EXHIBIT 10.11
EMPLOYMENT AGREEMENT
This AGREEMENT made as of June 3, 1996, by and between Ascent Entertainment
Group, Inc., a Delaware corporation ("Ascent"), a Delaware corporation, and
Xxxxx X. Xxxxxx, III, a resident of the State of Colorado(the "Executive").
WHEREAS, Ascent desires to employ the Executive as Executive Vice
President, Finance and Chief Operating Officer of Ascent, and the Executive
desires to accept such employment, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, and intending to be legally bound hereby, Ascent and the Executive
agree as follows:
1. EMPLOYMENT; DUTIES.
(a) EMPLOYMENT AND EMPLOYMENT PERIOD. Ascent shall employ the
Executive pursuant to this Agreement for a period (the "Employment Period")
commencing on June 3, 1996 (the "Effective Date") and continuing thereafter for
a term of four years until June 3, 2000, to serve as Executive Vice President,
Finance and Chief Operating Officer of Ascent or its successor entity unless
terminated in accordance with the provisions of this Agreement. In the event
that Ascent desires to extend the employment of the Executive, it must give
written notice of such desire by the third anniversary of the Effective Date,
and after such notice the parties shall enter into an exclusive negotiation
period of not less than six months, unless otherwise mutually agreed upon by the
parties in writing. Each 12 month period ending on the anniversary date of the
Effective Date is sometimes referred to herein as a "year of the Employment
Period."
(b) OFFICES, DUTIES AND RESPONSIBILITIES. Effective on June 21,
1996, Executive shall be elected Executive Vice President, Finance and Chief
Operating Officer of Ascent. The Executive shall report directly and solely to
the Chief Executive Officer and the Board of Directors of Ascent (the "Board");
provided that so long as Xxxxxxx Xxxxx is Chief Executive Officer and/or
Chairman of the Board, the Executive shall report solely to Xx. Xxxxx and the
Board. The
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Executive's offices shall be located at Ascent's headquarters, which are
presently located in Denver, Colorado. The Executive shall have all duties and
authority customarily accorded a chief operating officer, including, without
limitation, the lead responsibility with full autonomy, subject to the customary
authority and direction of the Board (and the Chief Executive Officer), to
direct and develop the operating capabilities and performance of Ascent. The
Executive shall be a member of any senior executive/management committees which
may be established from time to time by the Board. The Executive shall not be
required to perform services other than those comparable in scope, dignity and
stature to those customarily performed by chief operating officers and chief
financial officers of companies similar to Ascent.
(c) DEVOTION TO INTERESTS OF ASCENT. During the Employment Period,
the Executive shall render his business services solely in the performance of
his duties hereunder. The Executive shall use his best efforts to promote the
interests and welfare of Ascent. Notwithstanding the foregoing, the Executive
shall be entitled to undertake such outside activities (E.G., charitable,
educational, personal interests, board of directors membership, and so forth,
that do not compete with the Entertainment Business) as exist on the Effective
Date or do not unreasonably or materially interfere with the performance of his
duties hereunder as reasonably determined by the Board in consultation with the
Executive.
2. COMPENSATION AND FRINGE BENEFITS.
(a) BASE COMPENSATION. Ascent shall pay the Executive a base salary
("Base Salary") at the rate of $400,000 per year during the Employment Period
with payments made in installments in accordance with Ascent's regular practice
for compensating executive personnel, PROVIDED that in no event shall such
payments be made less frequently than twice per month. The Base Salary for the
Executive shall be reviewed for increases each year during the Employment Period
commencing the second year of the Employment Period. Any Base Salary increases
shall be approved by the Board in its sole discretion.
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(b) BONUS COMPENSATION. The Executive will be eligible to receive
bonuses ("Annual Bonus") during the Employment Period in accordance with the
following parameters: (i) the target bonus for each year during the Employment
Period shall be 75% of Base Salary for achieving 100% of the target level for
the performance measures; and (ii) the performance measures, the relative weight
to be accorded each performance measure and the amount of bonus payable in
relation to the target bonus for achieving more or less than 100% of the target
level for the performance measures shall be determined for each year during the
Employment Period by the Compensation Committee after consultation with the
Executive. As part of the consultation process set forth in the preceding
sentence, the Executive shall assist Ascent's Chief Executive Officer in
preparing, before the end of each fiscal year ending during the Employment
Period, a business plan for Ascent with respect to at least the following three
year period. The Board shall consider and approve such plans on an annual
basis, subject to such modifications as are otherwise consistent with this
Agreement, and each fiscal year the current plan shall be considered by the
Compensation Committee as the basis for establishing the bonus standards for
such year with such reasonable modifications as the Compensation Committee may
reasonably determine and which are consistent with this Agreement. During the
final partial fiscal year of the Employment Period, the Annual Bonus shall be
based on the standards set by the Compensation Committee for that fiscal year
and pro rated for the period during which the Executive is employed.
(c) FRINGE BENEFITS. The Executive also shall be entitled to
participate in group health, dental and disability insurance programs, and any
group profit sharing, deferred compensation, supplemental life insurance or
other benefit plans as are generally made available by Ascent to the senior
executives of Ascent on a favored nations basis, which benefits shall be
comparable, in the aggregate, to the benefits available to senior executives of
similarly situated companies. Such benefits shall include reimbursement of (i)
documented expenses reasonably incurred in connection with travel and
entertainment related to Ascent's business and affairs, (ii) Executive's
reasonable legal fees and costs incurred in connection with the drafting,
negotiation and execution of this Agreement; provided that such fees and costs
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shall not exceed $5,000, and (iii) a monthly payment for or reimbursement of
automobile and other transportation related expenses of $1,100 per month. All
benefits described in the foregoing (i) and (ii) that are reportable as earned
or unearned income will be "grossed up" by Ascent in connection with federal and
state tax obligations to provide Executive with appropriate net tax coverage so
that the benefits received by the Executive from the foregoing clauses (i) and
(ii) shall be net of income and employment taxes thereon. Without limiting any
of the foregoing, as soon as practicable Ascent will gather information
regarding nature and scope of benefit plans (E.G., profit sharing, deferred
compensation, supplemental life insurance) offered to executives of comparable
or otherwise relevant entertainment companies (including spinoffs and recent
issuers of initial public offerings), and the Board will determine in 1996
whether and to what extent to implement any such programs. Ascent reserves the
right to modify or terminate from time to time the fringe benefits provided to
the senior management group, PROVIDED that the fringe benefits provided to the
Executive shall not be materially reduced on an overall basis during the
Employment Period. Notwithstanding the foregoing, until such time as Ascent
shall implement group-health, dental and disability insurance plans for its
executives, or for a period of one year following the IPO, whichever is less,
Executive will be entitled to participate in the group health, dental, and
disability insurance plans made available to the senior management group of
COMSAT Corporation ("COMSAT").
(d) STOCK OPTIONS. Ascent hereby grants to Executive as of the
Effective Date options ("Options") to purchase 297,500 shares of Ascent's common
stock, par value $0.01 per share, each such Option exercisable at $18.25 per
share, which was the fair market value of the common stock on the Effective
Date. The Options shall be exercisable by Executive according to the following
schedule:
(i) 10% of the Options on or after the commencement of the
second year of the Employment Period;
(ii) 15% of the Options on or after the commencement of the
third year of the Employment Period;
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(iii) 25% of the Options on or after the commencement of the
fourth year of the Employment Period;
(iv) 25% of the Options on or after the commencement of the
fifth year of the Employment Period;
(v) 25% of the Options on or after the completion of the fifth
year of the Employment Period; provided, however, that for so long as COMSAT
owns at least 80% of Ascent, Executive shall not be entitled to exercise any of
the Options prior to the third anniversary of the Effective Date.
Notwithstanding the foregoing, 100% of the Options shall immediately vest and
become immediately exercisable, without any further action by the Executive,
upon the occurrence of any "change of control" as defined in Section 7(a) below,
or upon the occurrence of any event that results in Ascent's Common Stock no
longer being traded on any of the New York Stock Exchange, American Stock
Exchange or NASDAQ National Market System (including, without limitation, as a
result of any "going private" transaction with Ascent). Such options shall be
represented by a stock option agreement containing appropriate terms consistent
with the provisions of this Agreement. The Options, to the extent they remain
unexercised, shall automatically and without further notice terminate and become
of no further force and effect at the time of the earliest of the following to
occur:
(x) Three months after the date upon which a termination for
cause by Ascent (as provided in Section 5(b)) shall have become effective and
final; or
(y) Ten years after the Effective Date.
In the event of any stock split, stock dividend, spin-off,
reclassification, recapitalization, merger, consolidation, subdivision,
combination or other change which affects the character or amount of Ascent's
common stock after the Effective Date and prior to the exercise and/or
expiration of all of the Options, the number and exercise price of and/or the
formula for determining the value of such unissued or unexercised Options shall
be adjusted in order to make such Options, as nearly as may be practicable,
equivalent in nature and value to the Options that would have existed had such
change not taken place. In addition, if Ascent adopts a stock
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option plan that in Executive's sole judgment provides for any term(s) more
favorable to the grantee than any term(s) set forth above, Executive will be
entitled to the benefit of such more favorable term(s) with respect to the
Options, other than with respect to the vesting schedule thereof, but in no
event will any term(s) applicable to the Options be less favorable to Executive
than those set forth above.
During the Employment Period, the Executive shall be granted additional
non-statutory stock options as determined by the Compensation Committee in its
sole discretion, PROVIDED that no additional stock options shall be granted to
the Executive within three years from the Effective Date. Notwithstanding any
other provision of this Agreement except Section 5(b), the Compensation
Committee may in its discretion provide that any stock options granted to the
Executive which have not vested prior to his termination of employment shall
continue to vest in accordance with their original terms as if the Executive's
employment had not terminated.
(e) CONSULTING COMPENSATION. If the Executive is still employed by
Ascent on the date preceding the sixth anniversary of the Effective Date, and if
by such date the Executive and Ascent have not executed a written agreement for
an additional term of employment, then the Employment Period shall expire and,
in addition to and without limitation of any rights of either party under this
Agreement or otherwise, Ascent shall retain the Executive as a non-exclusive
consultant and, as compensation for such consulting services, shall pay the
Executive an amount equal to one hundred percent (100%) of his then current Base
Salary for an additional period of eighteen (18) months (the "Consulting
Period"), and during the Consulting Period the Executive shall continue to
receive Fringe Benefits (as defined below), and to vest in any employee stock
options previously awarded to the Executive, but the Executive shall not be
entitled to receive any Base Salary increases, bonuses, or further awards of
stock options. Without limiting any of the Executive's other rights under this
Agreement or otherwise, if the Executive is still employed by Ascent on the date
preceding the fourth anniversary of the Effective Date and is retained as a
consultant and is entitled to the compensation and benefits set forth in the
immediately preceding sentence, then such compensation and benefits shall
constitute the Executive's
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sole compensation resulting from the expiration of this Agreement, and the
Executive waives any claims to any additional compensation other than as a
result of Ascent's breach of this Agreement.
(f) PERFORMANCE-BASED COMPENSATION; CONFLICTING PROVISIONS. The
parties agree to use their best efforts in the administration of this Agreement
to take actions so as to comply with the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") to ensure, to the extent
possible consistent with the other terms of this Agreement and the Options, the
Federal tax deductibility under that section of compensation paid to the
Executive pursuant to performance-based compensation. Solely to the extent of
any conflict between the provisions of this Agreement and the provisions of any
agreement between Executive, on the one hand, and COMSAT, Ascent and/or any
affiliated or related entity of either of them, on the other hand, relating to
stock options (including the Options), life insurance, health insurance, any
other employee equity participation, profit sharing or retirement plan, group
health plan or other employee benefits (individually and collectively referred
to herein as the "Fringe Benefits"), the provisions of this Agreement will
control.
3. TRADE SECRETS; RETURN OF DOCUMENTS AND PROPERTY.
(a) Executive acknowledges that during the course of his employment
he will receive secret, confidential and proprietary information ("Trade
Secrets") of Ascent and of other companies with which Ascent does business on a
confidential basis and that Executive will create and develop Trade Secrets for
the benefit of Ascent. Trade Secrets shall include, without limitation, (i)
literary, dramatic or other works, screenplays, stories, adaptations, scripts,
treatments, formats, "bibles," scenarios, characters, titles of any kind and any
rights therein, custom databases, "know-how," formulae, secret processes or
machines, inventions, computer programs (including documentation of such
programs) (collectively, "Technical Trade Secrets"), and (ii) matters of a
business nature, such as customer data and proprietary information about costs,
profits, markets and sales, customer databases, and other information of a
similar nature to the extent not available to the public, and plans for future
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development (collectively, "Business Trade Secrets"). All Trade Secrets
disclosed to or created by Executive shall be deemed to be the exclusive
property of Ascent (as the context may require). Executive acknowledges that
Trade Secrets have economic value to Ascent due to the fact that Trade Secrets
are not generally known to the public or the trade and that the unauthorized use
or disclosure of Trade Secrets is likely to be detrimental to the interests of
Ascent and its subsidiaries. Executive therefore agrees to hold in strict
confidence and not to disclose to any third party any Trade Secret acquired or
created or developed by Executive during the term of this Agreement except
(i) when Executive is required to use or disclose any Trade Secret in the proper
course of the Executive's rendition of services to Ascent hereunder, (ii) when
such Trade Secret becomes public knowledge other than through a breach of this
Agreement, or (iii) when Executive is required to disclose any Trade Secret
pursuant to any valid court order in which the Executive is compelled to
disclose such Trade Secret. The Executive shall notify Ascent immediately of
any such court order in order to enable Ascent to contest such order's validity.
For a period of two (2) years after termination of the Employment Period for all
Business Trade Secrets and for a period of five (5) years after termination of
the Employment Period for all Technical Trade Secrets, the Executive shall not
use or otherwise disclose Trade Secrets unless such information (x) becomes
public knowledge or is generally known in the entertainment or sports industry
among executives comparable to the Executive other than through a breach of this
Agreement, (y) is disclosed to the Executive by a third party who is entitled to
receive and disclose such Trade Secret, or (z) is required to be disclosed
pursuant to any valid court order, in which case the Executive shall notify
Ascent immediately of any such court order in order to enable Ascent to contest
such order's validity.
(b) Upon the effective date of notice of the Executive's or Ascent's
election to terminate this Agreement, or at any time upon the request of Ascent,
the Executive (or his heirs or personal representatives) shall deliver to Ascent
(i) all documents and materials containing or otherwise relating to Trade
Secrets or other information relating to Ascent's business and affairs, and
(ii) all documents, materials and other property belonging to Ascent, which in
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either case are in the possession or under the control of the Executive (or his
heirs or personal representatives). The Executive shall be entitled to keep his
personal records relating to Ascent's business and affairs except to the extent
those contain documents or materials described in clause (i) or (ii) of the
preceding sentence, in which case Executive may retain copies for his personal
and confidential use.
4. DISCOVERIES AND WORKS. All discoveries and works made or conceived by
the Executive during his employment by Ascent pursuant to this Agreement,
jointly or with others, that relate to Ascent's activities ("Discoveries and
Works") shall be owned by Ascent. Discoveries and Works shall include, without
limitation, literary, dramatic or other works, screenplays, stories,
adaptations, scripts, treatments, formats, "bibles," scenarios, characters,
titles of any kind and any rights therein, other works of authorship,
inventions, computer programs (including documentation of such programs),
technical improvements, processes and drawings. The Executive shall
(i) promptly notify, make full disclosure to, and execute and deliver any
documents reasonably requested by, Ascent to evidence or better assure title to
such Discoveries and Works in Ascent, (ii) assist Ascent in obtaining or
maintaining for itself at its own expense United States and foreign copyrights,
trade secret protection or other protection of any and all such Discoveries and
Works, and (iii) promptly execute, whether during his employment by Ascent or
thereafter, all applications or other endorsements necessary or appropriate to
maintain copyright and other rights for Ascent and to protect their title
thereto. Any Discoveries and Works which, within sixty days after the
termination of the Executive's employment by Ascent, are made, disclosed,
reduced to a tangible or written form or description, or are reduced to practice
by the Executive and which pertain to work performed by the Executive while with
Ascent shall, as between the Executive and Ascent be presumed to have been made
during the Executive's employment by Ascent.
5. TERMINATION. This Agreement shall remain in effect during the
Employment Period, and this Agreement and Executive's employment with Ascent may
be terminated only as follows:
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(a) By the Executive (an "Executive Election") at any time upon sixty
(60) days advance written notice to Ascent upon an "Executive Election Event"
(as defined below). In such event or if the Executive's employment is
terminated by Ascent without "cause" (as defined below), there will be no
forfeiture, penalty, reduction or other adverse effect upon any rights or
interests relating to any Fringe Benefits, all of which will fully vest, to the
extent not previously vested, immediately upon such termination becoming
effective and final. Without limiting the foregoing, in the event of an
Executive Election or if the Executive's employment is terminated without
"cause," the Executive shall be entitled to receive the following benefits
through the longer of (a) the remainder of the Employment Period as if this
Agreement had remained in effect until the end of such four-year Employment
Period and (B) one year following the date of such termination (the "Duration
Period"): (i) his then current Base Salary; (ii) an Annual Bonus equal to
seventy-five percent (75%) of his then current Base Salary; and (iii) all other
benefits provided pursuant to Sections 2(c), (d) and (e) of this Agreement;
PROVIDED, HOWEVER, that in no event will the amounts payable under clauses (i)
and (ii) above be referable to less than one full year of the Employment Period.
The Executive shall have no obligation to seek other employment in the event of
his termination pursuant to this paragraph (a), PROVIDED, HOWEVER, that his
compensation from any such employment obtained shall offset up to fifty percent
(50%) of Ascent's obligations under clauses (i) and (ii) above, but only after
payments pursuant to clauses (i) and (ii) are made with respect to a one year
period following termination. Ascent shall have the option at any time during
the Duration Period to pay to the Executive in a lump sum the amounts remaining
under clauses (i) and (ii) of this paragraph (a), PROVIDED that the amount of
such lump sum payment shall be reduced up to fifty percent (50%) by the
compensation payable to the Executive from other employment for the time period
remaining on Ascent's payment obligation hereunder at the time such payment is
made. If Ascent exercises such option, Ascent shall have no further
compensation payment obligations under clauses (i) and (ii) above. The
Executive shall have the right to instruct Ascent to decrease any such payment
or other benefit due under this paragraph (a) to an amount not to exceed an
amount to be designated by the Executive in writing for the purpose of providing
that such payment (together with
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any other benefits provided to the Executive) shall not constitute a "parachute
payment" as defined in Section 280G of the Code; provided, however, that
Ascent's agreement to decrease such payment shall not result in any liability
from Ascent to the Executive with respect to any excise tax under Section 4999
of the Code (or any similar state or local provision), or any penalties or
interest with respect to such excise tax. Ascent shall place an amount
equivalent to its obligations owed to the Executive in connection with this
Section 5(a) in an escrow account to be administered by an unrelated third
party, or shall provide some other comparable form of security (e.g., an
irrevocable letter of credit) for such obligations reasonably acceptable to the
Executive. In all circumstances of termination under this Section 5(a), Ascent
shall remain obligated under clause (iii) and all stock options (including the
Option) will remain exercisable for the maximum period provided in each
applicable grant.
An "Executive Election Event" shall be any of the following: (I) any
substantial reduction (except in connection with the termination of his
employment voluntarily by the Executive or by Ascent for "cause" as defined
below) by Ascent, without the Executive's express written consent, of his
responsibilities as Executive Vice President, Finance and Chief Operating
Officer of Ascent; (II) any change in the reporting structure set forth in
Section 1(b) above; (III) any reduction in Executive's title such that he is no
longer either the chief operating officer nor chief financial officer, or the
functional equivalent thereof; (IV) a "Change of Control Event" (as defined in
Section 7(a) below); provided that in such event, the 50% offset from subsequent
employment set forth in the preceding paragraph shall be increased to 100% and
such offset shall apply during the first year after termination as well; (V) any
other material default of this Agreement which continues for ten (10) business
days following Ascent's receipt of written notice from the Executive specifying
the manner in which Ascent is in default of this Agreement; (VI) the Board's
requiring Executive to be based at any office location other than the principal
offices of Ascent, or the relocation, without Executive's consent, of such
principal offices to a location outside the greater Denver area prior to the
second anniversary of the Effective Date; or (VII) any purported termination of
Executive's
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employment otherwise than as expressly permitted by the Agreement.
(b) By Ascent at any time for "cause." For purposes of this
Agreement, Ascent shall have "cause" to terminate the Executive's employment
hereunder upon (i) the continued and deliberate failure of the Executive to
perform his material duties, in a manner substantially consistent with the
manner reasonably prescribed by the Board and in accordance with the terms of
this Agreement (other than any such failure resulting from his incapacity due to
physical or mental illness), which failure continues for ten (10) business days
following the Executive's receipt of written notice from the Board specifying
the manner in which the Executive is in default of his duties, (ii) the engaging
by the Executive in intentional serious misconduct that is materially and
demonstrably injurious to Ascent or its reputation, which misconduct, if it is
reasonably capable of being cured, is not cured by the Executive within ten (10)
business days following the Executive's receipt of written notice from the Board
specifying the serious misconduct engaged in by the Executive, (iii) the
conviction of the Executive of commission of a felony, whether or not such
felony was committed in connection with Ascent's business, or (iv) any material
breach by the Executive of Section 8 hereof. If Ascent shall terminate the
Executive's employment for "cause," there will be no forfeiture, penalty,
reduction or other adverse effect upon any vested rights or interests relating
to any Fringe Benefits. In such event, Ascent, in full satisfaction of all of
Ascent's obligations under this Agreement and in respect of the termination of
the Executive's employment with Ascent, shall pay the Executive his Base Salary,
a prorated Annual Bonus and all other compensation, benefits and reimbursement
through the date of termination of his employment, PROVIDED that the Options and
any other stock options granted to the Executive under the Ascent option or any
successor plan shall terminate three months after the date of termination of his
employment for "cause".
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6. DISABILITY; DEATH.
(a) If, prior to the expiration or termination of the Employment
Period, the Executive shall be unable to perform substantially his duties by
reason of disability or impairment of health for at least six consecutive
calendar months, Ascent shall have the right to terminate this Agreement by
giving sixty (60) days written notice to the Executive to that effect, but only
if at the time such notice is given such disability or impairment is still
continuing. Following the expiration of the notice period, the Employment
Period shall terminate with the payment of the Executive's Base Salary for the
month in which notice is given and a prorated Annual Bonus through such month,
and there will be no forfeiture, penalty, reduction or other adverse effect upon
any vested rights or interests relating to any Fringe Benefits. In the event of
a dispute as to whether the Executive is disabled within the meaning of this
paragraph (a), or the duration of any disability, either party may request a
medical examination of the Executive by a doctor appointed by the Chief of Staff
of a hospital selected by mutual agreement of the parties, or as the parties may
otherwise agree, and the written medical opinion of such doctor shall be
conclusive and binding upon the parties as to whether the Executive has become
disabled and the date when such disability arose. The cost of any such medical
examinations shall be borne by Ascent.
(b) If, prior to the expiration or termination of the Employment
Period, the Executive shall die, Ascent shall pay to the Executive's estate his
Base Salary and a prorated Annual Bonus through the end of the month in which
the Executive's death occurred, at which time the Employment Period shall
terminate without further notice and there will be no forfeiture, penalty,
reduction or other adverse effect upon any vested rights or interests relating
to any Fringe Benefits; PROVIDED that the Options and any other stock options
granted to the Executive under the Ascent option plan or any successor plan
shall become fully vested and shall terminate one year after the date of
termination of the Executive's employment for death, notwithstanding the
limitations of Section 2(e) of this Agreement.
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(c) Nothing contained in this Section 6 shall impair or otherwise
affect any rights and interests of the Executive under any compensation plan or
arrangement of Ascent which may be adopted by the Board.
7. CHANGE OF CONTROL.
(a) If, prior to the termination of the Employment Period, there is a
"Change of Control Event" (as hereinafter defined in this paragraph (a)), the
Executive shall have the right to exercise his Executive Election in accordance
with Section 5(a), but shall not have the right to give notice in accordance
with Section 5(a) in any event later than 120 days following such Change of
Control Event. Prior to any "change of control" (as hereinafter defined in this
paragraph (a)), and from time to time thereafter at the Executive's request upon
relevant changed circumstances in the ownership or management of Ascent, the
Executive and the Board will mutually determine whether such "change of control"
or changed circumstances would be reasonably likely to have a materially
detrimental effect on the condition, reputation or future prospects of Ascent or
its successor entity, the day-to-day circumstances of the Executive's employment
or the compensation payable to the Executive hereunder. An affirmative
determination with respect to either of the foregoing by the Executive and the
Board, or by an arbitrator as provided below, shall be referred to herein as a
"Change of Control Event", it being agreed that the arbitrator shall award the
Executive costs and attorneys' fees under Section 11(c) if the Executive has
submitted the matter to arbitration with a reasonable basis for doing so, even
if the Executive is not the prevailing party therein. If the Executive and the
Board are unable to agree on such determination, the Executive shall have the
right: (i) to submit to arbitration pursuant to Section 11 below the
determination of whether the "change of control" or changed circumstances would
be reasonably likely to have either of the materially detrimental effects
mentioned above, and an affirmative determination by the arbitrator shall
constitute a "Change of Control Event"; (ii) to accept continued employment with
Ascent or its successor entity on the terms of this Agreement; or (iii) to
terminate this Agreement by giving sixty (60) days written notice to Ascent to
that effect. If the Executive elects to terminate this Agreement pursuant to
clause (iii) of this paragraph (a),
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following the expiration of the notice period provided therein, the Employment
Period shall terminate with the payment of the Executive's Base Salary for the
month in which notice is given. "Change of control" for purposes of this
paragraph (a) shall mean any event as a result of which COMSAT no longer owns
more than fifty percent (50%) of the voting stock of Ascent, PROVIDED that any
Ascent voting stock which is publicly held shall be considered as owned by
COMSAT for this purpose.
(b) In the event that COMSAT or Ascent adopts any "change of control"
provisions applicable to any COMSAT or Ascent benefits plans, respectively,
providing for the accelerated vesting and/or payment of any benefits for its
senior management group, to the extent that such provisions give Executive
greater rights than those provided in paragraph (a) above, such provisions shall
apply to the Executive to the same extent as other Ascent senior executives or
COMSAT senior executives on a favored nations basis with respect to the benefits
affected by such COMSAT or Ascent provisions, respectively.
8. NON-COMPETITION.
(a) As an inducement for Ascent to enter into this Agreement, the
Executive agrees that for a period commencing as of the Effective Date and
running through the earlier of (i) the end of the Employment Period if the
Executive remains employed by Ascent for the entire Employment Period or
(ii) one year following termination of the Executive's employment by Ascent for
"cause" as defined in Section 5(b) hereof, or by the Executive for any reason
(other than an Executive Election Event or an event described in Section
7(a)(iii) above, in which case the provisions of this paragraph (a) shall not
apply) (the "Non-Competition Period"), the Executive shall not, without the
prior written consent of the Board, engage or participate, directly or
indirectly, as principal, agent, employee, employer, consultant, stockholder,
partner or in any other individual capacity whatsoever, in the conduct or
management of, or own any stock or any other equity investment in or debt of,
any business which is competitive with any business conducted by Ascent,
including the Entertainment Business.
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For the purpose of this Agreement, a business shall be considered to
be competitive with any business of Ascent only if such business is engaged in
providing services or products (i) similar to (A) any service or product
currently provided by Ascent during the Employment Period; (B) any service or
product which evolves from or results from enhancements in the ordinary course
during the Non-Competition Period to the services or products provided by Ascent
as of the date hereof or during the Employment Period; or (C) any future service
or product of Ascent as to which the Executive materially and substantially
participated in the development or enhancement, and (ii) to customers,
distributors or clients of the type served by Ascent during the Non-Competition
Period.
(b) NON-SOLICITATION OF EMPLOYEES. During the Non-Competition
Period, the Executive will not (for his own benefit or for the benefit of any
person or entity other than Ascent) solicit, or assist any person or entity
other than Ascent to solicit, any officer, director, executive or employee
(other than an administrative or clerical employee) of Ascent to leave his or
her employment.
(c) REASONABLENESS; INTERPRETATION. The Executive acknowledges and
agrees, solely for purposes of determining the enforceability of this Section 8
(and not for purposes of determining the amount of money damages or for any
other reason), that (i) the markets served by Ascent are national and
international and are not dependent on the geographic location of executive
personnel or the businesses by which they are employed; (ii) the length of the
Non-Competition Period is linked to the term of the Employment Period and the
severance benefit provided for in Section 5(a); and (iii) the above covenants
are manifestly reasonable on their face, and the parties expressly agree that
such restrictions have been designed to be reasonable and no greater than is
required for the protection of Ascent. In the event that the covenants in this
Section 8 shall be determined by any court of competent jurisdiction in any
action to be unenforceable by reason of their extending for too great a period
of time or over too great a geographical area or by reason of their being too
extensive in any other respect, they shall be interpreted to extend only over
the maximum period of time for which they may be enforceable, and/or over the
maximum geographical area as
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to which they may be enforceable and/or to the maximum extent in all other
respects as to which they may be enforceable, all as determined by such court in
such action.
(d) INVESTMENT. Nothing in this Agreement shall be deemed to
prohibit the Executive from owning equity or debt investments in any
corporation, partnership or other entity which is competitive with Ascent,
PROVIDED that such investments (i) are passive investments and constitute five
percent (5%) or less of the outstanding equity securities of such an entity the
equity securities of which are traded on a national securities exchange or other
public market, or (ii) are approved by the Board.
9. INDEMNIFICATION; LIABILITY INSURANCE. The Executive shall be entitled
to indemnification and coverage under Ascent's liability insurance policy for
directors and officers to the same extent as other directors and officers of
Ascent. During and after the term of employment, Ascent hereby agrees to
indemnify and hold Executive harmless against any and all claims arising from or
in connection with his employment by or service to Ascent to the full extent
permitted by law and, in connection therewith, to advance the expenses of
Executive incurred in defending against such claims subject to such limitations
as may actually be required by law.
10. ENFORCEMENT; JOINT AND SEVERAL LIABILITY. The Executive acknowledges
that a breach of the covenants or provisions contained in Sections 3, 4 and 8 of
this Agreement will cause irreparable damage to the Entertainment Business and
Ascent, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such breach will be inadequate. Accordingly, the
Executive agrees that if the Executive breaches or threatens to breach any of
the covenants or provisions contained in Sections 3, 4 and 8 of this Agreement,
in addition to any other remedy which may be available at law or in equity,
Ascent shall be entitled to seek specific performance and injunctive relief.
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11. ARBITRATION.
(a) Subject to Ascent's right to enforce Sections 3, 4 and 8 hereof
by an injunction issued by a court having jurisdiction (which right shall
prevail over and supersede the provisions of this Section 11), any dispute
relating to this Agreement, including the enforceability of this Section 11,
arising between the Executive and Ascent shall be settled by arbitration which
shall be conducted in Denver, Colorado, or any other location where the
Executive then resides at Ascent's request, before a single arbitrator in
accordance with the commercial arbitration rules of the American Arbitration
Association ("AAA"). Within 90 days after the Effective Date, the parties shall
mutually agree upon three possible arbitrators, one of whom shall be selected by
the AAA within 2 days after notice of a dispute to be arbitrated under this
Section 11. The parties shall instruct the arbitrator to use his or her best
efforts to conclude the arbitration within 60 days after notice of the dispute
to AAA.
(b) The award of any such arbitrator shall be final. Judgment upon
such award may be entered by the prevailing party in any federal or state court
sitting in Denver, Colorado or any other location where the Executive then
resides at Ascent's request.
(c) Subject to Section 7(a), the parties will bear their own costs
associated with arbitration and will each pay one-half of the arbitration costs
and fees of AAA; however, the arbitrator may in his sole discretion determine
that the costs of the arbitration proceedings, including attorneys' fees, shall
be paid entirely by one party to the arbitration if the arbitrator determines
that the other party is the prevailing party in such arbitration.
12. SEVERABILITY. Should any provision of this Agreement be determined to
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this Agreement, and any such unenforceability or prohibition in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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13. ASSIGNMENT. The Executive's rights and obligations under this
Agreement shall not be assignable by the Executive. Ascent's rights and
obligations under this Agreement shall not be assignable by Ascent except as
incident to the transfer, by merger or otherwise, of all or substantially all of
the business of Ascent. In the event of any such assignment by Ascent, all
rights of Ascent hereunder shall inure to the benefit of the assignee.
14. NOTICES. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method, provided
that in such case it shall also be sent by certified or registered mail, return
receipt requested; the day after it is sent, if sent for next day delivery to a
domestic address by recognized overnight delivery service (E.G., Federal
Express); and upon receipt, if sent by certified or registered mail, return
receipt requested. Unless otherwise changed by notice, in each case notice
shall be sent to:
If to Executive, addressed to:
Xxxxx X. Xxxxxx, III
00000 X. Xxxxxxxx Xxx.
Xxxxxx, Xxxxxxxx 00000
If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxx
Telecopier No. (000) 000-0000
With a copy to:
Ascent Entertainment Group
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopier No. (000) 000-0000
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15. MISCELLANEOUS. This Agreement constitutes the entire agreement, and
supersedes all prior agreements, of the parties hereto relating to the subject
matter hereof, and there are no written or oral terms or representations made by
either party other than those contained herein. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. The validity, interpretation,
performance and enforcement of the Agreement shall be governed by the laws of
the State of Colorado. The headings contained herein are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
/s/ Xxxxx X. Xxxxxx, III,
---------------------------------------
Xxxxx X. Xxxxxx, III, Executive
ASCENT ENTERTAINMENT GROUP, INC.
By: Xxxxxxx Xxxxx
---------------------------------------
Title: President and Chief Executive Officer
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