CONFIDENTIAL
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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This AMENDED AND RESTATED AGREEMENT made as of December 18, 1995, and
amended as of November 18, 1996, by and between Ascent Entertainment Group,
Inc., a Delaware corporation ("Ascent"), successor in interest to COMSAT
Entertainment Group ("CEG"), a Delaware corporation, and Xxxxxxx Xxxxx, a
resident of the State of Colorado(the "Executive").
WHEREAS, COMSAT Video Enterprises, Inc. ("CVE") a wholly owned
subsidiary of COMSAT Corporation, a District of Columbia corporation
("COMSAT") previously owned and operated the sports and entertainment
businesses of COMSAT which comprised the Entertainment segment of COMSAT
for purposes of its reports on Form 10-K and 10-Q (and any amendments
thereto) filed with the Securities and Exchange Commission (the
"Entertainment Business");
WHEREAS, COMSAT has created CEG as a holding company to own and
operate the Entertainment Business;
WHEREAS, the Executive currently serves as the President of CEG and
CVE;
WHEREAS Ascent succeeded to all of the assets of CEG and CVE;
WHEREAS, Ascent caused an initial public offering (the "IPO") of
approximately 19.3% of the shares of the common stock of Ascent on December
18, 1995 (the "IPO Date"); and
WHEREAS, Ascent desires to employ the Executive as President and Chief
Executive Officer of Ascent, and the Executive desires to accept such
employment, on the terms and conditions set forth herein;
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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 to serve as President and Chief Executive Officer of Ascent or
its successor entity for a period (the "Employment Period") commencing on
December 18, 1995 (the "Effective Date") and continuing thereafter for a
term of five years until December 18, 2000 unless terminated in accordance
with the provisions of this Agreement. The Executive shall also continue to
serve as President of CVE but shall not receive any compensation for such
position in addition to the compensation provided in 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 the
Effective Date, Executive shall be elected President and Chief Executive
Officer of Ascent. The Executive shall report directly and solely to the
Board of Directors of Ascent (the "Board"). Throughout the Employment
Period, Ascent shall cause Executive to be a member of the Board. In
addition, the Executive shall be a member of all committees of the Board
(including any executive committee or nominating committee) other than the
Audit Committee and the Compensation Committee, and other than any special
committees on which he might be regarded as a self-interested member. The
Executive's offices initially shall be located at the Company's
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headquarters, which are presently located in Denver, Colorado. The
Executive shall have all duties and authority customarily accorded a chief
executive officer, including, without limitation, the lead responsibility
with full autonomy, subject to the customary authority and direction of the
Board, to direct and develop the capabilities and performance of Ascent.
The Executive shall be a member and the chairman of any senior
executive/management committees which may be established from time to time
by the Board. The services to be rendered by the Executive as President of
Ascent shall be generally consistent with the services previously rendered
by the Executive as President of CVE. All employees of Ascent shall report,
directly or indirectly, to the Executive and the Executive shall have the
authority to hire and fire all such employees within established budget
parameters, provided that the Board shall approve (i)any salary actions
(including hiring decisions) for employees of Ascent which result in an
annual salary in excess of the amount established by the Board from time to
time, but in no event less than $150,000, and (ii) any bonuses to be
awarded to employees of Ascent, in excess of the amount established by the
Board from time to time, and provided further that the Board reserves the
right to take any such salary or bonus actions to the Compensation
Committee of the Board (the "Compensation Committee") for approval. The
Executive's management of Ascent shall be (x) in accordance with the
policies of the Board and Ascent's Policies and Procedures, both as in
effect from time to time, and (y)within the limits of an annual budget for
Ascent which shall be approved by the Board at least 30 days before the
beginning of the fiscal year to which such budget relates. The annual
budget shall provide adequate resources for Executive to operate the
Entertainment Business in a manner substantially consistent with the
customary day to day operations of comparable first-class businesses in the
United States entertainment industry. If the Executive proposes the
expenditure of any amounts which exceed the applicable annual budgets for
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Ascent, such excess amounts shall not be committed to Executive's authority
unless and until specifically authorized and approved by the Board.
(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 and the
Entertainment Business. 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 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.
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(a) Base Compensation. Ascent shall pay the Executive a base
salary ("Base Salary") at the rate of $500,000 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.
(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 70% of Base Salary for achieving 100% of the
target level for the performance measures; and (ii) the performance
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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 prepare 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.
(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 (including, without limitation, all expenses and losses incurred in
connection with the sale of Executive's home in Bethesda, Maryland, the
acquisition of a home in the Denver, Colorado area and relocation of
Executive and his family to the Denver area), (ii) Executive's reasonable
legal fees and costs incurred in connection with the drafting, negotiation
and execution of this Agreement, Irell & Xxxxxxx'x rates for fees and costs
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being deemed reasonable, and (iii) a monthly payment for or reimbursement
of automobile and other transportation related expenses of $1,200 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.
(d) Financial Planning. The Executive shall be entitled to
receive financial counseling and planning services provided by Ascent
consistent with similar services provided to the COMSAT senior management
group.
(e) 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 (i.e., one percent (1%) of the
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shares of Ascent common stock outstanding immediately following the IPO
(including any shares outstanding as a result of the underwriter's exercise
of their over-allotment option)), each such Option exercisable at the
per-share price to public at the IPO (the "IPO Per-Share Price"). 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;
(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
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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 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
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termination of employment shall continue to vest in accordance with their
original terms as if the Executive's employment had not terminated.
(f) COMSAT Benefits. After the Effective Date, the Executive
shall cease to participate in COMSAT's Key Employee Stock Plans, Insurance
and Retirement Plan for Executives, Directors and Executives Deferred
Compensation Plan (the "Deferred Compensation Plan"), Split Dollar
Insurance Plan, Annual Incentive Plan ("AIP") and Educational Grant Program
(collectively, the "COMSAT Executive Benefit Plans"), and shall forfeit any
and all rights and interests under the COMSAT Executive Benefit Plans;
provided, however, that (i) the Executive shall retain the stock options,
restricted stock awards, restricted stock units and phantom stock units
previously granted to him under the Key Employee Stock Plans and the AIP
(together with Executive's deferred compensation account referred to in
(iii) below, collectively, the "COMSAT Stock Awards"), which shall continue
to vest in accordance with their original terms as long as the Executive
remains employed by Ascent; (ii) the Executive shall be entitled to receive
a bonus with respect to 1995 under the AIP as determined in the sole
discretion of the Committee on Compensation and Management Development of
the COMSAT Board of Directors; and (iii) the disposition of the balance in
the Executive's deferred compensation account in the Deferred Compensation
Plan as of the Effective Date shall be mutually determined by COMSAT and
the Executive no later than December 31, 1996, provided that such account
shall continue to be maintained in the Deferred Compensation Plan with the
crediting of interest at the applicable rates until such disposition
occurs, and provided further that in no event shall the disposition of such
account result in a taxable event to the Executive at the time of such
disposition. Notwithstanding the foregoing, the Company shall use its best
efforts to cause 100% of the COMSAT Stock Awards to vest immediately and to
become immediately exercisable, without any further action by the
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Executive, upon the occurrence of any "change of control" as defined in
Section 7(a) below.
(g) 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 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.
(h) 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
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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, together with the
COMSAT Stock Awards, 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, (a) 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 (b) 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 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
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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
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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 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
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pertain to work performed by the Executive while with Ascent, COMSAT, CEG
and CVE shall, as between the Executive and Ascent, COMSAT, CEG and CVE be
presumed to have been made during the Executive's employment by Ascent,
COMSAT, CEG and CVE.
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:
(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 five-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 percent (70%) 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
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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 and COMSAT 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 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.
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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 President and Chief Executive Officer of Ascent; (II)
any change in the reporting structure set forth in Section 1(b) above;
(III) any requirement that Executive perform material services of lesser
stature than those typically performed by the president and CEO of
comparably sized companies in the entertainment industry; (IV) any
reduction in Executive's title; (V) 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; (VI) 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; (VII) 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 (VIII) any purported termination of Executive's
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
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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 involving a
crime of moral turpitude, 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 or under COMSAT's Key Employee
Stock Plans shall terminate three months after the date of termination of
his employment for "cause".
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
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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.
(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.
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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 attorney's 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
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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), 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
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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.
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
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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 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
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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.
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
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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.
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.
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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:
Xxxxxxx Xxxxx
0000 X. Xxxxxxxxxx Xxx
Xxxxxxxxx, Xxxxxxxx 00000
With a copy to:
Irell & Xxxxxxx
Suite 900
1800 Avenue of the Stars
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
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If to Ascent, addressed to:
Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, III
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
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 Maryland. 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/ Xxxxxxx Xxxxx
---------------------------
Xxxxxxx Xxxxx, Executive
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ASCENT ENTERTAINMENT GROUP, INC.
By: X.X. Xxxxx
---------------------------
Title: Chairman
