EXHIBIT 10.14
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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 headquarters, which are presently located in
Denver, Colorado. The Executive shall have all duties and authority
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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 Ascent, such excess
amounts shall not be committed to Executive's authority unless and until
specifically authorized and approved by the Board.
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(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.
(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 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
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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 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
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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 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:
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(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
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.
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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 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
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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
Executive, upon the occurrence of any Achange 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
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(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 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.
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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 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
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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 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
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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, 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,
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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 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
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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 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
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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 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
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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 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
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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.
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
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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),
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
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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.
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
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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 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.
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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.
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
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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.
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
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
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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
ASCENT ENTERTAINMENT GROUP, INC.
By: X.X. Xxxxx
----------------------------------------
Title: Chairman
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