EMPLOYMENT AGREEMENT
Exhibit 10.1
This Employment Agreement (the “Agreement”), dated as of April 13, 2009, is entered into by
and between Ascent Media Corporation, a Delaware corporation (the “Company”), and Xxxx X. Xxx
(“Executive”).
INTRODUCTION
The Company, through its subsidiaries (“Affiliates”), is engaged in the business of providing
technical and creative services to the entertainment industry. The Company desires to employ
Executive, and Executive desires to accept such employment, under the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
EMPLOYMENT; TERM; DUTIES
1.1 Employment. Upon the terms and conditions hereinafter set forth, the Company
hereby employs Executive, and Executive hereby accepts employment, as Senior Vice President of
Corporate Development.
1.2 Term. Subject to Article IV below, Executive’s employment hereunder shall be for
a term of five (5) years commencing effective as of September 17, 2008 (the “Commencement Date”),
and expiring at the close of business on September 16, 2013 (the “Term”).
1.3 Duties. During the Term, Executive shall perform such executive duties for the
Company and/or its Affiliates, consistent with his position hereunder, as may be assigned to him
from time to time by the individual(s) set forth in Section 1.4 below. Executive shall devote his
entire productive business time, attention and energies to the performance of his duties hereunder.
Executive shall use his best efforts to advance the interests and business of the Company and its
Affiliates. Executive shall abide by all rules, regulations and policies of the Company, as may be
in effect from time to time. Notwithstanding the foregoing, Executive may act for his own account
in passive-type investments as provided in Section 5.3, or as a member of boards of directors of
other companies, or as a consultant to Liberty Media Corporation (“LMC”), where the time allocated
for those activities does not interfere with or create a conflict of interest with the discharge of
his duties for the Company.
1.4 Reporting. Executive shall report directly to the Chief Executive Officer of the
Company.
1.5 Location. Except for services rendered during business trips as may be reasonably
necessary, Executive shall render his services under this Agreement primarily from the offices of
LMC in Englewood, Colorado and periodically from the offices of the Company in Santa Monica,
California.
1.6 Exclusive Agreement. Executive represents and warrants to the Company that there
are no agreements or arrangements, whether written or oral, in effect which would prevent Executive
from rendering his exclusive services to the Company during the Term.
ARTICLE II
COMPENSATION
2.1 Compensation. For all services rendered by Executive hereunder and all covenants
and conditions undertaken by him pursuant to this Agreement, the Company shall pay, and Executive
shall accept, as full compensation, the amounts set forth in this Article II.
2.2 Base Salary. The base salary shall be an annual salary of $325,000 (the “Base
Salary”), payable by the Company in accordance with the Company’s normal payroll practices.
Beginning as of the first anniversary of the Commencement Date, the Base Salary shall be reviewed
on an annual basis during the Term for increase in the sole discretion of the compensation
committee (the “Committee”) of the Board of Directors of the Company.
2.3 Bonus. For each fiscal year during the Term, commencing with the 2009 fiscal
year, in addition to the Base Salary, Executive shall be eligible for an annual bonus (the “Bonus”)
of 50% of Executive’s annual Base Salary (the “Target Bonus”). (The Company’s fiscal year is
currently January 1 through December 31 of each year.) Such bonus opportunity may exceed the 50%
Target Bonus but will not exceed 75% of Executive’s annual Base Salary. Executive’s entitlement to
any Bonus will be determined by the Committee in its sole discretion, based upon the achievement of
such criteria as the Committee may establish in its sole discretion. Nothing in this Agreement
shall be construed to guarantee the payment of any Bonus to Executive.
2.4 Deductions. The Company shall deduct from the compensation described in Sections
2.2 and 2.3, and from any other compensation payable pursuant to this Agreement, any federal, state
or local withholding taxes, social security contributions and any other amounts which may be
required to be deducted or withheld by the Company pursuant to any federal, state or local laws,
rules or regulations.
2.5 Disability Adjustment. Any compensation otherwise payable to Executive pursuant
to Sections 2.2 and 2.3 in respect of any period during which Executive is Disabled (as
contemplated in Section 4.4) shall be reduced by any amounts payable to Executive for loss of
earnings or the like under any insurance plan or policy sponsored by the Company.
2
ARTICLE III
BENEFITS; EXPENSES
3.1 Benefits. During the Term, Executive shall be entitled to participate in such
group life, health, accident, disability or hospitalization insurance plans and retirement plans as
the Company may make available to its other similarly situated executive employees as a group,
subject to the terms and conditions of any such plans. Executive’s participation in all such plans
shall be at a level, and on terms and conditions, that are commensurate with his positions and
responsibilities at the Company.
3.2 Expenses. The Company agrees that Executive is authorized to incur reasonable and
appropriate expenses in the performance of his duties hereunder and in promoting the business of
the Company in accordance with the terms of the Company’s Travel & Entertainment Policy (as the
same may be modified or amended by the Company from time to time in its sole discretion).
3.3 Vacation. Executive shall accrue a total of one hundred sixty (160) hours
of vacation per year following the date of this Agreement. If, at any time during the Term,
Executive accumulates two hundred forty (240) hours of earned but unused vacation time (the
“Accrual Cap”), Executive will not accrue additional vacation time until he has taken a portion of
the previously earned vacation. Executive will again accrue paid vacation time when his
accumulated amount of earned but unused vacation time falls below the Accrual Cap. Upon
termination of Executive’s employment, any accrued but unused vacation time will be paid to
Executive.
3.4 Equity Grants. As part of the consideration for Executive’s services to the
Company during the Term, the Company has made the following grants to Executive pursuant to the
Ascent Media Corporation 2008 Incentive Plan (the “Plan”):
(a) A grant of 34,542 shares (the “Restricted Shares”) of the Company’s Series A Common Stock,
par value $0.01 per share (“ASCMA Stock”), pursuant to the Restricted Stock Award Agreement dated
as of October 15, 2008, by and between the Company and Executive (the “Restricted Stock
Agreement”); and
(b) A grant of options to purchase from the Company, at an exercise price of $23.16 per share,
121,799 shares of ASCMA Stock (the “Options”), pursuant to the Non-Qualified Stock Option Agreement
dated as of October 15, 2008, by and between the Company and Executive, as amended by the Amendment
No. 1 to Non-Qualified Stock Option Agreement dated as of March 30, 2009, by and between the
Company and Executive (as amended, the “Option Agreement”).
The Restricted Shares and the Options shall be subject in all respects to the terms and conditions
of the Plan and the Restricted Stock Agreement and Option Agreement, as applicable.
3
ARTICLE IV
TERMINATION; DEATH; DISABILITY
4.1 Termination of Employment For Cause. In addition to any other remedies available
to the Company at law, in equity or as set forth in this Agreement, the Company shall have the
right, upon written notice to Executive, to terminate Executive’s employment hereunder at any time
for “Cause” (a “Termination For Cause”). In the event of a Termination For Cause, Executive’s
employment will terminate and the Company shall have no further liability or obligation to
Executive (other than the Company’s obligation to pay Base Salary and vacation time accrued but
unpaid as of the date of termination and reimbursement of expenses incurred prior to the date of
termination in accordance with Section 3.2 above).
For purposes of this Agreement, “Cause” shall mean: (a) any act or omission that constitutes
a breach by Executive of any of his material obligations under this Agreement; (b) the continued
failure or refusal of Executive (i) to substantially perform the material duties required of him as
an Executive of the Company and/or (ii) to comply with reasonable directions of the individual(s)
set forth in Section 1.4 above; (c) any material violation by Executive of any (i) policy, rule or
regulation of the Company or (ii) any law or regulation applicable to the business of the Company
or any of its affiliates; (d) Executive’s material act or omission constituting fraud, dishonesty
or misrepresentation, occurring subsequent to the commencement of his employment with the Company;
(e) Executive’s gross negligence in the performance of his duties hereunder; (f) Executive’s
conviction of, or plea of guilty or nolo contendere to, any crime (whether or not involving the
Company) which constitutes a felony or crime of moral turpitude or is punishable by imprisonment of
thirty (30) days or more, provided, however, that nothing in this Agreement shall
obligate the Company to pay Base Salary or any bonus compensation or benefits during any period
that Executive is unable to perform his duties hereunder due to any incarceration, and
provided, further, that nothing shall prevent Executive’s termination under any
other subsection of this Section 4.1 if it provides independent grounds for termination; or (g) any
other misconduct by Executive that is materially injurious to the financial condition or business
reputation of, or is otherwise materially injurious to, the Company or any of its Affiliates.
Notwithstanding the foregoing, no purported Termination For Cause pursuant to (a), (b), (c),
(d), (e) or (g) of the preceding paragraph of this Section 4.1 shall be effective unless all of the
following provisions shall have been complied with: (i) Executive shall be given written notice by
the Company of its intention to effect a Termination For Cause, such notice to state in detail the
particular circumstances that constitute the grounds on which the proposed Termination For Cause is
based; and (ii) Executive shall have ten (10) business days after receiving such notice in which to
cure such grounds, to the extent such cure is possible, as determined in the sole discretion of the
Company.
4.2 Termination of Employment Without Cause. During the Term, the Company may at any
time, in its sole discretion, terminate the employment of Executive hereunder for any reason (other
than those set forth in Section 4.1 above) upon written notice (the “Termination Notice”) to
Executive (a “Termination Without Cause”). In such event, the Company shall pay Executive an
amount equal to the sum of the following:
| (a) | any Base Salary and vacation time accrued but unpaid as of the date of termination; |
4
| (b) | subject to Sections 4.5, 4.6, 4.7, 4.9 and 5.3 below, an amount (the “Severance Payment”) equal to: |
| (i) | if the termination of Executive’s employment occurs prior to a Change in Control (as defined in Section 4.8), the product of (i) the sum of Executive’s Annual Base Salary plus the Target Bonus, both as in effect immediately prior to such Termination Without Cause, multiplied by (ii) 1; or | ||
| (ii) | if the termination of Executive’s employment occurs concurrently with or following a Change in Control, the product of (i) the sum of Executive’s Annual Base Salary plus the Target Bonus, both as in effect immediately prior to such Termination Without Cause, multiplied by (ii) 1.5; |
| (c) | any Bonus to which Executive has become entitled for the calendar year prior to the year in which such Termination Without Cause occurs but which remains unpaid at the date of termination (“Unpaid Bonus”); and | ||
| (d) | any reimbursement for expenses incurred in accordance with Section 3.2. |
Subject to Section 4.9, any Severance Payment to which Executive becomes entitled shall be payable
in a lump sum on the sixtieth (60th) day following the date of termination of
Executive’s employment (or, if such day is not a business day, on the first business day
thereafter).
In addition, subject to Sections 4.5, 4.6, 4.7, 4.9 and 5.3 below, to the extent such coverage
is available and is elected by Executive under the Consolidated Omnibus Budget Reconciliation Act
of 1985 (“COBRA”), the Company shall contribute to the health insurance plan maintained by the
Company and covering the Executive and his dependents as of the date of termination, or any
successor plan maintained by the Company, that amount that reflects the proportionate part of the
premium for such coverage that is paid by the Company as of the date of termination (the “Benefits
Payments”), such Benefits Payments to be made monthly in accordance with the Company’s normal
procedures for the payment of health insurance premiums, throughout the period beginning on the
date of termination and ending on the earlier of the 12-month anniversary of the date of
termination and the expiration of the coverage period specified in COBRA, such period to be
determined as of the date of termination (the “Reimbursement Period”) (i.e., Executive
shall bear responsibility for that portion of the health insurance premiums in excess of the
Benefits Payments), or, alternately, in the Company’s sole discretion, the Company shall reimburse
Executive the amount of the Benefits Payment on a monthly basis during the Reimbursement Period,
upon Executive’s submission to the Company of adequate proof of payment of the full COBRA premium
by Executive; provided, however, that if Executive becomes employed with another
employer during the Reimbursement Period and is eligible to receive health and/or medical benefits
under such other employer’s plans, the Company’s payment obligation under this paragraph shall be
reduced to the extent that comparable benefits and/or coverage is provided under such other
employer’s plans. For the avoidance of doubt, Executive shall be responsible for paying any U.S.
federal or state income taxes associated with the Benefits Payments.
Executive acknowledges that the payments and benefits referred to in this Section 4.2,
together with any rights or benefits under any written plan or agreement which have vested on or
5
prior to the termination date of Executive’s employment under this Section 4.2, constitute the
only payments which Executive shall be entitled to receive from the Company hereunder in the event
of any termination of his employment pursuant to this Section 4.2, and the Company shall have no
further liability or obligation to him hereunder or otherwise in respect of his employment.
4.3 Termination of Employment With Good Reason. In addition to any other remedies
available to Executive at law, in equity or as set forth in this Agreement, Executive shall have
the right during the Term, upon written notice to the Company, to terminate his employment
hereunder upon the occurrence of any of the following events: (a) a material diminution in
Executive’s then current Base Salary without the prior written consent of Executive; or (b) a
material breach by the Company of any provision of this Agreement without the prior written consent
of Executive (a “Termination With Good Reason”).
Notwithstanding the foregoing, no purported Termination With Good Reason pursuant to this
Section 4.3 shall be effective unless all of the following provisions shall have been complied
with: (i) Executive shall give the Company a written notice of Executive’s intention to effect a
Termination With Good Reason, such notice to state in detail the particular circumstances that
constitute the grounds on which the proposed Termination With Good Reason is based and to be given
no later than ninety (90) days after the initial occurrence of such circumstances; (ii) the Company
shall have thirty (30) days after receiving such notice in which to cure such grounds, to the
extent such cure is possible; and (iii) if the Company fails to cure such grounds within such
30-day period, Executive terminates his employment hereunder on the last day of such 30-day period.
In the event that a Termination With Good Reason occurs, then, subject to Sections 4.5, 4.6,
4.7, 4.9 and 5.3 below, Executive shall have the same entitlement to the amounts and benefits as
provided under Section 4.2 for a Termination Without Cause.
Executive acknowledges that the payments and benefits referred to in this Section 4.3,
together with any rights or benefits under any written plan or agreement which have vested on or
prior to the termination date of Executive’s employment under this Section 4.3, constitute the only
payments which Executive shall be entitled to receive from the Company hereunder in the event of
any termination of his employment pursuant to this Section 4.3, and the Company shall have no
further liability or obligation to him hereunder or otherwise in respect of his employment.
4.4 Death; Disability. In the event that Executive dies or becomes Disabled (as
defined herein) during the Term, Executive’s employment shall terminate either (i) when such death
occurs, or (ii) upon written notice by the Company at any time after Disability occurs (provided
that, in the event of any Disability, the Company shall have the right, but not the obligation, to
terminate this Agreement), and, in either event, the Company shall pay Executive (or his legal
representative, as the case may be) as follows:
| (a) | any Base Salary and vacation time accrued but unpaid as of the date of death or termination for Disability; and | ||
| (b) | any reimbursement for expenses incurred in accordance with Section 3.2. |
For the purposes of this Agreement, Executive shall be deemed to be “Disabled” or have a
“Disability” if, because of Executive’s physical or mental disability, he has been substantially
6
unable to perform his duties hereunder for twelve (12) work weeks in any twelve (12) month
period. Executive shall be considered to have been substantially unable to perform his duties
hereunder only if he is either (a) unable to reasonably and effectively carry out his duties with
reasonable accommodations by the Company or (b) unable to reasonably and effectively carry out his
duties because any reasonable accommodation which may be required would cause the Company undue
hardship. In the event of a disagreement concerning Executive’s perceived Disability, Executive
shall submit to such examinations as are deemed appropriate by three practicing physicians
specializing in the area of Executive’s Disability, one selected by Executive, one selected by the
Company, and one selected by both such physicians. The majority decision of such three physicians
shall be final and binding on the parties. Nothing in this paragraph is intended to limit the
Company’s right to invoke the provisions of this paragraph with respect to any perceived Disability
of Executive.
Notwithstanding the foregoing, to the extent and for the period required by any state or
federal family and medical leave law, upon Executive’s request (i) he shall be considered to be on
unpaid leave of absence and not terminated, (ii) his group health benefits shall remain in full
force and effect, and (iii) if Executive recovers from any such Disability, at that time, to the
extent required by any state or federal family and medical leave law, upon Executive’s request, he
shall be restored to his position hereunder or to an equivalent position, as the Company may
determine, and the Term of Executive’s employment hereunder shall be reinstated effective upon such
restoration. The Term shall not be extended by reason of such intervening leave of absence, nor
shall any compensation or benefits accrue in excess of those required by law during such
intervening leave of absence. Upon the expiration of any such rights, unless Executive has been
restored to a position with the Company, he shall thereupon be considered terminated.
Executive acknowledges that the payments referred to in this Section 4.4, together with any
rights or benefits under any written plan or agreement which have vested on or prior to the
termination date of Executive’s employment under this Section 4.4, constitute the only payments
which Executive (or his legal representative, as the case may be) shall be entitled to receive from
the Company hereunder in the event of a termination of his employment for death or Disability, and
the Company shall have no further liability or obligation to him (or his legal representatives, as
the case may be) hereunder or otherwise in respect of his employment.
4.5 No Mitigation by Executive. Except as otherwise expressly provided herein,
Executive shall not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided
for herein be reduced by any compensation earned by Executive as the result of employment by
another employer; provided, however, that if Executive becomes employed with
another employer and is eligible to receive health and/or medical benefits under such other
employer’s plans, Executive’s continued benefits and/or plan coverage as set forth in Section 4.2
or 4.3, as the case may be, shall be reduced to the extent that comparable benefits and/or coverage
is provided under such other employer’s plans.
4.6 Severance Agreement and Release. In the event that Executive’s employment
hereunder is terminated pursuant to (i) a Termination Without Cause (as defined in Section 4.2
above), or (ii) a Termination With Good Reason (as defined in Section 4.3 above), payment by the
Company of the amounts described in said sections shall be subject to the execution and delivery to
7
the Company by Executive of the Company’s standard severance agreement and release (the “Release”)
within the applicable time period described below.
The Release shall be delivered to Executive, in the case of a Termination Without Cause, at
the time of delivery of the Termination Notice, and, in the case of a Termination With Good Reason,
upon delivery of written notice by the Executive to the Company. Executive shall have a period of
twenty-one (21) days (or, if required by applicable law, a period of forty-five (45) days) after
the effective date of termination of Executive’s employment hereunder (the “Consideration Period”)
in which to execute and return the original, signed Release to the Company. If Executive delivers
the original, signed Release to the Company prior to the expiration of the Consideration Period and
does not thereafter revoke such Release within any period of time provided therefor under
applicable law, Executive shall, subject to Sections 4.7, 4.9 and 5.3 below, be entitled to the
Severance Payment as described in Section 4.2 (including by reason of Section 4.3, if applicable).
If Executive does not deliver the original, signed Release to the Company prior to the
expiration of the Consideration Period, or if Executive delivers the original, signed Release to
the Company prior to the expiration of the Consideration Period and thereafter revokes such Release
within any period of time provided therefor under applicable law, then:
| (a) | the Company shall pay Executive an amount equal to the sum of (i) any Base Salary and vacation time accrued but unpaid as of the date of termination, plus (ii) any reimbursement for expenses incurred in accordance with Section 3.2, plus (iii) any Unpaid Bonus described in Section 4.2(c) above; and | ||
| (b) | the Company shall have no obligation to pay to Executive the Severance Payment (as that term is defined in Section 4.2(b) above) or the Benefits Payments (as that term is defined in Section 4.2). |
4.7 Continued Compliance. Executive and the Company hereby acknowledge that any
Severance Payments and Benefits Payments payable by the Company under Section 4.2 (including by
reason of Section 4.3) are part of the consideration for Executive’s undertakings under Article V
below. Such amounts are subject to Executive’s continued compliance with the provisions of Article
V. If Executive violates the provisions of Article V, then the Company will have no obligation to
make any of the Severance Payments or Benefits Payments that remain payable by the Company under
Section 4.2 (including by reason of Section 4.3) on or after the date of such violation.
4.8 Change in Control. For purposes of this Agreement, a “Change in Control” means
any of the following that otherwise meets the definition of a “change in ownership,” a “change in
effective control” or a “change in ownership of a substantial portion of the assets” of the Company
within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended, including any
Treasury regulations promulgated thereunder and any guidance issued by the Internal Revenue Service
with respect thereto (hereinafter, the “Code”):
(a) the acquisition by any person or group (excluding Xxxx X. Xxxxxx and/or any family
member(s) of Xxxx X. Xxxxxx and/or any company, partnership, trust or other entity or
investment vehicle controlled by any of the foregoing persons or the holdings of which are
for the primary benefit or any of such persons (collectively, the “Permitted Holders”)) of
8
ownership of stock of the Company that, together with stock already held by such person or
group, constitutes more than 50% of the total fair market value or more than 50% of the
total voting power of the stock of the Company;
(b) the acquisition by any person or group (other than the Permitted Holders), in a single
transaction or in multiple transactions all occurring during the 12-month period ending on
the date of the most recent acquisition by such person or group, assets from the Company
that have a total gross fair market value equal to or exceeding 40% of the total gross fair
market value of all of the assets of the Company immediately prior to such acquisition or
acquisitions; or
(c) the acquisition by any person or group (other than the Permitted Holders), in a single
transaction or in multiple transactions all occurring during the 12-month period ending on
the date of the most recent acquisition by such person or group, of ownership of stock of
the Company possessing 30 percent or more of the total voting power of the stock of the
Company or the replacement of a majority of the Company’s Board of Directors during any
12-month period by directors whose appointment or election is not endorsed by a majority of
the members of the Company’s Board of Directors before the date of appointment or election.
For purposes of this Section 4.8, “person” and “group” have the meanings given to them for
purposes of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or any successor provisions, and the term “group” includes any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning of rule 13d-5(b)(1)
under the Exchange Act, or any successor provision.
4.9 Timing of Payments Under Certain Circumstances. With respect to any amount that
becomes payable to or for the benefit of Executive under this Agreement upon Executive’s Separation
from Service (as defined below) for any reason, the provisions of this Section 4.9 will apply,
notwithstanding any other provision of this Agreement to the contrary. If the Company determines
in good faith that Executive is a “specified employee” within the meaning of Section 409A of the
Internal Revenue Code, any Treasury regulations promulgated thereunder and any guidance issued by
the Internal Revenue Service relating thereto (collectively, “Code Section 409A”), then to the
extent required under Code Section 409A, payment of any amount of deferred compensation that
becomes payable to or for the benefit of Executive upon Separation from Service (other than by
reason of the death of Executive) and that otherwise would be payable during the six-month period
following Executive’s Separation from Service shall be suspended until the lapse of such six-month
period (or, if earlier, the date of Executive’s death). A “Separation from Service” of Executive
means Executive’s separation from service, as defined in Code Section 409A, with the Company and
all other entities with which the Company would be considered a single employer under Internal
Revenue Code Section 414(b) or (c), applying the 80% threshold used in such Internal Revenue Code
Sections or any Treasury regulations promulgated thereunder. Any payment suspended as provided in
this Section 4.9, unadjusted for interest on such suspended payment, shall be paid to Executive in
a single payment on the first business day following the end of such six-month period or within 30
days following the death of Executive, as applicable, provided that the death of Executive during
such six-month period shall not cause the acceleration of any amount that otherwise would be
payable on any date during such six-month period following the date of Executive’s death.
9
ARTICLE V
OWNERSHIP OF PROCEEDS OF EMPLOYMENT; NON-DISCLOSURE;
NON-COMPETITION
NON-COMPETITION
5.1 Ownership of Proceeds of Employment.
5.1.1 The Company shall be the sole and exclusive owner throughout the universe in perpetuity
of all of the results and proceeds of Executive’s services, work and labor in connection with
Executive’s employment by the Company, free and clear of any and all claims, liens or encumbrances.
Executive shall promptly and fully disclose to the Company, with all necessary detail for a
complete understanding of the same, any and all developments, client and potential client lists,
know how, discoveries, inventions, improvements, conceptions, ideas, writings, processes, formulae,
contracts, methods, works, whether or not patentable or copyrightable, which are conceived, made,
acquired, or written by Executive, solely or jointly with another, while employed by the Company
(whether or not at the request or upon the suggestion of the Company) and which are substantially
related to the business or activities of the Company or any of its Affiliates, or which Executive
conceives as a result of his employment by the Company or its Affiliates, or as a result of
rendering advisory or consulting services to the Company or its Affiliates (collectively,
“Proprietary Rights”).
5.1.2 Executive hereby assigns and transfers, and agrees to assign and transfer, all his
rights, title, and interests in the Proprietary Rights to the Company or its nominee. In addition,
Executive shall deliver to the Company any and all drawings, notes, specifications, and data
relating to the Proprietary Rights. All copyrightable Proprietary Rights shall be considered to be
“works made for hire.” Whenever requested to do so by the Company, Executive shall execute and
deliver to the Company any and all applications, assignments and other instruments and do such
other acts that the Company shall request to apply for and obtain patents and/or copyrights in any
and all countries or to otherwise protect the Company’s interest in the Proprietary Rights and/or
to vest title thereto to the Company; provided, however, the provisions of this
Section 5.1 shall not apply to any Proprietary Rights that Executive developed entirely on his own
time without using the Company’s equipment, supplies, facilities or proprietary information, except
for Proprietary Rights that (a) at the time of conception or reduction to practice of the
Proprietary Rights, relate to the Company’s business, or actual or demonstrably anticipated
research or development of the Company, or (b) result from any work performed by Executive for the
Company.
5.1.3 Executive shall assist the Company in obtaining such copyrights and patents during the
term of this Agreement, and any time thereafter on reasonable notice and at mutually convenient
times, and Executive agrees to testify in any prosecution or litigation involving any of the
Proprietary Rights; provided, however, Executive shall be reasonably compensated for his time and
reimbursed for any out-of-pocket expenses incurred in rendering such assistance or giving or
preparing to give such testimony.
5.2 Non-Disclosure of Confidential Information. As used herein, “Confidential
Information” means any and all information affecting or relating to the business of the Company and
its Affiliates, including without limitation, financial data, customer lists and data, licensing
arrangements, business strategies, pricing information, product development, intellectual,
artistic, literary, dramatic or musical rights, works, or other materials of any kind or nature
(whether or not
10
entitled to protection under applicable copyright laws, or reduced to or embodied in any medium or
tangible form), including without limitation, all copyrights, patents, trademarks, service marks,
trade secrets, contract rights, titles, themes, stories, treatments, ideas, concepts, technologies,
art work, logos, hardware, software, and as may be embodied in any and all computer programs,
tapes, diskettes, disks, mailing lists, lists of actual or prospective customers and/or suppliers,
notebooks, documents, memoranda, reports, files, correspondence, charts, lists and all other
written, printed or otherwise recorded material of any kind whatsoever and any other information,
whether or not reduced to writing, including “know-how”, ideas, concepts, research, processes, and
plans. “Confidential Information” does not include information that is in the public domain,
information that is generally known in the trade, or information that Executive can prove he
acquired wholly independently of his employment with the Company. Executive shall not, at any time
during the Term or thereafter, directly or indirectly, disclose or furnish to any other person,
firm or corporation any Confidential Information, except in the course of the proper performance of
his duties hereunder or as required by law (in which event Executive shall give prior written
notice to Company and shall cooperate with Company and Company’s counsel in complying with such
legal requirements). Promptly upon the expiration or termination of Executive’s employment
hereunder for any reason or whenever the Company so requests, Executive shall surrender to the
Company all documents, drawings, work papers, lists, memoranda, records and other data (including
all copies) constituting or pertaining in any way to any of the Confidential Information.
5.3 Non-Competition. Executive shall not, during the Term or during the Consideration
Period, directly: (a) compete with the Company; or (b) have an interest in, be employed by, be
engaged in or participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business within the
Territory (as such terms are hereinafter defined); provided, however, that
notwithstanding the foregoing, Executive may make solely passive investments in any Competing
Entity the common stock of which is “publicly held,” and of which Executive shall not own or
control, directly or indirectly, in the aggregate securities which constitute more than one (1%)
percent of the voting rights or equity ownership of such Competing Entity; or (c) solicit or divert
any business or any customer from the Company or assist any person, firm or corporation in doing so
or attempting to do so; or (d) cause or seek to cause any person, firm or corporation to refrain
from dealing or doing business with the Company or assist any person, firm or corporation in doing
so or attempting to do so.
For purposes of this Section 5.3, (i) the term “Competing Entity” shall mean any entity which
presently or during the period referred to above engages in any business activity in which the
Company or any of its Affiliates is then engaged; and (ii) the term “Territory” shall mean any
geographic area in which the Company or any of its Affiliates conducts business during such period;
provided, however, that, during the Consideration Period, the term “Territory”
shall mean only Los Angeles County, California.
Notwithstanding the foregoing, in the event that Executive elects, during the Consideration
Period, to either (a) compete with the Company, or (b) have an interest in, be employed by, be
engaged in or participate in the ownership, management, operation or control of, or act in any
advisory or other capacity for, any Competing Entity which conducts its business within the
Territory (the foregoing subsections (a) and (b), collectively, the “Competitive Activities”),
then, at least ten (10) business days prior to commencing any such Competitive Activities,
Executive shall deliver to the Company a written notice (the “Competition Notice”) advising the
Company of (i)
11
Executive’s intent to commence Competitive Activities, and (ii) the commencement date for such
Competitive Activities (the “Effective Date”). Executive’s election to participate in any
Competitive Activities during the Consideration Period shall not be deemed a breach of this
Agreement; rather, in the event Executive engages in Competitive Activities prior to the expiration
of the Consideration Period, then (x) Executive shall forfeit any Severance Payment and Benefits
Payments otherwise payable pursuant to Section 4.2 or 4.3 above, and (y) the Company shall have no
obligation to make any Severance Payment or Benefits Payments to Executive under Section 4.2 or 4.3
for any periods beyond the Effective Date.
5.4 Non-Solicitation.
5.4.1 Executive shall not, for a period of eighteen (18) months from the date of any
termination or expiration of his employment hereunder, directly or indirectly: (a) acquire any
financial interest in or perform any services for himself or any other entity in connection with a
business in which Executive’s interest, duties or activities would inherently require Executive to
reveal any Confidential Information; or (b) solicit or cause to be solicited the disclosure of or
disclose any Confidential Information for any purpose whatsoever or for any other party.
5.4.2 Executive shall not, for a period of eighteen (18) months from the date of any
termination or expiration of his employment hereunder, solicit, directly or indirectly, or cause or
permit others to solicit, directly or indirectly, any person employed by the Company (a “Current
Employee”) to leave employment with the Company. The term “solicit” includes, but is not limited to
the following (regardless of whether done directly or indirectly): (i) requesting that a Current
Employee change employment, (ii) informing a Current Employee that an opening exists elsewhere,
(iii) assisting a Current Employee in finding employment elsewhere, (iv) inquiring if a Current
Employee “knows of anyone who might be interested” in a position elsewhere, (v) inquiring if a
Current Employee might have an interest in employment elsewhere, (vi) informing others of the name
or status of, or other information about, a Current Employee, or (vii) any other similar conduct,
the effect of which is that a Current Employee leaves the employment of the Company.
5.5 Breach of Provisions. In the event that Executive shall breach any of the
provisions of this Article V, or in the event that any such breach is threatened by Executive, in
addition to and without limiting or waiving any other remedies available to the Company at law or
in equity, the Company shall be entitled to immediate injunctive relief in any court, domestic or
foreign, having the capacity to grant such relief, without the necessity of posting a bond, to
restrain any such breach or threatened breach and to enforce the provisions of this Article V.
Executive acknowledges and agrees that there is no adequate remedy at law for any such breach or
threatened breach and, in the event that any action or proceeding is brought seeking injunctive
relief, Executive shall not use as a defense thereto that there is an adequate remedy at law.
5.6 Reasonable Restrictions. The parties acknowledge that the foregoing restrictions,
the duration and the territorial scope thereof as set forth in this Article V, are under all of the
circumstances reasonable and necessary for the protection of the Company and its business.
5.7 Definition. For purposes of this Article V, the term “Company” shall be deemed to
include (i) any predecessor to, or successor of the Company, (ii) any subsidiary of the Company
(including, without limitation, any entity in which the Company owns 50% or more of the issued and
outstanding equity), and (iii) any entity that is under the control or common control of the
12
Company (including, by way of illustration and not as a limitation, any joint venture to which the
Company or one of its subsidiaries is a party).
5.8 Third Party Trade Secrets. In the same way that the Company endeavors to protect
its own Confidential Information, the Company endeavors not to engage in any conduct which would
violate the legal protection afforded to the trade secret information of third parties. Under no
circumstances will the Company accept the improper disclosure of other parties’ trade secrets.
Therefore, in rendering Executive’s services hereunder, Executive agrees not to disclose to the
Company or utilize in any manner trade secret information in Executive’s possession belonging to
any other party.
ARTICLE VI
MISCELLANEOUS
6.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective legal representatives, heirs, distributees, successors and
assigns.
6.2 Assignment. The Company may assign this Agreement to any successor in interest to
its business, and Executive hereby agrees to be employed by such assignee as though such assignee
were originally the employer named herein; provided, however, that, notwithstanding
any such assignment, the Company shall remain liable to Executive for any obligations arising under
Article IV above (including, without limitation, any amounts and benefits payable under Sections
4.2 and 4.3), regardless of the time of payment . Executive hereby acknowledges that the services
to be rendered by Executive are unique and personal, and, accordingly, Executive may not assign any
of his rights or delegate any of his duties or obligations under this Agreement.
6.3 Notices. Any notice provided for herein shall be in writing and shall be deemed
to have been given or made when personally delivered or three (3) days following deposit for
mailing by first class registered or certified mail, return receipt requested, or if delivered by
facsimile transmission, upon confirmation of receipt of the transmission, to the address of the
other party set forth below or to such other address as may be specified by notice given in
accordance with this Section 6.3:
| (a) | If to the Company: | ||
| Ascent Media Corporation 00000 Xxxxxxx Xxxxxxxxx Xxxxxxxxx, XX 00000 Attention: Chief Executive Officer Fax No.: (000) 000-0000 |
13
| With a copy to: | |||
| Ascent Media Corporation 000 Xxxxxxxx, 0xx Xxxxx Xxxxx Xxxxxx, XX 00000 Attention: General Counsel Fax No.: (000) 000-0000 |
| (b) | If to Executive: | ||
| Xxxx X. Xxx 0000 Xxxxx Xxxxxxxx Xxxxxx Xxxxxxxxx, XX 00000 |
6.4 Severability. If any provision of this Agreement, or portion thereof, shall be
held invalid or unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall attach only to such provision or portion thereof, and shall not in any
manner affect or render invalid or unenforceable any other provision of this Agreement or portion
thereof, and this Agreement shall be carried out as if any such invalid or unenforceable provision
or portion thereof were not contained herein. In addition, any such invalid or unenforceable
provision or portion thereof shall be deemed, without further action on the part of the parties
hereto, modified, amended or limited to the extent necessary to render the same valid and
enforceable.
6.5 Confidentiality. The parties hereto agree that they will not, during the Term or
thereafter, disclose to any other person or entity the terms or conditions of this Agreement
(excluding the financial terms hereof) without the prior written consent of the other party, except
as required by law, regulatory authority or as necessary for either party to obtain personal loans
or financing. Approval of the Company and of Executive shall be required with respect to any press
releases regarding this Agreement and the activities of Executive contemplated hereunder.
6.6 Arbitration. If any controversy, claim or dispute arises out of or in any way
relates to this Agreement, the alleged breach thereof, Executive’s employment with the Company or
termination therefrom, including without limitation, any and all claims for employment
discrimination or harassment, civil tort and any other employment laws, excepting only claims which
may not, by statute, be arbitrated, both Executive and the Company (and its directors, officers,
employees or agents) agree to submit any such dispute exclusively to binding arbitration. Both
Executive and the Company acknowledge that they are relinquishing their right to a jury trial in
civil court. Executive and the Company agree that arbitration is the exclusive remedy for all
disputes arising out of or related to Executive’s employment with the Company.
The arbitration shall be administered, at the election of the party initiating the arbitration
proceeding, either by JAMS in accordance with the Employment Arbitration Rules & Procedures of JAMS
then in effect and subject to JAMS Policy on Employment Arbitration Minimum Standards or by the
American Arbitration Association in accordance with the Employment Dispute Resolution Rules of the
American Arbitration Association, except as provided otherwise in this Agreement. Arbitration shall
be commenced and heard in the Englewood, Colorado metropolitan area. Only one arbitrator shall
preside over the proceedings. The arbitrator shall apply the substantive law (and the law of
remedies, if applicable) of Colorado or federal law, or both, as applicable to the claim(s)
14
asserted. In any arbitration, the burden of proof shall be allocated as provided by applicable law.
The arbitrator shall have the authority to award any and all legal and equitable relief authorized
by the law applicable to the claim(s) being asserted in the arbitration, as of the claim(s) were
brought in a court of law. Either party may bring an action in court to compel arbitration under
this Agreement and to enforce an arbitration award. Discovery, such as depositions or document
requests, shall be available to the Company and Executive as though the dispute were pending in
Colorado state court. The arbitrator shall have the ability to rule on pre-hearing motions, as
though the matter were in a Colorado state court, including the ability to rule on a motion for
summary judgment.
Unless otherwise permitted under applicable law, the fees of the arbitrator and any other fees
for the administration of the arbitration that would not normally be incurred if the action were
brought in a court of law (e.g., filing fees, room rental fees, etc.) shall be paid by the Company,
provided that Executive shall be required to pay the amount of filing fees equal to that which
Executive would be required to pay to file an action in Colorado state court. The arbitrator must
provide a written decision which is subject to limited judicial review consistent with applicable
law. If any part of this arbitration provision is deemed to be unenforceable by an arbitrator or a
court of law, that part may be severed or reformed so as to make the balance of this arbitration
provision enforceable.
6.7 Waiver. No waiver by a party hereto of a breach or default hereunder by the other
party shall be considered valid unless in writing signed by such first party, and no such waiver
shall be deemed a waiver of any subsequent breach or default of the same or any other nature.
6.8 Controlling Nature of Agreement. To the extent any terms of this Agreement are
inconsistent with the terms or provisions of the Company’s Employee Handbook or any other personnel
policy statements or documents, the terms of this Agreement shall control. To the extent that any
terms and conditions of Executive’s employment are not covered in this Agreement, the terms and
conditions set forth in the Employee Handbook or any similar document shall control such terms.
6.9 Entire Agreement. This Agreement sets forth the entire agreement between the
parties with respect to the subject matter hereof, and supersedes any and all prior agreements or
understanding between the Company and Executive, whether written or oral, fully or partially
performed relating to any or all matters covered by and contained or otherwise dealt with in this
Agreement.
6.10 Amendment. No modification, change or amendment of this Agreement or any of its
provisions shall be valid unless in writing and signed by the party against whom such claimed
modification, change or amendment is sought to be enforced.
6.11 Authority. The parties each represent and warrant that they have the power,
authority and right to enter into this Agreement and to carry out and perform the terms, covenants
and conditions hereof.
6.12 Applicable Law. This Agreement, and all of the rights and obligations of the
parties in connection with the employment relationship established hereby, shall be governed by and
construed in accordance with the substantive laws of the State of Colorado without giving effect to
principles relating to conflicts of law.
15
6.13 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and the same
instrument.
6.14 Compliance with Section 409A The provisions of this Agreement are intended to
satisfy the requirements of Code Section 409A and will be interpreted in a manner that is
consistent with such intent so that all payments and reimbursements made and all in-kind benefits
provided hereunder are either made or provided in compliance with Code Section 409A or are exempt
from the provisions thereof. Without limiting the generality of the foregoing, the Company and
Executive agree that Executive’s entitlement to any payment made pursuant to Section 4.2(b) or (c)
or any Benefit Payments (including by reason of Section 4.3) upon a Termination Without Cause or a
Termination with Good Reason shall be conditioned upon such termination constituting a Separation
from Service of Executive as defined in Section 4.9. The parties intend that, to the maximum
extent possible, any payment made pursuant to Section 4.2(b) or (c) or any Benefit Payments
(including by reason of Section 4.3) shall qualify as a short-term deferral pursuant to Treasury
Regulation § 1.409A-1(b)(4) or a separation payment pursuant to Treasury Regulation §
1.409A-1(b)(9).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| “COMPANY” ASCENT MEDIA CORPORATION |
||||
| By: | /s/ Xxxxxxx X. Xxxxx | |||
| Xxxxxxx X. Xxxxx | ||||
| Executive Vice President, General Counsel and Secretary | ||||
| “EXECUTIVE” |
||||
| /s/ Xxxx X. Xxx | ||||
| Xxxx X. Xxx | ||||
16
