EXHIBIT 10.22
CORPORATE AGREEMENT
THIS CORPORATE AGREEMENT ("Agreement") is entered into as of October 8,
1996, by and between On Command Corporation, a Delaware corporation ("On
Command"), and Ascent Entertainment Group, Inc., a Delaware corporation
("Ascent").
RECITALS
A. Ascent owns all of the issued and outstanding common stock, par value $.01
per share ("Common Stock"), of On Command.
B. SpectraVision, Inc., SpectraDyne, Inc. ("SpectraDyne"), and each of the
other domestic subsidiaries of SpectraVision (the "Debtors") have filed a
petition for relief under Chapter 11 of the United States Bankruptcy Code in the
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), which
cases were procedurally consolidated for joint administration (collectively, the
"Bankruptcy Case").
C. Ascent has entered into an Acquisition Agreement (the "Acquisition
Agreement") with On Command, the Debtors and the Official Creditors Committee
appointed by the U.S. Trustee (the "Creditors Committee") pursuant to which On
Command will acquire (the "Acquisition") all of the outstanding capital stock of
SpectraDyne in exchange for approximately 27.5% of the Common Stock and warrants
to purchase 7% of the Common Stock on a fully diluted basis (the "SpectraVision
Warrants").
D. On Command and On Command Video Corporation ("OCV"), a majority owned
subsidiary of Ascent have entered into a Merger Agreement (the "Merger
Agreement") pursuant to which OCV will be merged (the "Merger", and together
with the Acquisition, the "Transactions") into a wholly owned subsidiary of On
Command and stockholders of OCV and designees of Ascent and OCV will receive at
least 72.5% of the Common stock and warrants to purchase 13% of the Common Stock
on a fully diluted basis.
E. After consummation of the Transactions, the Common Stock will be registered
under the Securities Exchange Act of 1934 (the "Exchange Act") and traded on the
NASDAQ Stock Market.
F. The parties desire to enter into this Agreement to set forth their
agreement regarding (i) the agreement of On Command to cause to be nominated
for election to its board of directors individuals designated by Ascent such
that such individuals comprise a majority of the board of directors of On
Command, (ii) the agreement of On Command not to amend its certificate of
incorporation or bylaws without the consent of Ascent, (iii) the agreement of
the parties that at least two directors of On Command be independent directors,
and (iv) the agreement of On Command regarding certain covenants and agreements
applicable to On Command.
AGREEMENTS
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Ascent and On Command, for
themselves, their successors, and assigns, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. As used in this Agreement, the following terms will have
the following meanings, applicable both to the singular and the plural forms of
the terms described:
"ADDITIONAL INFORMATION" has the meaning ascribed thereto in Section
3.2(h).
"AFFILIATE" means, with respect to a given Person, any Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to vote a majority of
the securities having voting power for the election of directors (or other
Persons acting in similar capacities) of such Person or otherwise to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or otherwise.
"AFTER-TAX BASIS" means, with respect to any payment to be received or
accrued by any Person, the amount of such payment supplemented by a further
payment or payments (which shall be payable either simultaneously with the
initial payment or, in the event that taxes resulting from the receipt or
accrual of such initial payment are not payable in the year of receipt or
accrual at the time or time such taxes become payable) so that the sum of all
such initial and supplemental payments, after deduction of all taxes imposed by
any taxing authority (after taking into account any credits or deductions or
other tax benefits arising therefrom to the extent such are currently utilized)
resulting from the receipt or accrual of such payments (whether or not such
taxes are payable in the year of receipt or accrual) shall be equal to the
initial payment to be so received or accrued.
"AGREEMENT" has the meaning ascribed thereto in the preamble hereto, as
such agreement may be amended and supplemented from time to time in accordance
with its terms.
"ASCENT" has the meaning ascribed thereto in the preamble hereto.
"ASCENT ENTITIES" means Ascent and its Subsidiaries (other than
Subsidiaries that constitute On Command Entities). "Ascent Entity" shall mean
any of the Ascent Entities.
"BEST EFFORTS" means all reasonable efforts within the power of a party to
effect a given action, but shall not be construed so as to require any party to
take any action that would have a material adverse consequence to the party
responsible for performance of such action or make a material payment if neither
customarily nor proximately related to the performance of such action.
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"BASE RATE" with respect to any party means the highest marginal interest
rate paid by that party on such party's outstanding indebtedness for borrowed
money in effect from time to time or, if the party does not then have any
outstanding indebtedness for borrowed money, ten percent per annum.
"CLOSING DATE" means the closing date for the Transactions.
"COMSAT ENTITIES" means COMSAT Corporation and its Subsidiaries (other than
Subsidiaries that constitute Ascent Entities or On Command Entities). "COMSAT
Entity" shall mean any of the COMSAT Entities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or
any successor statute.
"GAAP" means generally accepted accounting principles.
"INTERCOMPANY RECEIVABLE ACCOUNT" has the meaning ascribed thereto in
Section 3.5.
"INTERCOMPANY SERVICES AGREEMENT" means the Intercompany Services Agreement
between Ascent and On Command entered into of even date herewith.
"LAWS" has the meaning ascribed thereto in Section 3.2(h).
"LOSSES" has the meaning ascribed thereto in Section 3.7.
"MERGER" has the meaning ascribed thereto in the Recitals.
"ON COMMAND" has the meaning ascribed thereto in the preamble hereto.
"ON COMMAND ENTITIES" means On Command and its Subsidiaries.
"PERSON" means any individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated organization, government (and
any department or agency thereof) or other entity.
"REGISTRATION STATEMENT" means the Registration Statement on Form S-4
(Registration No. 33-233-10407) pursuant to which On Command registered under
the Securities Act the shares of Common Stock and Warrants to be issued in the
Merger, as amended.
"REPRESENTATIVES" has the meaning ascribed thereto in Section 3.2(h).
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute.
"SETTLEMENT DATE" has the meaning ascribed thereto in Section 3.5.
"SUBSIDIARY" means, as to any Person, any corporation, association,
partnership, joint venture or other business entity of which more than 50% of
the voting capital stock or other voting ownership interests is owned or
controlled directly or indirectly by such Person or by one or more of the
Subsidiaries of such Person or by a combination thereof. Subsidiary, when used
with respect to Ascent or On Command, shall also include any other entity
affiliated with Ascent or On Command, as the case may be, that Ascent and
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On Command may hereafter agree in writing shall be treated as a "Subsidiary" for
the purposes of this Agreement.
"TRANSACTION EXPENSES" has the meaning ascribed thereto in Section 3.3.
"TRANSACTIONS" has the meaning ascribed thereto in the Recitals.
1.2. INTERNAL REFERENCES. Unless the context indicates otherwise,
references to Articles, Sections and paragraphs shall refer to the corresponding
articles, sections and paragraphs in this Agreement and references to the
parties shall mean the parties to this Agreement.
ARTICLE II
CORPORATE GOVERNANCE COVENANTS
2.1 ASCENT DIRECTORS. On Command covenants and agrees, for so long as the
Ascent Entities beneficially own, directly or indirectly, the largest percentage
(and at least 40%) of the outstanding securities of On Command entitled to be
cast for the election of directors, to propose, at each election of directors,
a slate of directors, or in the cases of vacancies, individual directors, for
election so that at all times during the term of this Agreement, a majority of
the board of directors of On Command is comprised of persons designated by
Ascent.
2.2 INDEPENDENT DIRECTORS. On Command and, for so long as the Ascent
Entities own the largest percentage (and at least 40%) of the outstanding
securities of On Command entitled to be cast for the election of directors,
Ascent shall each use its Best Efforts to cause no fewer than two individual
directors of On Command to be independent directors within the meaning of the
rules of the National Association of Securities Dealers, Inc. for the Nasdaq
National Market, or such other market or exchange on which the Common Stock may
then be traded, as such rules are in effect as of the date of this Agreement.
2.3 AMENDMENT TO CERTIFICATE OF INCORPORATION AND BYLAWS. On Command
hereby covenants and agrees, for so long as the Ascent Entities own the largest
percentage (and at least 40%) of the outstanding securities of On Command
entitled to be cast for the election of directors, not to amend, supplement,
restate, cancel, modify or alter its Certificate of Incorporation or Bylaws in
any manner whatsoever without the prior written consent of Ascent.
2.4 LIMITATION ON INDEBTEDNESS. On Command hereby covenants and agrees,
for so long as the Ascent Entities own the largest percentage (and at least 40%)
of the outstanding securities of On Command entitled to be cast for the election
of directors, that it will not incur any indebtedness, other than that certain
bank credit facility to be entered into on the Closing Date as described in the
Registration Statement and refinancings thereof (the "Credit Facility") and
other indebtedness incurred in the ordinary course of business consistent with
past practices, which together with the Credit Facility shall not exceed $100
million in the aggregate, without the prior written consent of Ascent. For so
long as the Ascent Entities own the largest percentage (and at least 40%) of the
outstanding securities of On Command entitled to be cast for the election of
directors, On Command agrees to (i) utilize reasonable cash management
procedures, and (ii) use its Best Efforts to minimize its excess cash holdings.
2.5 LIMITATION ON ISSUANCE OF EQUITY SECURITIES. On Command hereby
covenants and agrees, for so long as the Ascent Entities own the largest
percentage (and at least 40%) of the outstanding securities
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of On Command entitled to be cast for the election of directors, that it will
not issue any equity securities or any securities convertible into equity
securities without the prior written consent of Ascent.
2.6 CHANGE IN FISCAL YEAR. For so long as the Ascent Entities own the
largest percentage (and at least 40%) of the outstanding securities of On
Command entitled to be cast for the election of directors, On Command hereby
covenants and agrees that it will not change its fiscal year without the prior
written consent of Ascent.
ARTICLE III
CERTAIN OTHER COVENANTS AND AGREEMENTS
3.1. FCC CAPITALIZATION PLAN AND CREDIT AGREEMENT REQUIREMENTS. (a) For
so long as the Ascent Entities own the largest percentage (and at least 40%) of
the outstanding securities of On Command entitled to be cast for the election of
directors, On Command covenants and agrees that it will not take any action or
enter into any commitment or agreement which may reasonably be anticipated to
result, with or without notice and with or without lapse of time, or otherwise,
in a contravention or event of default by any Ascent Entity of any provision of
applicable law or regulation, including but not limited to provisions set forth
in Ascent's intercompany agreements with COMSAT and COMSAT's then current
capitalization plan approved by the Federal Communications Commission (the "FCC
Capitalization Plan"), or any provision set forth in any credit agreement,
indenture or other material instrument binding upon any COMSAT Entity or Ascent
Entity (collectively, the "Ascent Credit Agreements") as of the Closing Date and
in any refinancings thereof on the same terms or on terms no more restrictive as
to On Command (provided, that such terms are disclosed to On Command).
(b) On Command and Ascent agree to provide to the other any information
and documentation reasonably requested by the other for the purpose of
evaluating and ensuring compliance with Section 3.1(a) hereof.
(c) In connection with the execution and negotiation of any new loan or
credit agreement or indenture during the term of this Agreement, Ascent agrees
to use reasonable efforts to attempt to exclude the On Command Entities from the
representations, covenants and agreements required of Ascent (other than
financial covenants calculated generally on the basis of Ascent's published
financial statements); provided, that Ascent's obligations under this Section
3.1(c) shall not be construed so as to require Ascent to modify the terms of any
proposed agreement or indenture in a manner that Ascent, in the exercise of its
sole discretion, deems adverse to its interests, including but not limited to
accepting a higher interest rate or other financing costs; PROVIDED, HOWEVER,
that nothing contained in this Agreement is intended the limit in any way the
ability of the Ascent Entities to pledge their interests in any securities of On
Command to secure any financing or borrowing.
3.2 FINANCIAL STATEMENTS AND OTHER INFORMATION. (a) For so long as the
Ascent Entities own the largest percentage (and at least 40%) of the outstanding
securities of On Command entitled to be cast for the election of directors of
any stockholder, On Command shall deliver financial statements and other
information in such format and media, and on the same schedule, as Ascent
requires of its other Subsidiaries. Ascent shall provide On Command with
advance notice of any changes in the content, format or schedule for delivery of
the financial statements and other information required of its Subsidiaries
required by Ascent to analyze and review On Command's business, financial
condition or operating results.
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(b) At such time as Section 3.2 (a) above is no longer applicable, On
Command shall deliver to Ascent in such format and media as Ascent may
reasonably request:
(1) as soon as available, and in any event no later than the first
Friday in February after the end of each fiscal year of Ascent as long as
Ascent's fiscal year ends on December 31 or, if Ascent's fiscal year is
changed, 75 days after the end of such fiscal year, a consolidated audited
balance sheet of On Command and its Subsidiaries as of the end of such
fiscal year and the related consolidated statements of operations and cash
flows for such fiscal year, all prepared in accordance with GAAP, and
reported on by independent public accountants of recognized standing
selected by On Command with the consent of Ascent;
(2) as soon as available, and in any event no later than the Tuesday
of the week immediately preceding the first regularly scheduled meeting of
Ascent's Board of Directors after the end of each quarter of Ascent,
consolidated statements of operations as of the end of such fiscal quarter
and for the portion of On Command's fiscal year then ended, prepared in
accordance with GAAP;
(3) as soon as available, and in any event no later than 30 days after
the end of each quarter of Ascent, a consolidated unaudited balance sheet
of On Command and its Subsidiaries as of the end of such fiscal quarter and
the related consolidated statements of cash flows for such fiscal quarter
and for the portion of On Command's fiscal year then ended, all prepared in
accordance with GAAP;
(4) as soon as available, and in any event no later than the Tuesday
of the week immediately preceding the first regularly scheduled meeting of
Ascent's Board of Directors after the end of each month or, if no board
meeting is scheduled for that month, no later than the Tuesday of the week
immediately preceding the week in which the third Friday of the month
occurs after the end of each month, a report on revenues, operating
earnings and cash flow of On Command on a consolidated basis, which reports
shall contain such other financial information and data as Ascent may
reasonably prescribe, as of the end of the immediately preceding calendar
month;
(5) as soon as available, and in any event on a schedule to be
established in connection with the first regularly scheduled meeting of
Ascent's Board of Directors after the end of any quarter of Ascent, revised
forecasted quarterly statements of operations for the remainder of the
calendar year for On Command and its Subsidiaries on a consolidated basis;
(6) as soon as available, and in any event on a schedule to be
established in connection with the preparation of Ascent's operating budget
for the next fiscal year, a projected operating budget for On Command for
the ensuing fiscal year; and
(7) as soon as available, and in any event no later than five business
days following receipt of a request by Ascent, such other information
relating to On Command as Ascent may reasonably request, in connection with
the reporting of its ownership interest in On Command under the "equity
method" of accounting in accordance with GAAP, to prepare Ascent's own
financial statements and reports under the Exchange Act.
(c) For so long as the Ascent Entities own the largest percentage (and at
least 40%) of the outstanding securities of On Command entitled to be cast for
the election of directors of any stockholder,
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On Command shall deliver copies of its proposed budget and strategic business
plan to its directors on a schedule to be established by On Command's Board of
Directors in advance of the consideration of such documents by the Board of
Directors for approval and concurrently deliver copies thereof to Ascent's chief
executive officer, chief operating officer and chief financial officer.
(d) For so long as the Ascent Entities own the largest percentage (and at
least 40%) of the outstanding securities of On Command entitled to be cast for
the election of directors, On Command shall deliver written notice to Ascent of
(i) filing of any material litigation, counter-claim, administrative proceeding
or arbitration by or against On Command or any Subsidiary, (ii) any event of
default or breach under any material agreement to which On Command or any
Subsidiary is a party (including, but not limited to, this Agreement and the
Intercompany Management Services Agreement), and (iii) the entry of any material
judgment or order for the payment of money or injunctive relief against On
Command or any Subsidiary, in each case as soon as possible and in any event
within five business days after On Command becomes aware of such event. Ascent
shall provide notice to On Command of the occurrence of any of the foregoing
events relating to Ascent within the same time frame if On Command would be
required to disclose such events under applicable financial reporting
requirements pursuant to federal or state securities laws or in accordance with
GAAP.
(e) For so long as the Ascent Entities own the largest percentage (and at
least 40%) of the outstanding securities of On Command entitled to be cast for
the election of directors, On Command shall deliver to Ascent, if requested by
Ascent, information of the same type, and at the same time, as required to be
provided pursuant to paragraphs (a), (b) and (d) of this Section 3.2 for any
Subsidiary or any other corporation, association, partnership, joint venture or
other business entity in which On Command holds an equity interest if such
interest has a material impact on On Command's operating results.
(f) With respect to the financial statements delivered pursuant to Section
3.2(a) and (b), a certification executed by the Chief Financial Officer or Chief
Executive Officer of On Command certifying that such financial statements were
prepared in accordance with GAAP and fairly present the financial position of On
Command and its Subsidiaries as of the end of the applicable fiscal month,
quarter or year-end and their combined results of operations and cash flows for
the periods then ended, subject to year-end audit adjustments.
(g) On Command agrees to reimburse Ascent, no later than 30 days after
delivery to On Command of a written request for reimbursement by Ascent, for all
costs, losses, damages or liabilities (including attorney's fees and expenses)
that Ascent may incur as a result of any breach of the provisions of this
Section 3.2 by On Command.
(h) For so long as the Ascent Entities own the largest percentage (and at
least 40%) of the outstanding securities of On Command entitled to be cast for
the election of directors, On Command hereby agrees to provide to Ascent such
other information respecting the financial condition or operations of On Command
as Ascent may from time to time reasonably request. In addition, subject to
applicable law, each party hereto covenants and agrees to provide the other
party and its authorized accountants, counsel and other designated
representatives (collectively, the "Representatives") reasonable access
(including using reasonable efforts to give access to persons or firms
possessing information) during normal business hours to all records, books,
contracts, instruments, computer data and other data and information
(collectively, "Additional Information") insofar as such access is reasonably
required by the other party in connection with the transactions contemplated by
this Agreement and the Intercompany Services Agreement or as may be required by
such other party to comply with all applicable federal, state, county and local
laws, administrative or court orders, ordinances, regulations and codes,
including, but not limited to, securities
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and tax laws and regulations ("Laws"). Without limiting the foregoing,
Additional Information may be requested under this Section 3.2(h) for audit,
accounting, claims, regulatory, litigation and tax purposes, as well as for
purposes of fulfilling disclosure and reporting obligations and for performing
this Agreement and the transactions contemplated hereby. Each party covenants
that it will provide Additional Information to the other party promptly and on a
timely basis following a request therefor so as to permit the other party
sufficient time to process the Additional Information and incorporate such
Additional Information into any report, return or filing required under
applicable Laws or to effect the transactions contemplated by this Agreement and
the Intercompany Management Services Agreement, assuming that the request
therefor is made on a timely basis sufficiently in advance of any filing
deadline so as to permit such response.
(i) For so long as the Ascent Entities own the largest percentage (and at
least 40%) of the outstanding securities of On Command entitled to be cast for
the election of directors, On Command shall provide to Ascent access to On
Command's independent public accountants and Chief Financial Officer or other
officers at reasonable intervals.
(j) Each party shall hold, and cause its Representatives to hold, in
confidence, all information concerning the other in its possession or furnished
by the other or the other's Representatives pursuant to this Agreement and shall
not use any such information except for such purposes as shall be expressly
permitted hereunder (except in each case to the extent that such information has
been (i) in the public domain through no fault of such party or (ii) lawfully
acquired from other sources by such party), and each such party shall not
release or disclose such information to any other person, except its regulators,
auditors, attorneys, financial advisors, bankers, rating agencies, creditors,
insurers, and other consultants and advisors, unless compelled to disclose such
information, as advised by its counsel, in order to comply with reporting or
other requirements under applicable Laws. Without prejudice to the rights and
remedies of any party to this Agreement, a party disclosing confidential
information to the other party in accordance with the terms of this Agreement
shall be entitled to equitable relief by way of an injunction if the other party
hereto breaches or threatens to breach any provision of this Section 3.2(j).
Each party shall use the same care in keeping confidential the information of
the party as it would use in safeguarding its similar information, but in no
event less than reasonable care.
3.3 THE TRANSACTIONS. On Command shall pay all expenses relating to
Transactions (including the fees of the advisors and counsel to Ascent and to On
Command), all of the fees and reimbursable expenses of Xxxxx & Company
Incorporated ("Xxxxx") and Xxxx Xxxxxx Partners ("Xxxxxx") pursuant to their
respective engagement letters, all of the costs of producing, printing, mailing
and otherwise distributing the Registration Statement and the information
statement/prospectus, or any amendments or supplements to the foregoing relating
to the Transactions (collectively, the "Transaction Expenses"). Notwithstanding
anything to the contrary that may be contained in any other agreements, the
provisions of this paragraph shall govern and control the allocation of
Transaction Expenses as between Ascent and On Command. On Command hereby agrees
to save, protect, indemnify, defend and hold harmless, on an After-Tax Basis,
each of the Ascent Entities and each of the officers, directors, and employees
of each of the Ascent Entities from and against all Losses to which any of them
may become jointly or severally subject (i) arising out of any untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, with respect to the Registration Statement
(PROVIDED, HOWEVER, that On Command shall not be liable to the Ascent Entities
to the extent that any such Losses arise out of or relate to any untrue
statement or alleged untrue statement, or any omission or alleged omission, if
such statement or omission shall have been made in reliance upon and in
conformity with information relating to the Ascent Entities furnished in writing
to On Command by or on behalf of the Ascent Entities specifically for use in the
Registration Statement), or (ii) relating to any litigation initiated by persons
acting in their capacity as
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a stockholder or creditor of On Command and arising out of the Transaction.
Ascent hereby agrees to save, protect, indemnify, defend and hold harmless, on
an After-Tax Basis, On Command and each of the officers, directors, and
employees of On Command from and against all Losses to which any of them may
become jointly or severally subject relating to any litigation initiated by
persons acting in their capacity as a stockholder or creditor of Ascent arising
out of the Transactions.
3.4 ALLOCATION OF CERTAIN CONTINGENT LIABILITIES AND BENEFITS. The
parties agree that any costs and recoveries associated with certain contingent
liabilities and claims described in APPENDIX A and any contingent liabilities
and claims that may arise in the future shall be allocated between Ascent and On
Command in the manner therein described, the terms of which are incorporated
herein by reference.
3.5 INTERCOMPANY RECEIVABLES AND INTEREST. (a) For so long as the Ascent
Entities own the largest percentage (and at least 40%) of the outstanding
securities of On Command entitled to be cast for the election of directors,
Ascent shall debit or credit any amounts that are due and payable by On Command,
or owed to On Command, under the terms of this Agreement, or the Intercompany
Management Services Agreement against an intercompany receivable account (the
"Intercompany Receivable Account") that Ascent will maintain as part of its
books and records. If the Intercompany Receivable Account has a positive
balance (I.E., if the amounts owed to Ascent by On Command exceed the amounts
owed to On Command by Ascent) as of the end of any month, On Command shall pay
the amount of such balance to Ascent by wire transfer, intrabank transfer or
such other immediately available sources of funds as Ascent may agree no later
than the first business day after the date that the monthly financial statements
of On Command for that month are required to be delivered to Ascent pursuant to
Section 3.2(a) or, failing the specification of such a date by Ascent, the date
described in Section 3.2(b)(4) (the "Settlement Date"). If the Intercompany
Receivable Account has a negative balance (I.E., if the amounts owed to On
Command by Ascent exceed the amounts owed to Ascent by On Command) as of the end
of any month, Ascent shall pay the amount of such balance to On Command by wire
transfer, intrabank transfer or such other immediately available sources of
funds as On Command may agree no later than the Settlement Date.
(b) Any balances in the Intercompany Receivable Account that have not been
paid by the party responsible for such payment pursuant to terms of this Section
3.5 after the fifth business day after the Settlement Date shall bear interest
until such amount is paid in full, credited or debited (as applicable) against
the Intercompany Receivable Account, at a rate per annum equal at all times to
4% per annum above the Base Rate then in effect of the party obligated to make
such payment. In the event that the rate provided for in the preceding sentence
exceeds the maximum rate allowed by applicable law, the maximum legal rate of
interest shall apply. In the event that On Command wishes to contest or
disagrees with any credit or debit made against the Intercompany Receivable
Account during any month, On Command shall provide written notice of its
objection to such credit or debit no later than 10 business days after the
Settlement Date. Upon receipt of such notice, Ascent and On Command shall use
their Best Efforts to resolve any disagreements with respect to contested
credits or debits against the Intercompany Receivable Account before the next
Settlement Date. The failure to reach agreement as to the appropriate
resolution of any disputed credit or debit to the Intercompany Receivable
Account, however, shall not relieve either party of its obligation to make, or
give rise to any right of set-off by such party arising either at common law or
in equity (which such rights are hereby waived by each of the parties) against,
future payments to the other in respect of the Intercompany Receivable Account
pursuant to this Section 3.5.
3.6 EXISTING GUARANTEES. On Command acknowledges that Ascent provided
certain guarantees and support in connection with the Transactions and in
particular in connection with entering into the EDS
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Agreement (as defined in the Registration Statement), and On Command agrees to
indemnify and hold Ascent harmless with respect to any and all such guarantees.
3.7 SEPARATION AGREEMENT. Immediately prior to the effective time of any
transaction that would result in the Ascent Entities failing, or being
reasonably likely to fail, to own the largest percentage of the outstanding
securities of On Command entitled to be cast for the election of directors of
any stockholder, On Command and Ascent shall use their respective Best Efforts
to enter into a separation agreement containing such terms, in addition to those
set forth in this Agreement and the Intercompany Management Services Agreement,
as shall be necessary or appropriate to effect the orderly and timely
deconsolidation of On Command from the Ascent consolidated group.
3.8 USE OF ASCENT NAME. At such time as the Ascent Entities no longer own
or hold with power to vote the largest percentage (and at least 40%) of the
outstanding securities of On Command entitled to be cast for the election of
directors, On Command shall cease and desist from any further use of the Ascent
name and any Ascent logo, trademark or service xxxx, other than pursuant to a
written licensing agreement signed by Ascent authorizing such use or as may be
required to be disclosed by applicable law.
ARTICLE IV
MISCELLANEOUS
4.1. LIMITATION OF LIABILITY. Neither Ascent nor On Command shall be
liable to the other for any special, punitive or consequential damages arising
in connection with this Agreement or the Intercompany Management Services
Agreement.
4.2. SUBSIDIARIES. Ascent agrees and acknowledges that Ascent shall be
responsible for the performance by each Ascent Entity of the obligations
hereunder applicable to such Ascent Entity. On Command agrees and acknowledges
that On Command shall be responsible for the performance by each On Command
Entity of the obligations hereunder applicable to such On Command Entity.
4.3. AMENDMENTS; WAIVERS; REMEDIES. This Agreement and the Intercompany
Management Services Agreement may not be amended or terminated, nor may any
failure of performance or default be waived, orally, except by a writing duly
executed by or on behalf of the parties hereto. Any such amendment or waiver
shall be validly and sufficiently authorized for purposes of this Agreement if
it is signed on behalf of Ascent or On Command by any of their respective
presidents or vice presidents. No failure on the part of Ascent or On Command
to exercise, and no delay in exercising, any right hereunder or thereunder shall
operate as a waiver thereof (except as expressly provided herein or therein);
nor shall any single or partial exercise thereof or the exercise of any other
right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein and therein provided are cumulative and not
exclusive of any remedies provided at law or in equity.
4.4. TERM. This Agreement shall remain in effect until the Ascent Entities
no longer own or hold with power to vote the largest percentage (and at least
40%) of the outstanding securities of On Command entitled to be cast for the
election of directors; PROVIDED, that the provisions of Sections 3.2(j), 3.3,
3.4, 3.6 and any unsatisfied payment obligation pursuant to Section 3.5 shall
survive any such expiration.
4.5 SEVERABILITY. If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction or fully authorized
10
arbitration tribunal to be invalid, illegal or unenforceable to any extent, the
remainder of this Agreement or such provision or the application of such
provision to such party or circumstances, other than those to which it is so
determined to be invalid, illegal or unenforceable, shall remain in full force
and effect to the fullest extent permitted by law and shall not be affected
thereby, unless such a construction would be unreasonable.
4.6 NOTICES. Any notice, instruction, direction or demand under the terms
of this Agreement required to be in writing will be duly given upon delivery, if
delivered by hand, facsimile transmission or intercompany mail, or five (5) days
after posting if sent by certified mail, return receipt requested to the
following addresses:
Ascent:
Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, III
Executive Vice President, Finance and Chief Operating
Officer
Telecopy No.: 303/595-0823
With copy (which shall not constitute notice) to:
Ascent Entertainment Group, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Vice President, Business and Legal Affairs
Telecopy No.: 303/595-0127
and
On Command Corporation:
On Command Corporation
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxx A. C. Steel
Executive Vice President, Chief Operating Officer and
Chief Financial Officer
Telecopy No.: 408/496-0668
With copy (which shall not constitute notice) to:
On Command Corporation
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Acting General Counsel
Telecopy No.: 408/496-0668
11
or to such other address as either party may have furnished to the other in
writing in accordance with this Section 4.6.
4.7. FURTHER ASSURANCES. Ascent and On Command shall execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
instruments and take such other action as may be necessary or advisable to carry
out their obligations under this Agreement and under any exhibit, document or
other instrument delivered pursuant hereto.
4.8. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute but one and the same agreement.
4.9. GOVERNING LAW. This Agreement and the transactions contemplated
hereby shall be construed in accordance with, and governed by, the laws of the
State of Colorado without giving effect to the conflicts of law principles
thereof. Each party hereby agrees that any legal action or proceedings with
respect to this Agreement or the Intercompany Services Agreement shall be
brought in a federal or state court located in the State of Colorado, and each
of the parties hereby consents to the exclusive jurisdiction of such courts and
hereby waives any objections on the grounds of venue, FORUM NON CONVENIENS,
situs of the action, improper forum or any similar grounds.
4.10. SUCCESSORS. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
assigns. Nothing contained in this Agreement, express or implied, is intended
to confer upon any other person or entity any benefits, rights or remedies.
4.11. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized representatives.
ON COMMAND CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
ASCENT ENTERTAINMENT GROUP, INC.
By: /s/ Xxxxxxx Xxxxx
----------------------------------------------
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