EXHIBIT 10.1
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SETTLEMENT AGREEMENT
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The persons and entities represented by the undersigned attorneys (the
"Signatory Parties") have reached an agreement to settle and dismiss claims in
the actions captioned Tishrei Trading ▇. ▇▇▇▇▇ et al., Civil Action No. 17201NC,
Shores ▇. ▇▇▇▇▇ et al., Civil Action No. 17206NC, and Green ▇. ▇▇▇▇▇ et al.,
Civil Action No. 17211NC (the "Actions"), now pending in the Court of Chancery
for the State of Delaware in and for New Castle County (the "Court"), and
certain other outstanding matters between and among them, on the terms and
subject to the conditions set forth below (the "Settlement"):
1. Upon execution of this Settlement Agreement (the "Settlement
Agreement"), the plaintiffs in the Actions shall withdraw their motion for
preliminary injunction as soon as is practicable, and all discovery in the
Actions shall be stayed. The named defendants and the plaintiffs in the Actions
agree that they shall submit to the Court all pleadings or other papers, and
take any necessary actions, to carry out the provisions of the preceding
sentence.
2. Defendant Ascent Entertainment Group, Inc. ("Ascent") and EPL, LLC
and EPL II, LLC shall execute, in the form annexed hereto and incorporated
herein as Exhibit A, a Purchase and Sale Agreement (the "New Sale Agreement")
that shall rescind the Purchase and Sale Agreement (the "Sale Agreement") dated
as of April 25, 1999 by and between Ascent and EPL, LLC and EPL II, LLC. Upon
execution of the New Sale Agreement by the parties thereto, Ascent shall
promptly (a) issue a press release (the "Press Release") that describes the
material terms of the New Sale Agreement and this Settlement Agreement and
states that the full text of the New Sale Agreement and this Settlement
Agreement have been filed with the Securities and Exchange Commission ("SEC")
and (b) file with the SEC copies of the Press Release, the New Sale Agreement
and the Settlement Agreement, as exhibits to a Current Report on Form 8-K. The
Press Release shall refer to the fact that ▇▇▇▇▇▇▇ ▇▇▇▇▇ will be on leave from
his positions at Ascent.
3. Upon execution of the New Sale Agreement, Ascent shall solicit
from third parties cash offers ("Competing Offers") to purchase the equity
interests of the businesses contemplated to be sold pursuant to the New Sale
Agreement (the "Assets"), in accordance with the provisions of Section 10.11 of
the New Sale Agreement. Ascent shall engage an additional financial advisor (the
"Additional Financial Advisor") for the purposes of soliciting and
evaluating Competing Offers and providing the Board of Directors of Ascent (the
"Ascent Board") with an opinion as to the fairness, from a financial point of
view, of any Competing Offer that is accepted or approved by the Ascent Board.
The Additional Financial Advisor shall be ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
("▇▇▇▇▇▇▇▇▇▇▇") in the event that a retention agreement with ▇▇▇▇▇▇▇▇▇▇▇
reasonably satisfactory to Ascent can be agreed to; but in the event that such a
retention agreement is not agreed to, the selection by Ascent of the Additional
Financial Advisor shall be subject to the approval of counsel for plaintiffs in
the Actions, provided that such approval shall not be unreasonably withheld. The
Signatory Parties hereby covenant and agree that they shall not assert any
claims or causes of action, or commence or prosecute any action or suit, against
either the Additional Financial Advisor or ▇▇▇▇▇ & Co., except for gross
negligence or malfeasance, in connection with the solicitation of Competing
Offers or any actions that have been or will be taken with respect to the sale
of the Assets pursuant to the procedures set forth in this paragraph and in
Section 10.11 of the New Sale Agreement. The Additional Financial Advisior and
▇▇▇▇▇ & Co. shall be intended third-party beneficiaries of the provisions in the
preceding sentence, and there are no other intended third-party beneficiaries of
such provision.
4. As soon as is practicable upon (but in no event more than one week
after) execution of this Settlement Agreement, Ascent shall cause ▇▇▇▇▇ ▇. May
to become a member of the Ascent Board as a Class I director whose term
continues until Ascent's annual meeting of stockholders in the year 2001, and
the Ascent Board shall establish a three-member committee of outside directors
for the purpose of determining the terms and conditions of ▇▇▇▇▇▇▇ ▇▇▇▇▇'
▇▇▇▇▇▇▇▇▇ from Ascent. Mr. May shall be a member of that committee.
5. Solely for purposes of this Settlement, the named defendants and
the plaintiffs in the Actions (a) agree to seek jointly the certification,
pursuant to, among other things, Rules 23(a), b(1) and b(2) of the Court, of a
plaintiff class (the "Class") consisting of all common stockholders of the
Company during the period April 25, 1999 through the date of the closing of any
transaction involving the sale of the Assets pursuant to the procedures set
forth in section 10.11 of the New Sale Agreement, and (b) stipulate that the
plaintiffs in the Actions are appropriate plaintiffs for the purposes of a
derivative action pursuant to Rule 23.1 of the Court. The named defendants and
the plaintiffs in the Actions shall submit to the Court such pleadings as are
necessary to obtain an order from the Court certifying the Class and
implementing the Settlement in a form customary for settlements of the type
provided for herein.
6. The named defendants and the plaintiffs in the Actions shall
prepare, execute, and submit to the Court an appropriate stipulation of
settlement (the "Stipulation"), consistent with the terms of this Settlement
Agreement, as soon as is practicable. The Stipulation shall
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provide for, among other things, the complete discharge, settlement, dismissal
with prejudice, release of, and an injunction barring the assertion of, any and
all claims, rights, demands, causes of actions, suits, matters, and issues, that
Ascent or any member of the Class has asserted, might have asserted, or could
have asserted, in a direct, representative, derivative or any other capacity, in
any court of competent jurisdiction, arising out of or related, directly or
indirectly, in any way, to the subject matter of the Actions, the Assets, the
Sale Agreement, or the New Sale Agreement (including the process for the sale of
the Assets and all actions taken and to be taken in connection therewith),
against any defendant in the Actions (or any present or former director,
officer, employee, agent, attorney, advisor, financial advisor, investment
banker or representative of any defendant in the Actions, or such other related
person or entity as are customarily included in such a release) or against EPL,
LLC, EPL II, LLC, EPL III, LLC, or EPL IV, LLC (the "▇▇▇▇▇▇ LLCs") (or their
members or managers), whether arising under any state or federal statutory or
common law; provided, however, that, except as provided in the last sentence of
paragraph 3 herein, there shall be no discharge or release of any claim to
enforce, or arising out of or relating to any breach of, this Settlement
Agreement, the Stipulation or the New Sale Agreement. The Stipulation shall also
provide for the complete discharge, settlement, dismissal with prejudice,
release of, and an injunction barring the assertion of, any and all claims,
rights, demands, causes of actions, suits, matters, and issues, that any
Signatory Party (or any present or former director, officer, employee, agent,
attorney, advisor, financial advisor, investment banker or representative of any
such party, or such other related person or entity as are customarily included
in such a release) has asserted, might have asserted, or could have asserted, in
any court of competent jurisdiction, arising out of or related, directly or
indirectly, in any way, to the subject matter of the Actions, the Assets, the
Sale Agreement, or the New Sale Agreement (including the process for the sale of
the Assets and all actions taken and to be taken in connection therewith),
against any plaintiff in the Actions or any other defendant in the Actions (or
any present or former director, officer, employee, agent, attorney, advisor,
financial advisor, investment banker or representative of any such plaintiff or
other defendant in the Actions, or such other related person or entity as are
customarily included in such a release), or against the ▇▇▇▇▇▇ LLCs (or their
members or managers), whether arising under any state or federal statutory or
common law; provided, however, that, except as provided in the last sentence of
paragraph 3 herein, there shall be no discharge or release of any claim to
enforce, or arising out of or relating to any breach of, this Settlement
Agreement, the Stipulation or the New Sale Agreement.
7. The Stipulation shall expressly provide, among other things, that
the Signatory Parties that are defendants in the Actions have denied, and
continue to deny, that they have committed any violations of law, and that they
are entering into the Stipulation (a) because the
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proposed settlement would eliminate the burden and expense of further
litigation, and (b) to facilitate a sale of the Assets in accordance with the
best interests of Ascent and its stockholders. Neither the Lauries nor the
▇▇▇▇▇▇ LLCs (or their members or managers) are submitting themselves to the
jurisdiction of the Court or any of the courts located in Delaware except for
the purposes of the settlement of the Actions or the enforcement thereof, and
their participation in the settlement and the process related to the settlement
shall not constitute a waiver of the right of any or all of them to contest
personal jurisdiction, in the event that the settlement is not approved by the
court and/or consummated by the Signatory Parties. If the Settlement is not
approved by the Court and/or consummated by the Signatory Parties, the Lauries
and the ▇▇▇▇▇▇ LLCs (and their members and managers) specifically and expressly
reserve any and all of their respective rights to contest the personal
jurisdiction of the Court or any other courts located in Delaware over any or
all of them.
8. Ascent and individual defendants ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
III, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ mutually acknowledge
that, when executed by the parties thereto, the New Sale Agreement will provide
substantial benefits to the stockholders of Ascent, that such benefits will
result from the commencement and prosecution of the Actions by plaintiffs and
their counsel and their communications with Ascent and those individual
defendants, and that such benefits would not occur but for the commencement and
prosecution of the Actions by plaintiffs and their counsel and their
communications with Ascent and those individual defendants. Ascent and the
plaintiffs in the Actions shall attempt to reach agreement upon an amount of
attorneys' fees and expenses to be paid by Ascent (or any successors in interest
to Ascent) to counsel for plaintiffs, and, if such an amount is agreed upon, the
Stipulation shall provide that plaintiffs and their counsel shall submit to the
Court, and that defendants shall not oppose, a request for attorneys' fees and
expenses in such agreed-upon amount. In the event that such an amount of
plaintiffs' attorneys' fees and expenses is not agreed upon, the Stipulation
shall provide that Ascent (or any successors in interest to Ascent) shall pay
such fees and expenses in an amount as, upon application by plaintiffs' counsel,
the Court shall determine by order, subject to any appeal of such order. The
Stipulation shall provide that plaintiffs' attorneys' fees and expenses shall be
payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP within ten (10) days of the
date that any order by the Court directing the payment of such attorneys' fees
and expenses becomes final and not subject to further appeal or review, by
exhaustion of any possible appeal, lapse of time, or otherwise, and that in the
event that any appeal is taken from any determination of the Court of the amount
of such fees and expenses, Ascent (or any successors in interest to Ascent)
shall pay interest, at the prime rate as quoted by Citibank, N.A., on the amount
of such fees and expenses that are ultimately sustained on appeal.
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All applications for an award of attorneys' fees and expenses in connection with
the Actions or the subject matter of the Actions shall be submitted to the Court
and shall not be submitted or pursued in any other Court or forum. The
Stipulation shall further provide that all costs of notice and administration
incurred in connection with the Settlement shall be borne by defendant Ascent
(or any successors in interest to Ascent), and that no claim for attorneys' fees
and expenses shall be asserted against any other Signatory Party.
9. The consummation of the Settlement contemplated herein is subject
to: (a) certification of the Class and approval of the Settlement by the Court
after appropriate notice and hearing; and (b) the entry by the Court of a
judgment that (i) approves the Settlement and dismisses the Actions with
prejudice and without costs to any party (other than plaintiffs' attorneys' fees
and expenses) and (ii) has become final and no longer subject to further appeal
or review, whether by exhaustion of any possible appeal, lapse of time, or
otherwise. This Settlement Agreement shall be null and void and of no force and
effect, and shall not be deemed to prejudice in any way the positions of the
Signatory Parties with respect to the Actions (including but not limited to the
position of the Lauries and of the ▇▇▇▇▇▇ LLCs that the Court may not assert
personal jurisdiction over any or all of them), should any of the conditions set
forth in the preceding sentence not be met.
10. All counsel executing this Settlement Agreement hereby warrant and
represent that they have the full authority to do so. In the event that fewer
than all the defendants in the Actions execute this Settlement Agreement, this
Settlement Agreement shall be binding as to the Signatory Parties who do so
agree, and the Stipulation and Settlement contemplated herein shall contain
appropriate provisions to protect those defendants who do so agree from any
potential for exposure or liability to any non-settling defendant as a result of
the claims asserted in the Action (whether by an appropriate reduction of
judgment provision, settlement bar order, or otherwise) and, notwithstanding
anything in paragraph 6 herein, may exclude any defendant that does not agree
from obtaining the benefit of the release provisions of the Stipulation.
11. Nothing in this Settlement Agreement: (a) shall be deemed to be
(i) a presumption, a concession, or an admission, by any Signatory Party that is
a defendant in the Actions, of any fault, liability, or wrongdoing as to any
facts or claims alleged or asserted in the Actions, or any other actions or
proceedings, (ii) a presumption, a concession, or an admission by any or all of
the Lauries or the ▇▇▇▇▇▇ LLCs (or their members or managers) that personal
jursidiction over any or all of the Lauries or the ▇▇▇▇▇▇ LLCs (or their members
or managers) exists before the Court, or (iii) a presumption, a concession, or
an admission, by any Signatory Party that is a plaintiff in the Actions, of any
lack of merit in any claim of any fault, liability, or
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wrongdoing as to any facts or claims alleged or asserted in the Actions, or any
other actions or proceedings; and (b) shall be interpreted, construed, deemed,
invoked, offered, or
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received in evidence or otherwise used by any person in these Actions or any
other actions or proceedings, whether civil, criminal, or administrative, except
for purposes of enforcement of the Settlement Agreement and the Settlement
contemplated hereby. This Settlement Agreement and the Settlement contemplated
hereby shall be governed by, and construed in accordance with, the laws of the
State of Delaware without regard to conflict of laws principles. This Settlement
Agreement may be executed in counterparts by any of the Signatory Parties, and
as so executed shall constitute one agreement.
Dated: June 22, 1999
ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C.
LAW OFFICES OF ▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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On Behalf of Plaintiffs
POTTER, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
WACHTELL, LIPTON, ▇▇▇▇▇ & ▇▇▇▇
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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On Behalf of Defendants Ascent
Entertainment
Group, Inc., ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CONNOLLY, BOVE, LODGE & HUTZ
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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On Behalf of Defendant ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
III
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & FINGER, P.A.
▇▇▇▇▇▇▇▇▇▇ Hyatt ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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On Behalf of Defendant ▇▇▇▇▇▇▇ ▇▇▇▇▇
Prickett, Jones, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇▇, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, LLP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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On Behalf of the ▇▇▇▇▇▇ LLCs and Defendants
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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