Exhibit 10.6

 

INSIGHT COMMUNICATIONS COMPANY, INC.

810 Seventh Avenue

New York, New York 10019

 

August 25, 2003

 

Ms. Kim D. Kelly

131 East 69th Street

New York, New York 11559

 

Dear Kim:

 

This letter describes the arrangement between you and Insight Communications
Company, Inc. and its affiliates (collectively, the “Company”) with respect to
your transitional employment by the Company, your provision of consulting
services to the Company and the Company’s provision to you of certain severance
benefits (the “Agreement”).

 

1. Transitional Employment. Effective as of the date of this Agreement (the
“Agreement Date”), you hereby resign as President and Chief Operating Officer of
the Company and resign from all other offices, titles and positions with the
Company and its affiliates, including, but not limited to, membership in any
boards of directors or similar groups, and to execute all such documents as
necessary to effectuate such resignation. The Company agrees to employ you from
the date of this letter agreement through December 1, 2003 (the “Termination
Date”), at your current salary and medical benefits. Such salary will be payable
in the same increments and on the same pay periods as your current salary is
paid and otherwise in accordance with the normal pay policies of the Company. In
addition, and provided that you are in full compliance with all terms and
conditions of this Agreement, you will be paid a bonus of not less than eighty
percent (80%) of your maximum target bonus, such amount to be based upon the
usual criteria applied by the Compensation Committee of the Board of Directors
of the Company. Such bonus will be payable at such time as other bonuses of the
Company are paid with respect to such period, in accordance with the normal pay
policies of the Company (other than with respect to any requirement that you be
employed on a given date after December 1, 2003), and shall be pro rated to
reflect your employment through the Termination Date. In addition, the Company
will pay you for the vacation days to which you are entitled and had not taken
as of December 1, 2003. This vacation pay will be paid to you in a lump sum as
soon as practical after the Termination Date.

 

2. Consulting Services.

 

(a) You agree to provide consulting services to the Company beginning on the
Termination Date and ending on the earliest of (i) the second anniversary of the
Termination Date; (ii) the date on which you obtain other employment or (iii)
the date the Company elects (the “Consulting Period”). You shall provide such
consulting services during the Consulting Period as is reasonably requested by
the Company, provided that such consulting services shall not unreasonably
interfere with your business or personal affairs and you will not be required to
travel more extensively than you have during your term of employment with the
Company.

--------------------------------------------------------------------------------

Provided that you elect to receive continued medical coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”)
following the Termination Date, during the Consulting Period, the Company will
reimburse you for a portion of the medical insurance premiums owed under your
COBRA coverage such that the net amount you will pay for such coverage will be
equal to the amount that an active employee of the Company would pay to receive
the same medical coverage. In connection with your consulting services, the
Company will make available to you an office, secretary and facilities as
provided in paragraph 3(b) below.

 

(b) All of your reasonable out-of-pocket business expenses directly incurred in
your providing consulting services for the Company shall be reimbursed or paid
by the Company upon your providing suitable documentation of such expenses.

 

(c) You acknowledge that, during the Consulting Period, you shall be an
“independent contractor” and nothing in this Agreement is intended or shall be
construed to create an employment relationship between the Company and you
during the Consulting Period. Except as otherwise expressly set forth herein,
during the Consulting Period the Company will not make available to you any of
the benefits the Company generally provides to its employees.

 

(d) The parties hereby agree and acknowledge that, during the Consulting Period,
because you will not be an employee of the Company, the Company shall not
withhold Social Security taxes, income taxes, FICA payments, payments relating
to workers’ compensation, or any other taxes or charges on the amount paid
hereunder. Rather, it is expressly understood and intended that you shall be
solely responsible and liable for the payment of all of such taxes and charges.

 

3. Severance Payment and Outplacement/Office Space.

 

(a) Severance. The Company agrees to pay you two (2) times your current annual
base salary in a lump sum (i) one-half on the Effective Date of the waiver and
release that you execute on the Agreement Date pursuant to Paragraph 5 of this
Agreement and (ii) if you have so executed such waiver and release, one-half on
January 2, 2004. For purposes of this Agreement, the “Effective Date” of the
waiver and release means the eighth (8th) day following your execution of the
waiver and release (described in Paragraph 5) and delivery to the Company
without any revocation thereof.

 

(b) Outplacement Services & Office Space. The Company will provide you with
outplacement service through a bona fide outplacement organization reasonably
selected by the Company that, at a minimum, agrees to supply you with
outplacement counseling and an outplacement office with secretarial assistance.
The outplacement counseling will be provided to you until the earlier of (i) the
date on which you obtain other employment or (ii) six (6) months from the
Termination Date. The outplacement office with secretarial services and related
facilities will be provided to you for the term of the Consulting Period, but
for no longer than six (6) months.

 

4. Treatment of Equity. Prior to the Agreement Date, you were granted stock
options and restricted shares under the Company’s 1999 Equity Incentive Plan
(the “Plan”) having the vesting conditions described on Exhibit A hereto. The
Company shall cause the

 

2

--------------------------------------------------------------------------------

forfeiture and termination provisions (related solely to termination of
employment) of such grants listed in Exhibit A to be waived so that such stock
options and restricted shares shall continue to vest and continue to be
exercisable as if you remained an employee of the Company in accordance with the
provisions of the Plan and the respective agreements entered into thereunder.
However, the stock options granted to you on July 21, 1999 to purchase 843,750
shares of the Company’s common stock at an exercise price of $24.50 per share
(of which 666,000 shares are currently vested) will be cancelled and any
agreements relating to this stock option grant will be terminated upon the
execution of this Agreement. In addition, you agree that all your shares of
Class B Common Stock of the Company shall be immediately converted to shares of
Class A Common Stock, that any stock options held or beneficially owned by you
shall only be exercisable to acquire shares of Class A Common Stock, and that
you shall not be deemed to be a member of the Management Group (as defined in
the Company’s Restated Certificate of Incorporation).

 

5. Waiver and Release. In consideration for the right to receive the amounts
payable under this Agreement and the treatment of your equity as described
above, you agree and understand that you will sign a waiver and release on the
Agreement Date, on the Termination Date, and at the end of the Consulting
Period, which waiver and release is in the form attached hereto as Exhibit B;
provided, however, your unintentional failure to timely execute a release
pursuant to the requirements of this paragraph 5 shall not be deemed to be a
breach of this paragraph 5 for purposes of your forfeiture of equity as provided
in paragraph 11, unless you fail to execute such waiver and release within seven
(7) days following written notice by the Company of such failure.

 

6. Non-Competition. Until the third anniversary of the Termination Date, you
agree not to, either directly or indirectly, as a principal, agent, employee,
consultant, independent contractor, employer, licensor, licensee, creditor,
partner or shareholder (other than as an owner of 1% or less of the stock of a
public corporation) or in any other capacity, be employed by or provide services
to, or for the benefit of, any person or entity engaged in the business of
providing cable or telecommunication services or the resale of local satellite
services in any franchise area in which the Company or its affiliates provide
(or may have under serious consideration) cable or telecommunication services at
any time from the Agreement Date through the end of the Consulting Period;
provided, however, (i) your employment with a telecommunications company shall
not be deemed to violate the provisions of this paragraph 6 if: (A) your
position with such telecommunications company does not in any way relate to the
provision of telecommunications services in a franchise area in which the
Company (or its affiliates) is providing services at the time of your hire with
such company, (B) your job location with this telecommunications company is not
in the same geographical location as any franchise area in which the Company (or
its affiliates) is providing services at the time of your hire with such
company, and (C) you and such company prior to your commencing any such
employment certify in a notarized statement that the position satisfies the
requirements of subparagraphs (A) and (B) above; and (ii) your employment with
any company as the Chief Executive Officer of the Company shall, in writing,
agree to exclude from the prohibitions described in this paragraph 6, upon your
written request for such exclusion, shall not be deemed to violate the
provisions of this paragraph 6.

 

7. Non-Solicitation. Until the second anniversary of the Termination Date, you
agree not to, either directly or indirectly, as a principal, agent, employee,
consultant, independent

 

3

--------------------------------------------------------------------------------

contractor, employer, licensor, licensee, creditor, partner or shareholder
(other than as an owner of 1% or less of the stock of a public corporation) or
in any other capacity, (i) solicit, hire, attempt to solicit or hire, or
participate in any attempt to solicit or hire, except on behalf of the Company,
any person who on or during the six (6) months immediately preceding the date of
such solicitation or hire is or was an officer, employee or consultant of the
Company or any of its affiliates, or which you were aware was being actively
recruited by the Company or any of its affiliates, or (ii) solicit, induce or
attempt to solicit or induce any customer, supplier, vendor, licensor, licensee,
shareholder, owner of a site location, or other business relation of the Company
or its affiliates to terminate or otherwise alter its relationship with the
Company or its affiliates, or in any other way interfere with the Company’s
business relationship with any customer, supplier, licensee, shareholder, owner
of a site location, or other person or entity.

 

8. Non-Disclosure. You acknowledge that you have been and will continue to be
privy to all of the Company’s business goals, strategies and techniques, trade
secrets, and other confidential and proprietary business information
(collectively “Protected Information”) and that the continued confidentiality of
the Protected Information is essential to the Company’s success. Accordingly,
you agree, during the term of your employment, the Consulting Period and after
the end of the Consulting Period, to keep all Protected Information secret and
treat it confidentially and not appropriate, divulge, disclose or otherwise
disseminate (other than for the benefit of the Company) any Protected
Information, except to the extent that disclosure is required by law or legal
process.

 

9. Non-Disparagement. You agree during the terms of your employment, the
Consulting Period and after the end of the Consulting Period, not to disparage
or make any negative, derogatory or defamatory statements about the Company or
any of its affiliates, or any of their respective officers, directors,
employees, agents, consultants, representatives, successors, or assigns in any
manner or otherwise interfere with, diminish, hinder or in any way jeopardize
any of the Company’s or its affiliates’ relationships with anyone, including but
not limited to present or potential customers, suppliers, partners, other
collaborators, officers, directors, employees, agents, consultants,
representatives, successors, or assigns. The Company agrees that it will make a
reasonable and good faith effort to ensure the Company does not denigrate or
disparage you, and the Company agrees not to authorize anyone to, and to
instruct its executive-level employees that they shall not, make any disparaging
or negative statements about you to any third parties, including any employees
of the Company; provided, however, that the Company may make any disclosure
required by state or federal securities laws or other applicable law without
violation of this paragraph 9. The Company also agrees that upon any and all
reference checks, it will provide a positive reference and confirm that this
separation was amicable.

 

10. Indemnity and Company Release.

 

(a) Indemnity. The Company shall (i) indemnify you pursuant to the most
expansive standard pursuant to which it indemnifies any other senior level
executive of the Company in connection with your past or future service to the
Company as a director, officer, employee or agent of the Company for your past
or future service at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust,
person or other entity, and (ii) shall use its good faith best efforts to cause
any directors and officers liability insurance effective with respect to any
director, officer, employee

 

4

--------------------------------------------------------------------------------

or agent of the Company to be fully effective with respect to you; provided,
however, that if the Company determines in good faith that providing for such
coverage will result in (i) an unreasonable increase in cost or (ii) its
inability to obtain such insurance coverage through a carrier with which the
Company reasonably desires to obtain such coverage, then it shall not be
required to provide such directors and officers liability insurance. It is
expressly agreed and understood that such indemnification shall apply without
limitation to your consulting services.

 

(b) Company Release. The Company hereby releases, acquits and forever discharges
you, and your successors and assigns; from any and all claims, charges, demands,
actions, causes of action, proceedings, fees, costs, damages, penalties or
liabilities of any kind whatsoever, known or unknown, in law or in equity, which
the Company had or now has against you; provided that this release does not
extend to: (i) claims or causes of action arising under the Agreement and this
Waiver and Release (or any other Waiver and Release executed by the Company
pursuant to this Agreement); (ii) claims or causes of action arising out of or
relating to alleged or actual violations by you of applicable statutes, laws,
regulations, exchange rules or other applicable standards of conduct in the
relevant industry, or willful misconduct on your part or any other error, act or
omission entered into by you resulting in your directly or indirectly receiving
personal renumeration or other economic benefit; or (iii) claims or causes of
action arising out of your breach of duty of loyalty owed to the Company or
arising out of this transaction. The Company further agrees not to file any suit
or proceeding to assert any claim that has been released in this release.

 

11. Injunction. In addition to any other remedies permitted by law, the
provisions of paragraphs 6 through 9 shall be specifically enforceable. You
acknowledge that monetary damages would not be an adequate remedy for the
Company in the event of a breach of any of paragraphs 6 through 9, and that it
would be impossible for the Company to measure damages in the event of such a
breach. Therefore, you agree that, in addition to other rights that the Company
may have, the Company shall be entitled (without the requirement of posting a
bond) to an injunction preventing you from any breach of paragraphs 6 through 9.
It is expressly understood and agreed that, effective as of the date hereof, the
restrictive covenants in this Agreement are the exclusive restrictive covenants
to which you are subject covering the subject matter thereof.

 

12. Forfeiture of Equity, Loss of Payments and Other Severance Benefits. In the
event you materially breach any provision hereof, you shall, effective on the
date of such breach, immediately forfeit all vested and unvested stock options
of the Company, and all unvested restricted stock of the Company, held or
beneficially owned by you. In addition, all obligations of the Company hereunder
shall terminate, effective upon the date of such breach.

 

13. Public Announcements. The Company has sent out a mutually agreed-upon public
announcement of your separation from the Company. The Company agrees that,
except as otherwise required by state or federal securities laws or other
applicable law, it shall not make any public statement with respect to you or
your departure which is inconsistent with the mutually agreed-upon public
announcement previously sent out.

 

14. Legal Fees. Any legal expenses actually incurred by you, up to a maximum
amount of $15,000, in connection with the negotiation and execution hereof shall
be paid by the Company; provided that you submit proof in reasonable detail of
such expenses.

 

5

--------------------------------------------------------------------------------

15. Dispute Resolution. Any disputes arising out of the provisions of paragraphs
6 through 9 and paragraphs 11 and 12 shall be settled by the courts of law or
arbitration (binding or otherwise), at the election of the Company. Any disputes
arising out of any other provisions of this Agreement shall be settled by
binding arbitration in accordance with the rules of the American Arbitration
Association. The costs of any arbitrators involved shall be paid by the Company
and all other costs, including attorneys’ fees and expenses, shall be paid by
the party who incurred them.

 

16. Successors and Assigns. The Company shall be obligated to assign this
Agreement to any successor organization. This Agreement shall be binding upon
and inure to your benefit and the benefit of your estate and beneficiaries, the
Company and the successors and assigns of the Company.

 

17. Severability. If all or any part of this Agreement is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Agreement not
declared to be unlawful or invalid. Any provision so declared to be unlawful or
invalid shall, if possible, be construed in a manner which will give effect to
the terms of such provision to the fullest extent possible while remaining
lawful and valid.

 

18. Withholding. The Company may withhold from any amounts payable under this
Agreement any Taxes that are required to be withheld pursuant to any applicable
law or regulation.

 

19. Non-Alienation. Except as is otherwise expressly provided herein, benefits
payable under this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution or levy of any kind, either voluntary or involuntary,
prior to actually being received by you, and any such attempt to dispose of any
right to benefits payable hereunder shall be void.

 

20. Amendment and Waiver. This Agreement shall not be amended or modified except
by written instrument executed by the Company and you. A waiver of any term,
covenant or condition contained in this Agreement shall not be deemed a waiver
of any other term, covenant or condition, and any waiver of any default in any
such term, covenant or condition shall not be deemed a waiver of any later
default thereof or of any other term, covenant or condition.

 

21. Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.

 

22. Entire Agreement. This Agreement (which includes the exhibits hereto) forms
the entire agreement between the parties hereto with respect to the subject
matter contained in the Agreement and shall supersede and override all prior
agreements, promises and representations regarding such subject matter, whether
in writing or otherwise.

 

6

--------------------------------------------------------------------------------

23. Applicable Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of New York, without regard to its choice
of law principles.

 

24. Survival of Rights. Except as otherwise provided herein, all of your rights
hereunder, including your rights to compensation and benefits, and your
obligations under paragraphs 6 through 9 hereof, shall survive the Termination
Date and the termination of this Agreement.

 

25. Opportunity to Engage Counsel. You acknowledge that you have been afforded
the opportunity to ask questions and receive answers from the Company regarding
the provisions of this Agreement, including but not limited to the amounts
payable under this Agreement and the treatment of your equity as described
above, and to obtain any additional information reasonably necessary to verify
the accuracy of such information, and has received satisfactory answers to any
such questions. You further acknowledge that you have been afforded the
opportunity to consult your own legal, tax and financial advisors regarding such
provisions of this Agreement, and that you possess such business and financial
experience to protect your own interests in connection with the consummation of
the transactions described herein, and further acknowledge that you have not
received and are not relying upon any legal, tax or financial advice from the
Company or any of its affiliates, or any of their respective officers,
directors, employees, consultants, agents, consultants, representatives,
successors or assigns.

 

26. Captions. The captions of this Agreement are not a part of the provisions
hereof and shall have no force or effect.

 

Please indicate your acceptance of the foregoing by executing this agreement in
the space below.

 

INSIGHT COMMUNICATIONS

COMPANY, INC.

By:

 

 

--------------------------------------------------------------------------------

 

ACCEPTED AND AGREED TO

AS OF                             , 2003:

--------------------------------------------------------------------------------

KIM D. KELLY

 

7

--------------------------------------------------------------------------------

Exhibit A

 

DESCRIPTION OF STOCK OPTIONS AND RESTRICTED SHARES

 

STOCK OPTIONS

 

Grant Date

--------------------------------------------------------------------------------

  Exercise Price

--------------------------------------------------------------------------------

  Total Shares in Grant

--------------------------------------------------------------------------------

7/31/02

  $9.06   100,000

12/23/02

  $12.83   600,000

12/23/02

  $12.83   300,000

 

RESTRICTED STOCK

 

Grant Date

--------------------------------------------------------------------------------

  Total Shares in Grant

--------------------------------------------------------------------------------

11/15/02

  450,000

 

A-1

--------------------------------------------------------------------------------

Exhibit B

 

WAIVER AND RELEASE

 

This WAIVER AND RELEASE (“Release”) is entered into as of                     
(the “Release Date”) between Insight Communications Company, Inc. (the
“Company”), and Kim D. Kelly (the “Executive”).

 

WHEREAS, the Company and the Executive entered into an agreement dated as of
August 25, 2003 (the “Agreement”), so as to provide for the Executive’s
continued service to the Company, the provision of consulting services, and to
provide certain severance benefits to the Executive;

 

WHEREAS, it is a condition to the obligations of the Company under the Agreement
that the Executive sign and deliver this Waiver and Release;

 

NOW THEREFORE, in consideration of the agreements contained herein, and the
consideration provided in the Agreement, the Company and the Executive agree as
follows:

 

A. Release. In exchange for the consideration under the Agreement, which the
Executive acknowledges exceeds that to which she would otherwise have been
entitled, the Executive hereby releases, acquits and forever discharges the
Company, its parents, subsidiaries, and affiliates, and its and their respective
officers, directors, agents, servants, employees, attorneys, successors, and
assigns, of and from any and all claims, liabilities, demands, causes of action,
costs, expenses, attorneys fees, damages and obligations of every kind and
nature, in law, equity, or otherwise, known and unknown, suspected and
unsuspected, disclosed and undisclosed, arising out of or in any way related to
agreements, events, acts or conduct at any time on or prior to the Release Date,
including but not limited to: any and all such claims and demands directly or
indirectly arising out of or in any way connected with the Executive’s provision
of services to the Company and its affiliates, whether such services were
provided as an independent contractor, employee, officer, director or any other
relationship; claims pursuant to any federal, state, local law, statute or cause
of action including, but not limited to, the federal Civil Rights Act of 1964,
as amended, the federal Age Discrimination in Employment Act of 1967, as
amended, the federal Americans with Disabilities Act of 1990, as amended, tort
law, contract law, wrongful discharge, discrimination, fraud, defamation,
harassment, emotional distress, and breach of the implied covenant of good faith
and fair dealing. The Executive agrees that if any action with respect to the
claims released herein is brought in her name before any court or administrative
tribunal, she will not accept any payments in connection therewith. This Release
shall not release any rights the Executive has (1) under this Agreement, (2) to
continued medical insurance coverage under COBRA, (3) under the Company’s 401(k)
Plan, or (4) under other employee benefit and compensation plans of the Company,
in the ordinary course in accordance with their terms.

 

B. Representations and Warranties. The Executive expressly represents and
warrants that she is the sole owner of the actual or alleged claims, demands,
rights, causes of action, and other matters that are released herein; that the
same have not been transferred

 

B-1

--------------------------------------------------------------------------------

or assigned or caused to be transferred or assigned to any other person, firm,
corporation or other legal entity; and that she has the full right and power to
grant, execute and deliver the releases, undertakings, and agreements contained
herein.

 

C. Indemnification. The provisions set forth herein shall not release any rights
the Executive has to indemnification under the Company’s articles, by-laws, or
other agreements.

 

D. Severability. If all or any part of this Release is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of this Release not
declared to be unlawful or invalid. Any provision so declared to be unlawful or
invalid shall, if possible, be construed in a manner which will give effect to
the terms of such provision to the fullest extent possible while remaining
lawful and valid.

 

E. Counterparts. This Release may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which together will
constitute one and the same instrument.

 

F. Captions. The captions of this Release are not a part of the provisions
hereof and shall have no force or effect.

 

G. Applicable Law. This Release shall be interpreted and construed in accordance
with the laws of the State of New York, without regard to its choice of law
principles.

 

H. Survival of Executive’s Rights. Except as otherwise provided therein, all of
the Executive’s rights under the Agreement, including her rights to compensation
and benefits, indemnification, and her obligations under paragraphs 5 through 8
thereof, shall survive this Release.

 

I. The Executive acknowledges and represents that she (i) has read this Release,
(ii) has had the opportunity to consult with legal counsel prior to executing
this Release, (iii) understands the legal effect and binding nature of this
Release, and (iv) is acting voluntarily and with full knowledge of her actions
in executing this Release. Further, the Executive acknowledges that she has been
given at least twenty-one (21) days to fully consider entering into this Release
before its execution. The Executive acknowledges and represents that if she
elects to sign this Release prior to the expiration of the twenty-one (21) days,
she has done so knowingly and voluntarily.

 

J. The Executive may revoke this Release within the first seven (7) days after
her execution of this Release (“Revocation Period”), in which case this Release
shall not become effective or enforceable and all terms of this Release and the
Agreement to which it relates shall become null and void. If not revoked during
the Revocation Period, this Release shall remain in full force and effect. If
this Release is revoked, no payments shall be due under the Agreement.

 

B-2

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Release on the date first
above written.

 

INSIGHT COMMUNICATIONS COMPANY, INC.

By:

 

 

--------------------------------------------------------------------------------

    Its:

 

 

--------------------------------------------------------------------------------

Executive:

--------------------------------------------------------------------------------

KIM D. KELLY

 

B-3