% of the Accreted Value (as
defined in the Indenture governing such notes) thereof.
However, as of the date of this report, all of such notes and
debentures are trading at prices substantially above such
redemption prices. As a result, if such notes and debentures
continue to trade at such a premium, MCC and the issuers do
not expect that any of such notes or debentures will be
tendered in response to such offers to purchase. MCC and the
issuers believe that they will be able to purchase any of the
notes or debentures so tendered.
Acquisitions
On April 1, 1998, the Company completed the acquisition of the
Mountain Brook and Shelby Cable System from Mountain Brook and
Shelby Cable for an aggregate purchase price of $57,300,000.
The communities served by this system are adjacent to the
Company's existing systems in the suburban Birmingham, Alabama
area. As of the date of the acquisition, this system served
approximately 23,000 basic customers.
Divestitures
On March 30, 1998, the Company entered into a definitive
9
<PAGE>
agreement with Cable One, Inc. to sell its cable television
assets located in Mississippi, the Texas Panhandle and
Oklahoma. These systems serve an aggregate of approximately
71,500 customers. The transaction is subject to regulatory
approval and is expected to be completed during the third
quarter of 1998.
On April 1, 1998, the Company completed the sale of its cable
television systems located in Delaware and Maryland to an
affiliate of Comcast Corporation for a sales price of
approximately $65,500,000. As of the date of the sale, the
systems served approximately 26,500 customers.
On April 16, 1998, the Company entered into a definitive
agreement with Triax Midwest Associates, L.P. to sell its
cable television assets located in Illinois. These systems
serve an aggregate of approximately 32,500 customers. The
transaction is subject to regulatory approval and is expected
to be completed during the third quarter of 1998.
(3) Property and Equipment
Property and equipment consists of the following (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Cable systems $ 920,897 $ 878,721
Vehicles and other 40,983 37,943
Land and buildings 18,260 17,271
---------- ----------
980,140 933,935
Accumulated depreciation (255,449) (227,309)
---------- ----------
$ 724,691 $ 706,626
========== ==========
</TABLE>
(4) Other Assets
Other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Franchise rights $ 1,209,921 $ 1,209,725
Debt issuance costs 45,232 45,225
Going concern value of
acquired cable systems 37,274 37,274
Noncompetition agreements 25,914 25,914
Other 1,116 1,090
----------- -----------
1,319,457 1,319,228
Accumulated amortization (327,251) (303,033)
----------- -----------
$ 992,206 $ 1,016,195
=========== ===========
</TABLE>
10
<PAGE>
(5) Accrued Liabilities
Accrued liabilities consist of the following (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Accrued operating expenses $ 26,413 $ 27,923
Accrued programming costs 10,624 9,704
Accrued franchise fees 4,984 10,131
Other accrued liabilities 4,882 5,726
Accrued property taxes 2,751 5,125
Accrued acquisition costs 2,196 2,196
----------- -----------
$ 51,850 $ 60,805
=========== ===========
</TABLE>
(6) Long-term Debt
The Company had outstanding borrowings under long-term debt
arrangements as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Senior Credit Facility $ 962,500 $ 949,750
13 1/2% Senior Subordinated
Discount Notes, due
August 1, 2004 347,533 336,304
14 1/4% Senior Discount Notes,
due December 15, 2004 220,927 213,372
11 7/8% Senior Debentures,
due October 1, 2005 100,000 100,000
Capital leases and other notes 2,260 2,507
----------- -----------
1,633,220 1,601,933
Less current maturities 70,789 68,288
----------- -----------
$ 1,562,431 $ 1,533,645
=========== ===========
</TABLE>
Amounts outstanding under the Senior Credit Facility, bear
interest at either the (i) Eurodollar rate, (ii) prime rate or
(iii) CD base rate or Federal Funds rate, plus a margin of up
to 2.25% subject to certain adjustments based on the ratio of
Operating's total debt to annualized operating cash flow, as
defined. At March 31, 1998, borrowings under the Senior
Credit Facility bore interest at rates ranging from 6.73% to
8.63% under the Eurodollar and prime rate options. The
Company pays a commitment fee ranging from .250% to .375% on
the unused commitment under the Senior Credit Facility.
To reduce the impact of changes in interest rates on its
floating rate long-term debt, the Company has entered into
certain interest rate swap agreements with certain of the
11
<PAGE>
participating banks under the Senior Credit Facility. At
March 31, 1998, interest rate swap agreements covering a
notional balance of $400,000,000 were outstanding which
require the Company to pay fixed rates ranging from 5.75% to
5.77%, plus the applicable interest rate margin. These
agreements mature from 1998 through 2000, and allow for the
optional extension by the counterparty for additional periods
and certain of the agreements provide for the automatic
termination in the event that one month LIBOR exceeds 6.75% on
any monthly reset date. The Company has also entered into an
interest rate swap agreement covering an aggregate notional
principal amount of $100,000,000 which matures in the year
2000 whereby the Company receives one month LIBOR plus 0.07%
and is required to pay the higher of one month LIBOR at either
the beginning or end of the interest period, plus the
applicable interest rate margin.
As interest rates change under the interest rate swap
agreements, the differential to be paid or received is
recognized as an adjustment to interest expense. During the
three months ended March 31, 1998 and 1997, the Company
recognized additional interest expense of $27,700 and
$521,000, respectively, under its interest rate swap
agreements.
(7) Related Party Transactions
Prior to the consummation of the Vulcan Acquisition,
affiliates of Goldman Sachs owned limited partnership
interests in MCC. Maryland Cable, which is controlled by an
affiliate of Goldman Sachs, owned the Maryland Cable System
which served customers in and around Prince Georges County,
Maryland. Operating managed the Maryland Cable Systems under
the Maryland Cable Agreement, which was entered into in
September of 1994. Operating earned a management fee, payable
monthly, equal to 4.7% of the revenues of Maryland Cable, and
was reimbursed for certain expenses.
Effective January 31, 1997, the Maryland Cable System was sold
to Jones Communications of Maryland, Inc. Pursuant to the
Maryland Cable Agreement, Operating recognized incentive
management fees of $280,000 and $4,083,000 during the three
months ended March 31, 1998 and 1997, respectively, in
conjunction with the sale. Additional incentive management
fees may be recognized upon the dissolution of Maryland Cable,
which is anticipated to occur during 1998. There is no
assurance that any of such fees will be realized. Although
Operating is no longer involved in the active management of
those cable television systems, Operating has entered into an
agreement with Maryland Cable to oversee the activities, if
any, of Maryland Cable through the liquidation of the
partnership. Pursuant to such agreement, Operating will earn
a nominal monthly fee. Including the incentive management
fees noted above, during the three month periods ended March
31, 1998 and 1997, Operating earned total management fees of
$355,000 and $4,377,000, respectively.
(8) Comprehensive Income
In June 1997, SFAS No. 130, Reporting Comprehensive Income,
was issued. SFAS No. 130 establishes standards for reporting
and displaying comprehensive income and its components in an
annual financial statement that is displayed with the same
prominence as other annual financial statements.
12
<PAGE>
Reclassification of financial statements for earlier periods,
provided for comparative purposes, is required. The statement
also requires that the accumulated balance of other
comprehensive income to be displayed separately from retained
earnings and additional paid-in-capital in the equity section
of the statement of financial position. SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997.
Comprehensive loss for the three month period ended March 31,
1998 and 1997 was $32,873,000 and $25,177,000, respectively.
There are no differences between comprehensive loss and actual
net loss.
13
<PAGE>
(9) Financial Information
<TABLE>
MARCUS CABLE COMPANY, L.P. AND SUBSIDIARIES
Consolidating Schedule - Balance Sheet Information
As of March 31, 1998
(unaudited)
(in thousands)
ASSETS
<CAPTION>
Combined
Operating Capital Elimin- Operating Capital Elimin-
Partnership II Operating ations Consolidated Capital III Company ations Company
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents 1,285 1 (1,999) 0 (713) 1 1 811 0 100
Accounts receivable, net 133,378 0 88,996 (202,705) 19,669 0 0 0 0 19,669
Prepaid expenses and other 2,327 0 691 0 3,018 0 0 0 0 3,018
---------- ----- --------- ---------- ----------- ------ ------ ------- ------- --------
Total current assets 136,990 1 87,688 (202,705) 21,974 1 1 811 0 22,787
Property and equipment, net 717,396 0 7,295 0 724,691 0 0 0 0 724,691
Other assets, net 992,969 0 1,646,704 (1,623,982) 1,015,691 0 0 8,059 (31,544) 992,206
Investment in subsidiaries 0 0 46,613 (46,613) --- 0 0 390,512 (390,512) ---
---------- ----- --------- ---------- ----------- ------ ------ ------- ------- --------
Total assets 1,847,355 1 1,788,300 (1,873,300) 1,762,356 1 1 399,382 (422,056) 1,739,684
========== ===== ========= ========== =========== ====== ====== ======= ======== =========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Current maturities of
long-term debt 195 0 70,594 0 70,789 0 0 0 0 70,789
Accrued liabilities 171,150 0 76,709 (189,767) 58,092 0 0 25,302 (31,544) 51,850
Accrued interest 7,644 0 1,707 (7,644) 1,707 0 0 5,999 0 7,706
---------- ----- --------- ---------- ----------- ------ ------ ------- ------- --------
Total current liabilities 178,989 0 149,010 (197,411) 130,588 0 0 31,301 (31,544) 130,345
Long-term debt 1,621,754 0 1,249,026 (1,629,276) 1,241,504 0 0 320,927 0 1,562,431
Subsidiary limited partner
interest 0 0 (246) 0 (246) 0 0 0 0 (246)
Partners' capital 46,612 1 390,510 (46,613) 390,510 1 1 47,154 (390,512) 47,154
---------- ----- --------- ---------- ----------- ------ ------ ------- ------- --------
Total liabilities and
partners' capital 1,847,355 1 1,788,300 (1,873,300) 1,762,356 1 1 399,382 (422,056) 1,739,684
========== ===== ========= ========== =========== ====== ====== ======= ======== =========
14 (continued)
</TABLE>
<PAGE>
<TABLE>
MARCUS CABLE COMPANY, L.P. AND SUBSIDIARIES
Consolidating Schedule - Statement of Operations Information
For the three months ended March 31, 1998
(unaudited)
(in thousands)
<CAPTION>
Combined Operating
Operating Capital Elimin- Consol- Capital Elimin-
Partnership II Operating ations idated Capital III MCC ations Company
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Cable services 126,495 --- --- --- 126,495 --- --- --- --- 126,495
Management fees --- --- 355 --- 355 --- --- --- --- 355
--------- ------ -------- ------ ------- ------ ------ ------ ------ -------
Total revenues 126,495 --- 355 --- 126,850 --- --- --- --- 126,850
--------- ------ -------- ------ ------- ------ ------ ------ ------ -------
Operating expenses:
Selling, service and
system management 47,900 --- 653 --- 48,553 --- --- --- --- 48,553
General and administrative 15,746 --- 3,755 --- 19,501 --- --- --- --- 19,501
Allocated corporate costs 4,548 --- (4,548) --- --- --- --- --- --- ---
Depreciation and amortization 51,261 --- 418 --- 51,679 --- --- --- --- 51,679
--------- ------ -------- ------ ------- ------ ------ ------ ------ -------
Total operating expenses 119,455 --- 278 --- 119,733 --- --- --- --- 119,733
--------- ------ -------- ------ ------- ------ ------ ------ ------ -------
Operating income 7,040 --- 77 --- 7,117 --- --- --- --- 7,117
Other (income) expense:
Interest (income) expense, net 40,481 --- (11,288) --- 29,193 --- --- 10,797 --- 39,990
Equity earnings (loss)
of subsidiaries --- --- 33,441 (33,441) --- --- --- 22,076 (22,076) ---
--------- ------ -------- ------ ------- ------ ------ ------ ------ -------
40,481 --- 22,153 (33,441) 29,193 --- --- 32,873 (22,076) 39,990
--------- ------ -------- ------ ------- ------ ------ ------ ------ -------
Net loss (33,441) --- (22,076) 33,441 (22,076) --- --- (32,873) 22,076 (32,873)
========= ====== ======== ====== ======= ====== ====== ====== ====== =======
15
</TABLE>
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
attached consolidated financial statements and notes thereto, and
with the Company's audited consolidated financial statements and
notes thereto for the fiscal year ended December 31, 1997, included
in the Company's Annual Report on Form 10-K.
GENERAL
The Company's business strategy focuses on three principles: (i)
forming regional clusters of cable television systems through
strategic acquisitions, internal growth and divestitures of non-strategic
assets, (ii) promoting internal growth and enhanced
operating and financial performance by streamlining operations in
clustered systems and applying innovative marketing techniques and
(iii) upgrading systems and employing state-of-the-art technology
to enhance existing service and to develop, on a cost-effective
basis, ancillary revenue streams.
The Company has followed a systematic approach in acquiring,
operating and developing cable television systems based on the
principle of increasing operating cash flow while maintaining a
high quality standard of service. The Company's acquisition
strategy focuses on cable television systems in proximity to its
existing systems or of sufficient size to serve as cores for new
operating regions. The Company believes that increasing its
operating scale through strategic acquisitions, as well as through
internal growth, enhances its ability to reduce its programming
costs, develop new technologies, offer new services and improve
operating margins, and thus improve its long-term competitiveness.
In continuing to implement the Company's acquisition strategy, the
Company acquired the Mountain Brook and Shelby Cable System in
April of 1998. The Mountain Brook and Shelby Cable System serves
approximately 23,000 customers from a single headend through a 550
MHz HFC architecture. This system serves the two broader areas of
Mountain Brook and northern Shelby County, which are adjacent to
the Company's existing systems in the Birmingham, AL market. The
Company intends to interconnect this system with its existing HFC
networks and fully integrate the operations of this system with its
existing operations in the Birmingham area. Funding for the $57.3
million purchase was provided through the proceeds received from
the divestiture of the cable television systems located
in Delaware and Maryland.
The comparability of operating results between the three months
ended March 31, 1998 and the corresponding period for 1997 are
affected by several events which occurred during 1997. These
events include the Harron Acquisition, the Time Warner Exchange and
the sale of the previously managed Maryland Cable system.
The Company acquired the Harron Systems in July of 1997, which are
in proximity to other systems owned by the Company in the
Dallas/Ft. Worth Metroplex. The Company's basic customer count
increased by over 22,200 as a result of this acquisition. Funding
for the $34.5 million purchase was provided by borrowings under the
Senior Credit Facility.
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<PAGE>
On December 1, 1997, the Company completed an exchange of certain
cable television systems with Time Warner. The exchange involved
approximately 128,000 customers located in communities in Wisconsin
and Indiana. According to the terms of the agreement, Time Warner
received systems serving approximately 57,000 customers, while the
Company received systems serving approximately 71,000 customers
located in communities contiguous to the Company's existing
clusters. In addition to the contribution of its systems, the
Company paid $17,807,000 to Time Warner which was funded with
borrowings under the Senior Credit Facility.
Future expansion efforts are expected to focus on acquiring or
exchanging systems, with the strategic goal of forming or expanding
clusters of systems to permit operating efficiencies and economies
of scale. Opportunistic divestitures, in areas where consolidation
opportunities do not exist, are also considered. In implementing
the Company's divestiture strategy, the Company has recently
entered into agreements to divest certain non-strategic cable
systems. Upon completion of the sales of these non-strategic
systems, the Company will own and operate six core groups of cable
systems. See the discussion concerning system divestitures in Note
2 to the unaudited consolidated financial statements.
The Company has invested heavily in improving its infrastructure
and strives to maintain high technological standards in its cable
television systems on a cost-effective basis. During 1996 and
1997, the Company invested approximately $309 million in its
infrastructure through its capital spending programs. A
substantial portion of the spending has been dedicated to
upgrading/rebuilding its broadband network to an HFC system
architecture. Depending on market size, the Company's capital
deployment strategy generally centers on rebuilding and upgrading
systems to a minimum technical standard of 550 MHz in small
markets, while the larger markets, representing the majority of the
Systems, are being built utilizing a 750-862 MHz architecture.
In the majority of its rebuilt markets, the Company is activating
two-way network capability to support impulse PPV, high speed data
services and other advanced applications, while also deploying advanced
analog home terminal devices. As part of its investment, the
Company has deployed 4,800 miles of fiber optic cable and upgraded
15,500 miles of coaxial cable. By the end of 1998, 63% of the homes
passed by the Company's broadband networks will have bandwidth
capacity of 550 MHz or greater with more than 50% of the homes passed
by the networks at 750 MHz or greater. By the end of 1999, the Company
anticipates that its upgrade/rebuild program will be substantially complete
with almost 84% of the homes passed by its networks having
bandwidth capacity of 550 MHz or greater and 70% of the homes
passed by its networks at 750 MHz or greater. This capacity will
allow the Company to offer its customers between 80 and 100
channels of traditional analog video programming while having
reserved, across 70% of its technical infrastructure, 200 MHz of
"warehoused" spectrum. Such additional spectrum can be
used for digital services and other advanced applications. As a
further means of providing additional capacity and investing for
the future, the Company's upgrades to 750 MHz and 862 MHz include
fiber nodes sized from an average of 350 to 950 homes per fiber node with
8 optical fibers per fiber node. These multiple fibers per node will
provide for excess capacity and allow the Company to vary the number
of homes served from each node to optimize the service provided based on
customer demand. In addition to expanding revenue opportunities,
upgrading network architecture serves to enhance picture quality
and system reliability, thus improving overall customer
satisfaction.
17
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has grown significantly over the past several years
through acquisitions as well as through upgrading, extending and
rebuilding its existing cable television systems. Since expansion
by means of these methods is capital intensive, the Company has
relied upon various sources of financing to meet its funding needs.
These sources have included contributions from equity investors,
borrowings under various debt instruments and positive cash flows
from operations.
Uses of Cash
As part of the ongoing business strategy, the Company has invested,
and will continue to invest, significant amounts of capital
rebuilding and upgrading its cable systems so that by the end of
1999, 84% of the existing systems will have a bandwidth of
between 550 MHz and 862 MHz. This program should enable the
Company to deliver technological innovations to its customers as
such services become commercially viable. As part of this program,
certain systems, such as those serving the areas in and around Ft.
Worth/Tarrant County (Texas), Glendale/Burbank (California) and
suburban Birmingham (Alabama) together with selected systems in
Wisconsin, Indiana, Tennessee and other states in which the Company
operates cable systems, are being upgraded to 750 MHz or 862 MHz
with two-way communication capabilities.
A significant use of capital in 1998 will be to finance the planned
system upgrades, rebuilds and extensions and the purchase of
digital and data distribution equipment and home terminal
devices for use in customers' homes. Capital expenditures are
expected to approximate $218,097,000 (or approximately $200 per customer)
in 1998. The Company expects to fund these capital expenditures through
cash generated from operations and available borrowings under the Senior
Credit Facility. During the three months ended March 31, 1998, the
Company made capital expenditures of approximately $47,039,000.
Cash interest is payable monthly, quarterly and semiannually on
borrowings outstanding under the Company's Senior Credit Facility
and the 11 7/8% Debentures. No cash interest is payable on the 13 1/2%
Notes until February 1, 2000 and no cash interest is payable on the
14 1/4% Notes until December 15, 2000. Maturities of long-term debt
approximate $865,810,000 over the next five years. The Company
expects to cover both interest and principal payments on its long-term
obligations through internally generated funds, borrowings
under the Senior Credit Facility, or the future issuance of public
or private equity or debt. Although in the past the Company has
been able to obtain financing through equity investments, debt
issuances and bank borrowings, there can be no assurance that the
capital resources necessary to accomplish the Company's business
strategy will be available, or that the terms will be favorable to
the Company.
During the three months ended March 31, 1998, the Company made
gross payments of approximately $16,278,000 on the Senior Credit
Facility and other long-term debt.
The consummation of the Vulcan Acquisition has resulted in the
occurrence of a "change of control" under the Indentures governing
the 13 1/2% Notes, the 11 7/8% Debentures and the 14 1/4% Notes.
As a result, MCC and the issuers will be required to offer to
18
<PAGE>
repurchase such notes and debentures at a redemption price (i) in
the case of the 13 1/2% Notes, of 101% of the Accreted Value (as
defined in the Indenture governing such notes) thereof, (ii) in the
case of the 11 7/8% Debentures, at a redemption price of 101% of
the principal amount thereof plus accrued but unpaid interest to
the date of purchase and (iii) in the case of the 14 1/4% Notes, at
a redemption price of 101% of the Accreted Value (as defined in the
Indenture governing such notes) thereof. However, as of the date
of this report, all of such notes and debentures are trading at
prices substantially above such redemption prices. As a result, if
such notes and debentures continue to trade at such a premium, MCC
and the issuers do not expect that any of such notes or debentures
will be tendered in response to such offers to purchase. MCC and
the Issuers believe that they will be able to purchase any of the
notes or debentures so tendered.
Sources of Cash
The Company generated cash flows from operating activities of
$32,548,000 for the three month period ended March 31, 1998.
During the three months ended March 31, 1998, the Company borrowed
$29,000,000 under the Senior Credit Facility. Cash flows from
operating activities, funding from equity contributions and
borrowings have been sufficient to meet the Company's debt service,
working capital and capital expenditure requirements. The Company
has an aggregate of $1,633,220,000 of indebtedness outstanding in
the form of the 11 7/8% Debentures, 13 1/2% Notes, 14 1/4% Notes,
borrowings under the Senior Credit Facility and note payable and
capital lease obligations. The Company has an additional
$126,059,000 of borrowing capacity under its Revolving Credit
Facility after considering committed lines of credit of $3,941,000.
RESULTS OF OPERATIONS
The Company generates the majority of its revenues from monthly
customer fees for basic and premium services, installation income
and other ancillary services (such as the rental of home terminal
devices). Additional revenues are generated from pay-per-view
programming, the sale of advertising spots and sales commissions
from home shopping networks. Revenues were also generated from
fees earned in conjunction with the sale of and the management of
Maryland Cable.
The comparability of operating results between the three months
ended March 31, 1998 and the corresponding period for 1997 are
affected by several events which occurred during 1997 (collectively
referred to as the "Pro Forma Adjustments"). These events include
1) the acquisition of cable systems serving approximately 22,200
basic customers in Texas on July 1, 1997; 2) the addition of
approximately 14,000 net basic customers in Wisconsin and Indiana
through the exchange with Time Warner on December 1, 1997; and 3)
the sale of the previously managed Maryland Cable system on January
31, 1997.
Revenues
Revenues for the three months ended March 31, 1998 totaled
$126,850,000, which is an increase of $12,403,000, or 10.8%, over
revenues of $114,447,000 for the three months ended March 31, 1997.
Approximately $4,027,000 of such increase was the result of the
Harron Acquisition and the Time Warner Exchange. The remaining
increase was primarily attributable to growth in basic service
revenue, advertising sales revenue, equipment sales and rentals and
pay-per-view revenue. These increases were offset by decreases in
19
<PAGE>
premium service revenue and a decrease of $4,022,000 in management
fee income. Normalizing the effects of the Pro Forma Adjustments,
pro forma revenue increased $12,398,000, or 10.9%, for the three
months ended March 31, 1998, versus the comparable period in 1997.
The Company's basic service revenue increased $14,779,000, or
18.5%, to $94,660,000 for the three months ended March 31, 1998
from $79,881,000 for the three months ended March 31, 1997.
Approximately $3,362,000 of the increase was a result of the Harron
Acquisition and the Time Warner Exchange. The remaining increase
primarily reflects the impact of new product offerings, channel
additions, mid-year rate adjustments and increases in the number of
basic customers. Normalizing the effects of the Pro Forma
Adjustments, pro forma basic service revenues increased
$11,417,000, or 13.7%, for the three months ended March 31, 1998,
versus the comparable period in 1997.
The Company's advertising revenue increased $1,831,000, or 50.6%,
to $5,453,000 for the three months ended March 31, 1998 from
$3,622,000 for the three months ended March 31, 1997.
Approximately $176,000 of the increase was a result of the Harron
Acquisition and the Time Warner Exchange. The remaining increase
is primarily the result of increases in the number of insertable
channels, improved channel utilization through the installation of
digital equipment and greater market demand. Normalizing the
effects of the Pro Forma Adjustments, pro forma advertising
revenues increased $1,655,000, or 43.6%, for the three months ended
March 31, 1998, versus the comparable period in 1997.
Equipment sales and rentals increased $795,000, or 18.6%, to
$5,065,000 for the three months ended March 31, 1998 from
$4,270,000 for the three months ended March 31, 1997.
Approximately $189,000 of the increase was a result of the Harron
Acquisition and the Time Warner Exchange. The remaining increase
was primarily due to the deployment of addressable converters,
including advanced analog home terminal devices, in conjunction
with the system upgrades and rebuilds. Normalizing the effects of
the Pro Forma Adjustments, pro forma equipment sales and rentals
increased $606,000, or 13.6%, for the three months ended March 31,
1998, versus the comparable period in 1997.
Pay-per-view revenue increased $791,000, or 45.7%, to $2,520,000
for the three months ended March 31, 1998 from $1,729,000 for the
three months ended March 31, 1997. Approximately $195,000 of the
increase was a result of the Harron Acquisition and the Time Warner
Exchange. The remaining increase resulted from the deployment of
advanced analog home terminal devices, which have increased
availability of pay-per-view products. Normalizing the effects of
the Pro Forma Adjustments, pro forma pay-per-view revenues
increased $596,000, or 31.0%, for the three months ended March 31,
1998, versus the comparable period in 1997.
Premium service revenue decreased $2,098,000, or 13.8%, to
$13,090,000 for the three months ended March 31, 1998 from
$15,188,000 for the three months ended March 31, 1997.
Approximately $63,000 of the decrease was a result of the Harron
Acquisition and the Time Warner Exchange. The remaining decrease
resulted from a decrease in premium units as discussed below.
Normalizing the effects of the Pro Forma Adjustments, pro forma
premium service revenue decreased $2,035,000, or 13.5%, for the
three months ended March 31, 1998, versus the comparable period in 1997.
20
<PAGE>
The Company's management fee revenue decreased $4,022,000, or
91.9%, to $355,000 for the three months ended March 31, 1998 from
$4,377,000 for the three months ended March 31, 1997. The decrease
is a direct result of the sale of the Maryland Cable Systems, as
discussed in Note 7 to the unaudited consolidated financial
statements. Operating recognized incentive management fees of
$280,000 and $4,083,000 in February 1998 and January 1997,
respectively, in conjunction with the sale. The Company will
continue to earn a nominal monthly management fee through the date
of liquidation of the Maryland Cable partnership. Additional
incentive management fees may be recognized upon the termination of
the Maryland Cable partnership, expected to occur during 1998.
Customer Information
The following table illustrates the changes in the Company's basic
customers and premium units which have significantly contributed to
the revenue fluctuations previously noted. The increase in basic
customers for the three months ended March 31, 1998 equates to an
annualized growth rate of 1.3%. Substantially all of the internal
growth in basic customers is attributable to continued marketing
and sales efforts as well as the continued extension of physical
cable plant in order to pass additional dwelling units. The
decrease in premium units from December 31, 1997 was anticipated as
a reaction to a change in the Company's marketing strategy. In the
third quarter of 1997, the Company decided to no longer promote
deep discount sales offers due to the amount of churn these types
of offers produced. In an effort to renew premium unit growth, the
Company has introduced multiplex premium services at the a la carte
level and has introduced specific marketing campaigns, including
the "From the Earth to the Moon" campaign in conjunction with the
HBO miniseries of the same name. These multiplex services and
marketing campaigns are directed at upgrading existing customers'
service packages and acquiring new customers through discounted
initial service pricing packages. All of the campaigns are
specifically tailored toward customer retention and providing
programming variety and choice at competitive rates.
<TABLE>
<CAPTION>
Actual Actual Pro Forma
March 31, December 31, March 31,
1998 1997 1997 (a)
<S> <C> <C> <C>
Basic Customers 1,236,152 1,232,287 1,225,298
Premium Units 559,475 583,603 664,434
<FN>
(a) Includes approximately 22,200 basic customers and 13,500
premium units served by the cable systems in Texas which were
purchased in July 1997. Includes the net effect of the
exchange of systems in Wisconsin and Indiana with Time Warner
which resulted in an increase of approximately 14,000 basic
customers and a decrease of approximately 19,100 premium
units.
</FN>
</TABLE>
Costs and Expenses
Selling, service and system management expenses consist primarily
of labor costs and other expenses associated with programming,
21
<PAGE>
marketing, engineering and plant maintenance and advertising.
General and administrative costs consist primarily of salaries for
administrative personnel, customer billing costs, bad debt expense,
property taxes and copyright fees.
Selling, service and system management expenses increased
$7,121,000 or 17.2%, to $48,553,000 for the three months ended
March 31, 1998 from $41,432,000 for the three months ended March
31, 1997. Programming costs increased $4,572,000, or 16.5%, for
the three months ended March 31, 1998. Approximately $979,000 of
the programming cost increase resulted from the Harron Acquisition
and the Time Warner Exchange. The remaining programming cost
increase is primarily attributable to increases in the cost of
basic satellite programming as a result of annual cost increases,
incremental basic customer growth and the addition of satellite
programming channels to certain of the Company's rebuilt systems.
Other factors contributing to the increase in selling, service and
system management expenses resulted from an increase in marketing
expenses, plant expense and advertising expense of $1,314,000, or
65.6%, $945,000, or 9.6% and $289,000, or 16.0%, respectively, for
the three months ended March 31, 1998. Approximately $210,000 of
the increase in marketing expense resulted from the Harron
Acquisition and the Time Warner Exchange. The remaining increase in
marketing expense for the three months ended March 31, 1998
resulted from increases in labor costs, commissions and advertising
costs due to the introduction of several new marketing campaigns
and from a $700,000 reduction in channel launch support.
Approximately $613,000 of the plant expense increase resulted from
the Harron Acquisition and the Time Warner Exchange. The remaining
increase in plant expense for the three months ended March 31, 1998
was primarily the result of inflationary adjustments.
Approximately $24,000 of the advertising expense increase resulted
from the Harron Acquisition and the Time Warner Exchange. The
remaining increase in advertising expense for the three months
ended March 31, 1998 was due primarily to increases in production
and personnel costs and increases in commissions from the
production and sale of additional advertising spots. Normalizing
the effects of the Pro Forma Adjustments, pro forma selling,
service and system management expenses increased $5,294,000, or
12.2%, for the three months ended March 31, 1998, versus the
comparable period in 1997.
General and administrative expenses increased $2,003,000, or 11.4%,
to $19,501,000 for the three months ended March 31, 1998 from
$17,498,000 for the three months ended March 31, 1997.
Approximately $670,000 of the increase resulted from the Harron
Acquisition and the Time Warner Exchange. The remaining increase
is mainly attributable to incremental labor costs incurred as the
Company continues to add customer service resources, including
staffing both existing and new customer call centers. Billing
costs have increased as a result of upgrading the Company's customer
care platform. Normalizing the effects of the Pro Forma Adjustments,
pro forma general and administrative expenses increased $1,333,000,
or 7.3%, for the three months ended March 31, 1998, versus the
comparable period in 1997.
Depreciation and amortization expenses increased $7,533,000, or
17.1%, for the three months ended March 31, 1998 to $51,679,000
from $44,146,000 for the three months ended March 31, 1997. The
increase is principally a result of the additional capital
expenditures incurred to rebuild and upgrade the physical plant and
equipment of certain of the Systems.
22
<PAGE>
Operating Income
Operating income decreased $4,254,000, or 37.4%, to $7,117,000 for
the three months ended March 31, 1998 from $11,371,000 for the
comparable period in 1997 mainly due to the factors discussed
above.
The cable television industry generally measures the performance of
a cable system in terms of system cash flow before corporate
expenses and depreciation and amortization (often referred to as
"Cable System Cash Flow") and a cable television company in terms
of operating income before depreciation and amortization (often
referred to as "EBITDA"). These measures are not intended to be a
substitute or improvement on the terms disclosed on the financial
statements. Rather, these measures are included as industry
standards. Cable System Cash Flow increased $7,784,000, or 14.1%,
to $62,849,000 for the three months ended March 31, 1998 from
$55,065,000 for the three months ended March 31, 1997. EBITDA
increased $3,279,000, or 5.9%, to $58,796,000 for the three months
ended March 31, 1998 from $55,517,000 for the three months ended
March 31, 1997. Normalizing the effects of the Pro Forma
Adjustments, pro forma Cable System Cash Flow and EBITDA for the
three months ended March 31, 1998 increased 11.0% and 11.0%,
respectively, over the comparable period in 1997.
Other Expenses
Net interest expense increased $3,442,000, or 9.4%, to $39,990,000
for the three months ended March 31, 1998 from $36,548,000 for the
three months ended March 31, 1997. This increase was primarily
due to the scheduled increase in accretion for the 13 1/2% Notes and
the 14 1/4% Notes of $2,272,000 for the three months ended March 31,
1998. Total indebtedness, including public indebtedness,
increased to $1,633,220,000 at March 31, 1998 from $1,464,810,000
at March 31, 1997 as a result of the acquisition and exchange
(noted above), as well as increased capital expenditures incurred
as a result of the rebuild and upgrade process. The weighted
average interest rate, including commitment fees, for total debt
outstanding during the three months ended March 31, 1998 was 9.72%,
compared with 9.91% for the three months ended March 31, 1997.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 131, "Disclosure about Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 is effective for fiscal years
beginning after December 15, 1997. This statement establishes
standards for the way that public companies report information
about segments in annual and interim financial statements. The
effective adoption of SFAS No. 131 is not expected to have a
material impact on the Company's financial statements and related
disclosures.
INFLATION
Based on the FCC's current rate regulation standards, an inflation
factor is included in the benchmark formula in establishing the
initial permitted rate. Subsequent to establishing the initial
rate, an annual rate increase based on the year-end inflation
factor is permitted. In addition to annual rate increases, certain
costs over the prescribed inflation factors, defined by the FCC as
23
<PAGE>
"external costs", may be passed through to customers.
Certain of the Company's expenses, such as those for wages and
benefits, equipment repair and replacement and billing and
marketing generally increase with inflation. However, the Company
does not believe that its financial results have been adversely
affected by inflation. Periods of high inflation could have an
adverse effect to the extent that increased borrowing costs for
floating rate debt may not be offset by increases in revenues. As
of March 31, 1998, the Company had $962,500,000 of outstanding
borrowings under the Senior Credit Facility, $562,500,000 are not
subject to fixed rate interest swap agreements. The rates are
based on either the Eurodollar rate, prime rate or CD base rate,
plus a margin of up to 2.25% subject to certain adjustments based
on the ratio of Operating's total debt to annualized operating cash
flow.
To reduce the impact of changes in interest rates on its floating
rate long-term debt, the Company entered into certain interest rate
swap agreements with certain of the participating banks under the
Senior Credit Facility. At March 31, 1998, interest rate swap
agreements covering a notional balance of $400,000,000 were
outstanding which require the Company to pay fixed rates ranging
from 5.75% to 5.77%, plus the applicable interest rate margin.
These agreements mature from 1998 through 2000, and allow for the
optional extension by the counterparty for additional periods and
certain of these agreements provide for the automatic termination
in the event that one month LIBOR exceeds 6.75% on any monthly
reset date. The Company has also entered into an interest rate
swap agreement covering an aggregate notional principal balance of
$100,000,000 which matures in the year 2000 whereby the Company
receives one month LIBOR plus 0.07% and is required to pay the
higher of one month LIBOR at either the beginning or end of the
interest period, plus the applicable interest rate margin.
As interest rates change under the interest rate swap agreements,
the differential to be paid or received is recognized as an
adjustment to interest expense. During the three months ended
March 31, 1998 and 1997, the Company recognized additional expense
of $27,700 and $521,000, respectively, under its interest rate swap
agreements.
REGULATION IN THE CABLE TELEVISION INDUSTRY
The operation of cable television systems is extensively regulated
by the FCC, some state governments and most local governments. On
February 8, 1996, the President signed into law the 1996 Telecom
Act. This new law alters the regulatory structure governing the
nation's telecommunications providers. It removes barriers to
competition in both the cable television market and the local
telephone market. Among other things, it reduces the scope of
cable rate regulation.
The 1996 Telecom Act required the FCC to undertake a host of
implementing rulemakings, the final outcome of which cannot yet be
determined. Moreover, Congress and the FCC have frequently
revisited the subject of cable television regulation and may do so
again. Future legislative and regulatory changes could adversely
affect the Company's operations.
The 1996 Telecom Act sunsets FCC regulation of CPST rates for all
cable television systems (regardless of size) on March 31, 1999.
It also relaxes existing uniform rate requirements by specifying
that uniform rate requirements do not apply where the operator
24
<PAGE>
faces "effective competition," and by exempting bulk discounts to
multiple dwelling units, although complaints about predatory
pricing still may be made to the FCC. It is not possible at this
time to predict the outcome of such rulemakings. Until the various
required rulemakings are implemented which amend the rules under
the previous cable acts, the Company continues to be subject to the
provisions of the 1992 Cable Act.
The Company believes that it has materially complied with
provisions of the 1996 Telecom Act and the 1992 Cable Act,
including rate setting provisions promulgated by the FCC on April
1, 1993. However, in jurisdictions which have chosen not to
certify, refunds covering a one-year period on basic service may be
ordered if the Company is regulated at a later date and is unable
to justify its rates through a benchmark or cost-of-service filing.
The amount of refunds, if any, which may be payable by the Company
in the event that these systems' rates are successfully challenged
by franchising authorities is not currently estimable. During the
three month period ended March 31, 1998, there were no rate refunds
issued.
The Company currently has rate filings pending review at the FCC
pertaining to the CPST level of service. For the regulation period
from September 1, 1993 through May 15, 1994, there is one cost-of-service
filing pending review at the FCC affecting 344 customers.
For the re-regulation time period from May 1994 to the present,
there are filings for 23 franchises under review at the FCC
affecting approximately 145,000 customers. The majority of these
filings have been waiting to be reviewed for over three years.
Until the FCC rules on the complaints, the Company is required to
refresh its filings annually. During 1997 and the first quarter of
1998, the Company received favorable rulings (i.e., the FCC
confirmed the Company's rates and denied the complaint) for 23
filings affecting approximately 135,000 customers. The FCC also
issued several decisions reducing rates for certain of the Company
systems serving approximately 74,000 customers, which the Company
has asked to be reconsidered. If the FCC determines that the
Company's CPST rates for those 74,000 customers are unreasonable,
it has the authority to order the Company to reduce such rates and
to refund to those customers any overcharges with interest
occurring from the filing date of the rate complaint at the FCC.
The amount of refunds, if any, which may be required by the FCC in
the event the Company's CPST rates are found to be unreasonable for
those customers is estimated at approximately $429,000.
Because the FCC has not yet resolved pending rate complaints
involving the Company and because franchise authorities may certify
in the future, the overall impact of these regulations and other
provisions of the 1996 Telecom Act and the 1992 Cable Act on the
Company's business cannot be determined at this time.
25
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
There were no material legal proceedings instituted during the
three months ended March 31, 1998 to which the Company is a party
or of which any of its property is subject.
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
(a) Exhibits
Included in this report:
Exhibit:
<CAPTION>
<S> <C>
3.1 Certificate of Conversion of Marcus Cable Operating
Company, L.P. dated as of April 23, 1998.
3.2 Certificate of Cancellation of Marcus Cable
Operating Company, L.P. dated as of April 23, 1998.
3.3 Certificate of Formation of Marcus Cable Operating
Company, L.L.C. dated as of April 23, 1998.
3.4 Limited Liability Company Agreement of Marcus Cable
Operating Company, L.L.C. dated as of April 23,
1998.
10.1 Employment Agreement dated as of April 3, 1998
between Marcus Cable Company, L.P. and Jeffrey A.
Marcus.
10.2 Employment Agreement dated as of April 3, 1998
between Marcus Cable Company, L.P. and Thomas P.
McMillin.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.3 Indemnification Agreement dated as of April 23,
1998 between Marcus Cable Company, L.P. and Jeffrey
A. Marcus.
10.4 Indemnification Agreement dated as of April 23,
1998 between Marcus Cable Company, L.P. and Thomas
P. McMillin.
10.5 Second Amendment dated as of March 31, 1998 to the
Credit Agreement dated as of August 31, 1995, as
amended by the First Amendment thereto dated as of
March 14, 1997 among Marcus Cable Operating
Company, L.P., Marcus Cable Company, L.P., the
several banks and other financial institutions from
time to time parties thereto, the Co-Agent,
Managing Agents and Co-Arrangers named therein and
The Chase Manhattan Bank, as Administrative Agent.
10.6 Third Amendment dated as of April 15, 1998 to the
Credit Agreement dated as of August 31, 1995, as
amended by the First Amendment thereto dated as of
March 14, 1997 and the Second Amendment thereto
dated as of March 31, 1998 among Marcus Cable
Operating Company, L.P., Marcus Cable Company,
L.P., the several banks and other financial
institutions from time to time parties thereto, the
Co-Agent, Managing Agents and Co-Arrangers named
therein and The Chase Manhattan Bank, as
Administrative Agent.
10.7 Consent and Waiver dated as of April 21, 1998 to
the Credit Agreement dated as of August 31, 1995,
as amended by the First Amendment thereto dated as
of March 14, 1997, the Second Amendment thereto
dated as of March 31, 1998 and the Third Amendment
thereto dated as of April 15, 1998 among Marcus
Cable Operating Company, L.P., Marcus Cable
Company, L.P., the several banks and other
financial institutions from time to time parties
thereto, the Co-Agent, Managing Agents and Co-Arrangers
named therein and The Chase Manhattan Bank, as
Administrative Agent.
27.1 Financial Data Schedule (supplied for the
information of the Commission)
</TABLE>
(b) Reports on Form 8-K
The Company filed reports on Form 8-K reporting Item 5 --
Other Events on March 9, 1998, April 1, 1998, April 2, 1998,
April 7, 1998, April 16, 1998 and April 28, 1998, which also
contained an Item 2 -- Acquisition or Disposition of Assets.
27
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, each of the registrants have duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
MARCUS CABLE COMPANY, L.P.
(Registrant)
By: Marcus Cable Properties, L.P., its general
partner,
By: Marcus Cable Properties, Inc., its
general partner,
May 15, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive
Officer and Sole Director of
Marcus Cable Properties, Inc.
(Principal Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and
Chief Financial Officer of
Marcus Cable Properties, Inc.
(Principal Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and
Controller of Marcus Cable
Properties, Inc. (Principal
Accounting Officer)
28
<PAGE>
MARCUS CABLE OPERATING COMPANY, L.L.C.
(Registrant)
By: Marcus Cable Company, L.P., its general
partner,
By: Marcus Cable Properties, L.P., its
general partner,
By: Marcus Cable Properties, Inc.,
its general partner,
May 15, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive
Officer and Sole Director of
Marcus Cable Properties, Inc.
(Principal Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and
Chief Financial Officer of
Marcus Cable Properties, Inc.
(Principal Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and
Controller of Marcus Cable
Properties, Inc. (Principal
Accounting Officer)
MARCUS CABLE CAPITAL CORPORATION
(Registrant)
May 15, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Capital Corporation (Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Capital Corporation (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Capital Corporation
(Principal Accounting Officer)
29
<PAGE>
MARCUS CABLE CAPITAL CORPORATION II
(Registrant)
May 15, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Capital Corporation II (Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Capital Corporation II (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Capital Corporation
II (Principal Accounting Officer)
30
<PAGE>
MARCUS CABLE CAPITAL CORPORATION III
(Registrant)
May 15, 1998 By: /s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Its: President, Chief Executive Officer
and Sole Director of Marcus Cable
Capital Corporation III(Principal
Executive Officer)
By: /s/ Thomas P. McMillin
Thomas P. McMillin
Its: Executive Vice President and Chief
Financial Officer of Marcus Cable
Capital Corporation III (Principal
Financial Officer)
By: /s/ John P. Klingstedt, Jr.
John P. Klingstedt, Jr.
Its: Senior Vice President and Controller
of Marcus Cable Capital Corporation
III (Principal Accounting Officer)
31
<PAGE>
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Sequentially
Exhibit Numbered
Number Page
<S> <C> <C>
3.1 Certificate of Conversion of Marcus Cable
Operating Company, L.P. dated as of April 23, 1998. 34
3.2 Certificate of Cancellation of Marcus Cable
Operating Company, L.P. dated as of April 23, 1998. 36
3.3 Certificate of Formation of Marcus Cable Operating
Company, L.L.C. dated as of April 23, 1998. 38
3.4 Limited Liability Company Agreement of Marcus Cable
Operating Company, L.L.C. dated as of April 23, 1998. 40
10.1 Employment Agreement dated as of April 3, 1998 between
Marcus Cable Company, L.P. and Jeffrey A. Marcus. 50
10.2 Employment Agreement dated as of April 3, 1998 between
Marcus Cable Company, L.P. and Thomas P. McMillin. 81
10.3 Indemnification Agreement dated as of April 23, 1998
between Marcus Cable Company, L.P. and Jeffrey A. Marcus. 107
10.4 Indemnification Agreement dated as of April 23, 1998
between Marcus Cable Company, L.P. and Thomas P. McMillin. 123
10.5 Second Amendment dated as of March 31, 1998 to the
Credit Agreement dated as of August 31, 1995, as amended by
the First Amendment thereto dated as of March 14, 1997 among
Marcus Cable Operating Company, L.P., Marcus Cable Company,
L.P., the several banks and other financial institutions
from time to time parties thereto, the Co-Agent, Managing
Agents and Co-Arrangers named therein and The Chase
Manhattan Bank, as Administrative Agent. 139
10.6 Third Amendment dated as of April 15, 1998 to the
Credit Agreement dated as of August 31, 1995, as amended by
the First Amendment thereto dated as of March 14, 1997 and
the Second Amendment thereto dated as of March 31, 1998
among Marcus Cable Operating Company, L.P., Marcus Cable
Company, L.P., the several banks and other financial
institutions from time to time parties thereto, the Co-Agent,
Managing Agents and Co-Arrangers named therein and
The Chase Manhattan Bank, as Administrative Agent. 142
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.7 Consent and Waiver dated as of April 21, 1998 to the
Credit Agreement dated as of August 31, 1995, as amended by
the First Amendment thereto dated as of March 14, 1997, the
Second Amendment thereto dated as of March 31, 1998 and the
Third Amendment thereto dated as of April 15, 1998 among
Marcus Cable Operating Company, L.P., Marcus Cable Company,
L.P., the several banks and other financial institutions
from time to time parties thereto, the Co-Agent, Managing
Agents and Co-Arrangers named therein and The Chase
Manhattan Bank, as Administrative Agent. 147
27.1 Financial Data Schedule (supplied for the information of
the Commission)
</TABLE>
33
<PAGE>
Exhibit 3.1
CERTIFICATE OF CONVERSION
TO LIMITED LIABILITY COMPANY
of
MARCUS CABLE OPERATING COMPANY, L.P.
The undersigned, as an authorized person, is duly
executing and filing the following Certificate of Conversion to
Limited Liability Company for the purpose of converting a limited
partnership to a limited liability company (the "Conversion"),
pursuant to Section 18-214 of the Delaware Limited Liability
Company Act (the "Act"):
ARTICLE I
The name of the limited partnership prior to the
Conversion is Marcus Cable Operating Company, L.P., which was
formed as a Delaware limited partnership on June 23, 1994.
ARTICLE II
The name of the limited liability company as set forth in
its Certificate of Formation is Marcus Cable Operating Company,
L.L.C.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Conversion as of April 23, 1998.
By: MARCUS CABLE COMPANY,L.P.,
its general partner and
Authorized Person
By: Marcus Cable Properties,L.P.,
its general partner
By: Marcus Cable Properties, Inc.,
its general partner
By:/s/ Richard A. B. Gleiner
Name: Richard A. B. Gleiner
Title: Senior Vice President and Secretary
Exhibit 3.2
CERTIFICATE OF CANCELLATION
OF THE
CERTIFICATE OF LIMITED PARTNERSHIP
OF
MARCUS CABLE OPERATING COMPANY, L.P.
The undersigned, the sole general partner of Marcus Cable
Operating Company, L.P., is duly executing and filing the following
Certificate of Cancellation for the purpose of cancelling the
Limited Partnership pursuant to Section 17-203 of the Delaware
Revised Uniform Limited Partnership Act (the "Act"):
ARTICLE I
The name of the limited partnership is Marcus Cable
Operating Company, L.P. (the "Company").
ARTICLE II
The Company's Certificate of Limited Partnership was
filed in the Office of the Secretary of State on June 23, 1994.
ARTICLE III
The reason for the filing of this Certificate of
Cancellation is that the Company has been converted to Marcus Cable
Operating Company, L.L.C., a limited liability company formed under
the laws of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Cancellation as of April 23, 1998.
General Partner:
MARCUS CABLE COMPANY, L.P.:
By: Marcus Cable Properties, L.P.,
its general partner
By: Marcus Cable Properties, Inc.,
its general partner
By:/s/ Richard A. B. Gleiner
Name: Richard A. B. Gleiner
Title: Senior Vice President and Secretary
Exhibit 3.3
CERTIFICATE OF FORMATION
of
MARCUS CABLE OPERATING COMPANY, L.L.C.
The undersigned, as an authorized person, is duly
executing and filing the following Certificate of Formation for the
purpose of forming a limited liability company pursuant to the
Delaware Limited Liability Company Act (6 Del.C. SEC18-101, et. seq.)
(the "Act"):
ARTICLE I
The name of the limited liability company is Marcus Cable
Operating Company, L.L.C. (the "Company").
ARTICLE II
The address of the Company's registered office and the
name and address of its registered agent for service of process are
as follows:
The Corporation Trust Company
1209 Orange Street
Wilmington, DE 19801
IN WITNESS WHEREOF, the undersigned has executed this
Certificate of Formation as of April 23, 1998.
By:/s/ Richard A. B. Gleiner
Richard A. B. Gleiner
Authorized Person
Exhibit 3.4
LIMITED LIABILITY COMPANY AGREEMENT
OF
MARCUS CABLE OPERATING COMPANY, L.L.C.
(a Delaware Limited Liability Company)
This LIMITED LIABILITY COMPANY AGREEMENT OF MARCUS CABLE
OPERATING COMPANY, L.L.C. (the "Agreement"), entered into as of
April 23, 1998 by and between MARCUS CABLE COMPANY, L.P., a
Delaware limited partnership ("MCC") and MARCUS CABLE PROPERTIES,
L.P., a Delaware limited partnership ("MCPLP"), as the initial
members of Marcus Cable Operating Company, L.L.C., a Delaware
limited liability company (the "Company"),
W I T N E S S E T H:
WHEREAS, MCC and MCPLP are parties to that First Amended
and Restated Agreement of Limited Partnership of Marcus Cable
Operating Company, L.P., dated June 9, 1995 (the "MCOC Partnership
Agreement");
WHEREAS, MCC and MCPLP desire to convert the limited
partnership formed pursuant to the MCOC Partnership Agreement from
a limited partnership to a limited liability company under the
Delaware Limited Liability Company Act (6 Del.C. SEC 18-101, et.
seq.) (the "Delaware Limited Liability Company Act"); and
WHEREAS, the Certificate of Formation (the "Certificate")
of the Company will be executed and filed in the office of the
Secretary of State of the State of Delaware immediately following
the execution and delivery of this Agreement;
NOW THEREFORE, in consideration of the terms and
provisions set forth herein, the mutual benefits to be gained by
the performance thereof and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. General.
(a) Effective as of the date and time of filing of the
Certificate in the office of the Secretary of State of the State of
Delaware, the parties hereby form a limited liability company under
the Delaware Limited Liability Company Act. Except as expressly
provided herein, the rights and obligations of the members in
connection with the regulation and management of the Company shall
be governed by the Delaware Limited Liability Company Act.
(b) The name of the Company shall be "Marcus Cable
Operating Company, L.L.C. ". The business of the Company shall be
conducted under such name or any other name or names that the
members shall determine from time to time.
(c) The address of the registered office of the Company
in the State of Delaware shall be c/o Corporation Trust Company,
1209 Orange Street, Wilmington, Delaware 19801. The name and
address of the registered agent for service of process on the
Company in the State of Delaware shall be Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801. The
registered office or registered agent of the Company may be changed
from time to time by the members.
(d) The principal place of business of the Company shall
be at 2911 Turtle Creek Boulevard, Suite 1300, Dallas, Texas 75219.
At any time, the members may change the location of the Company's
principal place of business.
(e) The term of the Company will commence on the date of
the filing of the Certificate in the office of the Secretary of
State of the State of Delaware, and will continue and have
perpetual existence until dissolved and its affairs wound up in
accordance with the provisions of this Agreement.
(f) The execution of the Certificate by an officer of
Marcus Cable Properties, Inc., a Delaware corporation, and the
filing thereof in the office of the Secretary of State of the State
of Delaware are hereby ratified, confirmed and approved by the
members.
(g) The members shall cause the Company to be qualified,
formed or registered under assumed or fictitious name statutes or
similar laws in any jurisdiction in which the Company transacts
business in which such qualification, formation or registration is
required or desirable. Any one of the members, as an authorized
person within the meaning of the Delaware Limited Liability Company
Act, shall execute, deliver and file any certificates (and any
amendments and/or restatements thereof) necessary for the Company
to qualify to do business in a jurisdiction in which the Company
may wish to conduct business.
SECTION 2. Purposes. The Company is formed for the
object and purpose of, and the nature of the business to be
conducted by the Company is, engaging in any lawful act or activity
for which limited liability companies may be formed under the
Delaware Limited Liability Company Act and engaging in any and all
activities necessary, convenient, desirable or incidental to the
foregoing.
SECTION 3. Powers. The Company shall have all powers
necessary, appropriate or incidental to the accomplishment of its
purposes and all other powers conferred upon a limited liability
company pursuant to the Delaware Limited Liability Company Act.
SECTION 4. Management.
(a) Except as otherwise required by applicable law, the
powers of the Company shall at all times be exercised by or under
the authority of, and the business and affairs of the Company shall
be managed by, or under the direction of, the members.
(b) The act of members holding a majority of the
outstanding Units (as hereinafter defined) shall be the act of the
members for all purposes of this Agreement.
(c) The members shall be authorized to elect managers
and officers of the Company, who shall have such authority with
respect to the management of the business and affairs of the
Company as shall be specified by the members in the resolution or
resolutions pursuant to which such managers or officers were
elected.
SECTION 5. Members.
(a) The members of the Company shall initially be MCC
and MCPLP, and such other persons as may be admitted pursuant to
the provisions of this Agreement.
(b) No member shall be liable for the debts, liabilities
and obligations of the Company, including any debts, liabilities
and obligations under a judgment, decree or order of a court.
(c) Neither a member nor any of its affiliates,
partners, members, directors, managers, officers or employees shall
be expressly or impliedly restricted or prohibited by virtue of
this Agreement or the relationships created hereby from engaging in
other activities or business ventures of any kind or character
whatsoever. Except as otherwise agreed in writing, each of the
members and its affiliates, partners, members, directors, managers,
officers and employees shall have the right to conduct, or to
possess a direct or indirect ownership interest in, activities and
business ventures of every type and description, including
activities and business ventures in direct competition with the
Company.
SECTION 6. Units. Each member has heretofore made
the capital contribution described in Article III of the MCOC
Partnership Agreement. MCC shall hold 99.80 units ("Units") of
limited liability company interest in the Company and MCPLP shall
hold 0.20 Units.
SECTION 7. Distributions. The Company may from time
to time distribute to the members such amounts in cash and other
assets as shall be determined by the members. Each such
distribution shall be divided among the members in proportion to
the number of Units then held by them.
SECTION 8. Allocations. The profits and losses of
the Company shall be allocated to the members in proportion to the
number of Units held by them.
SECTION 9. Dissolution; Winding Up.
(a) The Company shall be dissolved upon (i) the adoption
of a plan of dissolution by the members or (ii) the occurrence of
any event required to cause the dissolution of the Company under
the Delaware Limited Liability Company Act.
(b) Any dissolution of the Company shall be effective as
of the date on which the event occurs giving rise to such
dissolution, but the Company shall not terminate unless and until
all its affairs have been wound up and its assets distributed in
accordance with the provisions of the Delaware Limited Liability
Company Act.
(c) Upon dissolution of the Company, the Company shall
continue solely for the purposes of winding up its business and
affairs as soon as reasonably practicable. Promptly after the
dissolution of the Company, the members shall designate one or more
persons (the "Liquidating Trustees") to accomplish the winding up
of the business and affairs of the Company. Upon their
designation, the Liquidating Trustees shall immediately commence to
wind up the affairs of the Company in accordance with the
provisions of this Agreement and the Delaware Limited Liability
Company Act. In winding up the business and affairs of the
Company, the Liquidating Trustees may take any and all actions that
they determine in their sole discretion to be in the best interests
of the members, including, but not limited to, any actions relating
to (i) causing written notice by registered or certified mail of
the Company's intention to dissolve to be mailed to each known
creditor of and claimant against the Company, (ii) the payment,
settlement or compromise of existing claims against the Company,
(iii) the making of reasonable provisions for payment of contingent
claims against the Company and (iv) the sale or disposition of the
properties and assets of the Company. It is expressly understood
and agreed that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction of
claims against the Company so as to enable the Liquidating Trustees
to minimize the losses that may result from a liquidation.
SECTION 10. Transfer. A member shall not transfer
(whether by sale, assignment, gift, pledge, hypothecation,
mortgage, exchange or otherwise) all or any part of its limited
liability company interest in the Company to any other person
without the prior written consent of each of the other members;
provided, however, that this Section 10 shall not restrict the
ability of any member to transfer (at any time) all or a portion of
its limited liability company interest in the Company to another
member.
SECTION 11. Admission of Additional Members. The
admission of additional members to the Company shall be
accomplished by amendment of this Agreement and, if required by the
Delaware Limited Liability Company Act, by the filing of an
appropriate amendment to the Certificate in the office of the
Secretary of State of the State of Delaware. An assignment or
transfer of a member's limited liability company interest shall
entitle an assignee to become or to exercise any rights or powers
of a member, including but not limited to a member's right to
participate in the management of the business and affairs of the
Company.
SECTION 12. Tax Matters. The members agree that, so
long as the Company has more than one member, it is their intention
that the Company shall be treated as a partnership for purposes of
United States federal, state and local income tax laws, and further
agree not to take any position or make any election, in a tax
return or otherwise, inconsistent herewith. So long as the Company
is a partnership for federal income tax purposes, MCC is hereby
designated as the "tax matters partner" of the Company (the "Tax
Matters Member") for purposes of section 6231(a)(7) of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall have the
power to manage and control, on behalf of the Company, any
administrative proceeding at the Company level with the Internal
Revenue Service relating to the determination of any item of
Company income, gain, loss, deduction or credit for federal income
tax purposes. In the event that the Company becomes a sole member
entity, it is intended that for federal income tax purposes its
assets be deemed to be owned by the sole member in accordance with
applicable Treasury Regulations. The members hereby agree that the
Company shall make the election provided by Section 754 of the Code
on its first tax return filed after the date hereof.
SECTION 13. Exculpation and Indemnification.
(a) Neither the members, their affiliates, nor any
person who at any time shall serve, or shall have served, as a
director, officer, employee or other agent of any member or any
such affiliate and who, in such capacity, shall engage, or shall
have engaged, in activities on behalf of the Company (a "Specified
Agent") shall be liable, in damages or otherwise, to the Company or
to any of the other members for and neither the Company nor any
other member shall take any action against the members, their
affiliates or any Specified Agent, in respect of any loss which
arises out of any acts or omissions performed or omitted by it
pursuant to the authority granted by this Agreement, or otherwise
performed on behalf of the Company, if such member, such affiliate,
or such Specified Agent, as applicable, in good faith, determined
that such course of conduct was in the best interests of the
Company. Each member shall look solely to the assets of the
Company for return of its investment, and if the property of the
Company remaining after the discharge of the debts and liabilities
of the Company is insufficient to return such investment, such
members shall have no recourse against the Company, the other
members or their affiliates, except as expressly provided herein;
provided, however, that the foregoing shall not relieve any member
of any fiduciary duty or duty of fair dealing to the other members
that it may have under applicable law.
(b) In any threatened, pending or completed claim,
action, suit or proceeding to which a member, any of its
affiliates, or any Specified Agent was or is a party or is
threatened to be made a party by reason of the fact that it is or
was engaged in activities on behalf of the Company, including
without limitation any action or proceeding brought under the
Securities Act of 1933, as amended, against a member, any of their
affiliates, or any Specified Agent relating to the Company, the
Company shall indemnify and hold harmless the members, any such
affiliates, and any such Specified Agents against losses, damages,
expenses (including attorneys' fees), judgments and amounts paid in
settlement actually and reasonably incurred by or in connection
with such claim, action, suit or proceeding; provided, however,
that neither the members, any of their affiliates, nor any
Specified Agent, shall be indemnified for actions constituting bad
faith, willful misconduct, or fraud. Any act or omission by any of
the members, any of their affiliates, nor any Specified Agent, if
done in reliance upon the opinion of independent legal counsel or
public accountants selected with reasonable care by such members,
such affiliates, or such Specified Agents, as applicable, shall not
constitute bad faith, willful misconduct, or fraud on the part of
such members, such affiliates, or such Specified Agents.
(c) The termination of any claim, action, suit or
proceeding by judgment, order or settlement shall not, of itself,
create a presumption that any member, its affiliates' or any
Specified Agents' act or failure to act constituted bad faith,
willful misconduct or fraud under this Agreement.
(d) Any such indemnification under this Section 13 shall
be recoverable only out of the assets of the Company and not from
the members.
SECTION 14. Miscellaneous.
(a) A member's limited liability company interest may be
evidenced by a certificate of limited liability interest executed
by one or more members and in substantially the form attached
hereto as Exhibit A (or in such other form as the members may
approve).
(b) The terms and provisions set forth in this Agreement
may be amended, and compliance with any term or provision set forth
herein may be waived, only by a written instrument executed by each
of the members. No failure or delay on the part of any member in
exercising any right, power or privilege granted hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege granted hereunder.
(c) This Agreement shall be binding upon and inure to
the benefit of the members and their respective successors and
assigns.
(d) This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware (without
regard to any conflicts of law principles that would require the
application of the laws of any other jurisdiction).
(e) In the event that any provision contained in this
Agreement shall be held to be invalid, illegal or unenforceable for
any reason, the invalidity, illegality or unenforceability thereof
shall not affect any other provision hereof.
(f) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed on the date first above written.
MARCUS CABLE COMPANY, L.P.
By: Marcus Cable Properties, L.P., its
general partner
By: Marcus Cable Properties, Inc., its
general partner
By:/s/ Richard A. B. Gleiner
Name: Richard A. B. Gleiner
Title: Senior Vice President
MARCUS CABLE PROPERTIES, L.P.
By: Marcus Cable Properties, Inc., its
general partner
By:/s/ Richard A. B. Gleiner
Name: Richard A. B. Gleiner
Title: Senior Vice President
EXHIBIT A
STOCK CERTIFICATE SPECIMEN
THE INTEREST EVIDENCED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, AND ACCORDINGLY SUCH INTEREST THEREIN MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
SUCH ACT AND SUCH LAWS OR PURSUANT TO AN EXEMPTION THEREFROM.
TRANSFERS, SALES, PLEDGES, HYPOTHECATIONS AND OTHER DISPOSITIONS OF
THE INTEREST EVIDENCED BY THIS CERTIFICATE ARE FURTHER RESTRICTED
BY THE TERMS OF THE LIMITED LIABILITY COMPANY AGREEMENT REFERRED TO
BELOW.
MARCUS CABLE OPERATING COMPANY, L.L.C.
Limited Liability Company Interest
SPECIMEN
Certificate No._______
This certifies that ___________________, a Member (the
"Member") of MARCUS CABLE OPERATING COMPANY, L.L.C., a limited
liability company formed under the laws of the State of Delaware
(the "Company"), is the registered holder of _____Units of limited
liability company interests in the Company, transferable on the
books of the Company, in person or by duly authorized attorney,
upon surrender of this Certificate properly endorsed and accepted
and satisfaction of certain conditions thereto. This Certificate
and the Units of limited liability company interests evidenced
hereby are issued and shall in all respects be subject to all the
provisions of the Limited Liability Company Agreement of the
Company as amended or restated from time to time, which Agreement
is available for inspection at the principal offices of the
Company, to all of which provisions the holder, by acceptance
hereof, hereby assets.
Witness the signature of the duly authorized officer of a
Member of the Company.
MARCUS CABLE OPERATING COMPANY, L.L.C.
By: MARCUS CABLE COMPANY, L.P., a Member
By: MARCUS CABLE PROPERTIES, L.P., General Partner
By: MARCUS CABLE PROPERTIES, INC. General Partner
SPECIMEN
By: ____________________________
Name:
Title: Dated:_____________
Exhibit 10.1
EMPLOYMENT AGREEMENT
(Jeffrey A. Marcus)
AGREEMENT, dated as of April 3, 1998 (this "Agreement"),
between Marcus Cable Company, L.P., a Delaware limited partnership
("MCC"), and Jeffrey A. Marcus ("Marcus").
WHEREAS, the current partners of MCC and Vulcan Cable,
Inc., a Washington corporation ("Buyer"), have entered into a
Purchase Agreement (the "Purchase Agreement"), dated as of even
date herewith, pursuant to which Buyer will, directly and
indirectly, ultimately acquire all of the partners' interests in
MCC (the "Acquisition");
WHEREAS, Buyer wishes to secure the services of Marcus as
Chairman, and pending the selection of a successor President and
Chief Executive Officer (the "Successor President"), as President
and Chief Executive Officer of MCC, and as a member of the
governing board of MCC and its ultimate general partner (the
"Board");
WHEREAS, Buyer desires that MCC enters into this
Agreement to assure itself of Marcus' availability as of the
Closing Date (as defined in the Purchase Agreement); and
WHEREAS, Marcus is willing to enter into this Agreement
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and obligations contained herein, the parties
agree, intending to be legally bound, as follows:
1. Employment; Term.
1.1 During the Agreement Term (as defined in
Section 1.2), MCC shall employ Marcus, and Marcus shall serve as
Chairman, President and Chief Executive Officer until such time
that a Successor President is jointly selected by Marcus and the
Buyer. Thereafter, Marcus shall continue to serve as Chairman.
During the entire Agreement Term, Marcus shall be a member of the
Board. In addition, Marcus shall serve as the Chairman, and prior
to the selection of the Successor President, as President and Chief
Executive Officer, and as a member of the governing boards of such
direct or indirect subsidiaries of MCC as Marcus shall from time to
time determine.
1.2 The term of this Agreement (the "Agreement
Term") shall commence on the Closing Date and terminate on the
third anniversary of the Closing Date, unless sooner terminated
pursuant to the provisions of Section 8 or Section 9.
Notwithstanding anything to the contrary, this Agreement shall be
void and of no force and effect if the Purchase Agreement is
terminated in accordance with its terms.
2. Duties and Authority.
2.1 During the Agreement Term, under the direction
and subject to the control of the Board (which direction shall be
such as is customarily exercised over a chief executive officer),
Marcus shall be responsible for the strategic direction, business,
affairs, properties and operations of MCC and shall have general
charge, management and control of MCC, with all such powers and
authority with respect to such business, affairs, properties and
operations as may be reasonably incident to such duties and
responsibilities, including, without limitation, but subject to
Section 1.1 with respect to the selection of the Successor
President, control over the hiring and termination of MCC's
management team. Following the selection of the Successor
President, Marcus shall delegate to the Successor President those
powers and authority as jointly determined by Marcus and the Buyer.
2.2 Throughout the Agreement Term, Marcus will be
the Chairman of any executive or compensation committee and a
member of any finance committee, if any, of the Board.
2.3 During the Agreement Term it shall not be a
violation of this Agreement for Marcus to: (a) subject to the
provisions of Section 10, serve as a director and/or executive
officer of another business, (b) serve on civic or charitable
boards or committees, (c) deliver lectures, fulfill speaking
engagements or teach at educational institutions or (d) manage
personal investments. Prior to the appointment of the Successor
President, Marcus will commit such time to his responsibilities
under this Agreement as is consistent with past practice.
Following the appointment of the Successor President, Marcus will
determine, in his sole discretion, the time commitment needed to
fulfill his responsibilities under this Agreement.
3. Location.
During the Agreement Term, Marcus' services under this
Agreement shall be performed principally in Dallas, Texas. The
parties, however, acknowledge and agree that the nature of Marcus'
duties hereunder shall require reasonable travel from time to time.
4. Cash Compensation.
4.1 Base Salary. During the Agreement Term, MCC
shall pay to Marcus, in monthly or more frequent installments in
accordance with MCC's regular payroll practices for senior
executives: (a) from the Closing Date through the date on which a
Successor President commences his or her employment with MCC, a
base salary of not less than $1,500,000 per annum, and
(b) thereafter, a base salary of not less than $750,000 per annum;
provided, however, that, in each case, such minimum base salary
shall be adjusted upward, as of January 1, 1999, and as of each
successive January 1 to the end of the Agreement Term, by 10% (as
so adjusted, including pursuant to the next sentence, the "Base
Salary"). It is understood that MCC may, at any time, in the
discretion of the Board, increase, but not decrease, Marcus' Base
Salary.
4.2 Bonus.
4.2.1 In addition to his Base Salary,
Marcus shall be entitled to receive with respect to each calendar
year (or portion thereof) during the Agreement Term, a bonus
("Bonus") of 50% of current Base Salary, of which 50% will be
discretionary, 25% will be based on actual cash flow to budget and
25% will be based on customer count to budget, and will be
determined in a manner consistent with MCC's existing executive
bonus plan. On the Closing Date, Marcus will be paid his Bonus
with respect to the period from January 1, 1998 through the Closing
Date.
4.2.2 Each Bonus, other than the Bonus
payable on the Closing Date, shall be paid to Marcus as soon as
practicable, but in no event later than March 31 following the end
of each calendar year. The amount of the Bonus payable with
respect to any period of less than an entire year shall be
determined by multiplying the Bonus that would have been payable
with respect to the whole such year (using actual results for such
year and assuming that this Agreement had been in effect the entire
such year) by a fraction, the numerator of which is the number of
days of such year included in the Agreement Term and the
denominator of which is 365.
4.3 Options.
4.3.1 As additional consideration for
Marcus entering into this Agreement, Marcus shall be granted,
beginning no later than six months (or at such later time that may
be agreed upon by the parties) after the Closing Date, options (or,
as appropriate, partnership "profits interests" having
substantially the same economic attributes as such options) and
vesting characteristics (modified appropriately to take into
account differences in form)) representing a share of the
Management Option Pool (as defined below) which is commensurate
with Marcus' position with the Company and is mutually agreed upon
by Marcus and the Buyer.
4.3.2 There shall be reserved for grants to
be jointly agreed upon by Marcus and the Buyer to employees of MCC
and its direct and indirect subsidiaries, including Marcus,
options (or, as appropriate, partnership "profits interests" having
substantially the same economic attributes as such options) and
vesting characteristics (modified appropriately to take into
account differences in form)) representing at least 10% of the
equity of MCC determined on a fully diluted basis as of the Closing
Date (after taking into account all possible issuances of equity
contemplated in this Section 4.3) (the "Management Option Pool").
At least 25% of the Management Option Pool options will be granted
within six months after the Closing Date. Such options will have
a strike price equal to fair market value at date of grant or as
otherwise mutually agreed upon by Marcus and the Buyer. In
addition, in the event options rather than "profits interests" are
granted, such options shall have a term of ten years (subject to
earlier termination as provided elsewhere herein), and such options
shall vest on anniversaries of the Closing Date, in equal amounts,
over four years from the Closing Date; provided that the vesting of
Marcus' remaining unvested options shall be accelerated if MCC does
not offer to renew this Agreement through the vesting period.
4.3.3 MCC shall comply with all federal and
state securities laws, rules and regulations applicable to the
issuance of the options referred to in this Section 4.3 and the
securities issuable upon exercise of such options. At such time
that MCC is subject to the Securities Exchange Act of 1934, as
amended, as the result of an offering of any of its equity, MCC
shall cause the securities issuable upon exercise of such options
to be registered pursuant to the Securities Act of 1933, as
amended, on Form S-8 or an equivalent form (and on a Form S-3
resale registration statement, if appropriate), and all other
applicable federal securities laws and state securities or blue sky
laws, and shall cause such securities to be approved for quotation
on the exchange on which MCC's equity is then or on which it will
be traded, and shall bear all expenses in connection with such
registration, quotation and compliance.
5. Expenses.
In addition to the compensation provided in Section
4, MCC shall pay or reimburse Marcus for all reasonable business
expenses actually incurred or paid by him during the Agreement Term
in the performance of his services hereunder upon presentation of
expense statements, vouchers, or such other supporting information
as MCC may customarily require of its senior executives.
6. Additional Benefits.
6.1 During the Agreement Term:
(a) Marcus shall be entitled to reasonable
annual vacation periods, not less than an aggregate of four weeks
in each calendar year, with full pay and benefits.
(b) Marcus shall be eligible for sick leave in
accordance with MCC's customary practice for senior executives.
(c) Marcus shall be entitled to participate in
any life insurance (term only), disability insurance, other
insurance, pension, profit-sharing, equity option, equity purchase
or other benefit plan of MCC now existing or hereafter adopted for
the benefit of the employees generally or of the executives of MCC.
(d) MCC will directly or indirectly maintain
its ownership of four fractional interests in aircraft operated by
Executive Jet Aviation, Inc. Such ownership entitles MCC to the
following aircraft usages: (i) 100 hours per year, G-IV SP or
equivalent, (ii) 100 hours per year, Citation X or equivalent,
(iii) 200 hours per year, Hawker 1000 or equivalent and (iv) 100
hours per year, Citation V or equivalent. Marcus will have
unlimited use of these aircraft subject to the foregoing time
limits for business or personal use; provided that Marcus' use
shall be limited to MCC business use after the appointment of the
Successor President. Any personal use will be additional income to
Marcus in accordance with the Internal Revenue Code of 1986, as
amended, and shall be in addition to, and not in lieu of, any other
compensation provided for herein.
(e) MCC shall furnish and bear (or reimburse
Marcus promptly upon request for) all business expenses of
operation of a car with a value of up to $100,000. Such car shall
be replaced with a new car every two years.
(f) MCC will continue to employ a personal
accountant and two secretaries for Marcus; provided that MCC will
only be obligated to employ one secretary and no accountant after
the appointment of the Successor President.
(g) MCC will provide Marcus with his current
office, at its current physical location, at 2911 Turtle Creek
Blvd., Suite 1300, Dallas, Texas 75219, or in the event MCC no
longer has offices at such location, a reasonably equivalent office
in a reasonably equivalent building.
(h) Marcus shall be entitled to receive such
additional benefits as may be granted to him from time to time by
the Board.
6.2 In addition, during the Agreement Term but only
prior to the appointment of the Successor President:
(a) MCC shall pay periodic fees and dues for
Marcus' membership in a country club selected by Marcus.
(b) MCC shall pay both initiation and periodic
fees and dues for Marcus' membership in any health or athletic club
and lunch club selected by Marcus.
6.3 On the Closing Date, MCC and Marcus will enter
into an Indemnification Agreement in the form of Exhibit A attached
hereto.
6.4 No payment or benefit made or provided under
this Agreement shall be deemed to constitute payment to Marcus, his
legal representatives or beneficiaries in lieu of, or in reduction
of, any benefit or payment under an insurance, pension, profit-sharing
or other benefit plan, and no payment under any such plan
shall reduce any payment or benefit due under this Agreement.
7. Certain Additional Payments by MCC.
7.1 Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment, distribution or transfer by MCC or any affiliate or any
other person or other event occurring with respect to Marcus and
MCC for Marcus' benefit (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement (including
pursuant to any of MCC's benefit plans)), determined without regard
to any additional payment required under this Section 7 (a
"Payment"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (and any
successor provision and any similar provision of state or local
income tax law) (collectively, "Section 4999"), or any interest or
penalty is incurred by Marcus with respect to such excise tax (such
excise tax, together with any such interest or penalty, hereinafter
collectively to be referred to as the "Excise Tax"), then Marcus
shall be entitled to receive or have paid to the Internal Revenue
Service or other appropriate authority (and any relevant state or
local authority) ("IRS") on his behalf an additional payment (a
"Gross-Up Payment") in an amount equal to the sum of (a) the Excise
Tax plus (b) all other taxes, penalties and interest (including any
excise tax imposed by Section 4999) paid or payable by Marcus on
account of the operation of this Section 7, such that, after
payment by Marcus of all such other taxes (including any interest
or penalty imposed with respect to such taxes) and any Excise Tax
imposed upon the Gross-Up Payment, Marcus shall be in the same
position as he would have been had no Excise Tax been imposed upon
the Payments.
7.1.1 Subject to the provisions of Section
7.3, all determinations required to be made under this Section 7,
including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment, and the assumptions to be utilized
in arriving at such determination, shall be made by KMPG Peat
Marwick, Dallas, Texas, or any other nationally recognized
accounting firm (the "Accounting Firm") that shall be MCC's outside
auditors at the time of such determination, which Accounting Firm
shall provide detailed supporting calculations to Marcus and MCC
within 15 business days of the receipt of notice from MCC or Marcus
that there has been a Payment that the person giving notice
believes may be subject to the Excise Tax, or such earlier time as
shall be requested by MCC. All fees and expenses of the Accounting
Firm shall be borne solely by MCC or Marcus. Any Gross-Up Payment,
as determined pursuant to this Section 7, shall be paid by MCC to
the IRS on Marcus' behalf within ten business days after the
receipt of the Accounting Firm's determination. If the Accounting
Firm shall determine that no Excise Tax is payable by Marcus, it
shall furnish to Marcus written advice that failure to report the
Excise Tax on Marcus' applicable federal income tax return would
not be reasonably likely to result in the imposition of a penalty
for fraud, negligence, or disregard of rules or regulations. Any
determination by the Accounting Firm shall be binding upon MCC and
Marcus in determining whether a Gross-Up Payment is required or the
amount thereof (subject to Section 7.1.2 and 7.2), in the absence
of material mathematical or legal error.
7.1.2 As a result of uncertainty in the
application of Section 4999 of the Internal Revenue Code of 1986,
as amended from time to time, and the regulations promulgated
thereunder (the "Code"), that may exist at the time of the initial
determination by the Accounting Firm, it may be possible that in
making the calculations required to be made hereunder, the
Accounting Firm shall determine that a Gross-Up Payment need not be
made that properly should be made ("Underpayment") or that a Gross-Up
Payment not properly needed to be made should be made
("Overpayment"). In the event that MCC shall exhaust or fail to
adequately pursue its remedies pursuant to Section 7.2, and Marcus
thereafter shall be required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment
that occurred, and MCC shall promptly pay the amount thereof to the
IRS on Marcus' behalf. In the event that the Accounting Firm shall
determine that an Overpayment was made, the parties will cooperate
in taking all necessary actions to make a claim for refund with
respect to such Overpayment.
7.1.3 Notwithstanding the foregoing,
payments received by Marcus in connection with the consummation of
the transactions provided for in the Purchase Agreement shall not
be covered by this Section 7.
7.2 Marcus shall give MCC written notice of any
claim by the IRS that, if successful, would require the payment by
MCC of a Gross-Up Payment. Marcus shall give such notice within
ten business days after Marcus shall be informed in writing of such
claim, provided that failure by Marcus to provide such notice shall
not result in a waiver or forfeiture of any rights of Marcus under
this Section 7 except to the extent of actual damages suffered by
MCC as a result of such failure; provided further that if such
failure prevents the contest of such claim, no payment shall be
required with respect to such claim by MCC under this Section 7.
Marcus shall not pay such claim prior to the expiration of 15 days
following the date on which Marcus gives such notice to MCC. If
MCC shall notify Marcus in writing prior to the expiration of such
15-day period that MCC desires to contest such claim, Marcus shall:
(a) give MCC any information reasonably
requested by MCC relating to such claim,
(b) take such action in connection with
contesting such claim as MCC shall reasonably request in writing
from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney selected
by MCC and reasonably acceptable to Marcus,
(c) cooperate in good faith with MCC's contest
of such claim, and
(d) permit MCC to control any proceedings to
the extent relating to such claim; provided, however, that MCC
shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Marcus harmless, on an after-tax
basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed in relation to such claim,
including all costs and expenses. Without limiting the foregoing
provisions of this Section 7.2, and to the extent its actions do
not unreasonably interfere or prejudice Marcus' disputes with the
IRS as to other issues, MCC shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the IRS in respect of such claim and may, at its
sole option, either direct Marcus to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and
Marcus agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as MCC shall determine; provided,
however, that if MCC shall direct Marcus to pay such claim and sue
for a refund, MCC shall advance the amount of such payment to
Marcus, on an interest-free basis, and shall indemnify and hold
Marcus harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed
income with respect to such advance, and further provided that any
extension of the statute of limitations relating to taxes for
Marcus' taxable year with respect to which such contested amount
shall be claimed to be due shall be limited solely to such claim.
Furthermore, MCC's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable
hereunder, and Marcus shall be entitled to settle or contest, as
the case may be, any other issue raised by the IRS to the extent
that such settlement or contest would not be reasonably likely to
have a material adverse effect on the issues with respect to the
Gross-Up Payment.
7.3 If, after Marcus' receipt of an amount advanced
by MCC pursuant to Section 7.2, Marcus shall become entitled to
receive any refund with respect to such claim, Marcus shall
promptly pay to MCC the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto).
If, after Marcus' receipt of an amount advanced by MCC pursuant to
Section 7.2, a determination shall be made that Marcus shall not be
entitled to any refund with respect to such claim, and MCC shall
not notify Marcus in writing of its intent to contest such denial
of refund prior to the expiration of 30 days after MCC shall
receive notice of such determination, then such advance shall be
forgiven and shall not be required to be repaid, and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
7.4 This Section 7 shall remain in full force and
effect following the termination of the Agreement Term for any
reason until the expiration of the statute of limitations on the
assessment of taxes applicable to Marcus for all periods in which
Marcus may incur a liability for taxes (including Excise Taxes),
interest or penalties arising out of the operation of this
Agreement.
8. Termination of Agreement for Cause.
MCC may terminate the Agreement Term "for cause"
upon 30 days' written notice, and all of MCC's obligations under
this Agreement shall terminate except (a) their obligation to pay
to Marcus amounts accrued, earned or required to be paid for
periods up to the date of termination, including, without
limitation, under Sections 4.1 and 4.2 hereof, (b) their
obligations under Section 7, (c) their obligations with respect to
vested options granted as described in Section 4.3, which vested
options shall remain exercisable for up to 90 days following the
date of termination, (d) their obligations under Section 6.3,
(e) their obligations under Section 13 and (f) their obligations
under Section 14.7. As used in this Agreement, the term "for
cause" shall mean and be limited to the following events:
(x) Marcus' conviction (which conviction, through lapse of time or
otherwise, is not subject to appeal) in a court of law of a felony
involving moral turpitude; or (y) Marcus' willful gross misconduct
or serious gross neglect of duties, which in either case has
resulted, or in all probability will result, in material economic
damage to MCC, but in no event shall an action constitute "cause"
pursuant to this clause (y) if Marcus believed in good faith that
such action or failure to act was in the best interest of MCC;
provided however, that the Agreement Term may not be terminated for
cause under the immediately preceding clause (y), unless Marcus
shall have first received written notice from the Board advising
him of the specific acts or omissions alleged to constitute a
failure or refusal to perform his duties, and such failure or
refusal to perform his duties continues after Marcus shall have had
a reasonable opportunity to correct the acts or omissions cited in
such notice. In no event shall the alleged mediocre or poor
performance of Marcus in his duties hereunder be deemed grounds for
termination of this Agreement for cause. Upon a termination for
cause, all of Marcus' obligations under this Agreement (other than
under Section 10) shall terminate.
9. Termination Other Than for Cause.
9.1 Death. If Marcus shall die during the
Agreement Term, the Agreement Term shall end, and all of MCC's
obligations hereunder shall terminate, except that (a) MCC shall
pay to Marcus' estate: (i) within 30 days after his death, the
Base Salary with respect to the then current year that would have
been payable to Marcus under Section 4.1 had the Agreement Term
ended on the last day of the month in which his death occurred;
(ii) at the same time as salary is paid to other employees of MCC,
the Base Salary that would have been payable to Marcus pursuant to
Section 4.1 had the Agreement Term continued uninterrupted for an
additional 12-month period immediately following the end of the
month in which Marcus' death occurred; (iii) as soon as is
practicable, but in no event later than March 31 of the year
immediately following the year in which Marcus' death occurs, the
Bonus that would have been payable to Marcus for the entire year in
which Marcus' death occurs (using actual results for such year and
assuming that the Agreement Term included the entire such year);
(iv) as soon as is practicable, but in no event later than March 31
of the second year immediately following the year in which Marcus'
death occurs, the Bonus that would have been payable to Marcus for
the entire year immediately following the year in which Marcus'
death occurs (using actual results for such year and assuming that
the Agreement Term included the entire such year), multiplied by a
fraction, the numerator of which is the number of full and partial
months in the Agreement Term in the year of Marcus' death and the
denominator of which is 12; (b) all the options previously granted
by MCC to Marcus shall be immediately vested and fully exercisable
and remain exercisable for up to 90 days following the date of
termination, (c) the obligations under Section 6.3 shall continue,
(d) the obligations under Section 7 shall continue, (e) the
obligations under Section 13 shall continue and (f) the obligations
under Section 14.7 shall continue.
9.2 Disability. If, during the Agreement Term,
Marcus shall become disabled so that he shall be unable
substantially to perform his services hereunder (a) for a period of
six consecutive months or (b) for an aggregate of six months within
any period of 12 consecutive months (a "Disability") then the Board
may, at any time during the continuance of such Disability,
terminate the Agreement Term under this Section 9.2 on 30 days'
prior written notice to Marcus. After such termination, Marcus
shall have no further obligation to perform services for MCC
pursuant to Section 2, and all of MCC's obligations under this
Agreement shall terminate, except that (a) MCC shall pay to Marcus,
(i) within 30 days after such termination, the Base Salary with
respect to the then current year that would have been payable to
Marcus under Section 4.1 had the Agreement Term ended on the last
day of the month in which the Agreement Term was terminated
pursuant to this Section 9.2; (ii) at the same time as salary is
paid to other Marcus employees of MCC, the Base Salary that would
have been payable to Marcus pursuant to Section 4.1 had the
Agreement Term continued uninterrupted for an additional 12-month
period immediately following the end of the month in which the
Agreement Term was terminated pursuant to this Section 9.2; (iii)
as soon as is practicable, but in no event later than March 31 of
the year immediately following the year in which the Agreement Term
was terminated pursuant to this Section 9.2, the Bonus that would
have been payable to Marcus for the entire year in which the
Agreement Term was terminated pursuant to this Section 9.2 (using
actual results for such year and assuming the Agreement Term
included the entire such year); (iv) as soon as is practicable, but
in no event later than March 31 of the second year immediately
following the year in which the Agreement Term was terminated
pursuant to this Section 9.2, the Bonus that would have been
payable to Marcus for the entire year immediately following the
year in which the Agreement Term was terminated pursuant to this
Section 9.2 (using actual results for such year and assuming that
Marcus had worked the entire such year), multiplied by a fraction,
the numerator of which is the number of full and partial months in
the Agreement Term in the year in which the Agreement Term was
terminated pursuant to this Section 9.2 and the denominator of
which is 12; (b) all the options previously granted by either MCC
to Marcus shall be immediately vested and fully exercisable and
remain exercisable for up to 90 days following the date of
termination, (c) the obligations under Section 6.3 shall continue,
(d) the obligations under Section 7 shall continue, (e) the
obligations under Section 13 shall continue and (f) the obligations
under Section 14.7 shall continue. Marcus shall have no obligation
to accept any employment offered to him by others in order to
minimize, or to be set off against, the amounts to which he is
entitled pursuant to this Section 9.2; provided, however, that (x)
if Marcus shall accept employment offered to him by others during
the period referred to in clause (a)(ii) above, the Base Salary
referred to in clause (a) (ii) above shall be reduced by the
amounts received by Marcus with respect to such employment during
the period of time referred to in such clause(a) (ii), and (y) if
Marcus shall receive payments in respect of disability insurance
provided pursuant to Section 6.1(c), the Base Salary referred to in
clause (a) (ii) above shall be reduced by the amounts received by
Marcus in respect of such disability insurance for the period of
time referred to in such clause (a)(ii). MCC shall not interpose
any defense against payment of such amounts based on refusal of
Marcus to seek or accept other employment.
9.3 Termination by Marcus.
9.3.1 Marcus may (but shall not be
obligated to) terminate the Agreement Term on 60 days' prior
written notice given at any time within 180 days following a Change
in Control (as defined below) or, if during the Agreement Term, (a)
Marcus shall not be elected (and continued) as a member of the
Board, as Chairman of MCC, and prior to the appointment of the
Successor President, as President and Chief Executive Officer of
MCC, or Marcus shall be removed from any such Board or office; or
(b) MCC shall fail to cure a breach of this Agreement within a
reasonable period of time after notice not to exceed 30 days
(provided, however, if the breach is unintentional and not
susceptible of cure within 30 days but is susceptible of cure
within an additional 30 days, and if MCC in good faith has made
material efforts to cure such breach within such 30-day period,
MCC, upon written notice to Marcus, shall have an additional period
of time to cure such breach, but not in any event to exceed an
additional 30 days); or (c) there shall have been a material
diminution in the authority or responsibilities contemplated in
Section 2; or (d) any benefit to which Marcus is entitled pursuant
to Section 6.1 or 6.2 shall have been materially reduced without an
effective economic substitute therefor being provided to Marcus; or
(e) Paul Allen or an entity as to which he has effective control
shall own or operate cable television systems outside of MCC and
its subsidiaries; or (f) Marcus shall be required to perform his
principal services under this Agreement at a place other than that
set forth in Section 3; or (g) MCC shall fail to comply with the
provisions of Section 14.4 hereof relating to specific assumptions
of the duties and obligations of MCC under this Agreement, unless
such failure is solely due to actions or failure to take actions on
the part of Marcus. Such right to terminate the Agreement Term
shall be Marcus' exclusive remedy in the event of the occurrence of
any of the events described in this Section 9.3.1. For purposes of
clause (c) of the preceding sentence, there shall be deemed to have
been a material diminution in the authority or responsibilities
contemplated in Section 2 if there shall occur any demotion or any
material reduction in the scope, level or nature of Marcus'
employment hereunder, or of the duties contemplated in Section 2,
or if Marcus is assigned duties inconsistent with Marcus' position
hereunder. For purposes of this Agreement, a "Change in Control"
shall be deemed to have occurred if any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act) (a "Person"), other than Paul Allen or Marcus, acquires
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly of 50% or more of
the voting power of the outstanding securities of MCC or its
ultimate general partner or otherwise controls the selection of a
majority of the members of the Board.
9.3.2 If Marcus shall elect to terminate
the Agreement Term upon the occurrence of any event described in
Section 9.3.1, or if MCC shall terminate the Agreement Term other
than for cause, death or Disability pursuant to Sections 8 and 9
hereof, then Marcus shall have no further obligation to perform
services for MCC pursuant to Section 2, but he shall be entitled to
receive from MCC, within 30 days after the date of termination of
the Agreement Term, in lieu of the amounts that would otherwise be
payable hereunder, a lump sum in cash of an amount equal to the sum
of (a) the aggregate of Base Salary that would have been payable
each year to Marcus pursuant to Section 4.1 for the period
beginning on the date of such termination and running through the
day on which the Agreement Term would have ended (as extended, if
theretofore extended) if not terminated pursuant to this Section 9
but in no event for a period of less than two years (the "Cutoff
Date"), and (b) an amount equal to the average Bonus earned or paid
under Section 4.2 in the previous three full calendar years of MCC
immediately preceding termination of employment, multiplied by the
number of whole and partial years (rounded to the nearest 100th
(.01)) remaining until the Cutoff Date. In addition, until the
Cutoff Date, MCC shall maintain, at its expense, all insurance
coverages and medical and health benefits in respect of Marcus that
shall have been in effect with respect to him prior to the
occurrence of the event entitling Marcus to terminate this
Agreement. Further, (a) all of the options previously granted by
MCC to Marcus shall be immediately vested and fully exercisable and
remain exercisable for up to 90 days following the date of
termination, (b) the obligations under Section 6.3 shall continue,
(c) the obligations under Section 7 shall continue, (d) the
obligations under Section 13 shall continue and (e) the obligations
under Section 14.7 shall continue.
10. Protection of Confidential Information.
10.1 Marcus agrees that, in view of the fact that
his work for MCC will bring him into close contact with many
confidential affairs of MCC not readily available to the public, he
will not disclose during the Agreement Term and for a period of
three years thereafter, to any person, firm, corporation,
partnership or other entity whatsoever (except MCC or any of their
subsidiaries or affiliates, or any officer, director, stockholder,
partner, associate, employee, agent or representative thereof) any
confidential information secrets of MCC which may come into his
possession during the Agreement Term (the "Confidential
Materials"). The term "Confidential Materials" does not include
information which (a) at the time of disclosure or thereafter is
generally available to or known by the public otherwise than by
reason of Marcus' disclosure thereof in violation of this
Agreement, (b) is, was or becomes available to Marcus on a
nonconfidential basis from a source other than MCC, provided that
Marcus has no reason to believe that such source is or was bound by
a confidentiality agreement with MCC, (c) has been made available,
or is made available, on a non-confidential basis to a third party
by MCC, by an individual authorized to do so, or (d) is known by
Marcus prior to its disclosure to Marcus. Marcus may use and
disclose Confidential Materials to the extent necessary to assert
any right or defend against any claim arising under this Agreement
or pertaining to Confidential Materials or their use, to the extent
necessary to comply with any applicable statute, constitution,
treaty, rule, regulation, ordinance or order, whether of the United
States, any state thereof, or any other jurisdiction applicable to
Marcus, or if Marcus receives a request to disclose all or any part
of the information contained in the Confidential Materials under
the terms of a subpoena, order, civil investigative demand or
similar process issued by a court of competent jurisdiction or by
a governmental body or agency, whether of the United States or any
state thereof, or any other jurisdiction applicable to Marcus.
10.2 During the Agreement Term, Marcus shall not be
employed by, or own an equity interest in, any entity that owns or
operates any cable television systems or otherwise provides multi-
channel video service or two way return interactive high speed data
service in the United States. Notwithstanding anything else
contained in this Section 10.2, Marcus may own, for investment
purposes only, up to ten percent of the stock of any publicly-held
corporation whose stock is either listed on a national stock
exchange or on the Nasdaq National Market.
10.3 During the Agreement Term, Marcus shall not
endeavor to entice away from MCC or any of its subsidiaries any
employee of MCC or any of its subsidiaries.
10.4 The parties hereto acknowledge that a breach by
Marcus of the terms of this Section 10 will cause MCC irreparable
injury. Marcus agrees that MCC is entitled to injunctive and other
equitable relief to prevent a breach or threatened breach of this
Section 10, which shall be in addition to any other rights or
remedies to which MCC may be entitled.
11. Notices.
All notices, requests, consents and other
communications, required or permitted to be given hereunder, shall
be in writing and shall be deemed to have been duly given (a) if
delivered personally, when delivered; (b) if delivered by overnight
carrier, on the first business day following such delivery; (c) if
delivered by registered or certified mail, return receipt
requested, on the third business day after having been mailed. In
any case, each such notice, request, or consent or other
communication shall be addressed as follows or to such other
address as either party shall designate by notice in writing to the
other in accordance herewith.
11.1 If to MCC:
Vulcan Cable, Inc.
110 110th Avenue Northeast
Bellevue, Washington 98004
Attention: William D. Savoy
11.2 If to Marcus:
Jeffrey A. Marcus
6801 Turtle Creek Blvd.
Dallas, Texas 75205-1249
12. Conversion to Consulting Agreement. In the event
that due to other business commitments of Marcus, otherwise
permitted by this Agreement, it is determined that Marcus'
continuation as an employee of MCC will violate the rules and
regulations of the Federal Communications Commission, MCC and Buyer
agree that this Agreement shall be converted to a Consulting
Agreement which will, as closely as possible, provide for the same
relative rights and obligations of the parties hereto.
13. Put Right.
13.1 Upon the occurrence of a Trigger Event (as
defined below), Marcus shall be entitled to require MCC to
repurchase all equity options and equity issued pursuant to
exercise of such equity options (the "Subject Securities") then
held by Marcus or, if applicable, his estate, for their then fair
market value. The "fair market value" of a security shall be the
closing price on the exchange or market on which such security is
traded or if such security is not so traded, the price which is
mutually agreed upon by the parties or determined by an independent
appraiser selected by the parties and paid for by MCC. For
purposes of this Section, the fair market value of equity options
will be the fair market value of the underlying security less the
then applicable strike price of the equity option. A "Trigger
Event" means the termination of the original term of the Agreement
Term for any reason.
13.2 If Marcus elects to exercise his put right
pursuant to Section 13.1, MCC shall repurchase the Subject
Securities not less than 30 nor more than 60 days after it has been
notified by Marcus of such election in accordance with Section 11.
14. General.
14.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Texas applicable to agreements made and to be performed entirely in
Texas.
14.2 The Section headings contained herein are for
reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
14.3 This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties.
14.4 This Agreement and the benefits hereunder are
personal to MCC and are not assignable or transferable, nor may the
services to be performed hereunder be assigned by MCC to any
person, firm, corporation or other entity; provided, however, that
this Agreement and the benefits hereunder may be assigned by MCC to
any corporation or other entity acquiring all or substantially all
of the assets of MCC or to any corporation or other entity into
which MCC may be merged or consolidated, and this Agreement and the
benefits hereunder will automatically be deemed assigned to any
such corporation or other entity, subject, however, to Marcus'
right to terminate the Agreement Term to the extent provided in
Section 9.3. In the event of any assignment of this Agreement to
any corporation or other entity acquiring all or substantially all
of the assets of MCC or to any other corporation or other entity
into which MCC may be merged or consolidated, the responsibilities
and duties assigned to Marcus by such successor corporation or
other entity shall be the responsibilities and duties of, and
compatible with the status of, Marcus' responsibilities, duties and
status with MCC. MCC shall require that any successor to MCC agree
to assume in writing the obligations of MCC pursuant to this
Agreement and the failure to secure such assumption on or prior to
the closing of any Change in Control shall constitute a breach of
MCC's duties under this Agreement and permit termination of the
Agreement Term by Marcus pursuant to Section 9.3.1.
14.5 Whenever this Agreement provides for any
payment to Marcus' estate, such payment may be made instead to such
beneficiary or beneficiaries as Marcus may have designated by
written notice to MCC; provided, however, that MCC shall not have
any liability to Marcus' estate for the payment of estate taxes,
local inheritance taxes or otherwise, provided it has actually made
payment to such beneficiary or beneficiaries. Marcus shall have
the right to revoke any such designation and to redesignate a
beneficiary or beneficiaries by written notice to MCC to such
effect.
14.6 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by all of the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of either party at
any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the
same. No waiver by any party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this
Agreement.
14.7 If any dispute or disagreement arising
hereunder or related hereto shall result in legal action between
MCC and Marcus, the prevailing party shall be entitled to recover
from the other party any reasonable expenses for attorney's fees
and disbursements incurred by him or it in connection with its good
faith maintenance or defense of such action, on an after-tax basis.
14.8 Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.,
General Partner
By: MARCUS CABLE PROPERTIES,
INC., General Partner
By:/s/ Richard A. B.Gleiner
Richard A. B. Gleiner
Senior Vice President and
General Counsel
JEFFREY A. MARCUS
/s/ Jeffrey A. Marcus
EXHIBIT A
MARCUS CABLE COMPANY, L.P.
INDEMNIFICATION AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of
__________, 1998, between Marcus Cable Company, L.P., a Delaware
limited partnership (the "Company"), and ____________________
("Indemnitee").
Background Statement and Recitals
Highly competent and experienced persons are becoming
more reluctant to serve companies as officers, directors or in
other capacities unless they are provided with adequate protection
through insurance and adequate indemnification against inordinate
risks of claims and actions against them arising out of their
service to and activities on behalf of the company.
The Board of Directors (the "Board") of Marcus Cable
Properties, Inc., a Delaware corporation (the general partner of
Marcus Cable Properties, L.P., a Delaware limited partnership,
which in turn is the general partner of the Company) (the "General
Partner") has determined that the inability of the Company to
attract and retain such persons would be detrimental to the best
interests of the Company and its investors and that the Company
should act to assure such persons that there will be increased
certainty of such protection in the future.
The Board has also determined that it is reasonable,
prudent and necessary for the Company, in addition to purchasing
and maintaining directors' and officers' liability insurance (or
otherwise providing for adequate arrangements of self-insurance),
contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve
or continue to serve the Company free from undue concern that they
will not be so indemnified.
Pursuant to that certain Employment Agreement (the
"Employment Agreement") between the Company and _________________,
dated as of ____________, 1998, Indemnitee is willing to serve,
continue to serve and to take on additional service for or on
behalf of the Company on the condition that he be so indemnified.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE XV
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have
the following respective meanings:
"Change in Control" means a change in control of the
Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limiting the
generality of the foregoing, a Change in Control shall be deemed to
have occurred (irrespective of the applicability of the initial
clause of this definition) if at any time any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act, but
excluding (a) Paul Allen, (b) any employee benefit plan of the
Company or of any subsidiary of the Company, and (c) any entity
organized, appointed or established by the Company pursuant to the
terms of any such plan) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's or the General
Partner's then outstanding securities or has the ability to appoint
a majority of the members of the Board.
"Claim" means an actual or threatened claim or request
for relief.
"Corporate Status" means the status of a person who is or
was a director, nominee for director, officer, employee, agent or
fiduciary of the Company or the General Partner (including any
predecessors to the Company or the General Partner), or of any
other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the Company or the
General Partner.
"Disinterested Director," with respect to any request by
Indemnitee for indemnification hereunder, means a director of the
General Partner who neither is nor was a party to the Proceeding or
subject to a Claim, issue or matter in respect of which
indemnification is sought by Indemnitee.
"DRULP" means the Delaware Revised Uniform Limited
Partnership Act and any successor statute thereto as either of them
may be amended from time to time.
"Expenses" means all attorneys' fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or
participating in (including on appeal), a Proceeding.
"Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and
partnership law, and neither contemporaneously is, nor in the five
years theretofore has been, retained to represent (a) the Company,
the General Partner or Indemnitee in any matter material to either
such party, (b) any other party to the Proceeding giving rise to a
claim for indemnification hereunder or (c) the beneficial owner,
directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's or the
General Partner's then outstanding voting securities (other than,
in each such case, with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements). Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company, the General Partner or Indemnitee in an action
to determine Indemnitee's rights under this Agreement.
"person" shall have the meaning ascribed to such term in
Sections 13(d) and 14(d) of the Exchange Act.
"Proceeding" means any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative and whether or not based
upon events occurring, or actions taken, before the date hereof
(except any of the foregoing initiated by Indemnitee pursuant to
Article VI or Section 7.8 to enforce his rights under this
Agreement), and any inquiry or investigation that could lead to,
and any appeal in or related to, any such action, suit,
arbitration, alternative dispute resolution mechanism, hearing or
proceeding.
ARTICLE XVI
SERVICES BY INDEMNITEE
Section 16.1 Services. Indemnitee agrees to serve, or
continue to serve, the Company and the General Partner pursuant to
the Employment Agreement and, as the Company has requested or may
request from time to time, as a director, officer, employee, agent
or fiduciary of another corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other
enterprise. Indemnitee and the Company each acknowledge that they
have entered into this Agreement as a means of inducing Indemnitee
to serve, or continue to serve, the Company and the General Partner
in such capacities. Indemnitee may at any time and for any reason
resign from such position or positions (subject to the terms and
conditions of the Employment Agreement, any other contractual
obligation or any obligation imposed by operation of law). The
Company shall have no obligation under this Agreement to continue
Indemnitee in any such position or positions.
ARTICLE XVII
INDEMNIFICATION
Section 17.1 General. The Company shall indemnify, and
advance Expenses to, Indemnitee to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit.
The rights of Indemnitee provided under the preceding sentence
shall include, but shall not be limited to, the right to be
indemnified and to have Expenses advanced in all Proceedings to the
fullest extent permitted by Section 17-108 of the DRULP. The
provisions set forth in this Agreement are provided in addition to
and as a means of furtherance and implementation of, and not in
limitation of, the obligations expressed in this Article III.
Section 17.2 Proceedings Other Than by or in Right of
the Company. Indemnitee shall be entitled to indemnification
pursuant to this Section 3.2 if, by reason of his Corporate Status,
he was, is or is threatened to be made, a party to any Proceeding,
other than a Proceeding by or in the right of the Company.
Pursuant to this Section 3.2, the Company shall indemnify
Indemnitee against Expenses, judgments, penalties, fines and
amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with any such Expenses,
judgments, penalties, fines and amounts paid in settlement)
actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any Claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful. Nothing in
this Section 3.2 shall limit the benefits of Section 3.1 or any
other Section hereunder.
Section 17.3 Proceedings by or in Right of the Company.
Indemnitee shall be entitled to indemnification pursuant to this
Section 3.3 if, by reason of his Corporate Status, he was, is or is
threatened to be made, a party to any Proceeding brought by or in
the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3.3, the Company shall indemnify
Indemnitee against Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any Claim,
issue or matter therein, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of
any Claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if
applicable law prohibits such indemnification; provided, however,
that, if applicable law so permits, indemnification against such
Expenses shall nevertheless be made by the Company in such event if
and only to the extent that the Court of Chancery of the State of
Delaware or other court of competent jurisdiction (the "Court"), or
the court in which such Proceeding shall have been brought or is
pending, shall so determine. Nothing in this Section 3.3 shall
limit the benefits of Section 3.1 or any other Section hereunder.
ARTICLE XVIII
EXPENSES
Section 18.1 Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this
Agreement to the contrary (except as set forth in Section 7.2(c) or
7.6), and without a requirement for any determination described in
Section 5.2, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with any Proceeding to which Indemnitee was or is a
party by reason of his Corporate Status and in which Indemnitee is
successful, on the merits or otherwise. If Indemnitee is not
wholly successful, on the merits or otherwise, in a Proceeding but
is successful, on the merits or otherwise, as to any Claim, issue
or matter in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf relating to each successfully resolved Claim,
issue or matter. For purposes of this Section 4.1 and without
limitation, the termination of a Claim, issue or matter in a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such Claim, issue or matter.
Section 18.2 Expenses of a Witness or Non-Party.
Notwithstanding any other provision of this Agreement to the
contrary, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness or otherwise participates in any
Proceeding at a time when he is not a party in the Proceeding, the
Company shall indemnify him against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith.
Section 18.3 Advancement of Expenses. The Company
shall pay all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding, whether brought by or
in the right of the Company or otherwise, in advance of any
determination with respect to entitlement to indemnification
pursuant to Article V within 15 days after the receipt by the
General Partner of a written request from Indemnitee requesting
such payment or payments from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by
Indemnitee. Indemnitee hereby undertakes and agrees that he will
reimburse and repay the Company for any Expenses so advanced to the
extent that it shall ultimately be determined (in a final
adjudication by a court from which there is no further right of
appeal or in a final adjudication of an arbitration pursuant to
Section 6.1 if Indemnitee elects to seek such arbitration) that
Indemnitee is not entitled to be indemnified by the Company against
such Expenses.
ARTICLE XIX
PROCEDURE FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION
Section 19.1 Request by Indemnitee. To obtain
indemnification under this Agreement, Indemnitee shall submit to
the General Partner a written request, including therein or
therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to
indemnification. The Secretary or an Assistant Secretary of the
General Partner shall, promptly upon receipt of such a request for
indemnification, advise the members of the Board in writing that
Indemnitee has requested indemnification.
Section 19.2 Determination of Request. Upon written
request by Indemnitee for indemnification pursuant to Section 5.1,
a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific case
as follows:
(a) If a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee unless Indemnitee
shall request that such determination be made by the
Disinterested Directors, in which case in the manner provided
for in clause (i) of paragraph (b) below;
(b) If a Change in Control shall not have occurred,
(i) by a majority vote of the Disinterested Directors, even
though less than a quorum of the Board, or (ii) if there are
no Disinterested Directors, or if such Disinterested Directors
so direct, by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to the Indemnitee,
or (iii) if Indemnitee and the Company mutually agree, by a
majority vote of the disinterested stockholders of the General
Partner; or
(c) As provided in Section 5.4(b).
If it is so determined that Indemnitee is entitled to
indemnification hereunder, payment to Indemnitee shall be made
within 15 days after such determination. Indemnitee shall
cooperate with the person or persons making such determination with
respect to Indemnitee's entitlement to indemnification, including
providing to such person upon reasonable advance request any
documentation or information that is not privileged or otherwise
protected from disclosure and that is reasonably available to
Indemnitee and reasonably necessary for such determination. Any
costs or expenses (including attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person or persons
making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement
to indemnification), and the Company shall indemnify and hold
harmless Indemnitee therefrom.
Section 19.3 Independent Counsel. If a Change in
Control shall not have occurred and the determination of
entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by (a) a
majority vote of the Disinterested Directors, even though less than
a quorum of the Board or (b) if there are no Disinterested
Directors, by a majority vote of the Board, and the General Partner
shall give written notice to Indemnitee, within 10 days after
receipt by the General Partner of Indemnitee's request for
indemnification, specifying the identity and address of the
Independent Counsel so selected. If a Change in Control shall have
occurred and the determination of entitlement to indemnification is
to be made by Independent Counsel, the Independent Counsel shall be
selected by Indemnitee, and Indemnitee shall give written notice to
the General Partner, within 10 days after submission of
Indemnitee's request for indemnification, specifying the identity
and address of the Independent Counsel so selected (unless
Indemnitee shall request that such selection be made by the
Disinterested Directors, in which event the General Partner shall
give written notice to Indemnitee, within 10 days after receipt of
Indemnitee's request for the Disinterested Directors to make such
selection, specifying the identity and address of the Independent
Counsel so selected). In either event, (i) such notice to
Indemnitee or the General Partner, as the case may be, shall be
accompanied by a written affirmation of the Independent Counsel so
selected that it satisfies the requirements of the definition of
"Independent Counsel" in Article I and that it agrees to serve in
such capacity and (ii) Indemnitee or the General Partner, as the
case may be, may, within seven days after such written notice of
selection shall have been given, deliver to the General Partner or
to Indemnitee, as the case may be, a written objection to such
selection. Any objection to selection of Independent Counsel
pursuant to this Section 5.3 may be asserted only on the ground
that the Independent Counsel so selected does not meet the
requirements of the definition of "Independent Counsel" in
Article I, and the objection shall set forth with particularity the
factual basis of such assertion. If such written objection is
timely made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until the Court has determined that
such objection is without merit. In the event of a timely written
objection to a choice of Independent Counsel, the party originally
selecting the Independent Counsel shall have seven days to make an
alternate selection of Independent Counsel and to give written
notice of such selection to the other party, after which time such
other party shall have five days to make a written objection to
such alternate selection. If, within 30 days after submission of
Indemnitee's request for indemnification pursuant to Section 5.1,
no Independent Counsel shall have been selected and not objected
to, either the General Partner or Indemnitee may petition the Court
for resolution of any objection that shall have been made by the
Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection
is so resolved or the person so appointed shall act as Independent
Counsel under Section 5.2. The Company shall pay any and all
reasonable fees and expenses incurred by such Independent Counsel
in connection with acting pursuant to Section 5.2, and the Company
shall pay all reasonable fees and expenses incident to the
procedures of this Section 5.3, regardless of the manner in which
such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to
Section 6.1, Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 19.4 Presumptions and Effect of Certain
Proceedings.
(a) Indemnitee shall be presumed to be entitled to
indemnification under this Agreement upon submission of a
request for indemnification pursuant to Section 5.1, and the
Company shall have the burden of proof in overcoming that
presumption in reaching a determination contrary to that
presumption. Such presumption shall be used by Independent
Counsel (or other person or persons determining entitlement to
indemnification) as a basis for a determination of entitlement
to indemnification unless the Company provides information
sufficient to overcome such presumption by clear and
convincing evidence.
(b) If the person or persons empowered or selected
under this Article V to determine whether Indemnitee is
entitled to indemnification shall not have made a
determination within 60 days after receipt by the General
Partner of Indemnitee's request for indemnification, the
requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a knowing
misstatement by Indemnitee of a material fact, or knowing
omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with
Indemnitee's request for indemnification, or (ii) a
prohibition of such indemnification under applicable law;
provided, however, that such 60-day period may be extended for
a reasonable time, not to exceed an additional 30 days, if the
person making the determination with respect to entitlement to
indemnification in good faith requires such additional time
for the obtaining or evaluating of documentation and/or
information relating to such determination; provided further,
that the 60-day limitation set forth in this Section 5.4(b)
shall not apply and such period shall be extended as necessary
(i) if within 30 days after receipt by the General Partner of
Indemnitee's request for indemnification under Section 5.1
Indemnitee and the General Partner have agreed, and the Board
has resolved, to submit such determination to the stockholders
of the General Partner pursuant to Section 5.2(b) for their
consideration at a special meeting of stockholders for the
purpose of making such determination to be held within 60 days
after such agreement and such determination is made thereat,
or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel, in which case the
applicable period shall be as set forth in clause (c) of
Section 6.1.
(c) The termination of any Proceeding or of any
Claim, issue or matter by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea
of nolo contendere or its equivalent, shall not by itself
adversely affect the rights of Indemnitee to indemnification
or create a presumption that Indemnitee did not act in good
faith or in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company or, with
respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.
Indemnitee shall be deemed to have been found liable in
respect of any Claim, issue or matter only after he shall have
been so adjudged by the Court after exhaustion of all appeals
therefrom.
ARTICLE XX
CERTAIN REMEDIES OF INDEMNITEE
Section 20.1 Indemnitee Entitled to Adjudication in an
Appropriate Court. If (a) a determination is made pursuant to
Article V that Indemnitee is not entitled to indemnification under
this Agreement, (b) there has been any failure by the Company to
make timely payment or advancement of any amounts due hereunder, or
(c) the determination of entitlement to indemnification is to be
made by Independent Counsel and such determination shall not have
been made and delivered in a written opinion within 90 days after
the latest of (i) such Independent Counsel's being appointed,
(ii) the overruling by the Court of objections to such counsel's
selection or (iii) expiration of all periods for the General
Partner or Indemnitee to object to such counsel's selection,
Indemnitee shall be entitled to commence an action seeking an
adjudication in the Court of his entitlement to such
indemnification or advancement of Expenses. Alternatively,
Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the commercial
arbitration rules of the American Arbitration Association.
Indemnitee shall commence such action seeking an adjudication or an
award in arbitration within 180 days following the date on which
Indemnitee first has the right to commence such action pursuant to
this Section 6.1, or such right shall expire. Neither the Company
nor the General Partner shall oppose Indemnitee's right to seek any
such adjudication or award in arbitration.
Section 20.2 Adverse Determination Not to Affect any
Judicial Proceeding. If a determination shall have been made
pursuant to Article V that Indemnitee is not entitled to
indemnification under this Agreement, any judicial proceeding or
arbitration commenced pursuant to this Article VI shall be
conducted in all respects as a de novo trial or arbitration on the
merits, and Indemnitee shall not be prejudiced by reason of such
initial adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Article VI, Indemnitee shall
be presumed to be entitled to indemnification or advancement of
Expenses, as the case may be, under this Agreement and the Company
shall have the burden of proof in overcoming such presumption and
to show by clear and convincing evidence that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case
may be.
Section 20.3 Company Bound by Determination Favorable
to Indemnitee in any Judicial Proceeding or Arbitration. If a
determination shall have been made or deemed to have been made
pursuant to Article V that Indemnitee is entitled to
indemnification, the Company shall be irrevocably bound by such
determination in any judicial proceeding or arbitration commenced
pursuant to this Article VI and shall be precluded from asserting
that such determination has not been made or that the procedure by
which such determination was made is not valid, binding and
enforceable, in each such case absent (a) a knowing misstatement by
Indemnitee of a material fact, or a knowing omission of a material
fact necessary to make a statement by Indemnitee not materially
misleading, in connection with Indemnitee's request for
indemnification or (b) a prohibition of such indemnification under
applicable law.
Section 20.4 Company Bound by the Agreement. The
Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Article VI
that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such
court or before any such arbitrator that the Company is bound by
all the provisions of this Agreement.
Section 20.5 Indemnitee Entitled to Expenses of
Judicial Proceeding. If Indemnitee seeks a judicial adjudication
of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and the Company shall
indemnify Indemnitee against, any and all expenses (of the types
described in the definition of Expenses in Article I) actually and
reasonably incurred by him in such judicial adjudication or
arbitration but only if Indemnitee prevails therein. If it shall
be determined in such judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses or other benefit sought,
the expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be equitably allocated
between the Company and Indemnitee. Notwithstanding the
foregoing, if a Change in Control shall have occurred, Indemnitee
shall be entitled to indemnification under this Section 6.5
regardless of whether Indemnitee ultimately prevails in such
judicial adjudication or arbitration.
ARTICLE XXI
MISCELLANEOUS
Section 21.1 Non-Exclusivity.
(a) The rights of Indemnitee to receive
indemnification and advancement of Expenses under this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable
law, the Agreement of Limited Partnership of the Company, any
other agreement, vote of stockholders or resolution of
directors of the General Partner, or otherwise. No amendment
or alteration of the Agreement of Limited Partnership of the
Company or any provision thereof shall adversely affect
Indemnitee's rights hereunder and such rights shall be in
addition to any rights Indemnitee may have under the Company's
Agreement of Limited Partnership and the DRULP or otherwise.
To the extent that there is a change in the DRULP or other
applicable law (whether by statute or judicial decision) that
allows greater indemnification by agreement than would be
afforded currently under the Company's Agreement of Limited
Partnership and this Agreement, it is the intent of the
parties hereto that the Indemnitee shall enjoy by virtue of
this Agreement the greater benefit so afforded by such change.
(b) The Company shall not cause the Agreement of
Limited Partnership of the Company to be amended in a manner
that adversely affects Indemnitee's rights to indemnification
thereunder existing as of the date hereof.
Section 21.2 Insurance and Subrogation.
(a) To the extent the Company maintains an
insurance policy or policies providing liability insurance for
directors, officers, employees, agents or fiduciaries of the
Company or of any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan
or other enterprise that such person serves at the request of
the Company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director,
officer, employee, agent or fiduciary under such policy or
policies.
(b) In the event of any payment by the Company
under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of
such documents as are necessary to enable the Company to bring
suit to enforce such rights.
(c) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee
has otherwise actually received such payment under the
Company's Agreement of Limited Partnership or any insurance
policy, contract, agreement or otherwise.
Section 21.3 Certain Settlement Provisions. The
Company shall have no obligation to indemnify Indemnitee under this
Agreement for amounts paid in settlement of a Proceeding or Claim
without the Company's prior written consent. The Company shall not
settle any Proceeding or Claim in any manner that would impose any
fine or other obligation on Indemnitee without Indemnitee's prior
written consent. Neither the Company nor Indemnitee shall
unreasonably withhold their consent to any proposed settlement.
Section 21.4 Duration of Agreement. This Agreement
shall continue for so long as Indemnitee serves as an officer,
employee, agent or fiduciary of the Company or, at the request of
the Company, as a director, nominee for director, officer,
employee, agent or fiduciary of another corporation, partnership,
limited liability company, joint venture, trust, employee benefit
plan or other enterprise, and thereafter shall survive until and
terminate upon the latest to occur of (a) the expiration of 10
years after the latest date that Indemnitee shall have ceased to
serve in any such capacity; (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to Article VI
relating thereto; or (c) the expiration of all statutes of
limitation applicable to possible Claims arising out of
Indemnitee's Corporate Status.
Section 21.5 Notice by Each Party. Indemnitee shall
promptly notify the Company and the General Partner in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document or communication relating
to any Proceeding or Claim for which Indemnitee may be entitled to
indemnification or advancement of Expenses hereunder; provided,
however, that any failure of Indemnitee to so notify the Company or
the General Partner shall not adversely affect Indemnitee's rights
under this Agreement except to the extent the Company or the
General Partner shall have been materially prejudiced as a direct
result of such failure. The Company or General Partner shall
notify promptly Indemnitee in writing, as to the pendency of any
Proceeding or Claim that may involve a claim against the Indemnitee
for which Indemnitee may be entitled to indemnification or
advancement of Expenses hereunder.
Section 21.6 Certain Persons Not Entitled to
Indemnification. Notwithstanding any other provision of this
Agreement to the contrary, Indemnitee shall not be entitled to
indemnification or advancement of Expenses hereunder with respect
to any Proceeding or any Claim, issue or matter therein, brought or
made by Indemnitee against the Company or any affiliate of the
Company, except as specifically provided in Article V or
Article VI.
Section 21.7 Indemnification for Negligence, Gross
Negligence, etc. Without limiting the generality of any other
provision hereunder, it is the express intent of this Agreement
that Indemnitee be indemnified and Expenses be advanced regardless
of Indemnitee's acts of negligence, gross negligence or intentional
or willful misconduct to the extent that indemnification and
advancement of Expenses is allowed pursuant to the terms of this
Agreement and under applicable law.
Section 21.8 Enforcement. The Company agrees that its
execution of this Agreement shall constitute a stipulation by which
it shall be irrevocably bound in any court or arbitration in which
a proceeding by Indemnitee for enforcement of his rights hereunder
shall have been commenced, continued or appealed, that its
obligations set forth in this Agreement are unique and special, and
that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to
Indemnitee, for which a remedy at law will be inadequate. As a
result, in addition to any other right or remedy he may have at law
or in equity with respect to breach of this Agreement, Indemnitee
shall be entitled to injunctive or mandatory relief directing
specific performance by the Company of its obligations under this
Agreement.
Section 21.9 Successors and Assigns. All of the terms
and provisions of this Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, heirs, executors,
administrators, legal representatives. The Company shall require
and cause any direct or indirect successor (whether by purchase,
merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by written agreement in form
and substance reasonably satisfactory to Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if
no such succession had taken place.
Section 21.10 Amendment. This Agreement may not be
modified or amended except by a written instrument executed by or
on behalf of each of the parties hereto.
Section 21.11 Waivers. The observance of any term of
this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the party
entitled to enforce such term only by a writing signed by the party
against which such waiver is to be asserted. Unless otherwise
expressly provided herein, no delay on the part of any party hereto
in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
Section 21.12 Entire Agreement. This Agreement and the
documents expressly referred to herein constitute the entire
agreement between the parties hereto with respect to the matters
covered hereby, and any other prior or contemporaneous oral or
written understandings or agreements with respect to the matters
covered hereby are expressly superseded by this Agreement.
Section 21.13 Severability. If any provision of this
Agreement (including any provision within a single section,
paragraph or sentence) or the application of such provision to any
person or circumstance, shall be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect
the application of such provision to other persons or
circumstances, it being the intent and agreement of the parties
that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent, or if such modification is
not possible, by substituting therefor another provision that is
valid, legal and unenforceable and that achieves the same
objective. Any such finding of invalidity or unenforceability
shall not prevent the enforcement of such provision in any other
jurisdiction to the maximum extent permitted by applicable law.
Section 21.14 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery of a standard
overnight courier or when delivered by hand or (c) the expiration
of five business days after the date mailed by certified or
registered mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other addresses for
a party as shall be specified by like notice):
If to the Company, to:
Marcus Cable Company, L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to the General Partner, to:
Marcus Cable Properties, Inc.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to Indemnitee, to:
Facsimile:
Section 21.15 Certain Construction Rules.
(a) The article and section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise
provided to the contrary, (i) all references to days shall be
deemed references to calendar days and (ii) any reference to
a "Section" or "Article" shall be deemed to refer to a section
or article of this Agreement. The words "hereof," "herein"
and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words
"include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation." Unless otherwise specifically provided
for herein, the term "or" shall not be deemed to be exclusive.
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
(b) For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed
on a person with respect to any employee benefit plan;
references to "serving at the request of the Company" shall
include any service as an officer, employee, agent or
fiduciary of the Company which imposes duties on, or involves
services by, such officer, employee, agent or fiduciary with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this
Agreement.
Section 21.16 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to the conflicts of laws
principles thereof.
Section 21.17 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be
one and the same instrument, notwithstanding that both parties are
not signatories to the original or same counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered to be effective as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.,
General Partner
By: MARCUS CABLE PROPERTIES,INC.,
General Partner
By:
Name:
Title:
INDEMNITEE
[Signature]
Name: [Printed Name]
Exhibit 10.2
EMPLOYMENT AGREEMENT
(Thomas P. McMillin)
AGREEMENT, dated as of April 3, 1998 (this "Agreement"),
between Marcus Cable Company, L.P., a Delaware limited partnership
("MCC"), and Thomas P. McMillin ("McMillin").
WHEREAS, the current partners of MCC and Vulcan Cable,
Inc., a Washington corporation ("Buyer"), have entered into a
Purchase Agreement (the "Purchase Agreement"), dated as of even
date herewith, pursuant to which Buyer will, directly and
indirectly, ultimately acquire all of the partners' interests in
MCC (the "Acquisition");
WHEREAS, Buyer wishes to secure the services of McMillin
as Executive Vice President and Chief Financial Officer of MCC;
WHEREAS, Buyer desires that MCC enters into this
Agreement to assure itself of McMillin's availability as of the
Closing Date (as defined in the Purchase Agreement); and
WHEREAS, McMillin is willing to enter into this Agreement
upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and obligations contained herein, the parties
agree, intending to be legally bound, as follows:
1. Employment; Term.
1.1 During the Agreement Term (as defined in
Section 1.2), MCC shall employ McMillin, and McMillin shall serve,
as Executive Vice President and Chief Financial Officer. In
addition, at the request of MCC's Chief Executive Officer, McMillin
shall serve as the Executive Vice President and Chief Financial
Officer of the direct or indirect subsidiaries of MCC.
1.2 The term of this Agreement (the "Agreement
Term") shall commence on the Closing Date and terminate on the
second anniversary of the Closing Date, unless sooner terminated
pursuant to the provisions of Section 7 or Section 8.
Notwithstanding anything to the contrary, this Agreement shall be
void and of no force and effect if the Purchase Agreement is
terminated in accordance with its terms.
2. Duties and Authority.
2.1 During the Agreement Term, McMillin shall be
responsible for the financial and accounting, information system,
regulatory planning and corporate development functions of MCC and
its subsidiaries, with all such powers and authority as may be
reasonably incident to such duties and responsibilities, including,
without limitation, and subject to the overall supervision and
control of MCC's Chief Executive Officer, control over the hiring
and termination of MCC's management team performing the foregoing
functions. McMillin shall report to the Chief Executive Officer of
MCC.
2.2 Throughout the Agreement Term, McMillin will be
a member of any committee comprised of executive officers of MCC
(an "Executive Committee").
2.3 During the Agreement Term it shall not be a
violation of this Agreement for McMillin to: (a) serve on civic or
charitable boards or committees, (b) deliver lectures, fulfill
speaking engagements or teach at educational institutions or
(c) manage personal investments, as long as such activities do not
adversely affect his performance of his obligations hereunder.
McMillin will commit full working time to his responsibilities
under this Agreement in a manner that is consistent with past
practice.
3. Location.
During the Agreement Term, McMillin's services under
this Agreement shall be performed principally in Dallas, Texas.
The parties, however, acknowledge and agree that the nature of
McMillin's duties hereunder shall require reasonable travel from
time to time.
4. Cash Compensation.
4.1 Base Salary. During the Agreement Term, MCC
shall pay to McMillin, in monthly or more frequent installments in
accordance with MCC's regular payroll practices for senior
executives, a base salary of not less than $500,000 per annum;
provided, however, such minimum base salary shall be adjusted
upward, as of January 1, 1999, and as of each successive January 1
to the end of the Agreement Term, in an amount determined by the
Compensation Committee of the Board (as defined below) which shall
in no event be less than the percentage increase during the prior
calendar year in the Consumer Price Index for Urban Consumers in
the Dallas, Texas Metropolitan Area, as published by the Bureau of
Labor Statistics of the U.S. Department of Commerce (as so
adjusted, including pursuant to the next sentence, the "Base
Salary"). It is understood that MCC may, at any time, in the
discretion of the governing board of MCC and its ultimate general
partner (the "Board"), increase, but not decrease, McMillin's Base
Salary.
4.2 Bonus.
4.2.1 In addition to his Base Salary,
McMillin shall be entitled to receive with respect to each calendar
year (or portion thereof) during the Agreement Term, a bonus
("Bonus") of 50% of current Base Salary, of which 50% will be
discretionary, 25% will be based on actual cash flow to budget and
25% will be based on customer count to budget, and will be
determined in a manner consistent with MCC's existing executive
bonus plan. On the Closing Date, McMillin will be paid his Bonus
with respect to the period from January 1, 1998 through the Closing
Date.
4.2.2 Each Bonus, other than the Bonus
payable on the Closing Date, shall be paid to McMillin as soon as
practicable, but in no event later than March 31 following the end
of each calendar year. The amount of the Bonus payable with
respect to any period of less than an entire year shall be
determined by multiplying the Bonus that would have been payable
with respect to the whole such year (using actual results for such
year and assuming that this Agreement had been in effect the entire
such year) by a fraction, the numerator of which is the number of
days of such year included in the Agreement Term and the
denominator of which is 365.
4.3 Options.
4.3.1 As additional consideration for
McMillin entering into this Agreement, McMillin shall be granted,
beginning no later than six months (or at such later time that may
be agreed upon by the parties) after the Closing Date, options (or,
if applicable, partnership "profits interests" having substantially
the same economic attributes as such options) and vesting
characteristics (modified appropriately to take into account
differences in form)) in an amount and on terms jointly determined
by the Compensation Committee of the Board and Jeffrey A. Marcus in
his capacity as Chairman of MCC. In addition, in the event options
rather than "profits interests" are granted, such options shall
vest, in equal annual amounts, over four years from the Closing
Date; provided that the vesting of McMillin's remaining unvested
options shall be accelerated if MCC does not offer to renew this
Agreement through the vesting period.
4.3.2 MCC shall comply with all federal and
state securities laws, rules and regulations applicable to the
issuance of the options referred to in this Section 4.3 and the
securities issuable upon exercise of such options. At such time
that MCC is subject to the Securities Exchange Act of 1934, as
amended, as the result of an offering of any of its equity, MCC
shall cause the securities issuable upon exercise of such options
to be registered pursuant to the Securities Act of 1933, as
amended, on Form S-8 or an equivalent form (and on a Form S-3
resale registration statement, if appropriate), and all other
applicable federal securities laws and state securities or blue sky
laws, and shall cause such securities to be approved for quotation
on the exchange on which MCC's equity is then or on which it will
be traded, and shall bear all expenses in connection with such
registration, quotation and compliance.
4.4 Signing Bonus.
On the Closing Date, McMillin will be paid a
signing bonus of $1,000,000.
5. Expenses.
In addition to the compensation provided in Section
4, MCC shall pay or reimburse McMillin for all reasonable business
expenses actually incurred or paid by him during the Agreement Term
in the performance of his services hereunder upon presentation of
expense statements, vouchers, or such other supporting information
as MCC may customarily require of its senior executives.
6. Additional Benefits.
6.1 During the Agreement Term:
(a) McMillin shall be entitled to reasonable
annual vacation periods, not less than an aggregate of four weeks
in each calendar year, with full pay and benefits.
(b) McMillin shall be eligible for sick leave
in accordance with MCC's customary practice for senior executives.
(c) McMillin shall be entitled to participate
in any life insurance (term insurance only), disability insurance,
other insurance, pension, profit-sharing, equity option, equity
purchase or other benefit plan of MCC now existing or hereafter
adopted for the benefit of the employees or of the executives of
MCC generally.
(d) MCC shall furnish and bear (or reimburse
McMillin promptly upon request for) all business expenses of
operation of a car with a value of up to $75,000. Such car shall
be replaced with a new car every two years.
(e) McMillin shall be entitled to receive such
additional benefits as may be granted to him from time to time by
the Board.
6.2 In addition, during the Agreement Term:
(a) MCC shall pay periodic fees and dues for
McMillin's membership in a country club selected by McMillin.
(b) MCC shall pay both initiation and periodic
fees and dues for McMillin's membership in any health or athletic
club and lunch club selected by McMillin.
6.3 On the Closing Date, MCC and McMillin will
enter into an Indemnification Agreement in the form of Exhibit A
attached hereto.
6.4 No payment or benefit made or provided under
this Agreement shall be deemed to constitute payment to McMillin,
his legal representatives or beneficiaries in lieu of, or in
reduction of, any benefit or payment under an insurance, pension,
profit-sharing or other benefit plan, and no payment under any such
plan shall reduce any payment or benefit due under this Agreement.
7. Termination of Agreement for Cause.
MCC may terminate the Agreement Term "for cause"
upon 30 days' written notice (or in the case of clause (x) in the
following sentence, upon immediate written notice), and all of
MCC's obligations under this Agreement shall terminate except (a)
their obligation to pay to McMillin amounts accrued, earned or
required to be paid for periods up to the date of termination,
including, without limitation, under Sections 4.1 and 4.2 hereof,
(b) their obligations with respect to vested options granted as
described in Section 4.3, which vested options shall remain
exercisable for up to 30 days following the date of termination,
(d) their obligations under Section 6.3, (e) their obligations
under Section 11 and (f) their obligations under Section 12.7. As
used in this Agreement, the term "for cause" shall mean and be
limited to the following events: (x) McMillin's conviction (which
conviction, through lapse of time or otherwise, is not subject to
appeal) in a court of law of a felony involving moral turpitude; or
(y) McMillin's serious willful gross misconduct or serious gross
neglect of duties, which in either case has resulted, or in all
probability will result, in material economic damage to MCC, but in
no event shall an action constitute "cause" pursuant to this clause
(y) if McMillin believed in good faith that such action or failure
to act was in the best interest of MCC; provided however, that the
Agreement Term may not be terminated for cause under the
immediately preceding clause (y), unless McMillin shall have first
received written notice from the Board advising him of the specific
acts or omissions alleged to constitute a failure or refusal to
perform his duties, and such failure or refusal to perform his
duties continues after McMillin shall have had a reasonable
opportunity to correct the acts or omissions cited in such notice.
In no event shall the alleged mediocre or poor performance of
McMillin in his duties hereunder be deemed grounds for termination
of this Agreement for cause. Upon a termination for cause, all of
McMillin's obligations under this Agreement (other than under
Section 9) shall terminate.
8. Termination Other Than for Cause.
8.1 Death. If McMillin shall die during the
Agreement Term, the Agreement Term shall end, and all of MCC's
obligations hereunder shall terminate, except that (a) MCC shall
pay to McMillin's estate: (i) all amounts accrued, earned or
required to be paid for periods up to the date of termination,
including, without limitation, under Sections 4.1 and 4.2 hereof;
and (ii) as soon as is practicable, but in no event later than
March 31 of the year immediately following the year in which
McMillin's death occurs, the Bonus that would have been payable to
McMillin for the entire year in which McMillin's death occurs
(using actual results for such year and assuming that the Agreement
Term included the entire such year), multiplied by a fraction, the
numerator of which is the number of full and partial months in the
Agreement Term in the year of McMillin's death and the denominator
of which is 12; (b) all of the vested options then held by McMillin
shall remain exercisable for up to one year following the date of
termination, (c) the obligations under Section 6.3 shall continue,
(d) the obligations under Section 11 shall continue and (f) the
obligations under Section 12.7 shall continue.
8.2 Disability. If, during the Agreement Term,
McMillin shall become disabled so that he shall be unable
substantially to perform his services hereunder (a) for a period of
six consecutive months or (b) for an aggregate of six months within
any period of 12 consecutive months (a "Disability") then the Board
may, at any time during the continuance of such Disability,
terminate the Agreement Term under this Section 8.2 on 30 days'
prior written notice to McMillin. After such termination, McMillin
shall have no further obligation to perform services for MCC
pursuant to Section 2, and all of MCC's obligations under this
Agreement shall terminate, except that (a) MCC shall pay to
McMillin, (i) all amounts accrued, earned or required to be paid
for periods up to the date of termination, including, without
limitation, under Sections 4.1 and 4.2 hereof; (ii) without
duplication of clause (i), Base Salary with respect to the then
current year that would have been payable to McMillin under Section
4.1 had the Agreement Term ended on the later of the date of
termination and the date on which payments are commenced under the
primary disability insurance policies provided pursuant to
Section 6.1(c); and (iii) as soon as is practicable, but in no
event later than March 31 of the year immediately following the
year in which the Agreement Term was terminated pursuant to this
Section 8.2, the Bonus that would have been payable to McMillin for
the entire year in which the Agreement Term was terminated pursuant
to this Section 8.2 (using actual results for such year and
assuming the Agreement Term included the entire such year),
multiplied by a fraction, the numerator of which is the number of
full and partial months in the Agreement Term in the year in which
the Agreement Term was terminated pursuant to this Section 9.2 and
the denominator of which is 12; (b) all of the vested options then
held by McMillin shall remain exercisable for up to 90 days
following the date of termination, (c) the obligations under
Section 6.3 shall continue, (d) the obligations under Section 11
shall continue and (e) the obligations under Section 12.7 shall
continue. MCC shall not interpose any defense against payment of
the foregoing amounts based on refusal of McMillin to seek or
accept other employment.
8.3 Termination by McMillin.
8.3.1 McMillin may (but shall not be obligated
to) terminate the Agreement Term, if during the Agreement Term, (a)
McMillin shall not be elected (and continued) as Executive Vice
President and Chief Financial Officer of MCC; or (b) MCC shall fail
to cure a breach of this Agreement within a reasonable period of
time after notice not to exceed 30 days (provided, however, if the
breach is unintentional and not susceptible of cure within 30 days
but is susceptible of cure within an additional 30 days, and if MCC
in good faith has made material efforts to cure such breach within
such 30-day period, MCC, upon written notice to McMillin, shall
have an additional period of time to cure such breach, but not in
any event to exceed an additional 30 days); or (c) there shall have
been a material diminution in the authority or responsibilities
contemplated in Section 2; or (d) any benefit to which McMillin is
entitled pursuant to Section 6.1 or 6.2 shall have been materially
reduced without an effective economic substitute therefor being
provided to McMillin; or (e) McMillin shall be required to perform
his principal services under this Agreement at a place other than
that set forth in Section 3; or (f) Jeffrey A. Marcus shall no
longer be Chairman of MCC due to the termination of his employment
by MCC, other than for cause, death or Disability or by Mr. Marcus
pursuant to the provisions of his employment agreement which are
similar to this Section 8.3.1; or (g) MCC shall fail to comply with
the provisions of Section 12.4 hereof relating to specific
assumptions of the duties and obligations of MCC under this
Agreement, unless such failure is solely due to actions or failure
to take actions on the part of McMillin. Such right to terminate
the Agreement Term shall be McMillin's exclusive remedy in the
event of the occurrence of any of the events described in this
Section 8.3.1. For purposes of clause (c) of the preceding
sentence, there shall be deemed to have been a material diminution
in the authority or responsibilities contemplated in Section 2 if
there shall occur any demotion or any material reduction in the
scope, level or nature of McMillin's employment hereunder, or of
the duties contemplated in Section 2, or if McMillin is assigned
duties inconsistent with McMillin's position hereunder.
8.3.2 If McMillin shall elect to terminate
the Agreement Term upon the occurrence of any event described in
Section 8.3.1, or if MCC shall terminate the Agreement Term other
than for cause, death or Disability pursuant to Sections 7 and 8
hereof, then McMillin shall have no further obligation to perform
services for MCC pursuant to Section 2, but he shall be entitled to
receive from MCC, within 30 days after the date of termination of
the Agreement Term, in lieu of the amounts that would otherwise be
payable hereunder, a lump sum in cash of an amount equal to the sum
of (a) the aggregate of Base Salary that would have been payable
each year to McMillin pursuant to Section 4.1 for the period
beginning on the date of such termination and running through the
day on which the Agreement Term would have ended if not terminated
pursuant to this Section 8 (the "Cutoff Date"), and (b) an amount
equal to the average Bonus earned or paid under Section 4.2 in the
previous three full calendar years of MCC immediately preceding
termination of employment, multiplied by the number of whole and
partial years (rounded to the nearest 100th (.01)) remaining until
the Cutoff Date. In addition, until the Cutoff Date, MCC shall
maintain, at its expense, all insurance coverages and medical and
health benefits in respect of McMillin that shall have been in
effect with respect to him prior to the occurrence of the event
entitling McMillin to terminate this Agreement. Further, (a) all
of the options previously granted by MCC to McMillin shall be
immediately vested and fully exercisable and remain exercisable for
up to 90 days following the date of termination, (b) the
obligations under Section 6.3 shall continue, (c) the obligations
under Section 11 shall continue and (d) the obligations under
Section 12.7 shall continue.
9. Protection of Confidential Information.
9.1 McMillin agrees that, in view of the fact that
his work for MCC will bring him into close contact with many
confidential affairs of MCC not readily available to the public, he
will not disclose during the Agreement Term and for a period of
three years thereafter, to any person, firm, corporation,
partnership or other entity whatsoever (except MCC or any of their
subsidiaries or affiliates, or any officer, director, stockholder,
partner, associate, employee, agent or representative thereof) any
confidential information secrets of MCC which may come into his
possession during the Agreement Term (the "Confidential
Materials"). The term "Confidential Materials" does not include
information which (a) at the time of disclosure or thereafter is
generally available to or known by the public otherwise than by
reason of McMillin's disclosure thereof in violation of this
Agreement, (b) is, was or becomes available to McMillin on a
nonconfidential basis from a source other than MCC, provided that
McMillin has no reason to believe that such source is or was bound
by a confidentiality agreement with MCC, (c) has been made
available, or is made available, on a non-confidential basis to a
third party by MCC, by an individual authorized to do so, or (d) is
known by McMillin prior to its disclosure to McMillin. McMillin
may use and disclose Confidential Materials to the extent necessary
to assert any right or defend against any claim arising under this
Agreement or pertaining to Confidential Materials or their use, to
the extent necessary to comply with any applicable statute,
constitution, treaty, rule, regulation, ordinance or order, whether
of the United States, any state thereof, or any other jurisdiction
applicable to McMillin, or if McMillin receives a request to
disclose all or any part of the information contained in the
Confidential Materials under the terms of a subpoena, order, civil
investigative demand or similar process issued by a court of
competent jurisdiction or by a governmental body or agency, whether
of the United States or any state thereof, or any other
jurisdiction applicable to McMillin.
9.2 During the Agreement Term, McMillin shall not
be employed by, or own an equity interest in, any entity that owns
or operates any cable television systems or otherwise provides
multi-channel video service or two way return interactive high
speed data service in the United States. Notwithstanding anything
else contained in this Section 10.2, McMillin may own, for
investment purposes only, up to ten percent of the stock of any
publicly-held corporation whose stock is either listed on a
national stock exchange or on the Nasdaq National Market.
9.3 During the Agreement Term, McMillin shall not
endeavor to entice away from MCC or any of its subsidiaries any
employee of MCC or any of its subsidiaries.
9.4 The parties hereto acknowledge that a breach by
McMillin of the terms of this Section 9 will cause MCC irreparable
injury. McMillin agrees that MCC is entitled to injunctive and
other equitable relief to prevent a breach or threatened breach of
this Section 10, which shall be in addition to any other rights or
remedies to which MCC may be entitled.
10. Notices.
All notices, requests, consents and other
communications, required or permitted to be given hereunder, shall
be in writing and shall be deemed to have been duly given (a) if
delivered personally, when delivered; (b) if delivered by overnight
carrier, on the first business day following such delivery; (c) if
delivered by registered or certified mail, return receipt
requested, on the third business day after having been mailed. In
any case, each such notice, request, or consent or other
communication shall be addressed as follows or to such other
address as either party shall designate by notice in writing to the
other in accordance herewith.
10.1 If to MCC:
Marcus Cable Company, L.P.
2911 Turtle Creek Boulevard, Suite 1300
Dallas, TX 75219
Attention: General Counsel
10.2 If to McMillin:
Thomas P. McMillin
6706 Stefani Drive
Dallas, TX 75225
11. Put Right.
11.1 Upon the occurrence of a Trigger Event (as
defined below), McMillin shall be entitled to require MCC to
repurchase all equity options and equity issued pursuant to
exercise of such equity options (the "Subject Securities") then
held by McMillin or, if applicable, his estate, for their then fair
market value. The "fair market value" of a security shall be the
closing price on the exchange or market on which such security is
traded or if such security is not so traded, the price which is
mutually agreed upon by the parties or determined by an independent
appraiser selected by the parties and paid for by MCC.
Notwithstanding anything to the contrary, in no event will the fair
market value for the Subject Securities be less than any fair
market value assigned thereto within the 12 months preceding the
Trigger Event. For purposes of this Section, the fair market value
of equity options will be the fair market value of the underlying
security less the then applicable strike price of the equity
option. A "Trigger Event" means the termination of the original
term of the Agreement Term for any reason.
11.2 If McMillin elects to exercise his put right
pursuant to Section 11.1, MCC shall repurchase the Subject
Securities not less than 30 nor more than 60 days after it has been
notified by McMillin of such election in accordance with
Section 10.
12. General.
12.1 This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of
Texas applicable to agreements made and to be performed entirely in
Texas.
12.2 The Section headings contained herein are for
reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
12.3 This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter
hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, between the parties.
12.4 This Agreement and the benefits hereunder are
personal to MCC and are not assignable or transferable, nor may the
services to be performed hereunder be assigned by MCC to any
person, firm, corporation or other entity; provided, however, that
this Agreement and the benefits hereunder may be assigned by MCC to
any corporation or other entity acquiring all or substantially all
of the assets of MCC or to any corporation or other entity into
which MCC may be merged or consolidated, and this Agreement and the
benefits hereunder will automatically be deemed assigned to any
such corporation or other entity, subject, however, to McMillin's
right to terminate the Agreement Term to the extent provided in
Section 8.3. In the event of any assignment of this Agreement to
any corporation or other entity acquiring all or substantially all
of the assets of MCC or to any other corporation or other entity
into which MCC may be merged or consolidated, the responsibilities
and duties assigned to McMillin by such successor corporation or
other entity shall be the responsibilities and duties of, and
compatible with the status of, McMillin's responsibilities, duties
and status with MCC. MCC shall require that any successor to MCC
agree to assume in writing the obligations of MCC pursuant to this
Agreement and the failure to secure such assumption on or prior to
the closing of any Change in Control shall constitute a breach of
MCC's duties under this Agreement and permit termination of the
Agreement Term by McMillin pursuant to Section 8.3.1.
12.5 Whenever this Agreement provides for any
payment to McMillin's estate, such payment may be made instead to
such beneficiary or beneficiaries as McMillin may have designated
by written notice to MCC; provided, however, that MCC shall not
have any liability to McMillin's estate for the payment of estate
taxes, local inheritance taxes or otherwise, provided it has
actually made payment to such beneficiary or beneficiaries.
McMillin shall have the right to revoke any such designation and to
redesignate a beneficiary or beneficiaries by written notice to MCC
to such effect.
12.6 This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or
covenants hereof may be waived, only by a written instrument
executed by all of the parties hereto, or in the case of a waiver,
by the party waiving compliance. The failure of either party at
any time or times to require performance of any provision hereof
shall in no manner affect the right at a later time to enforce the
same. No waiver by any party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in
any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this
Agreement.
12.7 If any dispute or disagreement arising
hereunder or related hereto shall result in legal action between
MCC and McMillin, the prevailing party shall be entitled to recover
from the other party any reasonable expenses for attorney's fees
and disbursements incurred by him or it in connection with its good
faith maintenance or defense of such action, on an after-tax basis.
12.8 Nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties
hereto or their respective successors and permitted assigns, any
rights, remedies, obligations or liabilities under or by reason of
this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.,
General Partner
By: MARCUS CABLE PROPERTIES,
INC., General Partner
By:/s/ Jeffrey A. Marcus
Jeffrey A. Marcus
President and
Chief Executive Officer
THOMAS P. MCMILLIN
/s/ Thomas P. McMillin
EXHIBIT A
MARCUS CABLE COMPANY, L.P.
INDEMNIFICATION AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of
__________, 1998, between Marcus Cable Company, L.P., a Delaware
limited partnership (the "Company"), and ____________________
("Indemnitee").
Background Statement and Recitals
Highly competent and experienced persons are becoming
more reluctant to serve companies as officers, directors or in
other capacities unless they are provided with adequate protection
through insurance and adequate indemnification against inordinate
risks of claims and actions against them arising out of their
service to and activities on behalf of the company.
The Board of Directors (the "Board") of Marcus Cable
Properties, Inc., a Delaware corporation (the general partner of
Marcus Cable Properties, L.P., a Delaware limited partnership,
which in turn is the general partner of the Company) (the "General
Partner") has determined that the inability of the Company to
attract and retain such persons would be detrimental to the best
interests of the Company and its investors and that the Company
should act to assure such persons that there will be increased
certainty of such protection in the future.
The Board has also determined that it is reasonable,
prudent and necessary for the Company, in addition to purchasing
and maintaining directors' and officers' liability insurance (or
otherwise providing for adequate arrangements of self-insurance),
contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve
or continue to serve the Company free from undue concern that they
will not be so indemnified.
Pursuant to that certain Employment Agreement (the
"Employment Agreement") between the Company and _________________,
dated as of ____________, 1998, Indemnitee is willing to serve,
continue to serve and to take on additional service for or on
behalf of the Company on the condition that he be so indemnified.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE XIII
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have
the following respective meanings:
"Change in Control" means a change in control of the
Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limiting the
generality of the foregoing, a Change in Control shall be deemed to
have occurred (irrespective of the applicability of the initial
clause of this definition) if at any time any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act, but
excluding (a) Paul Allen, (b) any employee benefit plan of the
Company or of any subsidiary of the Company, and (c) any entity
organized, appointed or established by the Company pursuant to the
terms of any such plan) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's or the General
Partner's then outstanding securities or has the ability to appoint
a majority of the members of the Board.
"Claim" means an actual or threatened claim or request
for relief.
"Corporate Status" means the status of a person who is or
was a director, nominee for director, officer, employee, agent or
fiduciary of the Company or the General Partner (including any
predecessors to the Company or the General Partner), or of any
other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the Company or the
General Partner.
"Disinterested Director," with respect to any request by
Indemnitee for indemnification hereunder, means a director of the
General Partner who neither is nor was a party to the Proceeding or
subject to a Claim, issue or matter in respect of which
indemnification is sought by Indemnitee.
"DRULP" means the Delaware Revised Uniform Limited
Partnership Act and any successor statute thereto as either of them
may be amended from time to time.
"Expenses" means all attorneys' fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or
participating in (including on appeal), a Proceeding.
"Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and
partnership law, and neither contemporaneously is, nor in the five
years theretofore has been, retained to represent (a) the Company,
the General Partner or Indemnitee in any matter material to either
such party, (b) any other party to the Proceeding giving rise to a
claim for indemnification hereunder or (c) the beneficial owner,
directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's or the
General Partner's then outstanding voting securities (other than,
in each such case, with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements). Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company, the General Partner or Indemnitee in an action
to determine Indemnitee's rights under this Agreement.
"person" shall have the meaning ascribed to such term in
Sections 13(d) and 14(d) of the Exchange Act.
"Proceeding" means any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative and whether or not based
upon events occurring, or actions taken, before the date hereof
(except any of the foregoing initiated by Indemnitee pursuant to
Article VI or Section 7.8 to enforce his rights under this
Agreement), and any inquiry or investigation that could lead to,
and any appeal in or related to, any such action, suit,
arbitration, alternative dispute resolution mechanism, hearing or
proceeding.
ARTICLE XIV
SERVICES BY INDEMNITEE
Section 14.1 Services. Indemnitee agrees to serve, or
continue to serve, the Company and the General Partner pursuant to
the Employment Agreement and, as the Company has requested or may
request from time to time, as a director, officer, employee, agent
or fiduciary of another corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other
enterprise. Indemnitee and the Company each acknowledge that they
have entered into this Agreement as a means of inducing Indemnitee
to serve, or continue to serve, the Company and the General Partner
in such capacities. Indemnitee may at any time and for any reason
resign from such position or positions (subject to the terms and
conditions of the Employment Agreement, any other contractual
obligation or any obligation imposed by operation of law). The
Company shall have no obligation under this Agreement to continue
Indemnitee in any such position or positions.
ARTICLE XV
INDEMNIFICATION
Section 15.1 General. The Company shall indemnify, and
advance Expenses to, Indemnitee to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit.
The rights of Indemnitee provided under the preceding sentence
shall include, but shall not be limited to, the right to be
indemnified and to have Expenses advanced in all Proceedings to the
fullest extent permitted by Section 17-108 of the DRULP. The
provisions set forth in this Agreement are provided in addition to
and as a means of furtherance and implementation of, and not in
limitation of, the obligations expressed in this Article III.
Section 15.2 Proceedings Other Than by or in Right of
the Company. Indemnitee shall be entitled to indemnification
pursuant to this Section 3.2 if, by reason of his Corporate Status,
he was, is or is threatened to be made, a party to any Proceeding,
other than a Proceeding by or in the right of the Company.
Pursuant to this Section 3.2, the Company shall indemnify
Indemnitee against Expenses, judgments, penalties, fines and
amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with any such Expenses,
judgments, penalties, fines and amounts paid in settlement)
actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any Claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful. Nothing in
this Section 3.2 shall limit the benefits of Section 3.1 or any
other Section hereunder.
Section 15.3 Proceedings by or in Right of the Company.
Indemnitee shall be entitled to indemnification pursuant to this
Section 3.3 if, by reason of his Corporate Status, he was, is or is
threatened to be made, a party to any Proceeding brought by or in
the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3.3, the Company shall indemnify
Indemnitee against Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any Claim,
issue or matter therein, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of
any Claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if
applicable law prohibits such indemnification; provided, however,
that, if applicable law so permits, indemnification against such
Expenses shall nevertheless be made by the Company in such event if
and only to the extent that the Court of Chancery of the State of
Delaware or other court of competent jurisdiction (the "Court"), or
the court in which such Proceeding shall have been brought or is
pending, shall so determine. Nothing in this Section 3.3 shall
limit the benefits of Section 3.1 or any other Section hereunder.
ARTICLE XVI
EXPENSES
Section 16.1 Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this
Agreement to the contrary (except as set forth in Section 7.2(c) or
7.6), and without a requirement for any determination described in
Section 5.2, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with any Proceeding to which Indemnitee was or is a
party by reason of his Corporate Status and in which Indemnitee is
successful, on the merits or otherwise. If Indemnitee is not
wholly successful, on the merits or otherwise, in a Proceeding but
is successful, on the merits or otherwise, as to any Claim, issue
or matter in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf relating to each successfully resolved Claim,
issue or matter. For purposes of this Section 4.1 and without
limitation, the termination of a Claim, issue or matter in a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such Claim, issue or matter.
Section 16.2 Expenses of a Witness or Non-Party.
Notwithstanding any other provision of this Agreement to the
contrary, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness or otherwise participates in any
Proceeding at a time when he is not a party in the Proceeding, the
Company shall indemnify him against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith.
Section 16.3 Advancement of Expenses. The Company
shall pay all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding, whether brought by or
in the right of the Company or otherwise, in advance of any
determination with respect to entitlement to indemnification
pursuant to Article V within 15 days after the receipt by the
General Partner of a written request from Indemnitee requesting
such payment or payments from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by
Indemnitee. Indemnitee hereby undertakes and agrees that he will
reimburse and repay the Company for any Expenses so advanced to the
extent that it shall ultimately be determined (in a final
adjudication by a court from which there is no further right of
appeal or in a final adjudication of an arbitration pursuant to
Section 6.1 if Indemnitee elects to seek such arbitration) that
Indemnitee is not entitled to be indemnified by the Company against
such Expenses.
ARTICLE XVII
PROCEDURE FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION
Section 17.1 Request by Indemnitee. To obtain
indemnification under this Agreement, Indemnitee shall submit to
the General Partner a written request, including therein or
therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to
indemnification. The Secretary or an Assistant Secretary of the
General Partner shall, promptly upon receipt of such a request for
indemnification, advise the members of the Board in writing that
Indemnitee has requested indemnification.
Section 17.2 Determination of Request. Upon written
request by Indemnitee for indemnification pursuant to Section 5.1,
a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific case
as follows:
(a) If a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee unless Indemnitee
shall request that such determination be made by the
Disinterested Directors, in which case in the manner provided
for in clause (i) of paragraph (b) below;
(b) If a Change in Control shall not have occurred,
(i) by a majority vote of the Disinterested Directors, even
though less than a quorum of the Board, or (ii) if there are
no Disinterested Directors, or if such Disinterested Directors
so direct, by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to the Indemnitee,
or (iii) if Indemnitee and the Company mutually agree, by a
majority vote of the disinterested stockholders of the General
Partner; or
(c) As provided in Section 5.4(b).
If it is so determined that Indemnitee is entitled to
indemnification hereunder, payment to Indemnitee shall be made
within 15 days after such determination. Indemnitee shall
cooperate with the person or persons making such determination with
respect to Indemnitee's entitlement to indemnification, including
providing to such person upon reasonable advance request any
documentation or information that is not privileged or otherwise
protected from disclosure and that is reasonably available to
Indemnitee and reasonably necessary for such determination. Any
costs or expenses (including attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person or persons
making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement
to indemnification), and the Company shall indemnify and hold
harmless Indemnitee therefrom.
Section 17.3 Independent Counsel. If a Change in
Control shall not have occurred and the determination of
entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by (a) a
majority vote of the Disinterested Directors, even though less than
a quorum of the Board or (b) if there are no Disinterested
Directors, by a majority vote of the Board, and the General Partner
shall give written notice to Indemnitee, within 10 days after
receipt by the General Partner of Indemnitee's request for
indemnification, specifying the identity and address of the
Independent Counsel so selected. If a Change in Control shall have
occurred and the determination of entitlement to indemnification is
to be made by Independent Counsel, the Independent Counsel shall be
selected by Indemnitee, and Indemnitee shall give written notice to
the General Partner, within 10 days after submission of
Indemnitee's request for indemnification, specifying the identity
and address of the Independent Counsel so selected (unless
Indemnitee shall request that such selection be made by the
Disinterested Directors, in which event the General Partner shall
give written notice to Indemnitee, within 10 days after receipt of
Indemnitee's request for the Disinterested Directors to make such
selection, specifying the identity and address of the Independent
Counsel so selected). In either event, (i) such notice to
Indemnitee or the General Partner, as the case may be, shall be
accompanied by a written affirmation of the Independent Counsel so
selected that it satisfies the requirements of the definition of
"Independent Counsel" in Article I and that it agrees to serve in
such capacity and (ii) Indemnitee or the General Partner, as the
case may be, may, within seven days after such written notice of
selection shall have been given, deliver to the General Partner or
to Indemnitee, as the case may be, a written objection to such
selection. Any objection to selection of Independent Counsel
pursuant to this Section 5.3 may be asserted only on the ground
that the Independent Counsel so selected does not meet the
requirements of the definition of "Independent Counsel" in
Article I, and the objection shall set forth with particularity the
factual basis of such assertion. If such written objection is
timely made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until the Court has determined that
such objection is without merit. In the event of a timely written
objection to a choice of Independent Counsel, the party originally
selecting the Independent Counsel shall have seven days to make an
alternate selection of Independent Counsel and to give written
notice of such selection to the other party, after which time such
other party shall have five days to make a written objection to
such alternate selection. If, within 30 days after submission of
Indemnitee's request for indemnification pursuant to Section 5.1,
no Independent Counsel shall have been selected and not objected
to, either the General Partner or Indemnitee may petition the Court
for resolution of any objection that shall have been made by the
Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection
is so resolved or the person so appointed shall act as Independent
Counsel under Section 5.2. The Company shall pay any and all
reasonable fees and expenses incurred by such Independent Counsel
in connection with acting pursuant to Section 5.2, and the Company
shall pay all reasonable fees and expenses incident to the
procedures of this Section 5.3, regardless of the manner in which
such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to
Section 6.1, Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 17.4 Presumptions and Effect of Certain
Proceedings.
(a) Indemnitee shall be presumed to be entitled to
indemnification under this Agreement upon submission of a
request for indemnification pursuant to Section 5.1, and the
Company shall have the burden of proof in overcoming that
presumption in reaching a determination contrary to that
presumption. Such presumption shall be used by Independent
Counsel (or other person or persons determining entitlement to
indemnification) as a basis for a determination of entitlement
to indemnification unless the Company provides information
sufficient to overcome such presumption by clear and
convincing evidence.
(b) If the person or persons empowered or selected
under this Article V to determine whether Indemnitee is
entitled to indemnification shall not have made a
determination within 60 days after receipt by the General
Partner of Indemnitee's request for indemnification, the
requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a knowing
misstatement by Indemnitee of a material fact, or knowing
omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with
Indemnitee's request for indemnification, or (ii) a
prohibition of such indemnification under applicable law;
provided, however, that such 60-day period may be extended for
a reasonable time, not to exceed an additional 30 days, if the
person making the determination with respect to entitlement to
indemnification in good faith requires such additional time
for the obtaining or evaluating of documentation and/or
information relating to such determination; provided further,
that the 60-day limitation set forth in this Section 5.4(b)
shall not apply and such period shall be extended as necessary
(i) if within 30 days after receipt by the General Partner of
Indemnitee's request for indemnification under Section 5.1
Indemnitee and the General Partner have agreed, and the Board
has resolved, to submit such determination to the stockholders
of the General Partner pursuant to Section 5.2(b) for their
consideration at a special meeting of stockholders for the
purpose of making such determination to be held within 60 days
after such agreement and such determination is made thereat,
or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel, in which case the
applicable period shall be as set forth in clause (c) of
Section 6.1.
(c) The termination of any Proceeding or of any
Claim, issue or matter by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea
of nolo contendere or its equivalent, shall not by itself
adversely affect the rights of Indemnitee to indemnification
or create a presumption that Indemnitee did not act in good
faith or in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company or, with
respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.
Indemnitee shall be deemed to have been found liable in
respect of any Claim, issue or matter only after he shall have
been so adjudged by the Court after exhaustion of all appeals
therefrom.
ARTICLE XVIII
CERTAIN REMEDIES OF INDEMNITEE
Section 18.1 Indemnitee Entitled to Adjudication in an
Appropriate Court. If (a) a determination is made pursuant to
Article V that Indemnitee is not entitled to indemnification under
this Agreement, (b) there has been any failure by the Company to
make timely payment or advancement of any amounts due hereunder, or
(c) the determination of entitlement to indemnification is to be
made by Independent Counsel and such determination shall not have
been made and delivered in a written opinion within 90 days after
the latest of (i) such Independent Counsel's being appointed,
(ii) the overruling by the Court of objections to such counsel's
selection or (iii) expiration of all periods for the General
Partner or Indemnitee to object to such counsel's selection,
Indemnitee shall be entitled to commence an action seeking an
adjudication in the Court of his entitlement to such
indemnification or advancement of Expenses. Alternatively,
Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the commercial
arbitration rules of the American Arbitration Association.
Indemnitee shall commence such action seeking an adjudication or an
award in arbitration within 180 days following the date on which
Indemnitee first has the right to commence such action pursuant to
this Section 6.1, or such right shall expire. Neither the Company
nor the General Partner shall oppose Indemnitee's right to seek any
such adjudication or award in arbitration.
Section 18.2 Adverse Determination Not to Affect any
Judicial Proceeding. If a determination shall have been made
pursuant to Article V that Indemnitee is not entitled to
indemnification under this Agreement, any judicial proceeding or
arbitration commenced pursuant to this Article VI shall be
conducted in all respects as a de novo trial or arbitration on the
merits, and Indemnitee shall not be prejudiced by reason of such
initial adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Article VI, Indemnitee shall
be presumed to be entitled to indemnification or advancement of
Expenses, as the case may be, under this Agreement and the Company
shall have the burden of proof in overcoming such presumption and
to show by clear and convincing evidence that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case
may be.
Section 18.3 Company Bound by Determination Favorable
to Indemnitee in any Judicial Proceeding or Arbitration. If a
determination shall have been made or deemed to have been made
pursuant to Article V that Indemnitee is entitled to
indemnification, the Company shall be irrevocably bound by such
determination in any judicial proceeding or arbitration commenced
pursuant to this Article VI and shall be precluded from asserting
that such determination has not been made or that the procedure by
which such determination was made is not valid, binding and
enforceable, in each such case absent (a) a knowing misstatement by
Indemnitee of a material fact, or a knowing omission of a material
fact necessary to make a statement by Indemnitee not materially
misleading, in connection with Indemnitee's request for
indemnification or (b) a prohibition of such indemnification under
applicable law.
Section 18.4 Company Bound by the Agreement. The
Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Article VI
that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such
court or before any such arbitrator that the Company is bound by
all the provisions of this Agreement.
Section 18.5 Indemnitee Entitled to Expenses of
Judicial Proceeding. If Indemnitee seeks a judicial adjudication
of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and the Company shall
indemnify Indemnitee against, any and all expenses (of the types
described in the definition of Expenses in Article I) actually and
reasonably incurred by him in such judicial adjudication or
arbitration but only if Indemnitee prevails therein. If it shall
be determined in such judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses or other benefit sought,
the expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be equitably allocated
between the Company and Indemnitee. Notwithstanding the
foregoing, if a Change in Control shall have occurred, Indemnitee
shall be entitled to indemnification under this Section 6.5
regardless of whether Indemnitee ultimately prevails in such
judicial adjudication or arbitration.
ARTICLE XIX
MISCELLANEOUS
Section 19.1 Non-Exclusivity.
(a) The rights of Indemnitee to receive
indemnification and advancement of Expenses under this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable
law, the Agreement of Limited Partnership of the Company, any
other agreement, vote of stockholders or resolution of
directors of the General Partner, or otherwise. No amendment
or alteration of the Agreement of Limited Partnership of the
Company or any provision thereof shall adversely affect
Indemnitee's rights hereunder and such rights shall be in
addition to any rights Indemnitee may have under the Company's
Agreement of Limited Partnership and the DRULP or otherwise.
To the extent that there is a change in the DRULP or other
applicable law (whether by statute or judicial decision) that
allows greater indemnification by agreement than would be
afforded currently under the Company's Agreement of Limited
Partnership and this Agreement, it is the intent of the
parties hereto that the Indemnitee shall enjoy by virtue of
this Agreement the greater benefit so afforded by such change.
(b) The Company shall not cause the Agreement of
Limited Partnership of the Company to be amended in a manner
that adversely affects Indemnitee's rights to indemnification
thereunder existing as of the date hereof.
Section 19.2 Insurance and Subrogation.
(a) To the extent the Company maintains an
insurance policy or policies providing liability insurance for
directors, officers, employees, agents or fiduciaries of the
Company or of any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan
or other enterprise that such person serves at the request of
the Company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director,
officer, employee, agent or fiduciary under such policy or
policies.
(b) In the event of any payment by the Company
under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of
such documents as are necessary to enable the Company to bring
suit to enforce such rights.
(c) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee
has otherwise actually received such payment under the
Company's Agreement of Limited Partnership or any insurance
policy, contract, agreement or otherwise.
Section 19.3 Certain Settlement Provisions. The
Company shall have no obligation to indemnify Indemnitee under this
Agreement for amounts paid in settlement of a Proceeding or Claim
without the Company's prior written consent. The Company shall not
settle any Proceeding or Claim in any manner that would impose any
fine or other obligation on Indemnitee without Indemnitee's prior
written consent. Neither the Company nor Indemnitee shall
unreasonably withhold their consent to any proposed settlement.
Section 19.4 Duration of Agreement. This Agreement
shall continue for so long as Indemnitee serves as an officer,
employee, agent or fiduciary of the Company or, at the request of
the Company, as a director, nominee for director, officer,
employee, agent or fiduciary of another corporation, partnership,
limited liability company, joint venture, trust, employee benefit
plan or other enterprise, and thereafter shall survive until and
terminate upon the latest to occur of (a) the expiration of 10
years after the latest date that Indemnitee shall have ceased to
serve in any such capacity; (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to Article VI
relating thereto; or (c) the expiration of all statutes of
limitation applicable to possible Claims arising out of
Indemnitee's Corporate Status.
Section 19.5 Notice by Each Party. Indemnitee shall
promptly notify the Company and the General Partner in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document or communication relating
to any Proceeding or Claim for which Indemnitee may be entitled to
indemnification or advancement of Expenses hereunder; provided,
however, that any failure of Indemnitee to so notify the Company or
the General Partner shall not adversely affect Indemnitee's rights
under this Agreement except to the extent the Company or the
General Partner shall have been materially prejudiced as a direct
result of such failure. The Company or General Partner shall
notify promptly Indemnitee in writing, as to the pendency of any
Proceeding or Claim that may involve a claim against the Indemnitee
for which Indemnitee may be entitled to indemnification or
advancement of Expenses hereunder.
Section 19.6 Certain Persons Not Entitled to
Indemnification. Notwithstanding any other provision of this
Agreement to the contrary, Indemnitee shall not be entitled to
indemnification or advancement of Expenses hereunder with respect
to any Proceeding or any Claim, issue or matter therein, brought or
made by Indemnitee against the Company or any affiliate of the
Company, except as specifically provided in Article V or
Article VI.
Section 19.7 Indemnification for Negligence, Gross
Negligence, etc. Without limiting the generality of any other
provision hereunder, it is the express intent of this Agreement
that Indemnitee be indemnified and Expenses be advanced regardless
of Indemnitee's acts of negligence, gross negligence or intentional
or willful misconduct to the extent that indemnification and
advancement of Expenses is allowed pursuant to the terms of this
Agreement and under applicable law.
Section 19.8 Enforcement. The Company agrees that its
execution of this Agreement shall constitute a stipulation by which
it shall be irrevocably bound in any court or arbitration in which
a proceeding by Indemnitee for enforcement of his rights hereunder
shall have been commenced, continued or appealed, that its
obligations set forth in this Agreement are unique and special, and
that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to
Indemnitee, for which a remedy at law will be inadequate. As a
result, in addition to any other right or remedy he may have at law
or in equity with respect to breach of this Agreement, Indemnitee
shall be entitled to injunctive or mandatory relief directing
specific performance by the Company of its obligations under this
Agreement.
Section 19.9 Successors and Assigns. All of the terms
and provisions of this Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, heirs, executors,
administrators, legal representatives. The Company shall require
and cause any direct or indirect successor (whether by purchase,
merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by written agreement in form
and substance reasonably satisfactory to Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if
no such succession had taken place.
Section 19.10 Amendment. This Agreement may not be
modified or amended except by a written instrument executed by or
on behalf of each of the parties hereto.
Section 19.11 Waivers. The observance of any term of
this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the party
entitled to enforce such term only by a writing signed by the party
against which such waiver is to be asserted. Unless otherwise
expressly provided herein, no delay on the part of any party hereto
in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
Section 19.12 Entire Agreement. This Agreement and the
documents expressly referred to herein constitute the entire
agreement between the parties hereto with respect to the matters
covered hereby, and any other prior or contemporaneous oral or
written understandings or agreements with respect to the matters
covered hereby are expressly superseded by this Agreement.
Section 19.13 Severability. If any provision of this
Agreement (including any provision within a single section,
paragraph or sentence) or the application of such provision to any
person or circumstance, shall be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect
the application of such provision to other persons or
circumstances, it being the intent and agreement of the parties
that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent, or if such modification is
not possible, by substituting therefor another provision that is
valid, legal and unenforceable and that achieves the same
objective. Any such finding of invalidity or unenforceability
shall not prevent the enforcement of such provision in any other
jurisdiction to the maximum extent permitted by applicable law.
Section 19.14 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery of a standard
overnight courier or when delivered by hand or (c) the expiration
of five business days after the date mailed by certified or
registered mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other addresses for
a party as shall be specified by like notice):
If to the Company, to:
Marcus Cable Company, L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to the General Partner, to:
Marcus Cable Properties, Inc.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to Indemnitee, to:
Facsimile:
Section 19.15 Certain Construction Rules.
(a) The article and section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise
provided to the contrary, (i) all references to days shall be
deemed references to calendar days and (ii) any reference to
a "Section" or "Article" shall be deemed to refer to a section
or article of this Agreement. The words "hereof," "herein"
and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words
"include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation." Unless otherwise specifically provided
for herein, the term "or" shall not be deemed to be exclusive.
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
(b) For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed
on a person with respect to any employee benefit plan;
references to "serving at the request of the Company" shall
include any service as an officer, employee, agent or
fiduciary of the Company which imposes duties on, or involves
services by, such officer, employee, agent or fiduciary with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this
Agreement.
Section 19.16 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to the conflicts of laws
principles thereof.
Section 19.17 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be
one and the same instrument, notwithstanding that both parties are
not signatories to the original or same counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered to be effective as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.,
General Partner
By: MARCUS CABLE PROPERTIES, INC.,
General Partner
By:
Name:
Title:
INDEMNITEE
[Signature]
Name: [Printed Name]
Exhibit 10.3
MARCUS CABLE COMPANY, L.P.
INDEMNIFICATION AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of April
23, 1998, between Marcus Cable Company, L.P., a Delaware limited
partnership (the "Company"), and Jeffrey A. Marcus ("Indemnitee").
Background Statement and Recitals
Highly competent and experienced persons are becoming
more reluctant to serve companies as officers, directors or in
other capacities unless they are provided with adequate protection
through insurance and adequate indemnification against inordinate
risks of claims and actions against them arising out of their
service to and activities on behalf of the company.
The Board of Directors (the "Board") of Marcus Cable
Properties, Inc., a Delaware corporation (the general partner of
Marcus Cable Properties, L.P., a Delaware limited partnership,
which in turn is the general partner of the Company) (the "General
Partner") has determined that the inability of the Company to
attract and retain such persons would be detrimental to the best
interests of the Company and its investors and that the Company
should act to assure such persons that there will be increased
certainty of such protection in the future.
The Board has also determined that it is reasonable,
prudent and necessary for the Company, in addition to purchasing
and maintaining directors' and officers' liability insurance (or
otherwise providing for adequate arrangements of self-insurance),
contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve
or continue to serve the Company free from undue concern that they
will not be so indemnified.
Pursuant to that certain Employment Agreement (the
"Employment Agreement") between the Company and Jeffrey A. Marcus,
dated as of April 3, 1998, Indemnitee is willing to serve, continue
to serve and to take on additional service for or on behalf of the
Company on the condition that he be so indemnified.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have
the following respective meanings:
"Change in Control" means a change in control of the
Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limiting the
generality of the foregoing, a Change in Control shall be deemed to
have occurred (irrespective of the applicability of the initial
clause of this definition) if at any time any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act, but
excluding (a) Paul Allen, (b) any employee benefit plan of the
Company or of any subsidiary of the Company, and (c) any entity
organized, appointed or established by the Company pursuant to the
terms of any such plan) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's or the General
Partner's then outstanding securities or has the ability to appoint
a majority of the members of the Board.
"Claim" means an actual or threatened claim or request
for relief.
"Corporate Status" means the status of a person who is or
was a director, nominee for director, officer, employee, agent or
fiduciary of the Company or the General Partner (including any
predecessors to the Company or the General Partner), or of any
other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the Company or the
General Partner.
"Disinterested Director," with respect to any request by
Indemnitee for indemnification hereunder, means a director of the
General Partner who neither is nor was a party to the Proceeding or
subject to a Claim, issue or matter in respect of which
indemnification is sought by Indemnitee.
"DRULP" means the Delaware Revised Uniform Limited
Partnership Act and any successor statute thereto as either of them
may be amended from time to time.
"Expenses" means all attorneys' fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or
participating in (including on appeal), a Proceeding.
"Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and
partnership law, and neither contemporaneously is, nor in the five
years theretofore has been, retained to represent (a) the Company,
the General Partner or Indemnitee in any matter material to either
such party, (b) any other party to the Proceeding giving rise to a
claim for indemnification hereunder or (c) the beneficial owner,
directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's or the
General Partner's then outstanding voting securities (other than,
in each such case, with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements). Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company, the General Partner or Indemnitee in an action
to determine Indemnitee's rights under this Agreement.
"person" shall have the meaning ascribed to such term in
Sections 13(d) and 14(d) of the Exchange Act.
"Proceeding" means any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative and whether or not based
upon events occurring, or actions taken, before the date hereof
(except any of the foregoing initiated by Indemnitee pursuant to
Article VI or Section 7.8 to enforce his rights under this
Agreement), and any inquiry or investigation that could lead to,
and any appeal in or related to, any such action, suit,
arbitration, alternative dispute resolution mechanism, hearing or
proceeding.
ARTICLE II
SERVICES BY INDEMNITEE
Section 2.1 Services. Indemnitee agrees to serve, or
continue to serve, the Company and the General Partner pursuant to
the Employment Agreement and, as the Company has requested or may
request from time to time, as a director, officer, employee, agent
or fiduciary of another corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other
enterprise. Indemnitee and the Company each acknowledge that they
have entered into this Agreement as a means of inducing Indemnitee
to serve, or continue to serve, the Company and the General Partner
in such capacities. Indemnitee may at any time and for any reason
resign from such position or positions (subject to the terms and
conditions of the Employment Agreement, any other contractual
obligation or any obligation imposed by operation of law). The
Company shall have no obligation under this Agreement to continue
Indemnitee in any such position or positions.
ARTICLE III
INDEMNIFICATION
Section 3.1 General. The Company shall indemnify, and
advance Expenses to, Indemnitee to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit.
The rights of Indemnitee provided under the preceding sentence
shall include, but shall not be limited to, the right to be
indemnified and to have Expenses advanced in all Proceedings to the
fullest extent permitted by Section 17-108 of the DRULP. The
provisions set forth in this Agreement are provided in addition to
and as a means of furtherance and implementation of, and not in
limitation of, the obligations expressed in this Article III.
Section 3.2 Proceedings Other Than by or in Right of
the Company. Indemnitee shall be entitled to indemnification
pursuant to this Section 3.2 if, by reason of his Corporate Status,
he was, is or is threatened to be made, a party to any Proceeding,
other than a Proceeding by or in the right of the Company.
Pursuant to this Section 3.2, the Company shall indemnify
Indemnitee against Expenses, judgments, penalties, fines and
amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with any such Expenses,
judgments, penalties, fines and amounts paid in settlement)
actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any Claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful. Nothing in
this Section 3.2 shall limit the benefits of Section 3.1 or any
other Section hereunder.
Section 3.3 Proceedings by or in Right of the Company.
Indemnitee shall be entitled to indemnification pursuant to this
Section 3.3 if, by reason of his Corporate Status, he was, is or is
threatened to be made, a party to any Proceeding brought by or in
the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3.3, the Company shall indemnify
Indemnitee against Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any Claim,
issue or matter therein, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of
any Claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if
applicable law prohibits such indemnification; provided, however,
that, if applicable law so permits, indemnification against such
Expenses shall nevertheless be made by the Company in such event if
and only to the extent that the Court of Chancery of the State of
Delaware or other court of competent jurisdiction (the "Court"), or
the court in which such Proceeding shall have been brought or is
pending, shall so determine. Nothing in this Section 3.3 shall
limit the benefits of Section 3.1 or any other Section hereunder.
ARTICLE IV
EXPENSES
Section 4.1 Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this
Agreement to the contrary (except as set forth in Section 7.2(c) or
7.6), and without a requirement for any determination described in
Section 5.2, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with any Proceeding to which Indemnitee was or is a
party by reason of his Corporate Status and in which Indemnitee is
successful, on the merits or otherwise. If Indemnitee is not
wholly successful, on the merits or otherwise, in a Proceeding but
is successful, on the merits or otherwise, as to any Claim, issue
or matter in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf relating to each successfully resolved Claim,
issue or matter. For purposes of this Section 4.1 and without
limitation, the termination of a Claim, issue or matter in a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such Claim, issue or matter.
Section 4.2 Expenses of a Witness or Non-Party.
Notwithstanding any other provision of this Agreement to the
contrary, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness or otherwise participates in any
Proceeding at a time when he is not a party in the Proceeding, the
Company shall indemnify him against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith.
Section 4.3 Advancement of Expenses. The Company
shall pay all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding, whether brought by or
in the right of the Company or otherwise, in advance of any
determination with respect to entitlement to indemnification
pursuant to Article V within 15 days after the receipt by the
General Partner of a written request from Indemnitee requesting
such payment or payments from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by
Indemnitee. Indemnitee hereby undertakes and agrees that he will
reimburse and repay the Company for any Expenses so advanced to the
extent that it shall ultimately be determined (in a final
adjudication by a court from which there is no further right of
appeal or in a final adjudication of an arbitration pursuant to
Section 6.1 if Indemnitee elects to seek such arbitration) that
Indemnitee is not entitled to be indemnified by the Company against
such Expenses.
ARTICLE V
PROCEDURE FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION
Section 5.1 Request by Indemnitee. To obtain
indemnification under this Agreement, Indemnitee shall submit to
the General Partner a written request, including therein or
therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to
indemnification. The Secretary or an Assistant Secretary of the
General Partner shall, promptly upon receipt of such a request for
indemnification, advise the members of the Board in writing that
Indemnitee has requested indemnification.
Section 5.2 Determination of Request. Upon written
request by Indemnitee for indemnification pursuant to Section 5.1,
a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific case
as follows:
(a) If a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee unless Indemnitee
shall request that such determination be made by the
Disinterested Directors, in which case in the manner provided
for in clause (i) of paragraph (b) below;
(b) If a Change in Control shall not have occurred,
(i) by a majority vote of the Disinterested Directors, even
though less than a quorum of the Board, or (ii) if there are
no Disinterested Directors, or if such Disinterested Directors
so direct, by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to the Indemnitee,
or (iii) if Indemnitee and the Company mutually agree, by a
majority vote of the disinterested stockholders of the General
Partner; or
(c) As provided in Section 5.4(b).
If it is so determined that Indemnitee is entitled to
indemnification hereunder, payment to Indemnitee shall be made
within 15 days after such determination. Indemnitee shall
cooperate with the person or persons making such determination with
respect to Indemnitee's entitlement to indemnification, including
providing to such person upon reasonable advance request any
documentation or information that is not privileged or otherwise
protected from disclosure and that is reasonably available to
Indemnitee and reasonably necessary for such determination. Any
costs or expenses (including attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person or persons
making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement
to indemnification), and the Company shall indemnify and hold
harmless Indemnitee therefrom.
Section 5.3 Independent Counsel. If a Change in
Control shall not have occurred and the determination of
entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by (a) a
majority vote of the Disinterested Directors, even though less than
a quorum of the Board or (b) if there are no Disinterested
Directors, by a majority vote of the Board, and the General Partner
shall give written notice to Indemnitee, within 10 days after
receipt by the General Partner of Indemnitee's request for
indemnification, specifying the identity and address of the
Independent Counsel so selected. If a Change in Control shall have
occurred and the determination of entitlement to indemnification is
to be made by Independent Counsel, the Independent Counsel shall be
selected by Indemnitee, and Indemnitee shall give written notice to
the General Partner, within 10 days after submission of
Indemnitee's request for indemnification, specifying the identity
and address of the Independent Counsel so selected (unless
Indemnitee shall request that such selection be made by the
Disinterested Directors, in which event the General Partner shall
give written notice to Indemnitee, within 10 days after receipt of
Indemnitee's request for the Disinterested Directors to make such
selection, specifying the identity and address of the Independent
Counsel so selected). In either event, (i) such notice to
Indemnitee or the General Partner, as the case may be, shall be
accompanied by a written affirmation of the Independent Counsel so
selected that it satisfies the requirements of the definition of
"Independent Counsel" in Article I and that it agrees to serve in
such capacity and (ii) Indemnitee or the General Partner, as the
case may be, may, within seven days after such written notice of
selection shall have been given, deliver to the General Partner or
to Indemnitee, as the case may be, a written objection to such
selection. Any objection to selection of Independent Counsel
pursuant to this Section 5.3 may be asserted only on the ground
that the Independent Counsel so selected does not meet the
requirements of the definition of "Independent Counsel" in
Article I, and the objection shall set forth with particularity the
factual basis of such assertion. If such written objection is
timely made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until the Court has determined that
such objection is without merit. In the event of a timely written
objection to a choice of Independent Counsel, the party originally
selecting the Independent Counsel shall have seven days to make an
alternate selection of Independent Counsel and to give written
notice of such selection to the other party, after which time such
other party shall have five days to make a written objection to
such alternate selection. If, within 30 days after submission of
Indemnitee's request for indemnification pursuant to Section 5.1,
no Independent Counsel shall have been selected and not objected
to, either the General Partner or Indemnitee may petition the Court
for resolution of any objection that shall have been made by the
Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection
is so resolved or the person so appointed shall act as Independent
Counsel under Section 5.2. The Company shall pay any and all
reasonable fees and expenses incurred by such Independent Counsel
in connection with acting pursuant to Section 5.2, and the Company
shall pay all reasonable fees and expenses incident to the
procedures of this Section 5.3, regardless of the manner in which
such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to
Section 6.1, Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 5.4 Presumptions and Effect of Certain
Proceedings.
(a) Indemnitee shall be presumed to be entitled to
indemnification under this Agreement upon submission of a
request for indemnification pursuant to Section 5.1, and the
Company shall have the burden of proof in overcoming that
presumption in reaching a determination contrary to that
presumption. Such presumption shall be used by Independent
Counsel (or other person or persons determining entitlement to
indemnification) as a basis for a determination of entitlement
to indemnification unless the Company provides information
sufficient to overcome such presumption by clear and
convincing evidence.
(b) If the person or persons empowered or selected
under this Article V to determine whether Indemnitee is
entitled to indemnification shall not have made a
determination within 60 days after receipt by the General
Partner of Indemnitee's request for indemnification, the
requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a knowing
misstatement by Indemnitee of a material fact, or knowing
omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with
Indemnitee's request for indemnification, or (ii) a
prohibition of such indemnification under applicable law;
provided, however, that such 60-day period may be extended for
a reasonable time, not to exceed an additional 30 days, if the
person making the determination with respect to entitlement to
indemnification in good faith requires such additional time
for the obtaining or evaluating of documentation and/or
information relating to such determination; provided further,
that the 60-day limitation set forth in this Section 5.4(b)
shall not apply and such period shall be extended as necessary
(i) if within 30 days after receipt by the General Partner of
Indemnitee's request for indemnification under Section 5.1
Indemnitee and the General Partner have agreed, and the Board
has resolved, to submit such determination to the stockholders
of the General Partner pursuant to Section 5.2(b) for their
consideration at a special meeting of stockholders for the
purpose of making such determination to be held within 60 days
after such agreement and such determination is made thereat,
or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel, in which case the
applicable period shall be as set forth in clause (c) of
Section 6.1.
(c) The termination of any Proceeding or of any
Claim, issue or matter by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea
of nolo contendere or its equivalent, shall not by itself
adversely affect the rights of Indemnitee to indemnification
or create a presumption that Indemnitee did not act in good
faith or in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company or, with
respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.
Indemnitee shall be deemed to have been found liable in
respect of any Claim, issue or matter only after he shall have
been so adjudged by the Court after exhaustion of all appeals
therefrom.
ARTICLE VI
CERTAIN REMEDIES OF INDEMNITEE
Section 6.1 Indemnitee Entitled to Adjudication in an
Appropriate Court. If (a) a determination is made pursuant to
Article V that Indemnitee is not entitled to indemnification under
this Agreement, (b) there has been any failure by the Company to
make timely payment or advancement of any amounts due hereunder, or
(c) the determination of entitlement to indemnification is to be
made by Independent Counsel and such determination shall not have
been made and delivered in a written opinion within 90 days after
the latest of (i) such Independent Counsel's being appointed,
(ii) the overruling by the Court of objections to such counsel's
selection or (iii) expiration of all periods for the General
Partner or Indemnitee to object to such counsel's selection,
Indemnitee shall be entitled to commence an action seeking an
adjudication in the Court of his entitlement to such
indemnification or advancement of Expenses. Alternatively,
Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the commercial
arbitration rules of the American Arbitration Association.
Indemnitee shall commence such action seeking an adjudication or an
award in arbitration within 180 days following the date on which
Indemnitee first has the right to commence such action pursuant to
this Section 6.1, or such right shall expire. Neither the Company
nor the General Partner shall oppose Indemnitee's right to seek any
such adjudication or award in arbitration.
Section 6.2 Adverse Determination Not to Affect any
Judicial Proceeding. If a determination shall have been made
pursuant to Article V that Indemnitee is not entitled to
indemnification under this Agreement, any judicial proceeding or
arbitration commenced pursuant to this Article VI shall be
conducted in all respects as a de novo trial or arbitration on the
merits, and Indemnitee shall not be prejudiced by reason of such
initial adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Article VI, Indemnitee shall
be presumed to be entitled to indemnification or advancement of
Expenses, as the case may be, under this Agreement and the Company
shall have the burden of proof in overcoming such presumption and
to show by clear and convincing evidence that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case
may be.
Section 6.3 Company Bound by Determination Favorable
to Indemnitee in any Judicial Proceeding or Arbitration. If a
determination shall have been made or deemed to have been made
pursuant to Article V that Indemnitee is entitled to
indemnification, the Company shall be irrevocably bound by such
determination in any judicial proceeding or arbitration commenced
pursuant to this Article VI and shall be precluded from asserting
that such determination has not been made or that the procedure by
which such determination was made is not valid, binding and
enforceable, in each such case absent (a) a knowing misstatement by
Indemnitee of a material fact, or a knowing omission of a material
fact necessary to make a statement by Indemnitee not materially
misleading, in connection with Indemnitee's request for
indemnification or (b) a prohibition of such indemnification under
applicable law.
Section 6.4 Company Bound by the Agreement. The
Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Article VI
that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such
court or before any such arbitrator that the Company is bound by
all the provisions of this Agreement.
Section 6.5 Indemnitee Entitled to Expenses of
Judicial Proceeding. If Indemnitee seeks a judicial adjudication
of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and the Company shall
indemnify Indemnitee against, any and all expenses (of the types
described in the definition of Expenses in Article I) actually and
reasonably incurred by him in such judicial adjudication or
arbitration but only if Indemnitee prevails therein. If it shall
be determined in such judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses or other benefit sought,
the expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be equitably allocated
between the Company and Indemnitee. Notwithstanding the
foregoing, if a Change in Control shall have occurred, Indemnitee
shall be entitled to indemnification under this Section 6.5
regardless of whether Indemnitee ultimately prevails in such
judicial adjudication or arbitration.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Non-Exclusivity.
(a) The rights of Indemnitee to receive
indemnification and advancement of Expenses under this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable
law, the Agreement of Limited Partnership of the Company, any
other agreement, vote of stockholders or resolution of
directors of the General Partner, or otherwise. No amendment
or alteration of the Agreement of Limited Partnership of the
Company or any provision thereof shall adversely affect
Indemnitee's rights hereunder and such rights shall be in
addition to any rights Indemnitee may have under the Company's
Agreement of Limited Partnership and the DRULP or otherwise.
To the extent that there is a change in the DRULP or other
applicable law (whether by statute or judicial decision) that
allows greater indemnification by agreement than would be
afforded currently under the Company's Agreement of Limited
Partnership and this Agreement, it is the intent of the
parties hereto that the Indemnitee shall enjoy by virtue of
this Agreement the greater benefit so afforded by such change.
(b) The Company shall not cause the Agreement of
Limited Partnership of the Company to be amended in a manner
that adversely affects Indemnitee's rights to indemnification
thereunder existing as of the date hereof.
Section 7.2 Insurance and Subrogation.
(a) To the extent the Company maintains an
insurance policy or policies providing liability insurance for
directors, officers, employees, agents or fiduciaries of the
Company or of any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan
or other enterprise that such person serves at the request of
the Company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director,
officer, employee, agent or fiduciary under such policy or
policies.
(b) In the event of any payment by the Company
under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of
such documents as are necessary to enable the Company to bring
suit to enforce such rights.
(c) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee
has otherwise actually received such payment under the
Company's Agreement of Limited Partnership or any insurance
policy, contract, agreement or otherwise.
Section 7.3 Certain Settlement Provisions. The
Company shall have no obligation to indemnify Indemnitee under this
Agreement for amounts paid in settlement of a Proceeding or Claim
without the Company's prior written consent. The Company shall not
settle any Proceeding or Claim in any manner that would impose any
fine or other obligation on Indemnitee without Indemnitee's prior
written consent. Neither the Company nor Indemnitee shall
unreasonably withhold their consent to any proposed settlement.
Section 7.4 Duration of Agreement. This Agreement
shall continue for so long as Indemnitee serves as an officer,
employee, agent or fiduciary of the Company or, at the request of
the Company, as a director, nominee for director, officer,
employee, agent or fiduciary of another corporation, partnership,
limited liability company, joint venture, trust, employee benefit
plan or other enterprise, and thereafter shall survive until and
terminate upon the latest to occur of (a) the expiration of 10
years after the latest date that Indemnitee shall have ceased to
serve in any such capacity; (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to Article VI
relating thereto; or (c) the expiration of all statutes of
limitation applicable to possible Claims arising out of
Indemnitee's Corporate Status.
Section 7.5 Notice by Each Party. Indemnitee shall
promptly notify the Company and the General Partner in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document or communication relating
to any Proceeding or Claim for which Indemnitee may be entitled to
indemnification or advancement of Expenses hereunder; provided,
however, that any failure of Indemnitee to so notify the Company or
the General Partner shall not adversely affect Indemnitee's rights
under this Agreement except to the extent the Company or the
General Partner shall have been materially prejudiced as a direct
result of such failure. The Company or General Partner shall
notify promptly Indemnitee in writing, as to the pendency of any
Proceeding or Claim that may involve a claim against the Indemnitee
for which Indemnitee may be entitled to indemnification or
advancement of Expenses hereunder.
Section 7.6 Certain Persons Not Entitled to
Indemnification. Notwithstanding any other provision of this
Agreement to the contrary, Indemnitee shall not be entitled to
indemnification or advancement of Expenses hereunder with respect
to any Proceeding or any Claim, issue or matter therein, brought or
made by Indemnitee against the Company or any affiliate of the
Company, except as specifically provided in Article V or
Article VI.
Section 7.7 Indemnification for Negligence, Gross
Negligence, etc. Without limiting the generality of any other
provision hereunder, it is the express intent of this Agreement
that Indemnitee be indemnified and Expenses be advanced regardless
of Indemnitee's acts of negligence, gross negligence or intentional
or willful misconduct to the extent that indemnification and
advancement of Expenses is allowed pursuant to the terms of this
Agreement and under applicable law.
Section 7.8 Enforcement. The Company agrees that its
execution of this Agreement shall constitute a stipulation by which
it shall be irrevocably bound in any court or arbitration in which
a proceeding by Indemnitee for enforcement of his rights hereunder
shall have been commenced, continued or appealed, that its
obligations set forth in this Agreement are unique and special, and
that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to
Indemnitee, for which a remedy at law will be inadequate. As a
result, in addition to any other right or remedy he may have at law
or in equity with respect to breach of this Agreement, Indemnitee
shall be entitled to injunctive or mandatory relief directing
specific performance by the Company of its obligations under this
Agreement.
Section 7.9 Successors and Assigns. All of the terms
and provisions of this Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, heirs, executors,
administrators, legal representatives. The Company shall require
and cause any direct or indirect successor (whether by purchase,
merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by written agreement in form
and substance reasonably satisfactory to Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if
no such succession had taken place.
Section 7.10 Amendment. This Agreement may not be
modified or amended except by a written instrument executed by or
on behalf of each of the parties hereto.
Section 7.11 Waivers. The observance of any term of
this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the party
entitled to enforce such term only by a writing signed by the party
against which such waiver is to be asserted. Unless otherwise
expressly provided herein, no delay on the part of any party hereto
in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
Section 7.12 Entire Agreement. This Agreement and the
documents expressly referred to herein constitute the entire
agreement between the parties hereto with respect to the matters
covered hereby, and any other prior or contemporaneous oral or
written understandings or agreements with respect to the matters
covered hereby are expressly superseded by this Agreement.
Section 7.13 Severability. If any provision of this
Agreement (including any provision within a single section,
paragraph or sentence) or the application of such provision to any
person or circumstance, shall be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect
the application of such provision to other persons or
circumstances, it being the intent and agreement of the parties
that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent, or if such modification is
not possible, by substituting therefor another provision that is
valid, legal and unenforceable and that achieves the same
objective. Any such finding of invalidity or unenforceability
shall not prevent the enforcement of such provision in any other
jurisdiction to the maximum extent permitted by applicable law.
Section 7.14 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery of a standard
overnight courier or when delivered by hand or (c) the expiration
of five business days after the date mailed by certified or
registered mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other addresses for
a party as shall be specified by like notice):
If to the Company, to:
Marcus Cable Company, L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to the General Partner, to:
Marcus Cable Properties, Inc.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to Indemnitee, to:
Jeffrey A. Marcus
6801 Turtle Creek Blvd.
Dallas, Texas 75205-1249
Facsimile: (214) 363-6876
Section 7.15 Certain Construction Rules.
(a) The article and section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise
provided to the contrary, (i) all references to days shall be
deemed references to calendar days and (ii) any reference to
a "Section" or "Article" shall be deemed to refer to a section
or article of this Agreement. The words "hereof," "herein"
and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words
"include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation." Unless otherwise specifically provided
for herein, the term "or" shall not be deemed to be exclusive.
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
(b) For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed
on a person with respect to any employee benefit plan;
references to "serving at the request of the Company" shall
include any service as an officer, employee, agent or
fiduciary of the Company which imposes duties on, or involves
services by, such officer, employee, agent or fiduciary with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this
Agreement.
Section 7.16 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to the conflicts of laws
principles thereof.
Section 7.17 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be
one and the same instrument, notwithstanding that both parties are
not signatories to the original or same counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered to be effective as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.,
General Partner
By: MARCUS CABLE PROPERTIES, INC.,
General Partner
By:/s/ Thomas P. McMillin
Thomas P. McMillin
Executive Vice President
INDEMNITEE
/s/ Jeffrey A. Marcus
Jeffrey A. Marcus
Exhibit 10.4
MARCUS CABLE COMPANY, L.P.
INDEMNIFICATION AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of April
23, 1998, between Marcus Cable Company, L.P., a Delaware limited
partnership (the "Company"), and Thomas P. McMillin ("Indemnitee").
Background Statement and Recitals
Highly competent and experienced persons are becoming
more reluctant to serve companies as officers, directors or in
other capacities unless they are provided with adequate protection
through insurance and adequate indemnification against inordinate
risks of claims and actions against them arising out of their
service to and activities on behalf of the company.
The Board of Directors (the "Board") of Marcus Cable
Properties, Inc., a Delaware corporation (the general partner of
Marcus Cable Properties, L.P., a Delaware limited partnership,
which in turn is the general partner of the Company) (the "General
Partner") has determined that the inability of the Company to
attract and retain such persons would be detrimental to the best
interests of the Company and its investors and that the Company
should act to assure such persons that there will be increased
certainty of such protection in the future.
The Board has also determined that it is reasonable,
prudent and necessary for the Company, in addition to purchasing
and maintaining directors' and officers' liability insurance (or
otherwise providing for adequate arrangements of self-insurance),
contractually to obligate itself to indemnify such persons to the
fullest extent permitted by applicable law so that they will serve
or continue to serve the Company free from undue concern that they
will not be so indemnified.
Pursuant to that certain Employment Agreement (the
"Employment Agreement") between the Company and Thomas P. McMillin
dated as of April 3, 1998, Indemnitee is willing to serve, continue
to serve and to take on additional service for or on behalf of the
Company on the condition that he be so indemnified.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants herein contained, and other good and valuable
consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have
the following respective meanings:
"Change in Control" means a change in control of the
Company of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is then subject to such reporting
requirement; provided, however, that, without limiting the
generality of the foregoing, a Change in Control shall be deemed to
have occurred (irrespective of the applicability of the initial
clause of this definition) if at any time any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act, but
excluding (a) Paul Allen, (b) any employee benefit plan of the
Company or of any subsidiary of the Company, and (c) any entity
organized, appointed or established by the Company pursuant to the
terms of any such plan) is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's or the General
Partner's then outstanding securities or has the ability to appoint
a majority of the members of the Board.
"Claim" means an actual or threatened claim or request
for relief.
"Corporate Status" means the status of a person who is or
was a director, nominee for director, officer, employee, agent or
fiduciary of the Company or the General Partner (including any
predecessors to the Company or the General Partner), or of any
other corporation, partnership, limited liability company, joint
venture, trust, employee benefit plan or other enterprise which
such person is or was serving at the request of the Company or the
General Partner.
"Disinterested Director," with respect to any request by
Indemnitee for indemnification hereunder, means a director of the
General Partner who neither is nor was a party to the Proceeding or
subject to a Claim, issue or matter in respect of which
indemnification is sought by Indemnitee.
"DRULP" means the Delaware Revised Uniform Limited
Partnership Act and any successor statute thereto as either of them
may be amended from time to time.
"Expenses" means all attorneys' fees, retainers, court
costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees and all other disbursements
or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or
participating in (including on appeal), a Proceeding.
"Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and
partnership law, and neither contemporaneously is, nor in the five
years theretofore has been, retained to represent (a) the Company,
the General Partner or Indemnitee in any matter material to either
such party, (b) any other party to the Proceeding giving rise to a
claim for indemnification hereunder or (c) the beneficial owner,
directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's or the
General Partner's then outstanding voting securities (other than,
in each such case, with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements). Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company, the General Partner or Indemnitee in an action
to determine Indemnitee's rights under this Agreement.
"person" shall have the meaning ascribed to such term in
Sections 13(d) and 14(d) of the Exchange Act.
"Proceeding" means any threatened, pending or completed
action, suit, arbitration, alternate dispute resolution mechanism,
administrative hearing or any other proceeding, whether civil,
criminal, administrative or investigative and whether or not based
upon events occurring, or actions taken, before the date hereof
(except any of the foregoing initiated by Indemnitee pursuant to
Article VI or Section 7.8 to enforce his rights under this
Agreement), and any inquiry or investigation that could lead to,
and any appeal in or related to, any such action, suit,
arbitration, alternative dispute resolution mechanism, hearing or
proceeding.
ARTICLE II
SERVICES BY INDEMNITEE
Section 2.1 Services. Indemnitee agrees to serve, or
continue to serve, the Company and the General Partner pursuant to
the Employment Agreement and, as the Company has requested or may
request from time to time, as a director, officer, employee, agent
or fiduciary of another corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other
enterprise. Indemnitee and the Company each acknowledge that they
have entered into this Agreement as a means of inducing Indemnitee
to serve, or continue to serve, the Company and the General Partner
in such capacities. Indemnitee may at any time and for any reason
resign from such position or positions (subject to the terms and
conditions of the Employment Agreement, any other contractual
obligation or any obligation imposed by operation of law). The
Company shall have no obligation under this Agreement to continue
Indemnitee in any such position or positions.
ARTICLE III
INDEMNIFICATION
Section 3.1 General. The Company shall indemnify, and
advance Expenses to, Indemnitee to the fullest extent permitted by
applicable law in effect on the date hereof and to such greater
extent as applicable law may thereafter from time to time permit.
The rights of Indemnitee provided under the preceding sentence
shall include, but shall not be limited to, the right to be
indemnified and to have Expenses advanced in all Proceedings to the
fullest extent permitted by Section 17-108 of the DRULP. The
provisions set forth in this Agreement are provided in addition to
and as a means of furtherance and implementation of, and not in
limitation of, the obligations expressed in this Article III.
Section 3.2 Proceedings Other Than by or in Right of
the Company. Indemnitee shall be entitled to indemnification
pursuant to this Section 3.2 if, by reason of his Corporate Status,
he was, is or is threatened to be made, a party to any Proceeding,
other than a Proceeding by or in the right of the Company.
Pursuant to this Section 3.2, the Company shall indemnify
Indemnitee against Expenses, judgments, penalties, fines and
amounts paid in settlement (including all interest, assessments and
other charges paid or payable in connection with any such Expenses,
judgments, penalties, fines and amounts paid in settlement)
actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any Claim, issue or matter
therein, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal Proceeding, had no
reasonable cause to believe his conduct was unlawful. Nothing in
this Section 3.2 shall limit the benefits of Section 3.1 or any
other Section hereunder.
Section 3.3 Proceedings by or in Right of the Company.
Indemnitee shall be entitled to indemnification pursuant to this
Section 3.3 if, by reason of his Corporate Status, he was, is or is
threatened to be made, a party to any Proceeding brought by or in
the right of the Company to procure a judgment in its favor.
Pursuant to this Section 3.3, the Company shall indemnify
Indemnitee against Expenses actually and reasonably incurred by him
or on his behalf in connection with such Proceeding or any Claim,
issue or matter therein, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing, no
indemnification against such Expenses shall be made in respect of
any Claim, issue or matter in such Proceeding as to which
Indemnitee shall have been adjudged to be liable to the Company if
applicable law prohibits such indemnification; provided, however,
that, if applicable law so permits, indemnification against such
Expenses shall nevertheless be made by the Company in such event if
and only to the extent that the Court of Chancery of the State of
Delaware or other court of competent jurisdiction (the "Court"), or
the court in which such Proceeding shall have been brought or is
pending, shall so determine. Nothing in this Section 3.3 shall
limit the benefits of Section 3.1 or any other Section hereunder.
ARTICLE IV
EXPENSES
Section 4.1 Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this
Agreement to the contrary (except as set forth in Section 7.2(c) or
7.6), and without a requirement for any determination described in
Section 5.2, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or on his behalf
in connection with any Proceeding to which Indemnitee was or is a
party by reason of his Corporate Status and in which Indemnitee is
successful, on the merits or otherwise. If Indemnitee is not
wholly successful, on the merits or otherwise, in a Proceeding but
is successful, on the merits or otherwise, as to any Claim, issue
or matter in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by
him or on his behalf relating to each successfully resolved Claim,
issue or matter. For purposes of this Section 4.1 and without
limitation, the termination of a Claim, issue or matter in a
Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such Claim, issue or matter.
Section 4.2 Expenses of a Witness or Non-Party.
Notwithstanding any other provision of this Agreement to the
contrary, to the extent that Indemnitee is, by reason of his
Corporate Status, a witness or otherwise participates in any
Proceeding at a time when he is not a party in the Proceeding, the
Company shall indemnify him against all Expenses actually and
reasonably incurred by him or on his behalf in connection
therewith.
Section 4.3 Advancement of Expenses. The Company
shall pay all reasonable Expenses incurred by or on behalf of
Indemnitee in connection with any Proceeding, whether brought by or
in the right of the Company or otherwise, in advance of any
determination with respect to entitlement to indemnification
pursuant to Article V within 15 days after the receipt by the
General Partner of a written request from Indemnitee requesting
such payment or payments from time to time, whether prior to or
after final disposition of such Proceeding. Such statement or
statements shall reasonably evidence the Expenses incurred by
Indemnitee. Indemnitee hereby undertakes and agrees that he will
reimburse and repay the Company for any Expenses so advanced to the
extent that it shall ultimately be determined (in a final
adjudication by a court from which there is no further right of
appeal or in a final adjudication of an arbitration pursuant to
Section 6.1 if Indemnitee elects to seek such arbitration) that
Indemnitee is not entitled to be indemnified by the Company against
such Expenses.
ARTICLE V
PROCEDURE FOR DETERMINATION OF ENTITLEMENT
TO INDEMNIFICATION
Section 5.1 Request by Indemnitee. To obtain
indemnification under this Agreement, Indemnitee shall submit to
the General Partner a written request, including therein or
therewith such documentation and information as is reasonably
available to Indemnitee and is reasonably necessary to determine
whether and to what extent Indemnitee is entitled to
indemnification. The Secretary or an Assistant Secretary of the
General Partner shall, promptly upon receipt of such a request for
indemnification, advise the members of the Board in writing that
Indemnitee has requested indemnification.
Section 5.2 Determination of Request. Upon written
request by Indemnitee for indemnification pursuant to Section 5.1,
a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific case
as follows:
(a) If a Change in Control shall have occurred, by
Independent Counsel in a written opinion to the Board, a copy
of which shall be delivered to Indemnitee unless Indemnitee
shall request that such determination be made by the
Disinterested Directors, in which case in the manner provided
for in clause (i) of paragraph (b) below;
(b) If a Change in Control shall not have occurred,
(i) by a majority vote of the Disinterested Directors, even
though less than a quorum of the Board, or (ii) if there are
no Disinterested Directors, or if such Disinterested Directors
so direct, by Independent Counsel in a written opinion to the
Board, a copy of which shall be delivered to the Indemnitee,
or (iii) if Indemnitee and the Company mutually agree, by a
majority vote of the disinterested stockholders of the General
Partner; or
(c) As provided in Section 5.4(b).
If it is so determined that Indemnitee is entitled to
indemnification hereunder, payment to Indemnitee shall be made
within 15 days after such determination. Indemnitee shall
cooperate with the person or persons making such determination with
respect to Indemnitee's entitlement to indemnification, including
providing to such person upon reasonable advance request any
documentation or information that is not privileged or otherwise
protected from disclosure and that is reasonably available to
Indemnitee and reasonably necessary for such determination. Any
costs or expenses (including attorneys' fees and disbursements)
incurred by Indemnitee in so cooperating with the person or persons
making such determination shall be borne by the Company
(irrespective of the determination as to Indemnitee's entitlement
to indemnification), and the Company shall indemnify and hold
harmless Indemnitee therefrom.
Section 5.3 Independent Counsel. If a Change in
Control shall not have occurred and the determination of
entitlement to indemnification is to be made by Independent
Counsel, the Independent Counsel shall be selected by (a) a
majority vote of the Disinterested Directors, even though less than
a quorum of the Board or (b) if there are no Disinterested
Directors, by a majority vote of the Board, and the General Partner
shall give written notice to Indemnitee, within 10 days after
receipt by the General Partner of Indemnitee's request for
indemnification, specifying the identity and address of the
Independent Counsel so selected. If a Change in Control shall have
occurred and the determination of entitlement to indemnification is
to be made by Independent Counsel, the Independent Counsel shall be
selected by Indemnitee, and Indemnitee shall give written notice to
the General Partner, within 10 days after submission of
Indemnitee's request for indemnification, specifying the identity
and address of the Independent Counsel so selected (unless
Indemnitee shall request that such selection be made by the
Disinterested Directors, in which event the General Partner shall
give written notice to Indemnitee, within 10 days after receipt of
Indemnitee's request for the Disinterested Directors to make such
selection, specifying the identity and address of the Independent
Counsel so selected). In either event, (i) such notice to
Indemnitee or the General Partner, as the case may be, shall be
accompanied by a written affirmation of the Independent Counsel so
selected that it satisfies the requirements of the definition of
"Independent Counsel" in Article I and that it agrees to serve in
such capacity and (ii) Indemnitee or the General Partner, as the
case may be, may, within seven days after such written notice of
selection shall have been given, deliver to the General Partner or
to Indemnitee, as the case may be, a written objection to such
selection. Any objection to selection of Independent Counsel
pursuant to this Section 5.3 may be asserted only on the ground
that the Independent Counsel so selected does not meet the
requirements of the definition of "Independent Counsel" in
Article I, and the objection shall set forth with particularity the
factual basis of such assertion. If such written objection is
timely made, the Independent Counsel so selected may not serve as
Independent Counsel unless and until the Court has determined that
such objection is without merit. In the event of a timely written
objection to a choice of Independent Counsel, the party originally
selecting the Independent Counsel shall have seven days to make an
alternate selection of Independent Counsel and to give written
notice of such selection to the other party, after which time such
other party shall have five days to make a written objection to
such alternate selection. If, within 30 days after submission of
Indemnitee's request for indemnification pursuant to Section 5.1,
no Independent Counsel shall have been selected and not objected
to, either the General Partner or Indemnitee may petition the Court
for resolution of any objection that shall have been made by the
Company or Indemnitee to the other's selection of Independent
Counsel and/or for the appointment as Independent Counsel of a
person selected by the Court or by such other person as the Court
shall designate, and the person with respect to whom an objection
is so resolved or the person so appointed shall act as Independent
Counsel under Section 5.2. The Company shall pay any and all
reasonable fees and expenses incurred by such Independent Counsel
in connection with acting pursuant to Section 5.2, and the Company
shall pay all reasonable fees and expenses incident to the
procedures of this Section 5.3, regardless of the manner in which
such Independent Counsel was selected or appointed. Upon the due
commencement of any judicial proceeding or arbitration pursuant to
Section 6.1, Independent Counsel shall be discharged and relieved
of any further responsibility in such capacity (subject to the
applicable standards of professional conduct then prevailing).
Section 5.4 Presumptions and Effect of Certain
Proceedings.
(a) Indemnitee shall be presumed to be entitled to
indemnification under this Agreement upon submission of a
request for indemnification pursuant to Section 5.1, and the
Company shall have the burden of proof in overcoming that
presumption in reaching a determination contrary to that
presumption. Such presumption shall be used by Independent
Counsel (or other person or persons determining entitlement to
indemnification) as a basis for a determination of entitlement
to indemnification unless the Company provides information
sufficient to overcome such presumption by clear and
convincing evidence.
(b) If the person or persons empowered or selected
under this Article V to determine whether Indemnitee is
entitled to indemnification shall not have made a
determination within 60 days after receipt by the General
Partner of Indemnitee's request for indemnification, the
requisite determination of entitlement to indemnification
shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification, absent (i) a knowing
misstatement by Indemnitee of a material fact, or knowing
omission of a material fact necessary to make Indemnitee's
statement not materially misleading, in connection with
Indemnitee's request for indemnification, or (ii) a
prohibition of such indemnification under applicable law;
provided, however, that such 60-day period may be extended for
a reasonable time, not to exceed an additional 30 days, if the
person making the determination with respect to entitlement to
indemnification in good faith requires such additional time
for the obtaining or evaluating of documentation and/or
information relating to such determination; provided further,
that the 60-day limitation set forth in this Section 5.4(b)
shall not apply and such period shall be extended as necessary
(i) if within 30 days after receipt by the General Partner of
Indemnitee's request for indemnification under Section 5.1
Indemnitee and the General Partner have agreed, and the Board
has resolved, to submit such determination to the stockholders
of the General Partner pursuant to Section 5.2(b) for their
consideration at a special meeting of stockholders for the
purpose of making such determination to be held within 60 days
after such agreement and such determination is made thereat,
or (ii) if the determination of entitlement to indemnification
is to be made by Independent Counsel, in which case the
applicable period shall be as set forth in clause (c) of
Section 6.1.
(c) The termination of any Proceeding or of any
Claim, issue or matter by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea
of nolo contendere or its equivalent, shall not by itself
adversely affect the rights of Indemnitee to indemnification
or create a presumption that Indemnitee did not act in good
faith or in a manner that he reasonably believed to be in or
not opposed to the best interests of the Company or, with
respect to any criminal Proceeding, that Indemnitee had
reasonable cause to believe that his conduct was unlawful.
Indemnitee shall be deemed to have been found liable in
respect of any Claim, issue or matter only after he shall have
been so adjudged by the Court after exhaustion of all appeals
therefrom.
ARTICLE VI
CERTAIN REMEDIES OF INDEMNITEE
Section 6.1 Indemnitee Entitled to Adjudication in an
Appropriate Court. If (a) a determination is made pursuant to
Article V that Indemnitee is not entitled to indemnification under
this Agreement, (b) there has been any failure by the Company to
make timely payment or advancement of any amounts due hereunder, or
(c) the determination of entitlement to indemnification is to be
made by Independent Counsel and such determination shall not have
been made and delivered in a written opinion within 90 days after
the latest of (i) such Independent Counsel's being appointed,
(ii) the overruling by the Court of objections to such counsel's
selection or (iii) expiration of all periods for the General
Partner or Indemnitee to object to such counsel's selection,
Indemnitee shall be entitled to commence an action seeking an
adjudication in the Court of his entitlement to such
indemnification or advancement of Expenses. Alternatively,
Indemnitee, at his option, may seek an award in arbitration to be
conducted by a single arbitrator pursuant to the commercial
arbitration rules of the American Arbitration Association.
Indemnitee shall commence such action seeking an adjudication or an
award in arbitration within 180 days following the date on which
Indemnitee first has the right to commence such action pursuant to
this Section 6.1, or such right shall expire. Neither the Company
nor the General Partner shall oppose Indemnitee's right to seek any
such adjudication or award in arbitration.
Section 6.2 Adverse Determination Not to Affect any
Judicial Proceeding. If a determination shall have been made
pursuant to Article V that Indemnitee is not entitled to
indemnification under this Agreement, any judicial proceeding or
arbitration commenced pursuant to this Article VI shall be
conducted in all respects as a de novo trial or arbitration on the
merits, and Indemnitee shall not be prejudiced by reason of such
initial adverse determination. In any judicial proceeding or
arbitration commenced pursuant to this Article VI, Indemnitee shall
be presumed to be entitled to indemnification or advancement of
Expenses, as the case may be, under this Agreement and the Company
shall have the burden of proof in overcoming such presumption and
to show by clear and convincing evidence that Indemnitee is not
entitled to indemnification or advancement of Expenses, as the case
may be.
Section 6.3 Company Bound by Determination Favorable
to Indemnitee in any Judicial Proceeding or Arbitration. If a
determination shall have been made or deemed to have been made
pursuant to Article V that Indemnitee is entitled to
indemnification, the Company shall be irrevocably bound by such
determination in any judicial proceeding or arbitration commenced
pursuant to this Article VI and shall be precluded from asserting
that such determination has not been made or that the procedure by
which such determination was made is not valid, binding and
enforceable, in each such case absent (a) a knowing misstatement by
Indemnitee of a material fact, or a knowing omission of a material
fact necessary to make a statement by Indemnitee not materially
misleading, in connection with Indemnitee's request for
indemnification or (b) a prohibition of such indemnification under
applicable law.
Section 6.4 Company Bound by the Agreement. The
Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Article VI
that the procedures and presumptions of this Agreement are not
valid, binding and enforceable and shall stipulate in any such
court or before any such arbitrator that the Company is bound by
all the provisions of this Agreement.
Section 6.5 Indemnitee Entitled to Expenses of
Judicial Proceeding. If Indemnitee seeks a judicial adjudication
of or an award in arbitration to enforce his rights under, or to
recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and the Company shall
indemnify Indemnitee against, any and all expenses (of the types
described in the definition of Expenses in Article I) actually and
reasonably incurred by him in such judicial adjudication or
arbitration but only if Indemnitee prevails therein. If it shall
be determined in such judicial adjudication or arbitration that
Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses or other benefit sought,
the expenses incurred by Indemnitee in connection with such
judicial adjudication or arbitration shall be equitably allocated
between the Company and Indemnitee. Notwithstanding the
foregoing, if a Change in Control shall have occurred, Indemnitee
shall be entitled to indemnification under this Section 6.5
regardless of whether Indemnitee ultimately prevails in such
judicial adjudication or arbitration.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Non-Exclusivity.
(a) The rights of Indemnitee to receive
indemnification and advancement of Expenses under this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may at any time be entitled under applicable
law, the Agreement of Limited Partnership of the Company, any
other agreement, vote of stockholders or resolution of
directors of the General Partner, or otherwise. No amendment
or alteration of the Agreement of Limited Partnership of the
Company or any provision thereof shall adversely affect
Indemnitee's rights hereunder and such rights shall be in
addition to any rights Indemnitee may have under the Company's
Agreement of Limited Partnership and the DRULP or otherwise.
To the extent that there is a change in the DRULP or other
applicable law (whether by statute or judicial decision) that
allows greater indemnification by agreement than would be
afforded currently under the Company's Agreement of Limited
Partnership and this Agreement, it is the intent of the
parties hereto that the Indemnitee shall enjoy by virtue of
this Agreement the greater benefit so afforded by such change.
(b) The Company shall not cause the Agreement of
Limited Partnership of the Company to be amended in a manner
that adversely affects Indemnitee's rights to indemnification
thereunder existing as of the date hereof.
Section 7.2 Insurance and Subrogation.
(a) To the extent the Company maintains an
insurance policy or policies providing liability insurance for
directors, officers, employees, agents or fiduciaries of the
Company or of any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan
or other enterprise that such person serves at the request of
the Company, Indemnitee shall be covered by such policy or
policies in accordance with its or their terms to the maximum
extent of the coverage available for any such director,
officer, employee, agent or fiduciary under such policy or
policies.
(b) In the event of any payment by the Company
under this Agreement, the Company shall be subrogated to the
extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of
such documents as are necessary to enable the Company to bring
suit to enforce such rights.
(c) The Company shall not be liable under this
Agreement to make any payment of amounts otherwise
indemnifiable hereunder if and to the extent that Indemnitee
has otherwise actually received such payment under the
Company's Agreement of Limited Partnership or any insurance
policy, contract, agreement or otherwise.
Section 7.3 Certain Settlement Provisions. The
Company shall have no obligation to indemnify Indemnitee under this
Agreement for amounts paid in settlement of a Proceeding or Claim
without the Company's prior written consent. The Company shall not
settle any Proceeding or Claim in any manner that would impose any
fine or other obligation on Indemnitee without Indemnitee's prior
written consent. Neither the Company nor Indemnitee shall
unreasonably withhold their consent to any proposed settlement.
Section 7.4 Duration of Agreement. This Agreement
shall continue for so long as Indemnitee serves as an officer,
employee, agent or fiduciary of the Company or, at the request of
the Company, as a director, nominee for director, officer,
employee, agent or fiduciary of another corporation, partnership,
limited liability company, joint venture, trust, employee benefit
plan or other enterprise, and thereafter shall survive until and
terminate upon the latest to occur of (a) the expiration of 10
years after the latest date that Indemnitee shall have ceased to
serve in any such capacity; (b) the final termination of all
pending Proceedings in respect of which Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to Article VI
relating thereto; or (c) the expiration of all statutes of
limitation applicable to possible Claims arising out of
Indemnitee's Corporate Status.
Section 7.5 Notice by Each Party. Indemnitee shall
promptly notify the Company and the General Partner in writing upon
being served with any summons, citation, subpoena, complaint,
indictment, information or other document or communication relating
to any Proceeding or Claim for which Indemnitee may be entitled to
indemnification or advancement of Expenses hereunder; provided,
however, that any failure of Indemnitee to so notify the Company or
the General Partner shall not adversely affect Indemnitee's rights
under this Agreement except to the extent the Company or the
General Partner shall have been materially prejudiced as a direct
result of such failure. The Company or General Partner shall
notify promptly Indemnitee in writing, as to the pendency of any
Proceeding or Claim that may involve a claim against the Indemnitee
for which Indemnitee may be entitled to indemnification or
advancement of Expenses hereunder.
Section 7.6 Certain Persons Not Entitled to
Indemnification. Notwithstanding any other provision of this
Agreement to the contrary, Indemnitee shall not be entitled to
indemnification or advancement of Expenses hereunder with respect
to any Proceeding or any Claim, issue or matter therein, brought or
made by Indemnitee against the Company or any affiliate of the
Company, except as specifically provided in Article V or
Article VI.
Section 7.7 Indemnification for Negligence, Gross
Negligence, etc. Without limiting the generality of any other
provision hereunder, it is the express intent of this Agreement
that Indemnitee be indemnified and Expenses be advanced regardless
of Indemnitee's acts of negligence, gross negligence or intentional
or willful misconduct to the extent that indemnification and
advancement of Expenses is allowed pursuant to the terms of this
Agreement and under applicable law.
Section 7.8 Enforcement. The Company agrees that its
execution of this Agreement shall constitute a stipulation by which
it shall be irrevocably bound in any court or arbitration in which
a proceeding by Indemnitee for enforcement of his rights hereunder
shall have been commenced, continued or appealed, that its
obligations set forth in this Agreement are unique and special, and
that failure of the Company to comply with the provisions of this
Agreement will cause irreparable and irremediable injury to
Indemnitee, for which a remedy at law will be inadequate. As a
result, in addition to any other right or remedy he may have at law
or in equity with respect to breach of this Agreement, Indemnitee
shall be entitled to injunctive or mandatory relief directing
specific performance by the Company of its obligations under this
Agreement.
Section 7.9 Successors and Assigns. All of the terms
and provisions of this Agreement shall be binding upon, shall inure
to the benefit of and shall be enforceable by the parties hereto
and their respective successors, assigns, heirs, executors,
administrators, legal representatives. The Company shall require
and cause any direct or indirect successor (whether by purchase,
merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Company, by written agreement in form
and substance reasonably satisfactory to Indemnitee, expressly to
assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if
no such succession had taken place.
Section 7.10 Amendment. This Agreement may not be
modified or amended except by a written instrument executed by or
on behalf of each of the parties hereto.
Section 7.11 Waivers. The observance of any term of
this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) by the party
entitled to enforce such term only by a writing signed by the party
against which such waiver is to be asserted. Unless otherwise
expressly provided herein, no delay on the part of any party hereto
in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any party
hereto of any right, power or privilege hereunder operate as a
waiver of any other right, power or privilege hereunder nor shall
any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.
Section 7.12 Entire Agreement. This Agreement and the
documents expressly referred to herein constitute the entire
agreement between the parties hereto with respect to the matters
covered hereby, and any other prior or contemporaneous oral or
written understandings or agreements with respect to the matters
covered hereby are expressly superseded by this Agreement.
Section 7.13 Severability. If any provision of this
Agreement (including any provision within a single section,
paragraph or sentence) or the application of such provision to any
person or circumstance, shall be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of
invalidating or voiding the remainder of this Agreement or affect
the application of such provision to other persons or
circumstances, it being the intent and agreement of the parties
that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to render it valid, legal and
enforceable while preserving its intent, or if such modification is
not possible, by substituting therefor another provision that is
valid, legal and unenforceable and that achieves the same
objective. Any such finding of invalidity or unenforceability
shall not prevent the enforcement of such provision in any other
jurisdiction to the maximum extent permitted by applicable law.
Section 7.14 Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given upon (a) transmitter's confirmation of a receipt of a
facsimile transmission, (b) confirmed delivery of a standard
overnight courier or when delivered by hand or (c) the expiration
of five business days after the date mailed by certified or
registered mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other addresses for
a party as shall be specified by like notice):
If to the Company, to:
Marcus Cable Company, L.P.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to the General Partner, to:
Marcus Cable Properties, Inc.
2911 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
Attention: General Counsel
Facsimile: (214) 521-3468
If to Indemnitee, to:
Thomas P. McMillin
6706 Stefani Drive
Dallas, Texas 75225
Facsimile: (214) 363-3514
Section 7.15 Certain Construction Rules.
(a) The article and section headings contained in
this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. As used in this Agreement, unless otherwise
provided to the contrary, (i) all references to days shall be
deemed references to calendar days and (ii) any reference to
a "Section" or "Article" shall be deemed to refer to a section
or article of this Agreement. The words "hereof," "herein"
and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Whenever the words
"include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words
"without limitation." Unless otherwise specifically provided
for herein, the term "or" shall not be deemed to be exclusive.
Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine
or neuter forms, and the singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
(b) For purposes of this Agreement, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed
on a person with respect to any employee benefit plan;
references to "serving at the request of the Company" shall
include any service as an officer, employee, agent or
fiduciary of the Company which imposes duties on, or involves
services by, such officer, employee, agent or fiduciary with
respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this
Agreement.
Section 7.16 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware, without giving effect to the conflicts of laws
principles thereof.
Section 7.17 Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to be
one and the same instrument, notwithstanding that both parties are
not signatories to the original or same counterpart.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered to be effective as of the date first above written.
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.,
General Partner
By: MARCUS CABLE PROPERTIES, INC.,
General Partner
By:/s/ Daniel J. Wilson
Daniel J. Wilson
Senior Vice President
INDEMNITEE
/s/ Thomas P. McMillin
Thomas P. McMillin
Exhibit 10.5
LENDER CONSENT LETTER
MARCUS CABLE OPERATING COMPANY, L.P.
CREDIT AGREEMENT DATED AS OF AUGUST 31, 1995
To: The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of
August 31, 1995, as amended by the First Amendment thereto dated
as of March 14, 1997 (the "Credit Agreement"), among Marcus Cable
Operating Company, L.P. (the "Borrower"), Marcus Cable Company,
L.P. (the "Parent"), the several banks and other financial
institutions from time to time parties thereto, the Co-Agent,
Managing Agents and Co-Arrangers named therein, and The Chase
Manhattan Bank, as Administrative Agent.
The Borrower and the Parent wish to amend certain
provisions of the Credit Agreement on the terms described in the
Second Amendment to the Credit Agreement in the form attached
hereto as Exhibit A (the "Amendment").
Pursuant to Section 12.1 of the Credit Agreement, the
undersigned Lender hereby consents to the execution by the
Administrative Agent of the Amendment.
Very truly yours,
_____________________________________________
(NAME OF LENDER)
By______________________________________
Name:
Title:
Dated as of March 31, 1998
SECOND AMENDMENT, dated as of March 31, 1998 (this
"Second Amendment"), to the Credit Agreement, dated as of August
31, 1995, as amended by the First Amendment thereto dated as of
March 14, 1997 (the "Credit Agreement"), among MARCUS CABLE
OPERATING COMPANY, L.P. (the "Borrower"), MARCUS CABLE COMPANY,
L.P. (the "Parent"), the several banks and other financial
institutions from time to time parties thereto, the Co-Agent,
Managing Agents and Co-Arrangers named therein, and THE CHASE
MANHATTAN BANK, as Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Borrower and the Parent wish to amend
certain provisions of the Credit Agreement as hereinafter
provided; and
WHEREAS, the parties hereto are willing to so amend the
Credit Agreement on the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained, the parties hereto agree
as follows:
1. Amendments to Credit Agreement.
(a) The definition of "Applicable One-Year Disposition
Percentage" in Section 1.1 of the Credit Agreement is hereby
amended by changing the percentage "15%" contained therein to the
percentage "20%".
(b) Section 8.8(g) of the Credit Agreement is hereby
amended by changing the amount "$100,000,000" contained therein
to the amount "$125,000,000".
2. Representations and Warranties on Second Amendment
Effective Date. Each of the representations and warranties made
by the Parent or the Borrower in Sections 5.1 through 5.20 of the
Credit Agreement, as amended hereby, are true and correct in all
material respects on and as of the Second Amendment Effective
Date (as defined below), as if made on and as of the Second
Amendment Effective Date, except to the extent such
representations and warranties expressly relate to an earlier
date.
3. Conditions to Effective Date. This Second
Amendment shall become effective on the date (the "Second
Amendment Effective Date") on which the Administrative Agent
shall have received (a) counterparts hereof, executed by the
Parent and the Borrower and (b) executed Consent Letters from the
Required Lenders authorizing the Administrative Agent to enter
into this Amendment.
4. Counterparts. This Second Amendment may be
executed by one or more of the parties to this Second Amendment
on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. A set of
the copies of this Second Amendment signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
5. GOVERNING LAW. THIS SECOND AMENDMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Second Amendment to be duly executed and delivered by their
respective proper and duly authorized officers as of the day and
year first above written.
MARCUS CABLE OPERATING COMPANY, L.P.
By: MARCUS CABLE COMPANY, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, INC.
General Partner
By:
Name:
Title:
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, INC.
General Partner
By:
Name:
Title:
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:
Name:
Title:
Exhibit 10.6
LENDER CONSENT LETTER
MARCUS CABLE OPERATING COMPANY, L.P.
CREDIT AGREEMENT DATED AS OF AUGUST 31, 1995
To: The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of
August 31, 1995, as amended by the First Amendment thereto dated
as of March 14, 1997 and the Second Amendment thereto dated as of
March 31, 1998 (the "Credit Agreement"), among Marcus Cable
Operating Company, L.P. (the "Borrower"), Marcus Cable Company,
L.P. (the "Parent"), the several banks and other financial
institutions from time to time parties thereto, the Co-Agent,
Managing Agents and Co-Arrangers named therein, and The Chase
Manhattan Bank, as Administrative Agent.
The Borrower and the Parent wish to amend certain
provisions of the Credit Agreement on the terms described in the
Third Amendment to the Credit Agreement in the form attached
hereto as Exhibit A (the "Amendment").
Pursuant to Section 12.1 of the Credit Agreement, the
undersigned Lender hereby consents to the execution by the
Administrative Agent of the Amendment.
Very truly yours,
_____________________________________________
(NAME OF LENDER)
By______________________________________
Name:
Title:
Dated as of April 15, 1998
Exhibit A
THIRD AMENDMENT, dated as of April 15, 1998 (this
"Third Amendment"), to the Credit Agreement, dated as of August
31, 1995, as amended by the First Amendment thereto dated as of
March 14, 1997 and the Second Amendment thereto dated as of March
31, 1998 (the "Credit Agreement"), among MARCUS CABLE OPERATING
COMPANY, L.P. (the "Borrower"), MARCUS CABLE COMPANY, L.P. (the
"Parent"), the several banks and other financial institutions
from time to time parties thereto, the Co-Agent, Managing Agents
and Co-Arrangers named therein, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Borrower and the Parent wish to amend
certain provisions of the Credit Agreement as hereinafter
provided; and
WHEREAS, the parties hereto are willing to so amend the
Credit Agreement on the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained, the parties hereto agree
as follows:
1. Amendments to Credit Agreement. (a) The
definitions of "Change of Control", "Investor Change of Control",
"Marcus Change of Control" and "Specified Investor" contained in
Section 1.1 of the Credit Agreement are hereby amended and
restated in their entirety (and, in certain cases, renamed) as
follows:
"Change of Control": shall be deemed to have occurred
at such time as any of the following occur:
(a) a Change of Control shall occur under and as
defined in any Existing Indenture or in any indenture
governing Refinancing Indebtedness in respect of
Indebtedness under any Existing Indenture, other than
as a result of the acquisition of any Capital Stock of
the Ultimate General Partner or any of its Affiliates
by any one or more Specified Investors;
(b) a Marcus/Allen Change of Control shall occur;
(c) an Investor Change of Control shall occur; or
(d) (i) the Borrower shall cease to be a direct
Wholly Owned Subsidiary of the Parent or (ii) the
Parent shall create, incur, assume or suffer to exist
any Lien on any Capital Stock of the Borrower.
"Investor Change of Control": shall be deemed to have
occurred at such time as the direct and indirect ownership
interests in the Borrower owned by the Specified Investors,
in the aggregate, shall be less than 51%.
"Marcus/Allen Change of Control": shall be deemed to
have occurred at such time as any of the following occur:
(i) any issuance or transfer of any equity
interest (or any beneficial interest in any equity
interest) in the Parent, the Parent General Partner or
the Ultimate General Partner, or any transfer of assets
of any Person, or any merger, consolidation or other
transaction, or any other event or occurrence, after
which the Investors shall own 51% or less of the
aggregate direct and indirect beneficial ownership
interest in the Parent General Partner or the Ultimate
General Partner or the Investors shall no longer have
the sole power to direct or cause the direction of the
management or policies of the Parent, the Parent
General Partner or the Ultimate General Partner; or
(ii) a transfer or assignment of the Parent
General Partner's general partnership interest in the
Parent, or of any portion thereof or of any beneficial
interest therein, if after giving effect to such
assignment or transfer, the aggregate direct or
indirect beneficial ownership interest of the Parent
General Partner in the general partnership interests of
the Parent is less than 51% and after which the Parent
General Partner does not have the sole power to take
all of the actions which the Parent General Partner is
entitled or required to take under the Parent
Partnership Agreement in its capacity as general
partner; or
(iii) a transfer or assignment of the Parent's
general partnership interest in the Borrower, or any
portion thereof or any beneficial interest therein, if
after giving effect to such assignment or transfer, the
aggregate direct or indirect beneficial ownership
interest of the Parent in the general partnership
interests of the Borrower is less than 51% and after
which the Parent does not have the sole power to take
all of the actions which the Parent is entitled or
required to take under the Partnership Agreement in its
capacity as general partner of the Borrower; or
(iv) a merger, consolidation or similar
transaction involving the Borrower unless the surviving
entity of such transaction is a partnership or
corporation of which an Investor is the sole general
partner or a stockholder having the power to elect a
majority of the Board of Directors of such corporation,
as the case may be, and with respect to which surviving
entity an Investor has the sole power to take all
actions with respect to such surviving entity which the
General Partner is entitled or required to take under
the Partnership Agreement in its capacity as the
General Partner; or
(v) the admission of any Person as a general
partner of the Parent after which the Parent General
Partner does not have the sole power to take all of the
actions which the Parent General Partner is entitled to
or required to take under the Parent Partnership
Agreement, as in effect on the Initial Term Loan
Availability Date, in its capacity as the general
partner of the Parent; or
(vi) the admission of any Person as a general
partner of the Borrower after which the Parent does not
have the sole power to take all actions which the
general partner of the Borrower is entitled to or
required to take under the Partnership Agreement as in
effect on the Initial Term Loan Availability Date, in
its capacity as the general partner of the Borrower.
Upon conversion of the Borrower into a limited liability
company, all references in this definition to general
partnership interests and general partner capacities with
respect to the Borrower shall be deemed to mean references
to comparable membership interests and member capacities.
"Specified Investors": the collective reference to
Paul G. Allen and his Control Affiliates.
(b) Section 1.1 of the Credit Agreement is hereby
amended by adding the following definition in the appropriate
alphabetical order:
"Investors": the collective reference to the Marcus
Family Investors, the Specified Investors and any entity
under the sole control of any of the foregoing.
2. Representations and Warranties on Third Amendment
Effective Date. Each of the representations and warranties made
by the Parent or the Borrower in Sections 5.1 through 5.20 of the
Credit Agreement, as amended hereby, are true and correct in all
material respects on and as of the Third Amendment Effective Date
(as defined below), as if made on and as of the Third Amendment
Effective Date, except to the extent such representations and
warranties expressly relate to an earlier date.
3. Conditions to Effective Date. This Third Amendment
shall become effective on the date (the "Third Amendment
Effective Date") on which (a) the Administrative Agent shall have
received (i) counterparts hereof, executed by the Parent and the
Borrower and (ii) executed Consent Letters from the Required
Lenders authorizing the Administrative Agent to enter into this
Third Amendment and (b) the Specified Investors (as defined
above) shall have acquired all of the Capital Stock of the Parent
previously owned by the "Specified Investors" (as defined in the
Credit Agreement prior to giving effect to this Third Amendment).
4. Counterparts. This Third Amendment may be executed
by one or more of the parties to this Third Amendment on any
number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. A set of
the copies of this Third Amendment signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
5. GOVERNING LAW. THIS THIRD AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to be duly executed and delivered by their
respective proper and duly authorized officers as of the day and
year first above written.
MARCUS CABLE OPERATING COMPANY, L.P.
By: MARCUS CABLE COMPANY, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, INC.
General Partner
By:
Name:
Title:
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, INC.
General Partner
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
Name:
Title:
Exhibit 10.7
LENDER CONSENT LETTER
MARCUS CABLE OPERATING COMPANY, L.P.
CREDIT AGREEMENT DATED AS OF AUGUST 31, 1995
To: The Chase Manhattan Bank, as Administrative Agent
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of
August 31, 1995, as amended by the First Amendment thereto dated
as of March 14, 1997, the Second Amendment thereto dated as of
March 31, 1998 and the Third Amendment thereto dated as of April
15, 1998 (the "Credit Agreement"), among Marcus Cable Operating
Company, L.P. (the "Borrower"), Marcus Cable Company, L.P. (the
"Parent"), the several banks and other financial institutions
from time to time parties thereto, the Co-Agent, Managing Agents
and Co-Arrangers named therein, and The Chase Manhattan Bank, as
Administrative Agent.
The Borrower and the Parent wish the Lenders to consent
to certain transactions on the terms described in the Consent and
Waiver to the Credit Agreement in the form attached hereto as
Exhibit A (the "Consent and Waiver").
Pursuant to Section 12.1 of the Credit Agreement, the
undersigned Lender hereby consents to the execution by the
Administrative Agent of the Consent and Waiver.
Very truly yours,
_____________________________________________
(NAME OF LENDER)
By______________________________________
Name:
Title:
Dated as of April 21, 1998
Exhibit A
CONSENT AND WAIVER, dated as of April 21, 1998 (this
"Consent and Waiver"), to the Credit Agreement, dated as of
August 31, 1995, as amended by the First Amendment thereto dated
as of March 14, 1997, the Second Amendment thereto dated as of
March 31, 1998 and the Third Amendment thereto dated as of April
15, 1998 (the "Credit Agreement"), among MARCUS CABLE OPERATING
COMPANY, L.P. (the "Borrower"), MARCUS CABLE COMPANY, L.P. (the
"Parent"), the several banks and other financial institutions
from time to time parties thereto, the Co-Agent, Managing Agents
and Co-Arrangers named therein, and THE CHASE MANHATTAN BANK, as
Administrative Agent.
W I T N E S S E T H :
WHEREAS, in connection with the acquisition by the
Specified Investors of Capital Stock of the Ultimate General
Partner and the limited partner interests in the Parent and the
Parent General Partner, the Parent will be required (i) to make
payments to Goldman Sachs & Co., or its affiliates, in the
aggregate amount of approximately $15,000,000, (ii) to make
payments to Hicks, Muse, Tate & Furst Incorporated, or its
affiliates, in the aggregate amount of approximately $2,100,000,
(iii) to make payments to one or more of the Marcus Family
Investors in the aggregate amount of approximately $10,000,000,
(iv) to make payments to or for the account of advisors of the
Specified Investors in the aggregate amount of approximately
$20,000,000, (v) to make payments to employees of the Borrower in
the aggregate amount of approximately $8,000,000, and (vi) to pay
other miscellaneous transaction fees and expenses of
approximately $5,000,000 (collectively, the "Acquisition-Related
Payments"); and
WHEREAS, the Lenders are willing to consent to the
Acquisition-Related Payments on the terms and conditions provided
herein;
NOW, THEREFORE, in consideration of the premises and of
the mutual agreements herein contained, the parties hereto agree
as follows:
1. Consent and Waiver. The Lenders hereby consent to
the making of the Acquisition-Related Payments and waive any
Default or Event of Default that would result therefrom.
2. Investments. The Acquisition-Related Payments will
be deemed to constitute Investments made pursuant to Section
8.8(j) of the Credit Agreement.
3. Representations and Warranties on Consent Effective
Date. Each of the representations and warranties made by the
Parent or the Borrower in Sections 5.1 through 5.20 of the Credit
Agreement, as amended hereby, are true and correct in all
material respects on and as of the Consent Effective Date (as
defined below), as if made on and as of the Consent Effective
Date, except to the extent such representations and warranties
expressly relate to an earlier date.
4. Conditions to Consent Effective Date. This Consent
and Waiver shall become effective on the date (the "Consent
Effective Date") on which (a) the Administrative Agent shall have
received (i) counterparts hereof, executed by the Parent and the
Borrower and (ii) executed Consent Letters from the Required
Lenders authorizing the Administrative Agent to enter into this
Consent and Waiver and (b) the Third Amendment Effective Date (as
defined in the Third Amendment, dated as of April 15, 1998, to
the Credit Agreement) shall have occurred.
5. Counterparts. This Consent and Waiver may be
executed by one or more of the parties to this Consent and Waiver
on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall
be deemed to constitute one and the same instrument. A set of
the copies of this Consent and Waiver signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.
6. GOVERNING LAW. THIS CONSENT AND WAIVER AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Consent and Waiver to be duly executed and delivered by their
respective proper and duly authorized officers as of the day and
year first above written.
MARCUS CABLE OPERATING COMPANY, L.P.
By: MARCUS CABLE COMPANY, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, INC.
General Partner
By:
Name:
Title:
MARCUS CABLE COMPANY, L.P.
By: MARCUS CABLE PROPERTIES, L.P.
General Partner
By: MARCUS CABLE PROPERTIES, INC.
General Partner
By:
Name:
Title:
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Financial Data Schedule represents Consolidated Marcus Cable Company, L.P.
and Subsidiaries as reflected in the Form 10-Q for the three month period ended
March 31, 1998.
</LEGEND>
<CIK> 0000910629
<NAME> MARCUS CABLE COMPANY, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 21,530
<ALLOWANCES> (1,861)
<INVENTORY> 0
<CURRENT-ASSETS> 22,787
<PP&E> 980,140
<DEPRECIATION> (255,449)
<TOTAL-ASSETS> 1,739,684
<CURRENT-LIABILITIES> 130,345
<BONDS> 1,562,431
0
0
<COMMON> 0
<OTHER-SE> 47,154
<TOTAL-LIABILITY-AND-EQUITY> 1,739,684
<SALES> 126,495
<TOTAL-REVENUES> 126,850
<CGS> 0
<TOTAL-COSTS> 119,733
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,990
<INCOME-PRETAX> (32,873)
<INCOME-TAX> 0
<INCOME-CONTINUING> (32,873)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32,873)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
