EXHIBIT 10.5
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PRE-INCORPORATION AND SHAREHOLDER RESTRICTIVE AGREEMENT
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THIS AGREEMENT, made and entered into this 7 day of October, 1991, by,
between and among PAUL D. FAJERSKI, CHARLES R. DRENNING and RANDOLPH S. FOWLER
(hereinafter collectively "Individual Shareholders") and ADELPHIA COMMUNICATIONS
CORPORATION, a Delaware company (hereinafter the "Corporate Shareholder").
W I T N E S S E T H:
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WHEREAS, the parties to this Agreement desire to organize a Company to
conduct the business of telecommunications and information movement and
management; and
WHEREAS, the Individual Shareholders and Corporate Shareholder desire
to invest money in such company, and the Corporate Shareholder shall lend money,
guarantee loans and/or contribute assets to the company; and
WHEREAS, because of the particular nature of the business to be
conducted by such a company and the contributions to the success thereof
believed to flow from the parties hereto, the parties to this Agreement desire
to provide for the stability of such a company and to promote continuity in its
management policies and stock ownership.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions, stipulations and agreements hereinafter contained, the
parties hereto, intending to be legally bound hereby, do mutually covenant and
agree as follows:
1. Preambles.
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The preambles set forth in Paragraphs 1 through 3 above are
incorporated herein by reference thereto.
2. Formation of Company.
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The parties hereto shall, as soon as possible, form company under the
laws of the State of Delaware.
3. Name of Company.
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The name of the company shall be Hyperion Telecommunciations, Inc.
(hereinafter the "Company"), or, if such name is not available, such other name
as the parties hereto shall select.
4. Purposes of Company.
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The purposes for which the Company shall be formed are: to conduct or
promote any and all lawful business or purposes, except as may otherwise be
provided by the Constitution or other law of the State of Delaware.
5. Organization of Company.
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The Company shall be organized in such a manner that:
(a) The duration of the Company shall be perpetual.
(b) There shall be between seven (7) and eleven (11) directors.
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(c) The officers of the Company shall be a Chairman of the Board,
Vice Chairman of the Board, President, Vice Presidents, Treasurer and
Secretary.
(d) The principal office of the Company shall be located at
Coudersport, Pennsylvania.
(e) The books and records of the Company shall be maintained at the
registered office of the Company.
(f) The Company shall be qualified to do business in such states as
shall be determined by the Board of Directors.
(g) The capital stock of the Company shall consist of One Thousand
(1,000) shares of common stock, $1.00 par value (hereinafter the "Shares")
to be issued as set forth below:
Paul D. Faerski 36.666 shares
Charles R. Drenning 36.666 shares
Randolph S. Fowler 36.666 shares
Adelphia Communications Corporation 890.002 shares
6. Corporate Actions.
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The parties agree that promptly following the execution of this
Agreement they shall:
(a) elect Paul D. Fajerski, Charles R. Drenning, Randolph S. Fowler,
, , , and
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directors of the Company.
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(b) Cause the following persons to be elected as officers of the
Company:
Chairman of the Board
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Vice Chairman of the Board
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President
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Paul D Fajerski Vice President
Charles R. Drenning Vice President
Randolph S. Fowler Vice President
Secretary
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Treasurer
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These officers shall serve until their successors are elected by the Board of
Directors.
(c) The initial Articles and By-Laws of the Company shall be in such
form as approved by the Shareholders. The Articles of the Company may only
be amended with the consent of the Shareholders.
(d) The fiscal year of the Company shall end on March 31, of each
year.
(e) The Corporate Shareholder shall select the accountants and the
attorneys for the Company.
(f) The books of account of the Company shall be maintained in
accordance with generally accepted accounting principles consistently
applied.
(g) If the Corporate Shareholder shall provide full management
services, it shall be paid a management fee of 5% of the gross revenues of
the Company, and in addition be paid or reimbursed for direct expenses.
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(h) If the Company shall provide services or personnel to the
Corporate Shareholder, such services or personnel shall be compensated for
at the reasonable cost of such services and, in addition, the Company.
(i) shall be paid or reimbursed for direct expenses.
(j) Cause the Company to enter into Employment Agreements with Paul
D. Fajerski, Charles R. Drenning and Randolph S. Fowler in substantially
the form attached hereto, made a part hereof and marked Exhibit A.
7. Loan and Guarantees.
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From time to time after the formation of the Company, the Corporate
Shareholder, in its sole discretion, may lend money to the Company, guarantee
loans and/or transfer assets at their fair market value to the Company. In the
event the Corporate Shareholder lends money or contributes assets to the
Company, such loans or the value of the contributed assets shall be evidenced by
the Company's Note in the form reasonably acceptable to the Shareholders.
Interest on the Note(s) shall be 20% per annum for money and/or assets used to
develop areas where the Corporate Shareholder has an operating cable system or
is installing a cable system jointly with the Company and Prime + 3% per annum
in new areas where the Corporate Shareholder does not have a cable system. The
Individual Shareholders shall not be required to guarantee any loans,
8. General Restriction on Transfer.
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(a) Restriction. A Shareholder shall not give, sell, transfer,
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assign, pledge, hypothecate or otherwise dispose of ("transfer") any
Shares, or agree to
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transfer any Shares, whether now held or hereafter acquired by the
Shareholder, except in accordance with the provisions of this Agreement.
(b) Effect of Purported Transfer. Any purported transfer of Shares
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by a Shareholder that is not in accordance with the provisions of this
Agreement shall be null and void, and shall not operate to transfer any
right, title or interest in such Shares to the purported transferee. The
Company shall not cause or permit the transfer of any certificate
representing any Shares to be made on its books unless the transfer is
permitted by this Agreement and has been made in accordance with its terms.
(c) Transfers to Family Members. An Individual Shareholder may,
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during the Shareholder's lifetime or upon his death, transfer Shares to or
for the benefit of his or her spouse or any of his or her lineal
descendants or any spouse of any such descendant without complying with
Section 9, provided, however, that such transferee shall enter into a
voting trust granting an Individual Shareholder or a third party acceptable
to the Corporate Shareholder the right to vote said shares. A transferee of
Shares under this Section shall be deemed to be a Shareholder from and
after the date of transfer for all purposes of this Agreement and shall
receive and hold the Shares subject to the terms of this Agreement,
including the provisions of this Section.
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Any transfer under this Section to a person other than a Shareholder who
has signed this Agreement shall be effective only upon the written
Agreement of the transferee to be bound by this Agreement as if an original
signatory party.
9. Rights of First Refusal Based on Third-Party Offers.
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(a) Company and Shareholder Options. Except as provided in Section
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8, no Individual Shareholder shall transfer any Shares unless the
Individual Shareholder shall have first offered to sell such Shares to the
Company, the Corporate Shareholder and the other Shareholders in accordance
with the following provisions:
(i) Offer to Sell to the Company. The Individual Shareholder
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proposing to transfer Shares (the "Transferring
Shareholder") shall first offer to sell the Shares to be
transferred (the "Offered Shares") to the Company by notice
to the Company which shall contain the name and address of
the prospective transferee and, if the prospective
transferee is a purchaser, the terms of the proposed sale
or exchange, which shall be limited to cash, securities
listed on an exchange and/or indebtedness and shall not
include other property (the "First Notice"). A copy of the
First Notice shall be delivered to each Shareholder at the
time it is delivered to the Company. Regardless of the
terms of any proposed sale or exchange, the offer to the
Company shall be at a price per Share equal to the lower of
the price under the terms of the proposed sale or exchange
(the "Purchase Price") or the Share Value as defined and
determined in accordance with Section 12, and shall be
payable as set forth in subsection 13(c).
(ii) Acceptance of Offer by the Company or Corporate
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Shareholder. For a period of 15 days following receipt
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of the First Notice by the Company, the Company or the
Corporate Shareholder shall have
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the option to accept the offer contained in the First
Notice. Such option shall be exercised in writing by the
Company or the Corporate Shareholder by notice to the
Transferring Shareholder with copies to the other
Shareholders (the "Exercise Notice") stating the number of
Offered Shares that the Company or the Corporate
Shareholder elects to purchase. If the Company or the
Corporate Shareholder elects not to purchase any of the
Offered Shares, the Secretary of the Company or the
Corporate Shareholder shall give written notice to that
effect to the Transferring Shareholder with copies to the
other Shareholders (the "Rejection Notice") not later than
45 days following the Company's receipt of the First
Notice.
(iii) Offer to Sell to Remaining Shareholders. If the Company
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or the Corporate Shareholder does not exercise its option
to purchase all the Offered Shares under paragraph (a)(ii),
the other Individual Shareholders of the Company (the
"Remaining Shareholders") shall have the option to purchase
any of the Offered Shares that the Company or the Corporate
Shareholder does not elect to purchase at the same price
per share at which the Shares were offered to the Company
under paragraph (a)(i), payable as set forth in subsection
(b). If the prospective transferee is a Shareholder, that
Shareholder shall be deemed to be a Remaining Shareholder
and may participate in the option granted under this
paragraph.
(iv) Acceptance of Offer by Remaining Shareholders. Within 20
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days after the receipt of a copy of the Exercise Notice or
the Rejection Notice, as the case may be, any Remaining
Shareholder desiring to acquire any part or all of the
Offered Shares not purchased by the Company or the
Corporate Shareholder shall deliver to the Secretary of the
Company a written election to purchase the Shares or a
specified number of them (a "Remaining Notice"). If the
total number of Shares specified in the Remaining Notices
exceeds the number of available Offered Shares, each
Remaining
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Shareholder shall have priority, up to the number of Shares
specified in the Remaining Shareholder's Remaining Notice,
to purchase such portion of the available Shares as the
number of the Shares that the Remaining Shareholder holds
bears to the total number of Shares held by all Remaining
Shareholders electing to purchase. The Shares not purchased
on such a priority basis shall be allocated in one or more
successive allocations to those Remaining Shareholders
electing to purchase more than the number of Shares in
which they have a priority right, up to the number of
Shares specified in their respective Remaining Notices, in
the proportion that the number of Shares held by each
Remaining Shareholder bears to the number of Shares held by
all Remaining Shareholders. Within 20 days after receipt of
the Remaining Notices from all Remaining Shareholders or,
if some Remaining Shareholders make no election, within 20
days after the expiration of the 20-day period provided by
this paragraph for the making of an election, whichever is
earlier, the Secretary of the Company shall notify the
Transferring Shareholder and each Remaining Shareholder
electing to purchase of the number of Shares to which such
election was effective.
(v) Closing; Suspension of Restrictions. A closing to
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purchase all the Offered Shares shall be held not more than
90 days after receipt by the Company of the First Notice
from the Transferring Shareholder pursuant to paragraph
(a)(i). If the Company, the Corporate Shareholder and/or
the Remaining Shareholders do not purchase all the Offered
Shares, the Offered Shares may be transferred by the
Transferring Shareholder at any time on or before the
expiration of 150 days from the date of receipt by the
Company of the First Notice, on the terms and to the
prospective transferee specified in the First Notice. A
transfer pursuant to the terms of the First Notice shall
comply with all applicable state and federal securities
laws and the Company may require an opinion of counsel to
the Transferring Shareholder to that effect. The transferee
will hold the Shares subject to the provisions of this
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Agreement. A transfer of the Offered Shares shall not be
made after the end of the 150-day period, nor shall any
change in the terms of the transfer or the identity of the
prospective transferee be permitted, without a new offering
to the Company and the Shareholders by the Transferring
Shareholder in compliance with the requirements of this
Section.
(b) Payment Terms. If the total purchase price for the Offered
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Shares under subsection (a) shall be $500,000 or less, $250,000 shall be
paid in cash or by certified check with the balance paid by promissory
judgment note and secured as hereinafter provided. If the total purchase
price for the Offered Shares shall be in excess of $500,000, not less than
fifty (50%) percent of the total purchase price shall be paid by the
Company, the Corporate Shareholder or any other Shareholder in cash or by
certified check, with the balance paid by promissory judgment note of the
purchaser secured by the Offered Shares with interest only payable in equal
installments on the last day of March, June, September and December of each
year over a period of two (2) years, and principal and interest payable in
twelve (12) equal quarterly installments thereafter until the balance of
the purchase price is paid in full with interest commencing not later than
the end of the first full calendar quarter after the closing date on the
outstanding balance, at the lowest rate of simple interest that would
result in there being no unstated interest for purposes of Section 483 of
the Internal Revenue Code of 1986. Each promissory judgment note shall
provide that if any installment of principal or interest is not paid when
due, and if the default continues for a period of 15 days after notice,
then, at the election of the holder, the full amount of the principal and
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interest remaining unpaid shall become immediately due and payable, and the
maker shall pay reasonable attorneys' fees to the holder in the event
judgment is filed or suit is commenced because of default. The maker of the
note shall have the right to prepay the principal without penalty at any
time and from time to time, but prepayments shall be in the inverse order
of maturity.
(c) Abandonment of Transaction. At any time before the Company, the
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Corporate Shareholder and/or the Remaining Shareholders have notified the
Transferring Shareholder that they have elected to purchase all of the
Offered Shares, the Transferring Shareholder may terminate the rights of
the Company, the Corporate Shareholder and the Remaining Shareholders to
purchase the Offered Shares under this Section by delivering to the Company
and the Shareholders a notice stating that the Transferring Shareholder has
abandoned the transfer that was the subject of the First Notice. A
subsequent transfer of Shares by the Transferring Shareholder shall not be
made without a new offering to the Company and the Shareholders by the
Transferring Shareholder in compliance with the requirements of this
Section.
(d) Right of Co-sale. Each Remaining Individual Shareholder who so
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desires (a "Co-selling Shareholder") shall have the right to sell under
this Section, on the same terms as the Transferring Shareholder either to
the Company, the Corporate Shareholder and/or the Remaining Shareholders or
to the proposed transferee:
(i) a number of Shares equal to the number of Offered Shares;
or
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(ii) if the proposed transferee shall elect to purchase only the
number of Offered Shares, a number of Shares equal to the
Offered Shares multiplied by a fraction, the numerator of
which shall be the number of Shares owned by the Co-selling
Shareholder, and the denominator of which shall be the
number of Shares owned by the Transferring Shareholder and
all Co-selling Shareholders exercising rights under this
subsection. A Co-selling Shareholder exercising the right
of co-sale under this subsection shall be deemed to have
waived any right to purchase any or all of the Offered
Shares under this Section. Each Co-selling Shareholder
shall give notice of his election to sell Shares under this
subsection in his Remaining Notice.
10. Sale by Corporate Shareholder.
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In the event the Corporate Shareholder desires to sell its Shares in
the Company without first receiving an offer to purchase its Shares from a third
party, it shall notify the Individual Shareholders in writing of its intent to
sell its Shares, and the Individual Shareholders, with or without third-party
investors, shall have the right, for a period of 60 days, to make an offer to
purchase the Corporate Shareholder's Shares, with a closing to take place 45
days after the Corporate Shareholder accepts the Individual Shareholder's offer.
If the Corporate Shareholder shall receive an unsolicited offer to purchase its
shares of the Company which the Corporate Shareholder desires to accept, the
Individual Shareholders shall not have a right of first refusal.
11. Involuntary Transfers.
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In the event that the Shares owed by any Shareholder shall be subject
to sale or other transfer by reason of (i) bankruptcy or insolvency proceedings,
whether voluntary or
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involuntary, (ii) distraint, levy, execution or other involuntary transfer, the
Shareholder owning the affected Shares shall give the Company and each other
Shareholder written notice thereof promptly upon the occurrence of such event,
stating the terms of such proposed transfer, the identity of the proposed
transferee, the price, value or consideration, if readily determinable, on the
basis of which the Shares are proposed to be transferred, and the number of
Shares to be transferred. The Company and other Shareholders shall have the same
rights of first refusal, respectively, with respect to the Shares proposed to be
transferred as are set forth in Section 9, except that the price to be paid for
each Share shall be the lesser of the price, value or consideration assigned the
Shares in the involuntary transfer or the Share Value.
12. Share Value.
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The "Share Value" shall be determined as follows:
(i) By the mutual agreement of the Individual Shareholder and
the Corporate Shareholder;
(ii) In the event the Transferring Shareholder and the Corporate
Shareholder fail to establish Share Value, the fair market
value of Shares shall be determined by a nationally
recognized financial advisor selected by the Corporate
Shareholder and the Individual Shareholders retained by the
Company whose determination of Share Value shall be final
and binding on the parties.
(iii) In the event an Individual Shareholder shall voluntarily
terminate his employment with the Company or is terminated
for cause within five (5) years from the date of said
individual's Employment Agreement, his Share Value shall be
reduced by 20% for each year or partial year remaining
under said Employment Agreement and, notwithstanding
anything herein to the contrary, the total purchase price
for his shares shall be made by Note as
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provided in Section 9(b) above. Cause is defined as willful
or intentional misconduct.
13. Forced Purchase or Sale.
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(a) Initiation of Offer. Independently of any other provision of
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this Agreement, any Individual Shareholder, upon termination of employment
or any time after five years from the date hereof, whichever first occurs,
may, by written notice delivered to the Corporate Shareholder and to the
Company, offer to sell all, but not less than all, of the Shares of the
Company then owned by the Individual Shareholder, and the Company or
Corporate Shareholder shall be required to purchase the Shares at the value
determined pursuant to Section 12 above.
(b) Initiation of Offer by Corporate Shareholder. Independently of
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any other provision of this Agreement, the Corporate Shareholder or the
Company shall have the right to buy all, but not less than all, of the
shares owned by all of the Individual Shareholders, and the Individual
Shareholders shall sell such shares at any time after ten (10) years from
the date hereof at the value determined pursuant to Paragraph 12 above.
(c) Payment. Payment for the Shares shall be made as provided in
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Section 9(b) above.
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14. Limitations on Company.
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Purchase Generally. The Company shall not exercise an option to
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purchase Shares, nor shall the Company be required to purchase Shares, if the
purchase on the terms proposed would be prohibited at the time under 15 Pa. C.S,
(S) 1551 or other applicable provision of law.
15. Merger, Consolidation.
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The Company shall be permitted to sell all or substantially all of its
assets to an independent, unrelated third party. The Company shall be permitted
to merge, consolidate, liquidate, dissolve, reorganize or transfer all or
substantially all of its assets to the Corporate Shareholder or an affiliate,
provided the Company's business shall be operated as a separate division with
separate valuation and payouts and separate books and records.
16. Corporate Shareholder's Permitted Transactions.
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The Corporate Shareholder, its Subsidiaries and any of its Affiliates
may engage in or possess an interest in other business ventures of any nature
and description, independently or with others, including corporations or other
business entities engaged in any and all aspects of the telecommunications
industry, including but not limited to, the acquisition, construction,
ownership, operation and management of Alternate Access and information movement
businesses, including businesses which are competitive but not substantially
similar to the Company's business. Neither the Company nor the Individual
Shareholders shall, by virtue of their interest in the Company, have any right
in or to such other ventures, including any opportunities developed by, or the
income or profits derived from, such other ventures. The
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Corporate Shareholder will provide the company a reasonable opportunity to bid,
participate or join in such other venture(s) outside of the Company.
Notwithstanding the previous sentence, the decision as to whether the Company
shall participate in such venture will be within the sole discretion of the
Corporate Shareholder.
17. Closings.
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The closing of any purchase and sale of Shares under this Agreement
shall take place at the principal office of the Company (or such other location
as may be agreed to by all parties involved). At the closing, the party selling
Shares shall deliver the certificates for the Shares being sold, duly endorsed
for transfer and free and clear of any lien, claim, charge, pledge, security
interest or encumbrance whatsoever.
18. Stock Certificates.
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All certificates representing Shares shall be marked with the
following legend:
This certificate of stock and the shares represented thereby are
held subject to the terms, covenants and conditions of a certain
Agreement among the Company and its then Shareholders, dated as
of , 1991 and all amendments thereto, and
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may not be transferred except in accordance with the terms and
provisions thereof. A copy of the Shareholders Agreement and all
amendments thereto is on file at the principal office of the
corporation.
19. Notices.
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(a) General Rule. Notices and all other communications under this
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Agreement shall be in writing and shall be either hand-delivered to the
recipient or mailed by certified mail, return receipt requested, addressed
as follows:
If to the Company, to:
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Adelphia Communications Corporation
5 West Third Street
Coudersport, PA 16915
If to the Shareholders, to:
Paul D. Fajerski
331 Alamo Drive
Upper St, Clair, PA 15241
Charles R. Drenning
1443 Old Meadow Road
Upper St. Clair, PA 15241
Randolph S. Fowler
336 Catalina Drive
Upper St. Clair, PA 15241
with a copy to:
Bernard Eisen, Esq.
Klett Lieber Rooney & Schorling
40th Floor, One Oxford Centre
Pittsburgh, PA 15219
Charles L. Holsworth, Esq.
Charles L. Holsworth and Associates P.C.
2550 Brownsville Road
Bavarian Village
Library, PA 15129
In the case of any other Shareholder, to the address of the Shareholder on the
records of the Company.
(b) Change of Address. Any party hereto may designate a different
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address to which notices are to be sent by giving notice of such change of
address in conformity with the provisions of this Section.
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(c) Time of Notice, Unless otherwise specified in this Agreement,
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all notices shall be deemed to have been given when delivered or mailed in
accordance with this Section.
20. Termination.
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This Agreement shall continue in full force and effect until the
earlier of:
(i) such time as the holders of all of the Shares subject to
this Agreement at the time shall agree to its termination;
or
(ii) the Company shall close a public offering of an equity
security of the Company.
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21. Rights, Obligations and Remedies.
---------------------------------
Except as provided herein, none of the parties hereto may assign,
transfer or otherwise dispose of any of their rights or obligations under this
Agreement. All rights and obligations under this Agreement shall inure to and
be binding upon the parties hereto and each of their respective heirs, personal
representatives, successors and assigns. The rights and obligations under this
Agreement are several, with each party being completely free to enforce any or
all rights or obligations under this Agreement against any other party with or
without the concurrence or joinder of any other party. The Shares are unique,
and the damages that might result to any party by breach of this Agreement by
any other party are difficult to determine, and, therefore, in addition to all
of the other remedies that may be available under applicable law, any party
shall have the right to equitable relief, including, without limitation, the
right to enforce specifically the terms of this Agreement by obtaining
injunctive relief against any party violating its terms.
22. General.
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(a) Confidentiality. Each of the parties to this Agreement agrees
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to regard and preserve as confidential all the terms and provisions of this
Agreement and shall not disclose the terms and provisions to any other
party.
(b) Computation of Days. In computing a number of days for any
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purpose under this Agreement, all days shall be counted, including
Saturdays, Sundays, and holidays.
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(c) Headings. All headings in this Agreement are for convenience
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only, and they do not form a part of this Agreement and shall not affect
its interpretation.
(d) Gender, Number and "Person." Words used in this Agreements,
----------------------------
regardless of the gender or number specifically used, shall be deemed and
construed to include any other gender, masculine, feminine or neuter, and
any other number, singular or plural, as the context requires. The term
"person" includes a corporation, partnership or other association, as well
as a natural person.
(e) Waiver. No course of dealing by any party or by the holder of
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any note that may be issued as permitted by this Agreement, nor any delay
or failure on the part of any person to exercise any right shall operate as
a waiver of such right or otherwise prejudice such person's rights, powers
and remedies, nor shall any waiver of one breach be construed as a waiver
of any rights or remedies with respect to any subsequent breach.
(f) Expenses. The costs incurred by the Shareholders in respect of
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the preparation, negotiation and execution of this Agreement or any
Exhibits hereto shall be borne by the Company.
(g) Enforceability. If any part of this Agreement is found to be
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invalid, illegal or unenforceable with respect to any person or set of
circumstances
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under any present or future laws in effect at any time during the term of
this Agreement, then and in that event it is the intention of the parties
that the remainder of this Agreement shall not be affected thereby.
(h) Entire Agreement. This writing represents the entire agreement
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and understanding of the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings
of the parties in connection herewith. This Agreement may not be amended or
modified except by an agreement in writing signed by each of the parties
hereto at the time.
(i) Counterparts. This Agreement may be executed in several
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counterparts each of which is an original and any Shareholder may become a
party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
It shall not be necessary in making proof of this Agreement or any
counterpart to produce or account for any of the other counterparts.
(j) Governing Laws. This Agreement shall be governed by and
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interpreted and enforced in accordance with the substantive laws of the
Commonwealth of Pennsylvania, without reference to the principles governing
the conflict of laws applicable in that or any other jurisdiction.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
ATTEST: CORPORATE SHAREHOLDER:
ADELPHIA COMMUNICATIONS
CORPORATION
/s/ Daniel R. Milliard, Secretary By: /s/ James P. Rigas
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Vice President
WITNESS: INDIVIDUAL SHAREHOLDERS:
/s/ B. Eisen /s/ Paul D. Fajerski (SEAL)
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PAUL D. FAJERSKI
WITNESS:
/s/ B. Eisen /s/ Charles R. Drenning (SEAL)
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CHARLES R. DRENNING
WITNESS:
/s/ B. Eisen /s/ Randolph S. Fowler (SEAL)
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RANDOLPH S. FOWLER
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of October , 1991 between (the
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"Employee") and HYPERION TELECOMMUNICATIONS, INC. (the "Company"), a Delaware
corporation.
W I T N E S S E T H:
WHEREAS, the Company desires to assure itself of the benefit of the
Employee's services and experience for a period of time; and
WHEREAS, the Employee is willing to enter into an Agreement to that
end with the Company upon the terms and conditions herein set forth.
NOW THEREFORE, in consideration of the premises and covenants herein
contained, the parties hereto agree as follows:
1. Term of Agreement
-----------------
Subject to the terms and conditions hereof, the term of employment of
the Employee under this Employment Agreement shall be for the period commencing
on the date hereof and terminating at midnight on , 1996,
-----------------------
Employee may defer commencement for thirty (30) days after the date hereof.
2. Services to be Rendered
-----------------------
The Company hereby agrees to employ the Employee as an executive
officer to perform services for the Company in such areas as requested by the
Company exclusive of Allegheny County, Pennsylvania, subject to the terms,
conditions and provisions of this
Employment Agreement, The Employee hereby accepts such employment and agrees to
devote his full time and attention to rendering services to the Company under
this Employment Agreement. In connection with the rendition of such services,
the Employee shall report to and be subject to the direction of the President
and Board of Directors of the Company, and he shall perform such services as
shall be designated by them.
3. Compensation
------------
3.1 In full payment for services rendered to the Company under this
Employment Agreement, the Company shall pay the Employee a base salary of not
less than $90,000 per year during the term hereof ("Base Salary"), to be paid in
accordance with Company policy. The Base Salary shall be increased by the amount
of Adelphia Communications Corporation wages grid for hourly employees is
increased each year.
3.2 In addition to the compensation otherwise provided for in this
Paragraph 3, the Employee shall, during the term of this Employment Agreement,
also be eligible to be awarded a bonus, as provided for in Paragraph 4 of this
Employment Agreement,
3.3 The Employee shall be deemed to be a 10-year employee and shall,
during the term of this Employment Agreement, be entitled to (i) vacations and
fringe benefits, including reimbursement of business expenses consistent with
the present practice of Adelphia Communications Corporation for its employees as
set forth in the Adelphia Communications Corporation Handbook and (ii) the use
of appropriate office space.
4. Bonus Compensation
------------------
The Company covenants and agrees that, for each fiscal year during the
term of the Employment Agreement, the Employee will be entitled to receive bonus
compensation
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("Bonus Compensation") provided the Employee meets the performance criteria to
be mutually agreed upon, with the maximum award not to exceed $20,000 per annum
payable quarterly,
5. Disability, Death and Termination
---------------------------------
5.1 In the event of the Employee's physical or mental disability (so
that the Employee is not reasonably able to render his full services hereunder),
the Employee's Base Salary shall continue for the period of any such disability
less any disability payments; provided, however that in the event any such
disability shall continue for a consecutive period of more than one hundred
eighty (180) days, then the Company may at its election, terminate this
Employment Agreement. In the event of any such termination, the Company shall
only be obligated for compensation earned by the Employee prior to such
termination
5.2 Upon the death of the Employee the Company shall continue for a
period of one hundred eighty (180) days from the Employee's date of death to pay
the Base Salary to the Employee's designated beneficiary.
5.3 If any of the following events should occur:
(i) the Employee voluntarily resigns or retires as an employee
of the Company without prior written consent of the
Company;
(ii) the Company terminates the Employee's employment for cause
which is defined as good and sufficient cause;
(iii) the Employee materially breaches this Employment Agreement
and fails to cure such breach within thirty calendar days
after receiving written notice of such breach from the
Company;
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then the Company's obligations hereunder shall terminate and no further payments
of any kind shall thereafter be made by the Company to the Employee hereunder.
6. Employees Acknowledgments
-------------------------
Employee recognizes and acknowledges that: (a) in the course of
Employee's employment by the Company it will be necessary for Employee to
acquire information which could include, in whole or in part, information
concerning the Company's sales, sales volume, sales methods, sales proposals,
customers and prospective customers, identity of customers and prospective
customers, identity of key purchasing personnel in the employ of customers and
prospective customers, amount or kind of customer's purchases from the Company,
the Company's sources of supply the Company's computer programs, system
documentation special hardware, product hardware, related software development,
the Company's manuals, formulae processes, methods, machines, compositions,
ideas, improvements, inventions or other confidential or proprietary information
belonging to the Company or relating to the Company's affairs (collectively
referred to herein as the "Confidential Information"); (b) the Confidential
Information is the property of the Company; (c) the use, misappropriation or
disclosure of the Confidential Information would constitute a breach of trust
and could cause irreparable injury to the Company; and (d) it is essential to
the protection of the Company's good will and to the maintenance of the
Company's competitive position that the Confidential Information be kept secret
and that Employee not disclose the Confidential Information to others or use the
Confidential Information to Employee's own advantage or the advantage of others.
Employee further recognizes and acknowledges that it is essential for
the proper protection of the business of the Company that Employee be restrained
(a) from soliciting or
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inducing any employee of the Company to leave the employ of the Company, (b)
from hiring or attempting to hire any employee of the Company, (c) from
soliciting the trade of or trading with the customers and suppliers of the
Company for any business purpose and (d) from competing against the Company for
a reasonable period following the termination of Employee's employment with the
Company.
7. Employee Covenants, Representations and Agreements
--------------------------------------------------
7.1 Non-Disclosure of Confidential Information. Employee agrees to
-------------------------------------------
hold and safeguard the Confidential Information in trust for the Company, its
successors and assigns and agrees that he shall not, without the prior written
consent of the Company, misappropriate or disclose or make available to anyone
for use outside the Company's organization at any time, either during his
employment with the Company or subsequent to the termination of his employment
with the Company for any reason, including without limitation termination by the
Company for cause or without cause, any of the Confidential Information, whether
or not developed by Employee, except as required in the performance of
Employee's duties to the Company,
7.2 Disclosure of Works and Inventions/Assignment of Patents.
---------------------------------------------------------
Employee shall disclose promptly to the Company or its nominee any and all
works, inventions, discoveries and improvements authorized, conceived or made by
Employee during the period of employment and related to the business or
activities of the Company, and hereby assigns and agrees to assign all his
interest therein to the Company or its nominee. Whenever requested to do so by
the Company Employee shall execute any and all applications assignments or other
instruments which the Company shall deem necessary to apply for and obtain
Letters, Patents. or Copyrights
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of the United States or any foreign country or to otherwise protect the
Company's interest therein. Such obligations shall continue beyond the
termination of employment with respect to works, inventions, discoveries and
improvements authored, conceived or made by Employee during the period of
employment, and shall be binding upon Employee's assigns, executors,
administrators and other legal representatives,
7.3 Duties. Employee agrees to be a loyal employee of the Company.
-------
Employee agrees to devote his best efforts full time to the performance of his
duties for the Company, to give proper time and attention to furthering the
Company's business, and to comply with all rules, regulations and instruments
established or issued by the Company. Employee further agrees that during the
term of this Agreement, Employee shall not, directly or indirectly, engage in
any business which would detract from Employee's ability to apply his best
efforts to the performance of his duties hereunder. Employee also agrees that he
shall not usurp any corporate opportunities of the Company.
7.4 Return of Materials. Upon the termination of Employee's
--------------------
employment with the Company for any reason, including without limitation
termination by the Company for cause or without cause, Employee shall promptly
deliver to the Company all correspondence, drawings, blueprints, manuals,
letters, notes, notebooks, reports, flow-charts, programs, proposals and any
documents concerning the Company's customers or concerning products or processes
used by the Company and, without limiting the foregoing, will promptly deliver
to the Company any and all other documents or materials containing or
constituting Confidential Information.
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7.5 Restrictions on Competition. Employee covenants and agrees that
----------------------------
during the period of Employee's employment hereunder and for a period of three
(3) years following the termination of Employee's employment, including without
limitation termination as set forth in Paragraph 5.03 hereof, Employee shall not
engage in any competing business, directly or indirectly, whether as principal
or as agent, officer, director, employee consultant shareholder, or otherwise,
alone or in association with any other person, corporation or other entity in
any city or municipality where the Company is offering its products or services.
For purposes of this Agreement, the term "competing business" shall
mean any person, corporation or other entity engaged in the business of (a)
providing telecommunications alternate access network systems or (b) selling or
attempting to sell any product or service which is the same as or similar to
products or services sold by the Company within the last three (3) years prior
to termination of Employee's employment hereunder.
7.6 Non-Solicitation of Customers and Suppliers. Employee agrees
--------------------------------------------
that during his employment with the Company he shall not, directly or
indirectly, solicit the trade of, or trade with, any customer, prospective
customer, supplier, or prospective supplier of the Company for any business
purpose other than for the benefit of the Company. Employee further agrees that
for three (3) years following termination of his employment with the Company,
including without limitation, termination by the Company for cause or without
cause, Employee shall not, directly or indirectly, solicit the trade of, or
trade with, any customers or suppliers, or prospective customers or suppliers,
of the Company.
7.7 Non-Solicitation of Employees. Employee agrees that, during his
------------------------------
employment with the Company and for three (3) years following termination of
Employee's
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employment with the Company, including without limitation termination by the
Company for cause or without cause, Employee shall not, directly or indirectly,
solicit or induce, or attempt to solicit or induce, any employee of the Company
to leave the Company for any reason whatsoever, or hire any employee of the
Company.
7.8 Work Made for Hire. Employee agrees that in the event of
-------------------
publication by Employee of written or graphic materials the. Company will retain
and own all rights in said materials, including right of copyright.
7.9 No Violation of Other Agreements. Employee represents and agrees
---------------------------------
that by entering into this Agreement, he will not violate or breach any other
agreement or contract by which he is bound. Employee further represents and
warrants that his employment with the Company will not require him to disclose
or use any confidential information belonging to prior employers or other
persons or entities.
8. Expenses.
---------
All reasonable travel, entertainment and other expenses incidental to
the rendering of services by the Employee hereunder shall be paid by the Company
in accordance with its normal practices in effect from time to time. If such
expenses are paid in the first instance by the Employee, the Company shall
reimburse him promptly therefor upon presentation of proper invoices.
9. Non-assignability
-----------------
Except as otherwise provided herein, this Employment Agreement may not
be assigned by either the Company or the Employee,
- 8 -
10. Merger or Consolidation
-----------------------
In the event of the merger or consolidation of the Company with any
other corporation or corporations, or of the sale by the Company of a major
portion of its assets or of its business and good will, this Employment
Agreement shall be assigned and transferred to such successor in interest as an
asset of the Company and such assignee shall assume the Company's obligations
hereunder, in which event the Employee agrees to continue to perform his duties
and obligations according to the terms and conditions hereof for such assignee
or transferee of this Employment Agreement.
11. Notices
-------
All notices and other communications which are required or may be
given under this Employment Agreement shall be in writing and shall be deemed to
have been given if delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid:
If to the Company, to it at the following address;
Hyperion Telecommunications, Inc.
Coudersport, PA 16915
If to the Employee, to him at the following address:
with a copy to:
Bernard Eisen, Esq.
Klett Lieber Rooney & Schorling
40th Floor, One Oxford Centre
Pittsburgh, PA 15219
or to such other place as either party shall have specified by notice in writing
to the other.
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12. Governmental Regulation
-----------------------
Nothing contained in this Employment Agreement shall be construed so
as to require the commission of any act contrary to law and wherever there is
any conflict between any provision of this Employment Agreement and any statute,
law, ordinance, order or regulation, the latter shall prevail, but in such event
any such provision of this Employment Agreement shall be curtailed and limited
only to the extent necessary to bring it within the legal requirements.
13. Governing Law
-------------
This Employment Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
14. Entire Agreement; Amendment
---------------------------
This Employment Agreement sets forth the entire understanding of the
parties in respect of the subject matter contained herein and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
and may only be amended by a written Agreement signed by both parties hereto or
their duly authorized representatives.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first above written.
WITNESS:
(SEAL)
- --------------------------------- ---------------------------------
ATTEST: HYPERION TELECOMMUNICATIONS,
INC.
By:
- --------------------------------- ------------------------------
[CORPORATE SEAL]
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